Thursday, December 21, 2006

E.D. Texas Issues Permanent Injunction in Visto v. Seven Networks

Visto has filed patent infringement suits against a number of "push" e-mail companies, including Infowave Software, RIM, Good Technology, and Microsoft. The leading case in Visto's enforcement effort, Visto Corp. v. Seven Networks (2:03cv333-TJW) obtained an infringement verdict last April. Last week, Judge Ward decided a number of post-trial issues in Visto's favor including punitive damages and permanent injunction. This was Judge Ward's first opinion addressing permanent injunctions after eBay, and marks only the second time in five cases where an injunction was granted in the E.D. Tex. In both cases, the court indicated that being a direct competitor of the patentee was a substantial factor in granting the injunction.

Judge Ward's (short) opinion on the injunction follows:

The court grants Visto’s motion for permanent injunction. In eBay v. MercExchange, the Supreme Court held that the traditional four-factor test for permanent injunctive relief applies to patent cases. eBay Inc. v. MercExchange, LLC, U.S. , 126 S.Ct. 1837, 1839 (2006). The Court recited the test as follows:

According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (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, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
Id. Bearing these factors in mind, the court now turns to the facts of this case to assess the propriety of permanent injunctive relief.

A. Irreparable injury.

Visto has demonstrated irreparable injury. The parties to this case are direct competitors, and this fact weighs heavily in the court’s analysis. Intellectual property enjoys its highest value whenit is asserted against a direct competitor in the plaintiff’s market. In Tivo v. EchoStar Communications Corp., 446 F. Supp.2d 664, 669 (E.D. Tex. 2006), Judge Folsom found irreparable harm because “[t]he availability of the infringing products leads to loss of market share for Plaintiff’s products.” Seven’s arguments to the contrary, focusing on the large market share of Research in Motion, are not persuasive. The court finds that Visto will suffer irreparable injury absent an injunction.

B. Inadequacy of legal remedies.

Visto has also demonstrated the inadequacy of legal remedies. It is true that the jury awarded a large damages verdict. Those damages, however, are designed to compensate Visto fairly and reasonably for its past injury. Under the jury’s verdict, Seven is willfully using its competitor’s intellectual property and a threat of continued infringement exists under this record. Although future damages may compensate Visto for an approximate loss, that does not make them adequate in the sense that they are a suitable proxy for injunctive relief. What makes legal remedies inadequate under the circumstances of this case is the inability to calculate the plaintiff’s future losses with precision. An injunction against the continued use of the plaintiff’s intellectual property is the proper remedy to prevent future infringement.

C. Balancing of hardships.

The court has considered the balance of hardships. The court agrees with Visto that if no permanent injunction is entered, Visto will lose goodwill, potential revenue, and the very right to exclude that is the essence of the intellectual property at issue. Although Seven will be harmed by an injunction, the balance of hardships favors Visto in this case.

D. Public interest.

The question presented by this factor is whether the public interest would be disserved by an injunction. There has been no persuasive showing that the public interest would be disserved by an injunction. In fact, the public interest would be served by issuing an injunction to protect the patent rights at issue. After considering the traditional equitable factors, the court concludes that a permanent injunction is proper in this case. The plaintiff’s motion for entry of a permanent injunction is therefore granted.

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