Consider this a heads up to patent holders thinking of taking a fly at preliminary injunctive relief. In Erico International Corp. v. Vutec Corp. & Wiremaid Products, a split panel of the Federal Circuit seemed to lower the standard of proof necessary to demonstrate invalidity at that procedural juncture. The result? Efforts intended as a warm-up act in the litigation may prematurely move the question of patent validity into the center ring. Without the net provided by the evidentiary standards required at trial, patent holders risk losing more than the motion at hand. With both strategic advantage and persuasive momentum at stake, requests for preliminary relief become feats of bravery fraught with real peril.
The patent holder in Erico didn't appear to be flying by the seat of its pants. The defendants admitted copying the patented design and methodology-a system of using open, flanged "J" hooks to ensure proper tension in the hanging of electrical and communication cables-and the patent holder marshaled significant evidence of secondary indicia of nonobviousness. The district court followed the traditional four part test and granted the patent holder's request for a preliminary injunction, rejecting the defendants' defenses of inequitable conduct, on-sale bar and obviousness.
The Federal Circuit agreed with the district court on the first two defenses. However, the court found that the defendants had raised enough questions regarding the patent's validity on grounds of obviousness to defeat the injunction. To reach that conclusion, the majority in Erico seemed to lighten the burden of proof for defendants claiming patent invalidity at the preliminary injunction stage. It held that evidence which "cast doubt" on the patent and/or demonstrated that the patent at issue "was vulnerable" raised "a substantial question" of invalidity sufficient to deny preliminary injunctive relief. It considered the inventor's own testimony regarding an implicit motivation to combine in the relevant industry particularly important in reaching its determination. Without much analysis of the prevailing abuse of discretion standard of review, the court vacated the injunction and remanded the case for trial.
A vigorous dissent argued that recent case law addressing the issue required a showing of "likelihood of success" on the question of obviousness-less than the "clear and convincing" evidence required at trial, but more than the majority's stated standard. The dissent also took issue with the majority for failing to show any clear error by the district court and for ignoring the evidence the district court did review regarding secondary indicia of nonobviousness.
Erico (and its dissent) spotlight the fact that the Federal Circuit has not yet reached a consensus on the standards to be used for review of questions of obviousness -and the burdens of proof born by each party-when preliminary relief is sought. When in doubt, litigants on either side should prepare a record which meets the standard least favorable to them and then be prepared to shine during oral advocacy. Additionally, secondary indicia and motivations to combine remain critical to an obviousness analysis and patent holders put their rights at risk if they ignore what was going on in the industry at the time of the invention.
Most importantly, Erico illustrates the consequences of ill-timed or ill-executed requests for preliminary relief. When a complete record is either not presented (or ignored) patent holders risk having their litigation spiral into a nose dive from which it may never recover. Whether that's a spectacle you'd rather not watch or the greatest show on earth depends on the location of your seat in the patent litigation bigtop.
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