In Entegris, Inc. v. Pall Corp., the Federal Circuit offers up what amounts to a primer on interlocutory appeal of injunctions. At the same time, it teaches litigants in patent disputes another strategic lesson that's often harder to learn: Knowing when to stop.
The patent holder in Entegris obtained a preliminary injunction which prohibited the alleged infringer from selling certain products. Because Pall, the alleged infringer, continued selling a modified product, the patent holder returned to court seeking contempt sanctions. By the time that motion was heard, Pall had again modified its product. It had also found two prior art references that, it now argued, made the patents in the case invalid.
The trial court split the baby. It ordered a $210,000 fine against Pall as a contempt sanction for its sales of the first modified product. At the same time, however, it granted Pall's motion to dissolve the preliminary injunction. The trial court agreed that the newly asserted prior art references raised a "substantial question" on the likelihood of success in the litigation for patent holder Entegris -thereby eliminating an element necessary for injunctive relief before trial.
Entegris then filed a motion to take back its last motion --or just wished that it could.
Actually, since the Federal Rules of Civil Procedure contain no such option, the parties were left to the appeals process. Pall appealed the sanctions order and Entegris cross-appealed the dissolution of the preliminary injunction.
Pall made a valiant attempt to garner appellate review of the sanction order, including trying to get the court to exercise pendent (or we're here anyway so you might as well decide it) jurisdiction. The Federal Circuit would not bite. In order for the court of appeals to review an injunction, the trial court must do more than clarify an existing order-it must "grant, continue, modify, refuse or dissolve an injunction or refuse to dissolve or modify an existing injunction." The Federal Circuit held fast to the strict statutory language and found that the order imposing sanctions did not change any of the terms of the original injunction-it merely made clear what conduct was prohibited. Without such a requisite change, the court found that appellate review was simply not available at that point in the litigation and the sanctions order remained in place.
Conversely, the trial court's dissolution of its earlier injunction did qualify for interlocutory review by the court appeals. Unfortunately for patent holder Entegris, the Federal Circuit agreed with the trial court's decision. After a careful review of the record, which included detailed arguments and expert submissions, the Court found that Pall had established a "substantial question" of invalidity. While not yet enough to succeed at trial-where a showing of "clear and convincing" evidence is required-Pall's new evidence was sufficient to put an end to the preliminary injunction.
Separately, the two holdings in the case are unremarkable as they seem to follow well-documented territory. Taken together though, they may have larger ramifications. Essentially Entegris says it is appropriate to issue sanctions of non-compliance with an injunction which, in retrospect, should never have been entered. Once again, the Federal Circuit seems to be emphasizing form over substance in favor of bright line rules for the lower courts-even in situations where it doesn't appear to make sense.
Whatever its long-term impact, the decision serves as an illustration of the old maxim "pick your battles" and the importance of knowing which issues to fight and which to forgo within the context of the litigation as a whole. True, Entegris won the sanctions it sought, but it also opened the door for Pall and its defensive coup. By turning the sanctions motion into a discussion of the validity of Entegris' patent, Pall changed the entire tone of the case at an early stage-putting Entegris on the defensive and gaining the strategic high-ground. We think Entegris may now regret its pursuit of sanctions and may wish it had waited until the end of discovery. On the other side, Pall's conduct demonstrates that continued litigation, even in the face of an adverse decision, can sometimes pay off.
We know hindsight's 20/20. When it comes to patent litigation though, it's always worth a look back to plan for the next battle ahead.
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