With an application for a temporary injunction, the patent holder can obtain an immediate prohibition of a patent infringement. The court will only grant such an application if the patent proprietor is more likely than not to prevail on the merits. Recently, the US Federal Court CAFC had to decide whether a preliminary injunction can be issued even if the Patent Office has initiated reexamination proceedings (PGR) because it considers the patent to be probably invalid.
Tinnus Enterprises produced and sold the “Bunch O Balloons” toy, with which a number of balloons can be filled with water at the same time. A patent was granted for this toy (US 9,051,066).
While the Patent Application was still in the Examination Proceedings, Telebrands came onto the market with an almost identical toy “Balloon Bonanza”. Competition between the suppliers led to the price falling from around $ 17 to $ 10 in a short space of time.
After the patent was granted, Tinnus filed a Lawsuit for patent infringement and sought a preliminary injunction.
In turn, Telebrands filed a post-grant review (PGR) proceeding with the US Patent and Trademark Office to invalidate the Patents. The USPTO declared the PGR request admissible and opened the PGR proceedings on the grounds that it appeared more likely than not that all claims were invalid in view of the grounds of the request.
While the PGR proceedings were still ongoing, the Disctrict Court granted the application for a preliminary injunction and issued a temporary sales ban against Telebrands.
Telebrands appealed against this to the Court of Appeals for the Federal Circuit (CAFC). The District Court should not have granted the preliminary injunction because the patent – as stated by the USPTO in the decision to intervene in the PGR proceedings – was probably invalid.
The CAFC rejects the appeal and confirms the interim sales ban.
First of all, the CAFC recalls that the issuance of an interim injunction is entirely at the discretion of the court of first instance. Therefore, in the case of an appeal against an interim injunction, the facts of the case are not reassessed, but it is only examined whether or not the lower court exceeded its discretionary powers. According to established jurisprudence, it must be examined whether the court has made a clear error in the weighting of the factors relevant to the decision or whether it has exercised its discretion incorrectly due to an error of law or due to a clearly incorrect assessment of the facts. The four factors relevant to the decision are:
(1) Probability of the patent proprietor winning the case
(2) Irreparable damage if the precautionary prohibition is not granted
(3) Weighing up the hardship for the parties (balance of hardship),
(4) Public interest.
Telebrands’ objections to the likelihood of prevailing are not persuasive: the District Court had rightly relied not only on the features visible on the product, but also on the instruction manual, in which the feature “shaking off the balloons”, which was not visible on the product, was expressly mentioned as a possibility. Moreover, the court had relied on the ordinary meaning of the term “attached” in finding infringement, which seems reasonable.
The objections to legal validity are also unconvincing. The lack of clarity of the indication “substantially filled” was only criticized in the Appeal Proceedings. It is not credible that the skilled person could not understand the term “substantially filled” when studying the description and the patent grant procedure. In this respect, there is no clear misinterpretation. The fact that the PGR proceedings led to the decision that the claims were indefinite does not lead to the precautionary prohibition being lifted either. The court is not bound by the decision of the Patent Office. Moreover, the party can also apply to the Disctrict Court to review the prohibition in the light of the Patent Office’s decision.
The objection that the patent is obvious is also not convincing. The three citations come from different fields (gastroenterology, garden irrigation) and no reason has been given why the skilled person should combine these different solutions in such a way that the invention results.
Finally, the other objections to the preliminary injunction are also unconvincing. The irreparable damage can also be based on circumstances prior to the grant of the patent. The price collapse that occurred before the patent was granted can be seen as an indication that the price could be increased again if the infringing products were not on the market. However, there are also facts that occurred after the patent was granted that the court relied on when weighing up the interests of the patent proprietor and the infringer, such as reputational damage from a review on the internet according to which the “off-brand” product is better than the original product.
Finally, there is nothing to criticize about the balancing of hardship and public interest. Thus, the District Court was correct to assess the relative size of the companies and the strong public interest in the enforcement of valid Patents in favor of the patentee.
Note: At present, due to great (political) pressure, the Patent Office almost always accedes to a nullity request against a patent and initiates a review. This is a strong headwind for the patent owner in the enforcement of its Patents. By emphasizing the independence of the District Court vis-à-vis the Patent Office, the CAFC has somewhat defused the situation. Injunctions are thus possible even if PGR proceedings are ongoing.