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June 20, 2007

Buffalo Enjoined from Selling Wi-Fi Gear in Patent Suit Injunction

A judge in Texas may have overstepped his limits: The East Texas court that found Buffalo Technologies in violation of a patent held by Australian technology agency CSIRO is well known by venue shoppers as a place to get a favorable hearing on any technology patent. CSIRO asked for Buffalo to be prevented from selling any equipment with Wi-Fi in it. The judge agreed and issued an injunction June 15. Buffalo was found in violation of the patent last November.

Now, this is sort of odd because CSIRO's lawyers state in several reports today that they didn't expect the judge to go along in light of the Supreme Court decision--one of several recent ones that limit patent protection and patentability--that states pretty bluntly that injunctions in patent cases shouldn't be issued even when a patentholder has had their claims upheld. The exception is if the patentholder is competing in the marketplace with the company that was found to violate their patents. That's not the case here, despite CSIRO arguments.

The Supreme Court's decision should prevent patentholders from using the threat of an injunction as a tool for settlement. The Research in Motion (Blackberry) settlement would likely not have been so large or happened in such a way after the highest court's ruling.

There's a four-part test in the S.C. ruling, and clearly none apply to CSIRO. I expect the injunction to be quickly vacated by a higher court.

(Update: Two commenters point out that I'm interpreted the Court's decision incorrectly. One notes that the decision specifically exempts research organizations from having to have commercially exploited their product. That stands in contrast to patent trolls that purchase patents for the sole purpose of extracting fees.)

Interesting fact in the Canberra Times article on the topic, which frankly crows about CSIRO's victory: Cisco already pays a royalty to CSIRO, and is thus unaffected, because of an agreement as part of their acquisition of Radiata, a venture based Down Under.

2 Comments

I think you may be confused on this one. The Supreme Court specifically states, "The decision to grant or deny such relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion." Further, I believe they also addressed your specific point as follows:

"Although the District Court recited the traditional four-factor test, 275 F.Supp.2d, at 711, it appeared to adopt certain expansive principles suggesting that injunctive relief could not issue in a broad swath of cases. Most notably, it concluded that a �plaintiff's willingness to license its patents� and �its lack of commercial activity in practicing the patents� would be sufficient to establish that the patent holder would not suffer irreparable harm if an injunction did not issue. Id., at 712. But traditional equitable principles do not permit such broad classifications. For example, some patent holders, such as university researchers or self-made inventors, might reasonably prefer to license their patents, rather than undertake efforts to secure the financing necessary to bring their works to market themselves. Such patent holders may be able to satisfy the traditional four-factor test, and we see no basis for categorically denying them the opportunity to do so."

[Editor's note: I'm being too categorical, obviously, but it doesn't seem that CSIRO's position puts them in a place that would provide them with the relief that the Supreme Court said should be limited. The example cited refers to licensing patents for exploitation. But that's not really what CSIRO did. The technology they claim to have patent rights over was already in products, and they didn't license their IP in order to cause those products to come into being, which is what I believe the court was saying. However, I welcome this kind of elaboration as IANAL (I am not a lawyer), and it's clear that your view holds in East Texas, at the very least! We'll see what an appeals court says. -gf]

If you actually READ the eBay decision, you would know that the Supreme Court explicitly stated that a research organization's lack of commercial activity was NOT grounds for denying an injunction.
Here's a link to a great blog about the Eastern District of Texas, including a summary of the CSIRO injunction decision: http://mcsmith.blogs.com/eastern_district_of_texas.

[Editor's note: I did read the eBay decision when issued, and I'd obviously missed this detail. Thanks for the clarification.- -gf]