Opinion
Case No. 02 C 1403.
August 25, 2004
DECISION
Auto Wax moves the court to enter a preliminary injunction (or require a bond in lieu thereof) against Kucala on the basis that Kucala is unlikely to be able to prevail on its claims of non-infringement and is not financially responsible to pay the judgment that will be likely entered in favor of Auto Wax on its counterclaims for infringement of the "'993 patent." See First Amended Counterclaim, ¶¶ 62 ff. [# 86].
Auto Wax's First Amended Counterclaim sets out three claims: infringement, inducement of infringement, and contributory infringement. They will be referred to collectively herein as "infringement claims."
Injunctive relief in patent cases is authorized by 35 U.S.C. § 283. In ruling on a motion for a preliminary injunction, a court must consider the following four factors: (1) the moving party's reasonable likelihood of success on the merits; (2) whether the moving party will suffer irreparable harm if the injunction is not granted; (3) whether the balance of hardships tips in favor of the moving party; and (4) whether the public interest would be served by the grant of an injunction. Anton/Bauer, Inc. v. PAG, Ltd., 329 F.3d 1343, 1348 (Fed. Cir. 2003). Although not all of these factors, taken individually, are necessarily dispositive, the moving party must establish at the very least both of the first two factors. Id. Moreover, in order to establish a likelihood of success on the merits, the moving party must show that "it will likely prove infringement" at trial and that "any challenges to the validity and enforceability of its patent `lack substantial merit.'" Id. (quoting Purdue Pharma L.P. v. Boehringer Ingelheim GmbH, 237 F.3d 1359, 1363 (Fed. Cir. 2001)).
On the basis of its experts' reports (one prepared by an individual who holds a Ph.D. in metallurgy as well as an engineering degree, and the other who holds a Ph.D. in chemical engineering), Auto Wax contends that it is highly likely to succeed on the merits because it has "scientific evidence" sufficient to establish infringement of the '993 patent, whereas Kucala has produced no evidence supporting its claim of non-infringement. Auto Wax further argues that it will be irreparably harmed if an injunction does not issue because it anticipates that Kucala will not pay a judgment; either it will seek bankruptcy protection or will otherwise evade payment even if it is able to pay. These allegations are supported by Kucala's own admissions that it has nearly exhausted its financial resources in this litigation, as well as Kucala's own track record in this case of willingness to disobey the court in order to evade discovery. Auto Wax further argues that its anticipated harm should an injunction be denied far outweighs harm to Kucala should an injunction be wrongfully entered because Auto Wax is funding this expensive litigation without any assurance that it will be compensated at the end of the road. Auto Wax argues that "[t]he public interest is served by avoiding consumer confusion and removing infringing products from the marketplace," Motion 7 ¶ D, citing Promatec Industries, Ltd. v. Equitrac Corp., 300 F.3d 808, 813-14.
This is at best a loose paraphrase of Promatec. The cited text reads, "As to the public interest, because the injunction prevents consumer confusion in the marketplace, the public interest will be served as well." Promatec was a Lanham Act case. By contrast, a patent case — at least this patent case — does not present a problem of consumer confusion; furthermore, the case says nothing about the benefit of "removing infringing products from the marketplace." The public interest in protecting a patent monopoly exists to "promote the Progress of Science and the Useful Arts." UNITED STATES CONST. Art. I, § 8. The court will not fashion a public interest argument for Auto Wax, however.
Kucala, in response to the motion, espouses the general principles that preliminary injunctions should be reserved for "drastic and extraordinary" situations, and prejudgment bonds are not appropriate unless the right to a preliminary injunction has been shown. As evidence, Kucala has submitted only what appears to be an opinion letter from patent counsel concluding that the patents in suit are not infringed by Kucala's commercial products. In the 20-page document, however, the author opines that because Kucala's product does not contain "a powder synthetic detergent" as is claimed, it does not infringe "the '416 patent." Regrettably for Kucala, the First Amended Counterclaim makes no claim regarding the '416 patent. Rather it alleges infringement of the '993 patent. Of the '993 patent, the author offers no opinion regarding infringement.
The court has examined the reports of Auto Wax's experts, as well as Kucala's opinion letter. If this is Kucala's preview of its case, it amounts to nothing because it does not even address the evidence Auto Wax has proffered. Although Kucala is correct that interlocutory relief is the exception, not the rule, the court is persuaded that this is an extraordinary case. Auto Wax has demonstrated likelihood of success on the merits; Kucala apparently has nothing in rebuttal. As for irreparable harm, once a clear likelihood of success has been shown by the patentee, irreparable harm is presumed. See Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001) ("Irreparable harm is presumed when a clear showing of patent validity and infringement has been made. This presumption derives in part from the finite term of the patent grant, for patent expiration is not suspended during litigation, and the passage of time can work irremediable harm.") (internal citations and quotation marks omitted). The time has come for Kucala to demonstrate, with substantial and admissible evidence of non-infringement, why an injunction should not be entered.
For these reasons, the court will set the motion for preliminary injunction for the same date as the Markman hearing, October 29, 2004. Plaintiff will be at that time expected to demonstrate with admissible evidence a prima facie case of non-infringement of the '993 patent, or by the same token, evidence sufficient to demonstrate at least a colorable defense to the counterclaims. If Kucala is unable to do so, the court will enter a preliminary injunction restraining further production, use and sale of the accused Kucala products. The court will also consider at that time whether it should impose a bond for anticipated damages. Thus, Kucala should be prepared to demonstrate why a bond should not be necessary. In the meantime, Kucala is given until September 9, 2004, to pay or post a bond in the amount of the award of sanctions that remains outstanding.
Kucala is hereby advised that should it appear that it actually has no evidence of non-infringement and yet continues to pursue this litigation, the court will be willing to entertain a motion for sanctions seeking attorneys' fees and reasonable expenses from the date of receipt of this order forward. Furthermore, Kucala is advised to consider the possibility of settlement and Auto Wax is directed to respond in a spirit of compromise to any good faith offer of settlement. This case will be called for status on September 30, 2004, at 10:00 (via telephone), at which time the court will expect a report on settlement discussions.