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Irreparable Harm for Permanent Injunction Supported by Lost Profits Award

Posted in IP, Patent Law

In f’real Foods, LLC et al v. Hamilton Beach Brands, Inc. et al, 1-16-cv-00041 (DDE 2020-07-16, Order) (Colm F. Connolly), plaintiffs freal Foods, LLC and Rich Products Corporation sued defendants Hamilton Beach Brands, Inc. and Hershey Creamery Company for infringement of four patents on four accused products that are high performance blenders manufactured by Hamilton Beach. After a four-day jury trial, the jury found that all four accused products infringed various claims of the asserted patents, and that none of the asserted patents are invalid. The Court then turned to the plaintiffs’ motion for a permanent injunction.

The Court first noted that a plaintiff seeking a permanent injunction must demonstrate the four eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388,391 (2006) factors: “( 1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and ( 4) that the public interest would not be disserved by a permanent injunction.” To satisfy the irreparable injury factor, a patentee must establish ( 1) that absent an injunction it will suffer irreparable injury and (2) that a sufficiently strong causal nexus relates the injury to the infringement. The Court also noted that the Supreme Court has cautioned lower courts that “[a]n injunction is a drastic and extraordinary remedy, which should not be granted as a matter of course” and when “a less drastic remedy … [is] sufficient to redress [ a plaintiffs] injury, no recourse to the additional and extraordinary relief of an injunction [is] warranted.”

As to three of the accused blenders, the Court denied a permanent injunction because, respectively: (1) “Plaintiffs have failed to show that they would suffer irreparable harm from the continued sales of the IMI2000;” (2) “Plaintiffs have not put forward evidence of lost sales or any other injury caused by sales of the BIC2000 and Defendants have put forward unrebutted evidence that freal’s blenders do not compete with the BIC2000, Plaintiffs have not established that they have suffered an in-reparable injury related to the BIC2000 blenders.;” and (3) “Plaintiffs have not shown that lost sales of the LT blender to Dairy Queen are an irreparable injury that supports a permanent injunction with respect to the BIC3000-DQ.”

However, the Court did find that all four eBay factors favored granting Plaintiffs’ motion for a permanent injunction as to the MIC2000 blenders. First, the Court found plaintiffs have demonstrated that they have been and will continue to be irreparably injured by being forced to compete with the MIC2000 blenders in the Shake Shop Express Program. Specifically, the Court reasoned when a patentee is “forced to compete against products that incorporate and infringe its own patented inventions[,]” the patentee suffers a harm that is often irreparable. And, the Court further reasoned that when a jury awards a patentee lost profits, the jury necessarily finds both this kind of competition and that the defendant’s action caused the patentee to lose sales. Thus, the Court held an award of lost profits “squarely supports a finding of irreparable harm.”

However, the Court did recognize that it may seem “odd” that a monetary award supports a finding of irreparable injury. But the Court reasoned a finding of lost profits demonstrates that a plaintiff was deprived of market share and business opportunities in addition to lost profits. A lost profits award does not compensate a plaintiff for those first two harms; and money damages alone cannot fully compensate a plaintiff for those harms. Thus, the Court inferred from the jury’s award of lost profits that plaintiffs have suffered an irreparable injury due to the MIC2000 blenders Hershey used in the Shake Shop Express program.

The Court also found that plaintiffs have shown that there is a causal nexus between defendants’ infringement and plaintiffs’ lost profits, lost market share, and lost business opportunities. Further, the court also found that monetary damages are inadequate to compensate plaintiffs’ injuries. As to the balance of the hardships between plaintiffs and defendants, the Court found it follows from a finding of lost profits that as long as defendants are permitted to continue infringing plaintiffs’ patents, plaintiffs will continue to lose profits, lose business opportunities, and be deprived of market share because defendants have made it clear that unless they are enjoined they will continue to infringe plaintiffs’ patents. Thus, even if monetary relief were adequate to compensate plaintiffs for their injuries, plaintiffs would have to file another lawsuit to obtain that relief and the danger of a “multiplicity of suits” traditionally have justified an equitable remedy, such as an injunction, that would afford a plaintiff complete relief in a single proceeding. Finally, the Court was not persuaded that the public interest would be disserved by a permanent injunction.

Thus, the Court denied a permanent injunction as to three of the accused products, but granted it to the final product based heavily on the jury’s awarding of lost profits. And, this is in contrast to the usual rule that a satisfactory monetary award cautions again a finding of irreparable injury.