February 19, 2008
A pair of preliminary injunctions vacated on appeal, putting claim construction and KSR as the cruxes of justification. In Erico v. Vutec & Doc's Marketing, though hotly contested, KSR Obzilla stomped in to quash a preliminary injunction. In Chamberlain Group v. Lear, a rather obvious inconsistency in claim construction resulted in preliminary injunction reversal.
Erico International v. Vutec & Doc's Marketing (CAFC 2007-1168)
Erico got 5,740,994 for a cable fastener, sold as J-Hook. Doc's Marketing self-admittedly copied and sold its own J-Hook. Lawsuit and preliminary injunction followed. On appeal, Doc's revived its prior art invalidity argument that didn't catch with the district court, in part because '994 had withstood reexam.
Erico contends that the district court had rejected Doc's obviousness invalidity challenge based on the PTO's reexamination in view of the OBO Betterman reference and the disclosure of "conforming standards" in the '994 patent itself. Furthermore, Erico argues that the district court is not bound by the findings of the PTO.
The smell of invalidity smoke must waft to dissuade from a preliminary injunction.
"Validity challenges during preliminary injunction proceedings can be successful, that is, they may raise substantial questions of invalidity, on evidence that would not suffice to support a judgment of invalidity at trial." Amazon.com, Inc., 239 F.3d at 1358. In other words, a defendant need not prove actual invalidity. On the contrary, a defendant must put forth a substantial question of invalidity to show that the claims at issue are vulnerable. Thus, a showing of a substantial question of invalidity requires less proof than the clear and convincing standard to show actual invalidity. Id.
Here, the CAFC caught a whiff of obviousness. Preliminary injunction vacated, in a 2-1 decision.
"Dissent Queen" Newman in "sage rage" mode (excerpts below); reversal burden of proof unmet:
The injunction preserves the status quo during this litigation, and is fully within the district court's discretionary authority. My colleagues on this panel have not only applied an incorrect standard to the preliminary injunction factor of likelihood of success on the merits, but they have also departed from the policy guidance of precedent, including eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) (the traditional criteria of equity apply to injunctions in patent cases) and Amoco Production Company v. Village of Gambell, 480 U.S. 531 (1987) ("The standard for a preliminary injunction is essentially the same as for a permanent injunction with the exception that the plaintiff must show a likelihood of success on the merits rather than actual success.").
The district court decided that the status quo should be preserved during this litigation. In overturning that decision, the panel majority mistakes the law, misplaces the burdens, misconstrues the assumptions, and ignores the district court's discretionary authority and its balance of the equitable aspects. The panel majority does not explain how the district court abused its discretion, nor is recognition given to the standard of review whereby, as this court has stated: "A decision granting a preliminary injunction will be overturned on appeal only if it is established that the district court made a clear error of judgment in weighing relevant factors, or relied on incorrect law or on clearly erroneous factual findings." Novo Nordisk of North America, Inc. v. Genentech, Inc., 77 F.3d 1364, 1367 (Fed. Cir. 1996).
As used by my colleagues, the raising of a "substantial question" does not require a preponderance of the evidence, although it requires "more than a mere scintilla." See Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951). Raising a "substantial question" concerning validity, it is not the same as establishing the "likelihood" of establishing invalidity. Precedent is clear that the standard is the likelihood of success at trial, with recognition of the presumptions and burdens. See, e.g., Gillette Co. v. Energizer Holdings, Inc., 405 F.3d 1367, 1370 (Fed. Cir. 2005); Nat'l Steel Car, Ltd. v. Canadian Pac. Ry., Ltd., 357 F.3d 1319, 1325 (Fed. Cir. 2004); Ranbaxy Pharms., Inc. v. Apotex, Inc., 350 F.3d 1235, 1239 (Fed. Cir. 2003); Purdue Pharma L.P. v. Boehringer Ingelheim GmbH, 237 F.3d 1359, 1363 (Fed. Cir. 2001); Smith International, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1579 (Fed. Cir. 1983).
