Injunctive Relief For Standard Essential Patents

• Published date: 20 July 2023
• Subject Matter: Intellectual Property, Litigation, Mediation & Arbitration, Patent, Trials & Appeals & Compensation
• Law Firm: Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
• Author: Mr Daniel Cooley and Kathleen Hanley

In many patent suits, patent holders seek injunctive relief to prevent an accused infringer from continuingto practice the patented invention. Whether an injunction can be granted depends on various considerations a judge may weigh under her equitable powers. These considerations may become complicated when the patent is a standard-essential patent (SEP) encumbered by a commitment to license the SEP on fair, reasonable, and non-discriminatory (FRAND) terms.

Background of SEPs and FRAND Terms

An SEP is a patent whose subject matter is essential for compliance with an industry standard. Standard Setting Organizations (SSOs) set industry standards to ensure interoperability and efficiency of technologies in an industry. Participants in SSOs typically enter into an agreement to disclose their SEP patents and license such patents on FRAND terms.² Two problems that may occur with SEPs are patent "hold-up" and patent "hold-out." Patent "hold-up" occurs when an SEP holder refuses to license its SEP on FRAND terms to potential licensees.³ Patent "holdup" prevents implementers from fully complying with an industry-standard because the implementer cannot negotiate a license for an SEP on FRAND terms. The agreements between SEP holders and SSOs are meant to mitigate patent "hold-up" by obligating the SEP holder to license on FRAND terms to any willing licensee.4 Patent "hold-out" occurs when an implementer refuses to pay a reasonable royalty rate for the use of an SEP.⁵ A "hold-out" issue may arise when it is unclear whether an SEP holder's FRAND commitments prohibit a court from granting injunctive relief in an infringement case against an implementer that refuses to negotiate a license.

Case Law on SEPs and Injunctive Relief

Prior to 2006, courts followed a "general rule" in patent cases that "an injunction will issue when infringement has been adjudged, absent a sound reason for denying it."⁶

Courts frequently granted injunctions for patent holders in infringement cases, except "in rare instances . . . in order to protect the public interest."⁷ However, the near automatic grant of injunctions in patent cases was halted by the Supreme Court case eBay Inc. v. MercExchange, LLC.⁸ In this case, the Supreme Court overturned the Federal Circuit's "general rule," and instead held that patent disputes are not unique from any other case when analyzing injunctive relief.⁹The Supreme Court emphasized that courts must follow the traditional four-factor test for granting...