Defendant's bankruptcy favors permanent injunction, federal circuit rules

By Anthoula Pomrening | Sep 13, 2010

In Retractable Technologies Inc. v. Occupational & Medical Innovations Ltd., a patent infringement case from the Eastern District of Texas, the U.S. Court of Appeals for the Federal Circuit granted a permanent injunction in favor of the plaintiff based in part upon the defendant's bankruptcy and the fact that plaintiff and defendant are direct competitors.

Retractable Technologies Inc. filed suit against Occupational & Medical Innovations Ltd., alleging that OMI infringed certain claims of U.S. Patent No. 6,572,584 through OMI's retractable syringes and misappropriated RTI's trade secrets.

After trial, the jury found that the patent was infringed by OMI and not invalid, and awarded damages for patent infringement and trade secret misappropriation.

RTI then moved for the entry of a permanent injunction to prevent OMI from making, using, importing, selling or offering for sale its syringes.

The court examined the factors set forth in eBay Inc. v. MercExchange LLC to determine whether RTI was entitled to a permanent injunction.

Considering the first factor, whether the party has suffered an irreparable injury, and the second factor, whether remedies at law would be adequate to compensate for that injury, the court believed it would be highly probable that OMI would not be able to pay the monetary damages to RTI because OMI had entered into the Australian equivalent of bankruptcy.

Since RTI's syringes directly competed with OMI's syringes and RTI refused to license its technology to OMI, the court found that RTI would be irreparably harmed if no injunction were entered and that monetary damages would be inadequate to compensate RTI for such an injury.

As to the third factor, whether in view of the balance of hardships a remedy in equity is warranted, OMI argued that, considering its weak financial state, the balance of hardships favored OMI.

The court was not persuaded.

"OMI's financial position as a result of its infringement is irrelevant to the Court's injunction analysis," the court found.

Further, the court noted that the products at issue- retractable syringes- were the core of RTI's business and comprised more than 95 percent of RTI's recent sales.

As a result, the court found the third factor favored RTI.

With respect to the fourth factor, whether the public interest would be disserved by a permanent injunction, the court explained that "it is in the public interest to enforce patent rights and encourage innovation."

In addition, the court considered that the U.S. Food and Drug Administration's approval of OMI's syringes was based on RTI's testing data and thus "OMI's syringes may not have been properly tested and may not meet the FDA's requirements."

Thus, the fourth factor slightly favored a permanent injunction.

OMI asked for the injunction to be stayed pending appeal based on its financial state and its case on the merits, but the court declined to do so.

Since all four eBay factors weighed in favor of an injunction, the court granted RTI's motion for permanent injunction.

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