The U.S. Court of Appeals for the Federal Circuit clarified its requirements for a preliminary injunction and, in light of that clarification, determined that the district court was correct in denying a preliminary injunction for infringement of a design patent. Titan Tire Corporation v. Case New Holland Inc., Case No. 08-1078 (Fed. Cir., June, 3, 2009) (Plager, J.).

Titan, the exclusive licensee of a tractor tire design patent owned by co-plaintiff Goodyear Tire & Rubber Company (Goodyear), sought an injunction against Case New Holland (Case) for selling backhoes allegedly having tractor tires covered by the patented design. The district court found that Titan failed to meet the “likely to succeed” on the merits factor required for a preliminary injunction because it did not rebut Case’s challenge to the obviousness of the patent. While finding that the other three preliminary injunction factors—irreparable harm, balance of the hardships and public interest—weighed in favor of granting an injunction, the trial court concluded that Titan’s failure to establish a likelihood of success on the validity issue was sufficient to defeat the motion for a preliminary injunction. Titan appealed.

In affirming the exercise of discretion by the district court, the Federal Circuit stated that a preliminary injunction to prohibit infringement is extraordinary relief within the discretion of the district court. According to Federal Circuit: “[T]he factors the trial court considers when determining whether to grant a preliminary injunction are of longstanding and universal applicability. As the Supreme Court recently reiterated, there are four: ‘[a] plaintiff seeking a preliminary injunction must establish [1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.’”

The Court noted that during preliminary matters the patent enjoys a presumption of validity. Because of that presumption, the infringer has the burden to present a substantial question of invalidity and the patentee has the burden to establish that the invalidity defense lacks substantial merit.

The Federal Circuit went on to clarify the standard of proof imposed on the movant for a preliminary injunction, explaining that when analyzing the likelihood of success factor, the district court, after considering all the evidence available at this early stage of the litigation, must determine whether it is more likely than not that the challenger will be able to prove that the patent is invalid by clear and convincing evidence. The Federal Circuit explained that while the “clear and convincing” standard regarding the challenger’s evidence applies only at trial on the merits and not at the preliminary injunction stage, that burden of proof is a consideration for the district judge to take into account when assessing the challenger’s case at the preliminary injunction stage. However, “clear and convincing” is not the evidentiary burden to be met preliminarily by the challenger. Rather, the evidentiary burden necessary to establish a substantial question of invalidity is a quantum above the “substantial evidence” test but below the “clear and convincing” burden.

Here the defendant presented three primary references that, when coupled with secondary reference, presented substantial obviousness issues. The Federal Circuit noted that the test of design patent obviousness using secondary references was similar to the discarded point of novelty test as explained in Egyptian Goddess (see IP Update, Vol. 10, No. 9) in that each of the secondary references focused on individual features and not the design as a whole. While the district court stated that the application of KSR to design patents was “new and untested ground,” [due to the functionality language of KSR] the Federal circuit stated that “[w]ith or without KSR,” it was not persuaded that the district court abused its discretion is finding that Titan was unlikely to succeed on the merits of the validity issue.

The Federal Circuit found that the district court applied the correct law governing preliminary injunctions because it accurately articulated the “likelihood of success” standard and its analysis demonstrated that the court considered and weighed both parties’ arguments on the issue of obviousness and that Case had presented a substantial question of invalidity that Titan was unlikely to withstand.

Practice Note: Notwithstanding a patent’s presumption of validity when seeking preliminary injunctive relief, the patentee should be prepared to fully rebut any alleged invalidity grounds raised by the challenger to convince the court that the invalidity contention lacks substantial merit.