Nichia v. Everlight was decided on April 28, 2017 on appeal from the Eastern District of Texas. The patents-in-suit disclosed designs and methods of manufacturing LED devices. After a bench trial, the district court found defendant Everlight infringed plaintiff Nichia’s patents, and that the patents were not invalid. The court then denied Nichia’s request for a permanent injunction because there was no showing of irreparable harm. Both parties appealed.
The Federal Circuit affirmed the infringement finding, the non-invalidity finding, and the denial of the permanent injunction.
A party seeking an injunction must show (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 the balance of the hardships between the parties favor the injunction; and (4) that the public interest would not be disserved by a permanent injunction.
The district court didn’t err in finding that Nichia would not suffer irreparable harm absent an injunction. The lower court found no “meaningful competition” between the parties. First, Nichia is an LED chip manufacturer as well as a packager, while Everlight is solely an LED packager. Second, the companies sell to different parties, with Everlight selling to distributors and Nichia selling directly to customers. Third, even assuming competition, Everlight competed on a very small fraction of Nichia’s sales: “Nichia identified 516 sales opportunities, with Everlight as a competitor in only 3.”
Nichia also failed to show that it would suffer future irreparable harm because of past lost sales. In fact, Nichia failed to show that Everlight caused a single lost sale.
Nichia failed to show it suffered price erosion because of Everlight’s infringement. Nichia argued that it was forced to lower prices on a contract with GE to compete against Everlight. But the district court found that the lower prices were required by GE, so “Nichia was going to have to lower its prices, regardless of Evelight’s competition.” Further, several licensed competitors had offered products at lower prices, independent of Everlight, which drove down prices. Nichia thus could not show that Everlight was the but-for cause of its claimed price erosion.
A plaintiff’s past willingness to license its patent does not per se show a lack of irreparable harm if a new infringer were licensed. But evidence of licensing activities “can carry weight in the irreparable-harm inquiry.” “The fact of the grant of previous licenses, the identity of the past licensees, the experience in the market since the licenses were granted, and the identity of the new infringer all may affect the district court’s” decision as to whether a reasonable royalty may adequately compensate for the infringement. In denying the permanent injunction, the district court found that Nichia’s licenses were to significant competitors who posed major threats to Nichia’s flagship products; and that these licenses changed the market by making available multiple low-priced non-infringing alternatives.
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