by Intellectual Property Attorney Bill Honaker, the IP Guy
The Siemens Gamesa v. GE patent case has been widely discussed in the wind industry and has raised important questions about patent law and Intellectual Property rights.
Last year, a jury found that GE’s Haliade-X wind turbine infringed Siemens’ patent. The patent protects a structural support arrangement that allows the wind turbine to be larger, handle increased loads and generate more energy. The jury found a reasonable royalty for the infringement was $30,000 per megawatt. Judge John Young then heard arguments regarding whether to order an injunction against GE’s infringing acts.
In 2006, the United States Supreme Court, in the case of eBay v. Merck Exchange, found that courts must apply a four-factor test to justify issuing an injunction, the same test traditionally applied by courts of equity. The Supreme Court made it clear that ordering an injunction in a patent case shouldn’t be treated any differently than any other action. Prior to the eBay decision, injunctions in patent cases were typically ordered, except in extraordinary circumstances. If you infringed a patent, you could expect an injunction against any further infringement.
In the eBay case, four factors that must be considered are:
1) has the patentee suffered irreparable injury;
2) are remedies available at law, such as monetary damages, inadequate to compensate for the injury;
3) considering the balance of hardships between the parties, is a remedy in equity warranted; and
4) will the public interest be disserved by a permanent injunction?
It’s important to note that after the eBay decision, many in the IP world thought that injunctions would be almost impossible to obtain. The four factors are a high hurdle, and it was thought that money would compensate for most injuries. However, the Court of Appeals for the Federal Circuit, the only appeals court that handles patent cases, issued decisions further defining what is required for an injunction, and admonished courts not to ignore the fundamental right of patent owners to exclude others. Although not as certain as pre-eBay injunctions, injunctions are still readily available for patent owners against infringers.
The Siemens Court considered these factors, and the parties’ arguments, and issued an injunction… well sort of issued an injunction. This is where things get interesting.
The court provided carveouts. GE had two projects, the Vineyard Winds project, which was being manufactured, and the Ocean Winds project, which was due to begin, with the contracts having been negotiated. The court allowed GE to continue with these products because the Judge thought it was in the public’s interest not to delay wind turbine development. For the Vineyards Winds project, GE was ordered to pay the $30,000 royalty. With the Ocean Winds project, they were ordered to put 100% of any profits into a trust until the court could determine a reasonable royalty for that project.
Normally, an injunction enjoins all actions, there are no carveouts. But this court was concerned about the public interest and the need for alternative energy and didn’t want to slow the development of these projects.
The judge clearly showed his concern for the climate crisis in a further order issued on February 2, 2023, establishing the Ocean Winds royalty. The judge began his written opinion by chastising both parties for putting corporate interests over the public interest. He encouraged both parties to cross-license each other’s patents for the global public interest. The judge clearly used his concern about the public interest as a factor in issuing the injunction and creating the carveouts that allowed an injunction of all future infringing projects, while allowing these two to continue. Siemens wanted the Court to triple the jury-determined royalty, and GE wanted it left alone. The judge split the difference and doubled the royalty ordering a $60,000 per megawatt royalty.
It will be interesting to see what happens on appeal. The Appeals Court has made it clear that it is in the public’s interest to have a strong patent system and that injunctions support this public interest. Will the Appeals Court allow a Solomon-like splitting of the baby to support two different public interests? Will this be a future trend? All I know for certain is that patents are at the heart of this decision and once again show their value in protecting innovation. Without them, there would have been no fight, and maybe no incentive to advance this much-needed technology.
About the Author:
Bill Honaker, “The IP Guy” is a former USPTO Examiner, a partner with Dickinson-Wright, and author of the forthcoming book, Invisible Assets – How to Maximize the Hidden Value in Your Business. To download a sample chapter, click here.
Photo credit: Z22, CC BY-SA 3.0, via Wikimedia Commons