In the recent Eastern District of Texas decision in Smith & Nephew Inc. v. Arthrex Inc., the federal court tempered the grant of a motion for stay of the permanent injunction pending appeal by incorporating certain provisions into the stay.
By way of background, this case was tried and the jury reached a verdict on Feb. 12.
In accordance with the jury's verdict, the court entered a final judgment in favor of Smith & Nephew with a total award of a little over $5 million. Smith & Nephew filed a motion for a permanent injunction while Arthrex filed a motion for stay of the injunction pending appeal.
In granting Smith & Nephew's motion for a permanent injunction against Arthrex, the district court found that Smith & Nephew had demonstrated irreparable harm due to loss of market share, lost profits and potential revenue.
The court rejected the argument that continuing infringement could be addressed by future damages noting that Smith & Nephew makes and sells products, has a presence in the relevant market and has name recognition, goodwill and market share in the relevant market. In view of this, the court found that legal remedies would be inadequate and granted an injunction.
After considering the traditional equitable factors, the court then found that a stay of the permanent injunction pending appeal would be appropriate.
The court was clear that "[t]his order should not be read as implying any opinion of this Court that an injunction should not ordinarily issue on an infringement finding between competitors."
Rather, the facts of this case warranted a stay of the injunction and the court was careful to "temper the injury to Smith & Nephew" by imposing certain conditions on Arthrex during the pendency of the appeal, including a suspension of any current sales incentives for the purchase of the accused product and the payment into escrow of a 36 percent royalty.
While willing to stay a permanent injunction, the court attempted to protect the patentee from any potential injury caused by the stay of the injunction pending appeal by crafting the stay tailored to the facts of the case.
Anthoula Pomrening is a partner with McDonnell Boehnen Hulbert & Berghoff LLP in Chicago, Ill. She has experience in all areas of patent and trademark practice. She can be contacted at (312)935-2366 (direct) or pomrening@mbhb.com.