Judkins v. HT Window Fashion (CAFC 07-1434)

Judkins developed a process for making "window coverings in the early 1990s and had his lawyer draft a patent application in 1991." But he didn't bother to file until 1995. "In 1996, another inventor filed a patent application for a similar product that issued the next year," 5,692,550.

Newell Window Furnishings was the owner of '550. In 1998, Newell went after an infringer. Judkins' work "was analyzed as prior art, and he and his attorney testified in the case."

"Also in early 1998, Judkins sought an interference between the '550 patent and his own" application.

The court ruled that the defendant in that case could not rebut the inference, drawn from Judkins's four-year delay in applying for a patent, that he had suppressed, concealed, or abandoned his invention.

'550 was invalidated on other grounds.

The BPAI ruled against Judkins for abandoning his invention.

Judkins and Newell, both out of luck, cut a deal. Judkins then appealed the BPAI ruling, and got a judge to give Judkins' application priority. Hence '120.

Shortly before the patent issued, Judkins sent letters to HT's customers and potential customers warning of likely infringement

Judkins sued shortly after issuance. HT struck back with its counterclaim, to stop Judkins from spooking its customer base. The district court ruled didn't think HT "had a likelihood of prevailing," so ruled against HT.

The district court also noted that "the irreparable harm balance does not weigh in [HT's] favor" because patentees in Judkins's position have a right to protect their inventions by, among other things, warning the marketplace against infringement. Id. at 766. In contrast, the court found any harm to HT was not "particularly irreparable" because it would only take the form of lost sales compensable through monetary relief. Id. at 767. The court concluded that the balance of harms was an alternative basis to deny HT's motion for a preliminary injunction.

The CAFC:

The first of these elements--the movant's chances for success on the merits--is critical in this case because it was the principal ground on which the district court denied HT the relief it sought. To prevail on an unfair-competition claim under section 43(a) of the Lanham Act stemming from a patentee's marketplace activity in support of his patent, the claimant must first establish that the activity was undertaken in bad faith. Zenith Elecs. Corp. v. Exzec, Inc., 182 F.3d 1340, 1353 (Fed. Cir. 1999). "[A] patentee has a right to inform potential infringers of a patent and potentially infringing activity unless the communication is made in bad faith." GP Indus., Inc. v. Eran Indus., Inc., 500 F.3d 1369, 1374 (Fed. Cir. 2007) (citing Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1386 (Fed. Cir. 1998) and 35 U.S.C. § 287). Although bad faith in this context has both objective and subjective elements, the former is a threshold requirement: "a bad faith standard cannot be satisfied in the absence of a showing that the claims asserted were objectively baseless," meaning no reasonable litigant could realistically expect to prevail in a dispute over infringement of the patent. Id. at 1374 (citing Prof'l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60 (1993)). If a district court weighing a motion to enjoin a patentee from communicating its rights determines the patent in question is not necessarily invalid or unenforceable, the objective baselessness requirement is not met, and no injunction should issue. Id. at 1375. This court has made it clear that "[a]n injunction against communication [of patent rights] is strong medicine that must be used with care and only in exceptional circumstances." Id. at 1374. Indeed, once the court concludes that the claims of infringement are objectively baseless, the court must then consider whether the claims were made in subjective bad faith. Cf. Prof'l Real Estate Investors, 508 U.S. at 60.

The CAFC didn't find the Judkins - HT Window deal a conspiracy, nor Judkins' suit "a sham." Nor was inequitable conduct a slam dunk for the way Judkins got his patent.

Affirmed. Back to the district court.