Tinnus v. Telebrands was decided on January 24, 2017 on appeal from the Eastern District of Texas. There, the district court granted plaintiff Tinnus a preliminary injunction, affirming a Magistrage Judge’s finding that the claims were likely infringed, were not vulnerable on indefiniteness or obviousness grounds, and that Tinnus made a showing of irreparable harm. In a parallel PTAB proceeding, relying on the same evidence and arguments before the district court, the Board found certain claims of the patent indefinite and obvious. Defendant Telebrands appealed the preliminary injunction.
The Federal Circuit affirmed the preliminary injunction grant.
A decision to grant or deny a preliminary injunction is within the discretion of the district court based on “(1) the likelihood of the patentee’s success on the merits; (2) irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest.”
To show a likelihood of success on the merits, the patentee “must show that it will likely prove infringement, and that it will likely withstand challenges, if any, to the validity of the patent.” An accused infringer defeats this showing by “demonstrating a substantial question of validity or infringement.” Showing “a substantial question of invalidity at the preliminary injunction stage” is a “lower” burden “than what is required to prove invalidity at trial.” “Vulnerability is the issue at the preliminary injunction stage, while validity is the issue at trial.” A patent’s presumption of validity is sufficient to show a likelihood of success on validity, absent a challenge by the accused infringer. When the alleged infringer attacks the patent’s validity, “the burden is on the challenger to come forward with evidence of invalidity, which the patentee must then rebut.” The patentee rebuts the attack by showing it “lacks substantial merit.”
The Federal Circuit reviews preliminary injunction using the law of the regional circuit – abuse of discretion under Fifth Circuit law. The Court held that the district court did not abuse its discretion in finding the patent likely infringed, and not vulnerable to indefiniteness or obviousness.
The Federal Circuit then affirmed the district court’s finding of irreparable harm. The Court rejected Telebrands’s argument that irreparable harm must be measured from the date the patent issues. “Evidence of consumer confusion, harm to reputation, and loss of goodwill pre-dating the patent is, at the very least, circumstantial evidence demonstrating the possibility of identical harms once the patent issues.” This is because the issuance of a patent would not “somehow mitigate or otherwise eliminate those harms.” The Magistrate Judge found such harm based on customer calls, emails, and online reviews. Regarding price erosion, plaintiff originally sold its product for $17, and had to reduce its price to $9.99 in response to direct competition from the infringing product. This evidence is still relevant despite that the erosion happened pre-issuance. The Federal Circuit also found post-issuance evidence supporting irreparable harm. For example, a review of the plaintiff’s product stated that the customer liked the defendant’s product better. Such “establishes persisting harm to Tinnus’s reputation and tarnishes its status as the innovator in this market.”
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