Thursday, February 3, 2022

Federal Circuit Affirms Preliminary Injunction

This morning the Federal Circuit handed down a precedential opinion in Blephex, LLC v. Myco Industries, Inc., affirming a grant of a preliminary injunction in a patent infringement dispute.  The opinion is by Judge O'Malley, joined by Chief Judge Moore and Judge Schall.

The plaintiff alleges that the defendants infringe the ’087 Patent, claim 16 of which recites "[a] method of treating an eye for an ocular disorder with a swab operably connected to an electromechanical device . . . ."  The district court concluded that all four of the Winter factors (that the plaintiff show "that (1) it is “likely to succeed on the merits,” (2) it is “likely to suffer irreparable harm in the absence of preliminary relief,” (3) the “balance of equities tips in [its] favor,” and (4) “an injunction is in the public interest”) weighed in favor of granting a preliminary injunction.  On appeal, the principal issue is likelihood of success on the merits, specifically whether the plaintiff is likely to succeed in the face of the defendants' invalidity arguments.  The analytical framework for evaluating this issue in the context of a motion for a preliminary injunction, as set forth in cases such as Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372 (Fed. Cir. 2009), is somewhat complicated, as this court explains:

. . . in the context of a patent infringement suit, “[a] patent holder seeking a preliminary injunction bears the burden of establishing a likelihood of success on the merits with respect to the patent’s validity.” . . . Absent an invalidity defense, “the very existence of the patent with its concomitant presumption of validity satisfies the patentee’s burden of showing a likelihood of success on the validity issue.” Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1377 (Fed. Cir. 2009) (citations omitted). But if the accused infringer presents a substantial question of validity, “i.e., asserts an invalidity defense that the patentee cannot prove ‘lacks substantial merit,’ the preliminary injunction should not issue.” . . . 

To show invalidity at trial, Myco will have “the ultimate burden of persuasion to prove invalidity by clear and convincing evidence, as well as the initial burden of going forward with evidence to support its invalidity allegation.” Titan Tire, 566 F.3d at 1376 (citing Tech. Licensing Corp. v. Videotek, Inc., 545 F.3d 1316, 1327 (Fed. Cir. 2008)). At the preliminary injunction stage, however, those burdens are “tailored to fit the preliminary injunction context.” Id. at 1377. If an alleged infringer attacks the validity of a patent at the preliminary injunction stage, as Myco has, it bears the initial burden “to come forward with evidence of invalidity,” just as it would at trial. Id. If the alleged infringer comes forward with such evidence, the district court should then consider “the evidence on both sides of the validity issue” to determine if the alleged infringer has raised a substantial question of validity. Id. at 1379 (citations omitted).

Myco need not, to defeat a preliminary injunction, prove invalidity by clear and convincing evidence, as it must to succeed at trial. . . . It need only present evidence showing that there is a substantial question of validity despite the presumption of patent validity and BlephEx’s arguments in favor of validity, such that BlephEx’s likelihood of success is in question. Titan Tire, 566 F.3d at 1377–79. Again, the ultimate burden is on BlephEx to show that it is likely to succeed on the merits to obtain the extraordinary remedy of a preliminary injunction, including “on the validity issue.” Titan, 566 F.3d at 1377. But the initial burden is on Myco to produce some evidence to raise a substantial question of validity. Id. at 1377. To fulfill that burden, Myco need only “assert[] a defense that [BlephEx] cannot show ‘lacks substantial merit.’” . . (pp. 9-10).

Applying those standards here, the court finds no abuse of discretion in the district court's finding of a likelihood of success on the merits.  In particular, the court agrees with the district court that the claim in suit is not anticipated by a prior art published patent application that includes, inter alia, two figures relating to an eye treatment, because neither figure discloses a swab connected to an electromechanical device.  The court also rejects the defendants' nonobviousness arguments as resting on attorney argument, rather than evidence that a person of skill in the art "would have been motivated to modify the device of Figure 3 to use a swab" (p.17).  

In addition, the court rejects arguments that the preliminary injunction fails to preserve the status quo:

At the outset, we note that Myco misidentifies the “status quo” in this case. Myco posits that the “status quo” is the last uncontested status preceding the start of the parties’ controversy. It asserts that, in this case, the “status quo” is the state of the world before the ’087 patent issued, i.e., “a market where both BlephEx and Myco competed and sold their products” and in which BlephEx could not assert infringement of claim 16, as it had not yet been granted. . . . Although the ’087 patent was granted after Myco began selling the AB Max, it was granted before BlephEx filed suit against Myco, even if only shortly before. Thus, the status quo when the preliminary injunction was filed was a state in which the ’087 patent had been granted and could be asserted. 

Contrary to Myco’s arguments, moreover, preservation of the status quo is not the sole objective of preliminary injunctions. Preliminary injunctions also serve to prevent ongoing trespasses during the pendency of an infringement case. . . .

Just as preservation of the status quo is not the sole aim of preliminary injunctions, it is not an overriding concern that trumps consideration of the four preliminary injunction factors. Rather, it is inherent in the four preliminary injunction factors—particularly in the “irreparable harm” and “balance of hardships” factors. In some cases, a preliminary injunction may rightly disturb the status quo.

Contrary to Myco’s assertion that the district court ignored the status quo, the district court considered the status quo in its analysis of the irreparable harm factor. We do not discern clear error in that analysis. Nor do we believe that the district court gave short shrift to its consideration of the status quo. The district court directly addressed Myco’s claim that the allegedly infringing sales of the AB Max had occurred before issuance of the ’087 patent. It found that the record showed that Myco and BlephEx are direct competitors, that BlephEx had suffered price erosion, loss of goodwill, and damage to its reputation, and that BlephEx is threatened with extinction by continued sales of the AB Max (pp. 19-21).

Finally, the court rejects the argument that the injunction, forbidding the sale of the AB Max, is overly broad, noting conflicting testimony on the issue of whether the accused product has any noninfringing uses.

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