Thursday, September 21, 2023

Federal Circuit Vacates Grant of Preliminary Injunction

The decision, handed down this morning, is Well Cell Global LLC v. Calvit, nonprecedential opinion by Judge Chen, joined by Judges Prost and Cunningham.  The patent at issue, U.S. Patent No. 10,533,990, “is directed to an individualized therapy for infusing insulin intravenously to a patient.”  Plaintiff licensed the use of the patented method, but following a dispute filed suit against the defendants for, inter alia, patent infringement and for misappropriation of trade secrets.  Plaintiff then moved for a preliminary injunction, which the district court granted.  The Federal Circuit reverses, concluding that (1) although the district court did not abuse its discretion in finding that the defendants had waived their invalidity challenge, at least for purposes of the motion for preliminary injunction, but (2) the evidence presented in support of the balance of hardships and likely success on the infringement claim was speculative and conclusory:


Well Cell at best provided evidence of speculative harm, not likelihood that such harm would occur as required to establish irreparable harm for a preliminary injection. . . . Well Cell argued—and the district court found—that Well Cell’s reputation risked being damaged if Appellants performed the claimed methods illegally or improperly and Well Cell was blamed for such behavior. . . .


Well Cell’s argument rests on two levels of speculation—first that Appellants would perform the claimed methods illegally or improperly and second that Well Cell would then get pinned with the blame for Appellants’ misconduct. But Well Cell never explained or proved why there was reason to believe Appellants would likely misuse Well Cell’s intellectual property, or, if they had, how and why the public would assume Well Cell was at fault. Because Well Cell’s irreparable harm allegations rested on unsubstantiated assertions, the court clearly erred by finding that Well Cell sufficiently established a likelihood of irreparable harm. . . .


. . . the record shows Well Cell never identified any particular claim of the ’990 patent in its likelihood of infringement arguments, and the district court’s opinion never analyzed any particular claim either. Nor did Well Cell ever establish on the record what particular steps and procedures Appellants perform when providing their insulin therapy. Instead of comparing one of the patent claims to Appellants’ established procedures, Well Cell and the district court appeared to assume the Appellants must have performed at least one of the claimed methods during the pendency of the license, and Appellants must have continued practicing the same procedures without a license unless Appellants could prove otherwise. . . . Despite some Appellants having been former licensees, Well Cell’s infringement theory still rests on assumptions, not proof. On the facts of this case, this argument cannot support a finding of a likelihood of success on the merits for infringement (pp. 8, 10).

In addition, the Federal Circuit states that neither the district court nor the plaintiff identified the alleged trade secrets, and thus the trade secret claim doesn’t support the injunction either.  The decision thus highlights that the movant bears the burden of demonstrating likely success on infringement and irreparable harm. Relatedly, although reputational harm resulting from an act of infringement can factor into the analysis--and might even, on occasion, result in damages liability, as I explain in this article--the movant has to demonstrate the existence of that harm.

In a footnote at the end of the opinion, the court also reminds us that, in U.S. practice, injunctions are supposed to be specific:  "We note Appellants’ concern that the district court’s injunction was overly broad without specifying the methods enjoined. On remand, should a new injunction issue later in the case, the district court must describe the methods enjoined with specificity consistent with our case law. See Int’l Rectifier Corp. v. IXYS Corp., 383 F.3d 1312 (Fed. Cir. 2004)."

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