I resume blogging this week with a post about the Federal Circuit’s December 17 precedential decision in Wonderland Switzerland AG v. Evenflo Co., majority opinion by Chief Judge Moore joined by Judge Prost, with a separate opinion by Judge Reyna concurring in part and dissenting in part. (Still to come are my promised posts on Acer, Inc. et al. v. Nokia Technologies Oy, [2025] WHC 3331 (Pat.) (Eng.) and related developments in the UPC, as well as the UPC COA’s damages decision in Bhagat Textile Engineers v. Oerlikon Textile GmbH & Co KG. Meanwhile, I am heading to the Association of American Law School’s Annual Meeting in New Orleans tomorrow, and will be speaking there on Thursday on the remedy of destruction, which was the subject of a paper I coauthored with Professor Chung-Lun Shen in 2024; and I eagerly await publication of my book Remedies in IP Law, which should be out within the next week.)
In Wonderland, the plaintiff filed suit for the infringement of two patents (ʼ043 and ʼ951) relating to child car seats. The jury found that the accused products (referred to as the 3-in-1 and 4-in-1 seats) infringed; the Federal Circuit, in portions of the opinion I will omit here, reverses the finding that the 4-in-1 seats infringed ʼ043, but otherwise affirms on liability. The court nevertheless concludes that the district court abused its discretion in granting a permanent injunction as to both patents. As for ʼ951, the court concludes that the district court abused its discretion “because Wonderland expressly declined to request [injunctive] relief” (p.13). Moreover, this was not harmless error, because “the injunction could affect Evenflo’s release of other products, which may not necessarily infringe the ʼ043 patent”—and because it was an abuse of discretion to enjoin the infringement of ʼ951 (p.13). With regard to ʼ951, the district court erred in relying “solely on speculative and conclusory evidence that Wonderland suffered, and would continue to suffer, irreparable harm or injury that could not be compensated with monetary damages” (p.14). More specifically:
. . . the district court did not point to any non-speculative or non-conclusory evidence establishing Wonderland’s business partner, Graco Children’s Products Inc. (Graco), lost sales or market share of car seat products to Evenflo as opposed to the large number of other competitors in the market. . . . for non-car seat products, the district court improperly relied on speculative and conclusory testimony from Wonderland’s managing director, Renee Wang, that a lost car seat sale “naturally leads” to the loss of market share across other products. . . . This testimony was concededly based on “no[thing] more than [the notion that] the parents will buy other products under the same brand name.” . . . Without providing any evidence of such consumer behavior, Ms. Wang merely speculated that after buying a car seat, a parent “may” also choose to buy other products under the same brand. . . . Such speculative testimony is not sufficient to establish irreparable harm. . . .
With respect to reputational loss, the district court cited no record evidence to support its findings that “[t]he similarity between Graco’s products and Evenflo’s Accused Products has caused Graco’s products to lose some of their ‘distinctiveness and market allure’ and has also harmed Graco’s reputation as an innovator in the marketplace.” . . . Nor did the district court cite any evidence to support its finding that such reputational factors “cause Wonderland irreparable harm because of Graco and Wonderland’s close working relationship and exclusive supplier arrangement.” . . . Similarly, the district court failed to identify any evidence from the trial record supporting its assertions that “an average customer . . . [would] assume that Graco’s products do not contain unique or innovative technologies,” that such reputational harm would flow to Wonderland, or that Wonderland would suffer reputational harm because it “may be seen as failing to enforce its intellectual property rights.” . . (pp. 14-15).
The preceding analysis would seem to demonstrate the importance of eBay’s allocation to the plaintiff of the burden of proof on the eBay factors, in contrast with practice in other common-law countries where it would be the defendant’s burden to come forward with evidence showing why the court should deny permanent injunctive relief.
On the issue of willfulness, the district court invoked Federal Rule of Evidence 403 to exclude an email chain, in which “Evenflo’s affiliated corporation, Goodbbay Child Products Co., Ltd. . . . notified Evenlo employee that one of the accused products might fall with the scope of claim 1 of the ʼ043 patent and asked how to ‘avoided the claims of the patent’” (p.16), on the ground that the probative value of this evidence was substantially outweighed by the danger of unfair prejudice and confusion. The majority concludes that this too was an abuse of discretion because portions of the email chain were highly probative of willfulness, and “not merely cumulative in view of Evenflo’s stipulation to awareness of the ʼ043 patent” (p.19). Moreover, the majority concludes that the district court could have managed the risks of unfair prejudice and confusion by limiting instructions or redaction; the text of the email did not raise any privilege or hearsay concerns; and the error was not harmless. So this issue is remanded for a new trial. Judge Reyna dissents on this issue only, in view of the substantial deference normally accorded to Rule 403 rulings; in his view, the trial judge’s decision was neither irrational nor arbitrary.
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