Casting Doubt on Patent's Validity is Sound Strategy for Defeating Preliminary Injunction

 

By Kimberly Seluga

 

T

he Federal Circuit has clarified the burdens of proof that apply to requests for a preliminary injunction. The likely result is greater difficulty for patentees who seek such relief. 

In Titan Tire Co. v. Case New Holland, Inc., the court affirmed the denial of Titan’s motion for a preliminary injunction, where the district court found Titan was not likely to withstand Case’s validity challenge on obviousness grounds.  In holding that the trial court did not abuse its discretion, the Federal Circuit spelled out the analysis for determining whether a preliminary injunction should issue, with emphasis on the burdens each party must bear when the patent’s validity is challenged. 

Although a patent is presumed valid at all stages of the litigation, the ultimate question regarding validity at the preliminary injunction stage is not whether the accused has proved invalidity. Rather, the trial court must be persuaded that the patentee is likely to defeat the validity challenge at trial. Thus, proving that it will likely succeed on the validity issue at trial is part of the patentee’s burden of proving a likelihood of success on the merits at trial, a key factor in determining whether a preliminary injunction should issue.

After establishing that the ultimate burden as to validity at this stage rests with the patentee, the court clarified the standards for determining whether the patentee has presented persuasive evidence that it will likely succeed on the validity issue at trial. The court revisited and further interpreted a 1992 decision which held that the accused must raise a “substantial question” of invalidity and that the patentee must show that the accused’s argument “lacks substantial merit.”

The “substantial question” standard might have once been considered a procedural step which, if not sufficiently raised by the challenger, would not require any showing by the patentee that the invalidity defense “lacks substantial merit.” But the court explained that such an interpretation was not intended.  Rather, “the phrase refers to a conclusion reached by the trial court after considering the evidence on both sides of the validity issue.” The court stated,

A finding of a “substantial question” of invalidity is a substantive conclusion by the trial court, a conclusion that the patentee is unlikely to succeed on the merits of the validity issue because the patentee is unlikely to establish that the alleged infringer’s invalidity defense “lacks substantial merit.”…

 

[I]f the trial court concludes that 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. 

The accused infringer will have raised a “substantial question” of invalidity where it shows that it is more likely than not (or by a preponderance of the evidence) that it will prove invalidity at trial by clear and convincing evidence.  If the accused proves this successfully, “it follows that the patentee by definition has not been able to show a likelihood of success on the merits of the validity issue, at least not at [the preliminary injunction] stage.” 

Thus, although the patentee bears the ultimate burden of showing that the invalidity defense “lacks substantial merit,” his success is assessed by measuring whether the accused infringer has met its burden on invalidity.

The court emphasized that the fact that the accused will have to prove invalidity by clear and convincing evidence at trial is a factor for the court to consider, but the accused need not satisfy that demanding standard of proof at the preliminary injunction stage, and a decision on the merits of the validity challenge “rests initially in the capable hands and sound judgment of the trial court.” 

While the Titan court claims to merely clarify precedent, the ruling will lead to the grant of fewer preliminary injunctions. Although the decision does not strip patentees of the presumption that their patent is valid (presumably, a 50/50 tie as to validity still goes to the patentee), the case portends greater difficulty for a patentee in withstanding a validity challenge at the preliminary injunction stage than at trial. 

Titan will motivate accused infringers to allocate more resources to challenging patent validity at the preliminary injunction stage, especially since success at that juncture not only defeats the patentee’s request for relief but may cause the patentee to question the viability of his lawsuit altogether. Of course, this will require great diligence on the part of accused infringers, since mounting a robust invalidity defense is a tall task in the face of the often meager notice provided before the preliminary injunction hearing.

Likewise, patentees may now think better of seeking a preliminary injunction in the first place, since challenges to validity are harder to repel at that early stage than at trial, and any resulting tarnish on the validity of one’s patent could be tough to rub off.