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Federal Circuit clarifies how to analyze likelihood of success at preliminary injunction stage
June 08, 2009
The Federal Circuit Wednesday affirmed a district court's denial of preliminary injunction to the plaintiffs (a patentee and its licensee with a right to enforce the patent) in a design patent case. The district court held there was a substantial question regarding the validity of the patent that was not shown to lack substantial merit, and therefore the plaintiffs were not likely to succeed on the merits.

On appeal, the Federal Circuit took the opportunity to clarity how district courts should assess likelihood of success in patent cases, particularly when invalidity is raised in response to the motion for preliminary injunction. Specifically, the court observed:

[W]hen analyzing the likelihood of success factor, the trial court, after considering all the evidence available at this early stage of the litigation, must determine whether it is more likely than not that the challenger will be able to prove at trial, by clear and convincing evidence, that the patent is invalid. We reiterate that the "clear and convincing" standard regarding the challenger's evidence applies only at trial on the merits, not at the preliminary injunction stage. The fact that, at trial on the merits, the proof of invalidity will require clear and convincing evidence is a consideration for the judge to take into account in assessing the challenger's case at the preliminary injunction stage; it is not an evidentiary burden to be met preliminarily by the challenger.

If the trial court is persuaded, then it follows that the patentee by definition has not been able to show a likelihood of success at trial on the merits of the validity issue, at least not at this stage. This decision process, which requires the court to assess the potential of a "clear and convincing" showing in the future, but in terms of what is "more likely than not" presently, rests initially in the capable hands and sound judgment of the trial court.

Applying this standard, the Federal Circuit determined the district court did not abuse its discretion in denying the injunction.

More detail of Titan Tire Corp. v. Case New Holland, Inc. after the jump.

The Goodyear Tire & Rubber Company owns U.S. Design Patent No. D360,862 ("the '862 patent"). The '862 patent issued on August 1, 1995 and claims a design for a tractor tire, as shown below.

D360862

Titan Tire Corporation is a licensee of Goodyear's patent, and also has the right to enforce the patent. Titan, along with Goodyear, brought suit against Case, its affiliate, Case New Holland America LLC, and supplier, GPX International Tire Corporation for infringement. Specifically, Titan alleged Case sold backhoes equipped with tires that infringe the '862 patent. In May 2007, Titan filed a motion for a preliminary injunction to seeking to enjoin Case from selling backhoes with infringing tires. After a hearing on the motion, Titan, responding to Case's assertion that CNH, not Case, was the corporate entity that sold backhoes in the United States, filed an amended complaint adding CNH as well as GPX, the manufacturer of the "Easy Rider" model tire at issue, as defendants. The district court denied the injunction, holding that even though the other factors favored granting an injunction, Titan had not shown a likelihood of success on the merits because the plaintiffs failed to show the patent was likely to withstand the defendant's obviousness challenge to its validity. Titan appealed.

In light of the recent Altana v. Teva case and continuing misunderstandings regarding the proper presumptions and burdens of proof surrounding motions for preliminary injunction, the Federal Circuit took the opportunity to clarify how to properly frame the question of likelihood of success in motions for preliminary injunction. To establishing a likelihood of success on the merits, the patentee seeking a preliminary injunction in a patent infringement suit must show that it will likely prove infringement, and that it will likely withstand challenges, if any, to the validity of the patent. The court elaborated on how this should be analyzed by courts with the limited record available in the context of a preliminary injunction.

At Trial

  • An issued patent comes with a statutory presumption of validity under 35 U.S.C. § 282.
  • An alleged infringer raising invalidity as an affirmative defense has 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.
  • Once the challenger presents initially persuasive evidence of invalidity, the burden of going forward shifts to the patentee to present contrary evidence and argument.
  • To ultimately prevail, the party challenging the patent's validity must carry its burden of persuasion to prove by clear and convincing evidence that the patent is invalid.
Before Trial (Preliminary Injunction Stage)
  • The patent enjoys the same presumption of validity during preliminary injunction proceedings as at other stages of litigation.
    • If the alleged infringer does not challenge validity, 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.
  • If the alleged infringer responds to the preliminary injunction motion by launching an attack on the validity of the patent, the burden is on the challenger to come forward with evidence of invalidity (just as it would be at trial)
    • Evidence presented by the alleged infringer to support an invalidity defense must "raise a substantial question."
    • The alleged infringer at the preliminary injunction stage does not need to prove invalidity by the "clear and convincing" standard that will be imposed at trial on the merits, but instead must show by a preponderance of the evidence that its invalidity challenge will be successful at trial by clear and convincing evidence.
  • The patentee, to avoid a conclusion that it is unable to show a likelihood of success, then has the burden of responding with contrary evidence, which may include analysis and argument.
  • At this stage, instead of the alleged infringer having to persuade the trial court that the patent is invalid, at this stage it is the patentee (the moving party) who must persuade the court that he is likely to succeed at trial on the validity issue.
    • It is the patentee's obligation to show that the alleged infringer's defense "lacks substantial merit" by producing rebuttal evidence.

