Patent Case Summaries November 2, 2022

Patent Case Summaries | Week Ending October 28, 2022

A weekly summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit and the opinions designated precedential or informative by the Patent Trial and Appeal Board.

ABC Corp. I, et al. v. Partnership and Unincorporated Ass’ns Identified on “Schedule A,” et al., Nos. 2021-2150, -2277, -2355 (Fed. Cir. (N.D. Ill.) Oct. 28, 2022). Opinion by Taranto, joined by Dyk and Stoll.

ABC asserted four design patents on hoverboards, alleging infringement by various business entities selling hoverboards online. ABC identified the defendants in “Schedule A” to the Complaint.

In 2020, the district court entered a preliminary injunction against the then-identified defendants, including defendants not yet served with process and not given advance notice of the request for a preliminary injunction as required by Federal Rule of Civil Procedure 65(a). Six months later, the district court entered an order amending Schedule A to add new entities, effectively adding new defendants bound by the 2020 preliminary injunction, though these new entities likewise had not been served with process and were not given Rule 65(a) notice. The enjoined defendants appealed.

The Federal Circuit first addressed at length whether it had jurisdiction over the appeals. For instance, one of the Notices of Appeal identified only the preliminary injunction order and not the subsequent order amending Schedule A, though both orders should have been identified. The Federal Circuit nonetheless determined that it had jurisdiction. The court applied the rule that a mistake in designating the judgment appealed from “is not always fatal, so long as the intent to appeal from a specific ruling can fairly be inferred by probing the notice,” and where “the other party was not misled or prejudiced.”

Turning to the merits, the Federal Circuit vacated both the preliminary injunction and the order amending Schedule A because “no advance notice or opportunity to oppose was given” to the enjoined parties, thus violating Rule 65(a). Quoting its own precedent, the court reiterated that “a preliminary injunction issued without notice, motion, hearing or evidence should be vacated.”

Additionally, the Federal Circuit noted that the injunction had substantive defects. The defects were “very similar” to defects present in a separate preliminary injunction issued by the district court in 2021. The Federal Circuit addressed that defective injunction in a companion opinion, which is summarized below.

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ABC Corp. I, et al. v. Partnership and Unincorporated Ass’ns Identified on “Schedule A,” et al., No. 2022-1071 (Fed. Cir. (N.D. Ill.) Oct. 28, 2022). Opinion by Dyk, joined by Taranto and Stoll.

In addition to the 2020 preliminary injunction (addressed in a companion opinion, summarized above), the district court entered another preliminary injunction in 2021. The 2021 injunction arose when the defendants sought to dissolve the 2020 preliminary injunction. The district court allowed the plaintiffs to file a renewed motion for a preliminary injunction, which the district granted in 2021.

The focus of the dispute on appeal of the 2021 injunction was whether the plaintiffs had demonstrated a likelihood of success on the merits that the accused products infringed four design patents on hoverboards. The district court found a likelihood of success. The Federal Circuit disagreed, concluding that “the district court erred in four independent respects.”

“First, the district court applied, at least in part, the wrong legal standard.” The district court had identified a dispute among the parties’ competing experts that warranted a trial, and the district court found that the need for a trial was “sufficient” for demonstrating a likelihood of success on the merits. The district court also found that “the claim designs in the infringing products are not sufficiently dissimilar, or plainly dissimilar.” The Federal Circuit held that “this reasoning is directly counter to our precedent.” To show a likelihood of success on the merits, “a patentee must show that it will likely prove infringement of the asserted claims.” And “if the defendant raises a substantial question concerning infringement, i.e., asserts an infringement defense that the patentee cannot prove ‘lacks substantial merit,’ the preliminary injunction should not issue.”

“Second, the district court was required to conduct the ordinary observer analysis through the lens of the prior art,” but here the district court’s “conclusory discussion contains no indication that it conducted the required analysis.” A dominant feature of the patented design and the accused products—an “hourglass” shape for the hoverboard—also appeared in the prior art. In such circumstances, “the focus of the infringement substantial similarity analysis in most cases will be on other features of the design.” The plaintiffs’ evidence, however, relied on the hourglass shape to show substantial similarity, which was improper.

“Third, the district court failed to apply the ordinary observer test on a product-by-product basis.” The court’s failure to do so was deemed “particularly important … in light of significant differences among the accused products themselves.”

Lastly, the language of the injunction was overbroad because it “simply prohibit[ed] further infringement” of the patents. The Federal Circuit explained that a preliminary injunction “must be limited to those products actually found likely to infringe and those ‘not more than colorably different.’”

Because the district court erred in issuing the 2021 injunction, the Federal Circuit reversed and remanded.

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