Harm To Licensees Does Not Justify Preliminary Injunction To Protect Plaintiff's Licensing Business

A California court recently denied Finjan's motion for a preliminary injunction to prevent the alleged infringer, Blue Coat Systems, LLC, from selling its accused product before trial. Although Finjan was likely to prevail in its infringement suit, and although Finjan's licensees may have competed with Blue Coat, the court nevertheless found that Finjan was not entitled to a preliminary injunction because it failed to prove that it would suffer irreparable harm if Blue Coat were allowed to continue its activities. In particular, it found that harm to Finjan's licensees did not create irreparable harm to Finjan or justify Finjan's request for a preliminary injunction.

Finjan sought a preliminary injunction to prevent Blue Coat from making, using, selling, or importing its Internet security software before trial. Finjan, a company primarily engaged in the business of licensing its computer security patents, initially sued Blue Coat for patent infringement in 2013, and asserted numerous patents in a legal battle spanning years. During an earlier litigation, Finjan won a multimillion dollar judgement against Blue Coat, 60% of which related to infringement by the same accused Blue Coat product as in the present case.

Background

When issued by a court, preliminary injunctions prevent an accused infringer from performing infringing activities until a final judgment issues after trial. As such, they are considered "drastic or extraordinary" remedies "for preserving the status quo," preventing "irreparable loss of rights before the judgment." A party seeking a preliminary injunction must prove four elements: (1) that it is likely to succeed on the merits of the case; (2) that it is likely to suffer irreparable harm if the injunction is not granted; (3) that the balance of the hardships on the parties imposed by an injunction weighs in its favor; and (4) that an injunction is in the public interest.

Based on expert testimony and the judgment that Finjan won against Blue Coat during the previous litigation, Finjan argued it would likely win the current case against Blue Coat. Citing its own expert testimony, Blue Coat argued that Finjan would not win the case because its products did not infringe Finjan's patents, and because the asserted patent was probably invalid given that the USPTO had instituted IPR proceedings against it.

The parties also disagreed about whether Finjan would be irreparably harmed without a preliminary injunction. Finjan argued...