Opinion ID: 208066
Heading Depth: 2
Heading Rank: 3

Heading: The Permanent Injunction and Royalty Award

Text: Fresenius argues that the district court abused its discretion when it permanently enjoined Fresenius and awarded Baxter a royalty on hemodialysis machines sold before January 1, 2009, and disposables linked to those machines. Although we hold that the district court did not err when it determined that injunctive relief is appropriate, we vacate the injunction and remand for the district court to revise or reconsider the injunction in light of our reversal of JMOL. We likewise vacate the royalty award and remand for the district court to reconsider that award in view of this opinion.
To obtain a permanent injunction, the prevailing patentee must demonstrate: 2008-1306, -1331 22 (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. eBay, 547 U.S. at 391. The district court performed the appropriate analysis required by eBay. It weighed all of the factors and explained why it ultimately determined that injunctive relief is appropriate. Injunction Order, slip op. at 3–8. Contrary to Fresenius’s assertion, the district court did not consider the permanent injunction to be “all but inevitable” following the infringement determination. 4 Fresenius asserts several additional challenges to the district court’s analysis, but it cites no legal error and fails to demonstrate that the district court made any clearly erroneous factual determinations. For example, Fresenius asserts that the district court “ignored” evidence, see Appellant’s Br. at 50–52, but there is no requirement that the district court’s opinion discuss every single fact alleged by Fresenius. In addition, the record contains support for the district court’s factual determinations; the district court did not clearly err. Thus, 4 The district court did discuss an injunction as “all but inevitable,” but it did so in the context of balancing the relative hardships to the parties and did not commit legal error. The district court noted that it was “somewhat bewildering that, having admitted to infringing the patents nearly two years ago and having known for at least a year that an injunction was all but inevitable, Fresenius has apparently done nothing to implement any alternative to the [accused infringing device].” Injunction Order, slip op. at 7 (emphasis added). The district court then found that the balance of hardships favored Baxter because “[i]t is Fresenius’s burden, and not Baxter’s, to taste the bitter fruit of its own inaction.” Id. Read in context, the “all but inevitable” statement does not amount to legal error, particularly in light of the fact that the district court applied the correct four-factor test and explained its analysis. The district court was likely merely acknowledging, as did Chief Justice Roberts in eBay, that “courts have granted injunctive relief upon a finding of infringement in the vast majority of patent cases.” eBay, 547 U.S. at 395 (Roberts, C.J., concurring). 2008-1306, -1331 23 we conclude that the district court did not abuse its discretion when it granted permanent injunctive relief. Nonetheless, we vacate the injunction and remand for the district court to revise or reconsider the injunction in light of our reversal of the district court’s grant of JMOL regarding the ’027 and ’131 patents.
The district court ordered Fresenius to pay an ongoing royalty of 10% of the sales price for any infringing machines sold before January 1, 2009, and a royalty of 7% of the sales price for all disposable products linked to infringing machines that were sold from November 7, 2002, until the patents expire. Injunction Order, slip op. at 9–10. Fresenius argues the district court abused its discretion by imposing the ongoing royalty without explaining the bases for its royalty rate determinations. See Paice LLC v. Toyota Motor Corp., 504 F.3d 1293, 1315 (Fed. Cir. 2007) (remanding because, absent an explanation of the selection of the royalty rate, this court cannot determine whether the district court abused its discretion) (citing Hensley v. Eckerhart, 461 U.S. 424, 437 (1983) (“It [is] important . . . for the district court to provide a concise but clear explanation of its reasons for the fee award.”)). We do not decide today whether the district court’s royalty award was proper. Instead, we vacate the royalty award and remand for the district court to consider whether the previous award is proper in light of this court’s modification of the district court’s judgment. In particular, we note that our reversal of JMOL may affect the district court’s consideration of the putative royalty rate that would result from a hypothetical negotiation between Baxter and Fresenius. That analysis is influenced by the Georgia Pacific factors, see Minks v. Polaris Indus., 546 F.3d 1364, 1372 (Fed. Cir. 2008), and 2008-1306, -1331 24 our decision here may affect how the district court weighs one of more of those factors, see Georgia-Pac. Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970). Fresenius also argues that the district court erred by imposing a royalty on postverdict sales of disposables linked to machines that were sold pre-verdict. According to Fresenius, that portion of the royalty is inappropriate because the jury had already awarded Baxter damages based on machines sold pre-verdict. We disagree because the district court acted within its discretion. A damages award for pre-verdict sales of the infringing product does not fully compensate the patentee because it fails to account for post-verdict sales of repair parts. See Carborundum Co. v. Molten Metal Equip. Innovations, Inc., 72 F.3d 872, 881–82 (Fed. Cir. 1995). Although the jury had awarded damages for Fresenius’s pre-verdict sales of machines and disposable products, Fresenius cites no evidence indicating that the jury also considered post-verdict sales of disposable products linked to machines sold pre-verdict. The district court was within its discretion to impose a royalty on those sales of disposable products in order to fully compensate Baxter for the infringement.