Genband v. Metaswitch was decided on July 10, 2017 on appeal from the Eastern District of Texas. There, after a jury found that Defendant Metaswitch infringed claims of Plaintiff Genband’s patents, and that the claims were not invalid, Genband moved for a permanent injunction. The district court denied the request because “Genband failed to show that it would suffer irreparable harm from Metaswitch’s continued infringement,” finding no causal nexus between the alleged irreparable harm and the infringing features, and finding timing issues because Genband delayed for several year in bringing the suit and did not seek a preliminary injunction. Genband appealed.
The Federal Circuit vacated the denial of the permanent injunction and remanded.
The district court erred in finding no causal nexus for the alleged irreparable harm. Genband “relied on evidence that Metaswitch was making sales in direct competition with it, causing Genband to lose sales and thereby to suffer harm.” “[I]n a multi-purchaser, multi-component situation in which only a component of a larger product or system is covered by the patent in suit,” the standard for causal nexus is not whether “the patented features drive demand for the product.” Rather, the standard is less stringent.
The “patentee need not show that one of the patented features is the sole reason consumers purchased the accused products.” “[P]roving a causal nexus [only] requires the patentee to show some connection between the patented features and the demand for the infringing products.” The patentee may show this with “evidence that a patented feature is one of several features that cause consumers to make their purchasing decisions.” Here, the Federal Circuit found “no sufficient basis for inferring that the district court actually used” the correct test for determining a causal nexus, rather than an unduly stringent test. to interpret and apply the “drive demand” standard. The Federal Circuit thus remanded for the district court to apply the correct causal-nexus test.
On remand the district court will also reconsider Genband’s timing in bringing the suit and in seeking a permanent injunction. “[W]hen a patent owner postpones suit and forgoes a preliminary injunction, there may well be reasons for the patent owner’s actions independent of any implied concession that the infringement-caused injury is not actually irreparable: for example, the competitive threat may initially be small, or the merits may be much better presented through full litigation than through abbreviated preliminary-injunction proceedings.”
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