An Economic Approach to the 'Balance of Hardships' and 'Public Interest' Tests for Preliminary Injunction Motions in Patent Infringement Cases

Sat Jul 01 16:24:38 EDT 2000
By Dr. Ramsey Shehadeh et al.

In order to obtain a preliminary injunction against patent infringement, a patent holder must demonstrate that the balance of four factors favors the grant of the injunction:

:: Whether the patent owner will have an adequate remedy at law or will be irreparably harmed if a preliminary injunction does not issue;

:: Whether the patent owner has at least a reasonable likelihood of success on the merits;

:: Whether the threatened injury to the patent owner outweighs the threatened harm that the injunction may inflict upon the alleged infringer; and

:: Whether the granting of a preliminary injunction will serve the public interest.

The second criterion is a matter of law requiring assessments of patent validity, enforceability and infringement. The other three are, at least, in part, economic criteria.

In this report, NERA considers two of the three economic criteria related to a request for a preliminary injunction: the balance of hardships and the impact of an injunction on public welfare.

The essay does not consider the interesting economic issue of whether - and if so, when - the harm caused by infringement reasonably can be considered "irreparable." Under certain simplifying assumptions, the authors can illustrate when a hypothetical patent holder will (and will not) lose more as a result of the claimed infringement than an accused infringer will gain. They can also generalize to some extent about public-interest considerations. The essay also considers briefly the conditions under which there would be economic support for the recent decision of a Federal claimed infringed its patent.