IP Law Daily Preliminary injunction barring patentee from communicating its patent rights was improperly ordered
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Friday, April 3, 2020

Preliminary injunction barring patentee from communicating its patent rights was improperly ordered

By Brian Craig, J.D.

District court abused its discretion when it granted a preliminary injunction enjoining a patentee’s speech without a finding of bad faith.

The U.S. Court of Appeals of Appeals for the Federal Circuit has reversed and vacated a preliminary injunction barring a patent holder from exercising its free speech because the federal district court in Detroit improperly granted the injunction without a finding of bad faith. In the declaratory judgment action brought by plaintiff Myco Industries, Inc. seeking noninfringement of a patent for an eyelid treatment method against patent owner BlephEx, LLC, the Federal Circuit reversed the district court’s preliminary injunction that enjoined patentee BlephEx from making allegations of patent infringement and threatening litigation against Myco’s potential customers. The Federal Circuit held that federal law requires a showing of bad faith before a patentee can be enjoined from communicating patent rights and that speech is not to be enjoined lightly (Myco Industries, Inc. v. Choate, April 3, 2020, O'Malley, K.).

BlephEx owns U.S. Patent No. 9,039,718 (the ’718 patent) which relates to an eyelid treatment method. Myco Industries brought an action for declaratory judgment of noninfringement against BlephEx. The district court issued a preliminary injunction enjoining BlephEx, its officers, agents, and those in active concert with BlephEx from making allegations of patent infringement and threatening litigation against Myco’s potential customers. BlephEx appealed the district court’s preliminary injunction order.

Bad faith requirement. The Federal Circuit first held that the district court improperly enjoined the patentee’s speech without a finding of bad faith. When a preliminary injunction prevents a patentee from communicating its patent rights, a court applies federal patent law and precedent relating to the giving of notice of patent rights. In such cases, the grant of a preliminary injunction is reviewed in the context of whether, under applicable federal law, the notice of patent rights was properly given. Federal law requires a showing of bad faith before a patentee can be enjoined from communicating its patent rights. A showing of "bad faith" must be supported by a finding that the claims asserted were objectively baseless.

Here, the district court failed to make any factual findings concerning bad faith by BlephEx. To the extent the district court made any factual findings relevant to bad faith, moreover, the court expressly declined to find that any of BlephEx’s statements were either false or misleading. The Federal Circuit found that this alone warrants reversal.

Myco maintained, however, that the district court’s analysis was appropriate because the injunction merely precludes BlephEx from alleging infringement and threatening litigation against Myco’s potential customers, who are purportedly immune from infringement under 35 U.S.C. § 287(c). But the Federal Circuit held that Section 287(c) does not mean that allegations of infringement directed to medical practitioners are made in bad faith. The injunction is not limited to allegations of patent infringement against Myco’s potential customers. Rather, the district court’s injunction enjoins BlephEx from both: (1) making allegations of patent infringement in general; and (2) threatening litigation against Myco’s potential customers. Additionally, there is no evidence that BlephEx made any threats of litigation against Myco’s potential customers. Myco’s implied bad faith argument fails. The Federal Circuit held that "[s]peech is not to be enjoined lightly." Here, there is not even a finding, let alone a finding supported by evidence and a correct view of the law, that the speech restrained was either false or misleading. Because the district court failed to make a finding of bad faith, let alone an acknowledgment of that requirement, the district court abused its discretion by enjoining the patentee’s speech rights.

Likelihood of success. The Federal Circuit also concluded that the district court erred in its claim construction analysis thatMyco would likely succeed on the merits of its claims. While the Federal Circuit will not lightly intrude upon a district court’s discretionary decision to issue only a tentative claim construction and to base its resolution of a preliminary injunction motion upon that tentative claim construction, errors in the claim construction analysis required the Federal Circuit to reverse the district court’ conclusion on likelihood of success.

The district court’s claim construction that limits the scope of the claims is faulty in a number of ways, ignoring key governing principles of law in light of the plain language of the claims and the prosecution history. The district court’s noninfringement analysis also frequently conflates the invention claimed in the ’718 patent with the BlephEx product. Infringement is determined on the basis of the claims, not on the basis of a comparison with the patentee’s commercial embodiment of the claimed invention. Therefore, the Federal Circuit reversed the district court’s claim construction and Myco’s likelihood of success on its noninfringement contentions. In turn, the Federal Circuit reversed the district court’s preliminary injunction with respect to BlephEx’s ability to make generalized allegations of infringement with respect to the ’718 patent.

This case is No. 19-2374.

Attorneys: Peter J. Armenio (Quinn Emanuel Urquhart & Sullivan, LLP) for Myco Industries, Inc. and John R. Choate. Christopher C. Smith (Brooks Kushman PC) for BlephEx, LLC and James Rynerson.

Companies: Myco Industries, Inc.; BlephEx, LLC

MainStory: TopStory Patent GCNNews FedCirNews

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