De-Stabilizing Preliminary Injunctions through De Novo Review of Claim Construction

Chamberlain Group v. Lear Corp. (Fed. Cir. 2008)

Chamberlain's patent is directed to improved security for remote garage door controls. After an initial claim construction, the N.D. Ill. court granted summary judgment for Chamberlain and issued a preliminary injunction.

A major point of contention was the claimed "binary code" limitation.  In a portion of its system, Lear used a three-symbol (trinary) code. Of course the underlying processor is binary and thus encodes the trinary code as binary numbers. In its preliminary injunction decision, the lower court held that Lear likely infringed because of the trinary coded binary numbers.

De Novo Review: On appeal, the CAFC reversed, but only after noting that the "district court commendably strove to follow this court's rules for claim construction."  In particular, the CAFC found in its de novo review that the specification requires a finding that a trinary code is not a binary code even though it is stored in binary format.

De Novo Preliminary Injunction: A preliminary injunction requires a showing that the patentee has a strong likelihood of success on the merits of the case.  Because a showing of success on the merits depends upon the claim construction, the appellate panel held that reversal on claim construction will almost always lead to vacatur of a preliminary injunction. I.e., "A correct claim construction is almost always a prerequisite for imposition of a preliminary injunction."

Preliminary Injunction Vacated.

Notes:

1. This decision is important because it shows how de novo review of claim construction can de-stable holdings that are otherwise reviewed only for clear error.
2. Background on the Litigation

Threatening Letters to Infringer's Clients Are Not Actionable Unless "Objectively Baseless" (Although They Will Create DJ Jurisdiction)

GP Industries v. Eran (Fed. Cir. 2007)

Eran makes “leakproof” rain gutter covers. Several Eran employees were fired during the summer of 2005.  Those individuals reorganized as GPI — a potential competitor to Eran. As a preemptive strike, Eran mailed letters to its distributors and contractors noting that GPI’s planned to sell a competitive product that infringed Eran’s patent.

After GPI filed for declaratory judgment, the district court (Nebraska) granted GPI’s motion for a preliminary injunction — stopping Eran from “(1) seeking to prevent GPI from making and selling its gutter products during the pendency of this litigation and (2) making vague and unspecified allegations of infringement against GPI in the marketplace.”

On appeal, the CAFC reversed — finding that the preliminary injunction had been improperly granted.

The party seeking a preliminary injunction has the burden of showing: “(1) a reasonable likelihood of success on the merits; (2) irreparable harm; (3) a balance of hardships in its favor; and (4) public interest in favor of the injunction.” Once granted, a preliminary injunction will only be vacated for clear error.

Injunction against Communications: Based on First Amendment rights and 35 U.S.C. § 287 (notice), injunctions relating to communications must pass a higher hurdle. In particular, “bad faith” is required in order to bar communications.

“One has a right to inform others of his or her patent rights. See 35 U.S.C. § 287. Thus, an injunction against communication is strong medicine that must be used with care and only in exceptional circumstances.”

In Globetrotter Software, the CAFC held that “bad faith” communications require “objectively baseless claims.”  Notably, these determinations are based on federal law that preempt any state laws that may be less strict.

Here, the CAFC found that Eran’s statements could not be “objectively baseless” since the lower court had noted the real potential that Eran would eventually succeed on the merits of the case.

Preliminary Injunction Reversed

Notes:

• Hovey Williams of Kansas City, Missouri represented the patentee, Eran.
• Kirton & McConkie of Salt Lake City, Utah represented the accused infringer.

Nonpracticing Entity (CSIRO) Gets Injunction

CSIRO v. Buffalo Technology (E.D.Tex. 2007)

CSIRO operates as a technology licensing arm of the Australian Government. CSIRO does not practice its inventions, but has asserted its wireless LAN patent against a number of accused infringers, including Intel, Microsoft, Marvell, and Buffalo. The patent is broad enough to cover all 802.11a/g wireless technology and has a 1992 priority date.

In the case against Buffalo, CSIRO won a slam-dunk summary judgment of validity and infringement. The court then considered whether to award a permanent injunction in favor of the non-practicing entity (NPE).

In Preliminary Injunction Decision, CAFC Forecasts Post-eBay Jurisprudence

Sanofi v. Apotex (Fed. Cir. 2006)

Generic manufacturer Apotex wants to make something similar to Sanofi’s Plavix (clopidogrel bisulfate) and filed an ANDA alleging that Sanofi’s patents were invalid.

The two parties worked together to negotiate a settlement.  The agreement, however, was not accepted by state attorneys general even after new terms were presented. Under provisions of the agreement, the regulatory denial killed the settlement and the parties resumed litigation.

Sanofi then filed a motion for preliminary injunction to stop Apotex from selling its product. Within 21 days, the district court issued a PI. (During that time, Apotex shipped six-months of product). Apotex then appealed the PI.  Preliminary injunction jurisprudence has its own four-factor test that is similar to that of permanent injunctions. The plaintiff must show:

• Reasonable likelihood of success on the merits of the case;
• Irreparable harm if an injunction is not issued;
• Balance of hardships tipped in favor of the plaintiff; and
• Public interest that is not negatively impacted.

The major difference between the factors for consideration in preliminary injunctive relief and those for permanent relief is that preliminary relief requires a showing of a likelihood of success while permanent relief requires success on the merits as a precondition. Thus, the final three factors will give some indication of how the court will rule in post-eBay injunction cases.

Likelihood of success on the merits: Apotex took the odd position of arguing anticipation based on a broadly worded claim of a prior art patent that was examined during prosecution.  The CAFC confirmed that this made the burden of proving invalidity at trial “especially difficult.”  On obviousness, the CAFC confirmed that the unpredictability of enantiomer activity made the claimed dextrorotatory formation nonobvious even if the molecule as a whole was known.

On Irreparable Harm: The settlement agreement between the parties included a provision that capped any damages for infringement by Apotex — seemingly an admission that Sanofi would settle for money damages. The court did not buy-into this argument, but only because of the technicality that the agreement also contemplated an injunction.

Balance of hardships tip entirely in Sanofi’s favor because Apotex chose to launch its product under threat of injunctive relief.  It could have avoided the situation altogether and thus should not benefit from this factor.

Public Interest: The CAFC continued its line of the “importance of the patent system in encouraging innovation.” Interestingly, the court focuses on how the expense of pharmaceutical inventions necessitates strong patent protection. . . . begging the question of whether less expensive innovations (such as software) have less of a public interest in strong patent protection.