KSR Invades Preliminary Injunctions at the CAFC

Erico Int'l Corp. v. Vutec Corp. (2007-1168) February 19, 2008

After surviving reexamination, Erico alleged that their J-Hook patent was being infringed by the defendants. While one of the defendants assured Erico that they would stop selling the allegedly infringing product, they "sold the very products it promised to retain and continued to manufacture and sell knock off J-Hooks."

The district court granted Erico's motion for a preliminary injunction. In defending against the motion, it was argued, among other things, that the patent was invalid due to obviousness. The documents relied upon for obviousness were (1) a reference that was considered by the PTO during reexamination, combined with (2) a new reference (the "EAI/TIA spacing standards" document). The district court did not find the obviousness arguments persuasive, noting that "the [PTO] had sufficient information before it during its prior examinations to assess the very obviousness claim [defendant] now raises, and because secondary considerations of nonobviousness cut in [Erico's] favor."

Vacating the preliminary injunction, the CAFC concluded that the prior art posed a "serious challenge" to the validity of the patent. Citing KSR and Dystar, the court found that "it is reasonable to infer that one of ordinary skill would have considered the [reexamination reference] coupled with the EIA standards and common knowledge within the art as shown by Mr. Laughlin's testimony to explain that Claim 17 is vulnerable based on invalidity."

The court also noted that, for the purposes of preliminary injunctions,

a defendant need not prove actual invalidity. On the contrary, a defendant must put forth a substantial question of invalidity to show that the claims at issue are vulnerable. Thus, a showing of a substantial question of invalidity requires less proof than the clear and convincing standard to show actual invalidity.

Judge Newman, dissenting:

[The Supreme Court] explained that "[t]he purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held" . . . The question here on appellate review is whether the district court abused its discretion in deciding to maintain the status quo during this litigation.

The district court decided that the status quo should be preserved during this litigation. In overturning that decision, the panel majority mistakes the law, misplaces the burdens, misconstrues the assumptions, and ignores the district court's discretionary authority and its balance of the equitable aspects. The panel majority does not explain how the district court abused its discretion, nor is recognition given to the standard of review whereby, as this court has stated: "A decision granting a preliminary injunction will be overturned on appeal only if it is established that the district court made a clear error of judgment in weighing relevant factors, or relied on incorrect law or on clearly erroneous factual findings."