The Chamberlain Group v. Lear (CAFC 07-1314, -1467)
The Chamberlain Group asserted 6,154,544, claiming a remote-control garage door opener, against Lear, and got a preliminary injunction. Disputed claim construction over the term "code," specifically, "binary code" versus "trinary code," led to a CAFC reversal.
Binary numbers are simply computer processor representation of numbers at the bit level: 0s & 1s. So, what's binary "code" in light of the claims including "trinary code"?
The district court explained that its construction of "binary code" encompassed anything represented in 0s and 1s in a computer... Accordingly, the trial court's construction of "binary code" would also encompass values expressed in "trinary code," as the latter term is used throughout the '544 patent. But, as the district court itself recognized, "binary code" cannot include "trinary code." The patent claims and specification, moreover, do not permit these two terms to overlap... Thus, the district court's construction of "binary code" is internally inconsistent and contradictory to the rest of the patent. To resolve this contradiction and preserve the independent meaning of "binary code" as compared to "trinary code" in the '544 patent, this court reads "binary code" as limited to binary numbers, and "trinary code" as limited to trinary numbers. Because the substance, rather than the form, controls whether a "code" is "binary" or "trinary" for the '544 patent, trinary code is still trinary code when expressed as a trinary number represented by (base 2) bit pairs, using 0s and 1s, as in the transmitter's microcontroller, or when expressed as a trinary number represented in (base 3) timed pulses as in the modulated RF signal transmitted to the receiver. The "binary-coded trinary number[s]" described by the district court, Preliminary Injunction Order at 7, are therefore trinary codes, not binary codes.
With a rummy claim construction, the preliminary injunction is unjustified.
This court reviews a grant or denial of a preliminary injunction for abuse of discretion. Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001). Where a district court relies on an erroneous claim construction in granting injunctive relief, this legal error may well constitute an abuse of discretion requiring this court to vacate the injunction. See SRAM Corp. v. AD-II Eng'g, Inc., 465 F.3d 1351, 1352-53 (Fed. Cir. 2006) ("Because the district court erred in construing claim 16, we vacate the district court's . . . grant of an injunction against AD-II, and remand for further proceedings consistent with this opinion."). A preliminary injunction requires analysis of the likelihood of success on the merits. See Abbott Labs. v. Andrx Pharms., Inc., 452 F.3d 1331, 1334 (Fed. Cir. 2006) (quoting Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 973 (Fed. Cir. 1996)). This factor, in turn, depends fundamentally on the meaning of the asserted claim and its relationship to the accused product or process. Therefore, a correct claim construction is almost always a prerequisite for imposition of a preliminary injunction.
Preliminary injunction vacated; case remanded.
Posted by Patent Hawk at February 19, 2008 8:04 PM | Injunction
"KSR Obzilla" - love it, and your posts. Keep it up!
Posted by: anon at February 19, 2008 10:23 PM
"Abuse of discretion has not been shown in the district court's consideration and weighing of the relevant factors at this preliminary stage." Boy is Judge Newman ever so right in saying this in the Erico case. I'm astounded that the majority panel opinion (by Judge Rader) would vacate the district court's PI on this record. The judge who granted this PI is not some inexperienced, patent unsavvy judge who can be duped by the trial attorneys. Instead, Judge O'Malley is a highly experienced district court judge, who, if I recall correctly, is a former patent attorney. If someone with Judge O'Malley's experience can be "second-guessed" by the Federal Circuit on the grant of a PI motion (especially on a validity issue that O'Malley would definitely know better than most district court judges), that doesn't bode well for any grant of a PI being upheld. If I were the patentee here, I would definitely consider requesting a rehearing en banc because this majority panel decision appears to be itself "abitrary and capricious."
Posted by: EG at February 20, 2008 7:35 AM
Exactly so, EG. However, I think the overwhelming case of obviousness trumped the other considerations in the minds of the majority. There is just no way that method claim will stand up under 103. At some point, the facts of the underlying case should matter when considering whether an abuse of discretion has occurred. In the interests of justice, why delay defendant's ability to sell their product until after litigation when there is no chance that the method claim will survive?
Posted by: Len Heyman at February 20, 2008 9:35 AM