United States: Brocade v. A10 Networks: Brocade Granted Permanent Injunction As It Satisfied Causal Nexus Requirement By Showing That It Practiced Its Patent, That A10 Was A Direct Competitor And That It Does Not License Its Patents

Last Updated: January 25 2013
Article by Stanley M. Gibson

After the recent Federal Circuit decision in the Apple v. Samsung case and the district court's application of that reasoning to find that a permanent injunction should not issue in Apple's favor, many predicted that it would be very difficult to obtain a permanent injunction in patent cases going forward where many components are at issue. Not so fast.

As the district court explained in the Brocade Communications Systems ("Brocade") v. A10 Networks ("A10"), upon the showing of an appropriate causal nexus a permanent injunction should issue. "Some have suggested that these standards herald the death, or at least the wounding, of the permanent injunction in patent cases involving hardware or software products with hundreds or thousands of components. One standard in particular - the "casual nexus" standard - bears the brunt of this discussion. Whether those opinions are fair or even accurate is something this court cannot say. What this court can say, however, is that whatever the "trend" of permanent injunctions in such cases, the Federal Circuit has made clear that injunctions can and should continue to issue upon the assembly and presentation of an appropriate record. After careful consideration of the parties' voluminous papers and substantial oral arguments, the court is persuaded that the record in this case, which shows a clear causal nexus between Brocade's loss of exclusivity in its inventions and A10's infringement, is one such example."

In determining that a permanent injunction should issues, the district court focused on the traditional four, equitable factors: (1) irreparable harm; (2) inadequate legal remedies; (3) balance of hardships; and (4) the public interest.

Focusing on irreparable harm (which tripped up Apple in its battle against Samsung), the district court noted that Brodcade had "[p]roven a sufficient nexus between the established infringement and irreparable harm from the loss of its exclusive right to practice its patents." To support the causal nexus, the district court stated that "Brocade has demonstrated that A10's infringement prevents it from practicing its patents exclusively. Brocade has shown that its ServerIron series of ADC ("ServerIron") practices the four claims from the three patents-in-issue. In particular, Ivy Hsu ("Hsu"), one of the named inventors of the three patents, and Azer Bestavros and Izhak Rubin, two of Brocade's experts, testified that Brocade's product practiced the route redundancy invention in the '195 Patent and the re-ordering features of the '500 Patent and the '009 Patent. Neither evidence that Brocade licenses any of the technology in the patents to any other parties. Brocade also shows that its in direct competition with A10, such that its loss of exclusivity is particularly injurious. Brocade's witness, Ken Chen ("Cheng"), and A10's founder, Lee Chen ("Chen"), both described Foundry/Brocade and A1- as competitors. Emails from A10 employees identify Foundry - now Brocade- as a "good target[] to attack." Cheng also distinguished the "high performance" products Brocade and A10 offer from the GSLB and HA products offered by companies with larger market share. Brocade's expert James Malackowski identified 165 of its customers who bought A10s AX product with the infringing features included and who had also been Brocade customers."

As a result, the district court found the irreparable harm prong satisfied. "In a situation such as this, where Brocade has shown that it practices its patent, that A10 is its direct competitor, and that Brocade does not license its patents, Brocade has shown that it suffers the type of irreparable harm that a permanent injunction is intended to remedy."

The district court also determined that the legal remedies, i.e., damages were inadequate to remedy the harm suffered by Brocade. "Although money damages may compensate Brocade for previous harm from the infringement, they do not protect Brocade's right to practice exclusivity patented improvements to the GSLB and HA functions. Here, exclusivity protects Brocades' competitive position. Brocade's right to exclusivity cannot be protected through damages alone; an injunction is necessary to ensure its rights."

Referring to the balance of hardships, the district court also concluded that this favored Brocade once again due to the exclusivity conferred by a patent. "Brocade, on the other hand, would suffer ongoing loss of its rights to exclusively practice its patents, and Brocade's loss would be at the hands of a direct competitor. Brocade's hardship in the absence of an injunction outweighs A10's hardship if an injunction were to be entered. The balance, therefore, weighs in favor of entry of an injunction."

Finally, weighing the public interest, the district court found that an injunction barring future infringement and carving out current users would preserve the public interest.

Accordingly, the district court entered a narrowly tailored permanent injunction.

Brocade Communications Systems, Inc. et al., v. A10 Networks, Inc., et al., Case No. C 10-3428 PSG (N.D. Cal. Jan. 10, 2013)

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Stanley M. Gibson
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