If the district court concludes there is a "substantial question" concerning the validity of the patent, meaning that the alleged infringer has presented an invalidity defense that the patentee has not shown lacks substantial merit, it necessarily follows that the patentee has not succeeded in showing it is likely to succeed at trial on the merits of the validity issue. Such evaluation by the district court refers to the net of the evidence after the trial court considers all evidence on both sides of the validity issue available at this early stage of the litigation and sometimes requires the court to make its decision based on less than a complete record or on disputed facts whose eventual determination will require trial. The weight of evidence necessary for a showing of a "substantial question" regarding invalidity should not be confused with the similarly phrased but quite different test (applicable to review of jury verdicts and certain administrative law matters including matters on appeal from the USPTO) usually known as "substantial evidence" in the record.

The Federal Circuit summarized the applicable analysis as follows:

Thus, when analyzing the likelihood of success factor, the trial court, after considering all the evidence available at this early stage of the litigation, must determine whether it is more likely than not that the challenger will be able to prove at trial, by clear and convincing evidence, that the patent is invalid. We reiterate that the "clear and convincing" standard regarding the challenger's evidence applies only at trial on the merits, not at the preliminary injunction stage. The fact that, at trial on the merits, the proof of invalidity will require clear and convincing evidence is a consideration for the judge to take into account in assessing the challenger's case at the preliminary injunction stage; it is not an evidentiary burden to be met preliminarily by the challenger.

If the trial court is persuaded, then it follows that the patentee by definition has not been able to show a likelihood of success at trial on the merits of the validity issue, at least not at this stage. This decision process, which requires the court to assess the potential of a "clear and convincing" showing in the future, but in terms of what is "more likely than not" presently, rests initially in the capable hands and sound judgment of the trial court.

Having framed the question, the Federal Circuit then turned to whether the district court abused its discretion in holding Titan was not likely to succeed based on Case's obviousness challenge. The court reiterated "the ultimate inquiry under section 103 is whether the claimed design would have been obvious to a designer of ordinary skill who designs articles of the type involved." This "requires that one must find a single reference, a something in existence, the design characteristics of which are basically the same as the claimed design," or in other words, a "primary reference." Secondary references may then be used to modify the primary reference to produce the claimed design, so long as the secondary reference(s) are related to the primary reference such that the ornamental features would suggest their application to the primary reference.

Here, Titan argued the district court failed to explicitly designate a "primary reference" rendered its analysis faulty. The Federal Circuit disagreed, noting the district court would have been entitled to consider any one of the three prior art references cited by the district court to be a primary reference creating basically the same visual impression as the claimed design. Two of these references are depicted below:

Prior art

The Federal Circuit also had no issues with the designs the district court used as "supplemental designs," even though the district court did not explicitly refer to them as such. Further, at least one of these supplemental designs had enlarged, six-sided lug heads, rendering it capable of being considered a "secondary reference" in that it could be used to modify "one of the primary references to create a design with the same overall visual appearance" as the claimed design.

Applying these proper presumptions and burdens of proof surrounding motions for preliminary injunction, along with the facts of record, the Federal Circuit determined the district court did not abuse its discretion in denying Titan's motion for preliminary injunction. The district court accurately set forth the "likelihood of success" standard in the opinion and its analysis demonstrated that it considered and weighed both parties' arguments on the issue of obviousness. The court also reminded the parties that there have been no final rulings on the merits of the case, and the trial court is not bound by its preliminary conclusions.

In an interesting side note, the Federal Circuit referenced its recent en banc decision in Egyptian Goddess, where the court scrapped the "point of novelty" test for design patent infringement. While the court observed its obviousness analysis resembles the "point of novelty" test, it did not address whether Egyptian Goddess had any effect on invalidity, observing the result in this case would be the same whether or not the point of novelty test applied.

To read the full decision in Titan Tire Corp. v. Case New Holland, Inc., click here.

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