Categories: Injunctions
Date: Jul 5, 2014
Title: Trebro Mfg. v. Firefly Equip.: Multiple Abuses of Discretion in Denial of Preliminary Injunction
| Title | Trebro Mfg., Inc. v. Firefly Equip., LLC, No. 2013-1437 (Fed. Cir. April 9, 2014). | |
| Issues | [Whether, in denying a motion for preliminary injunction,] the district court erred in determining that [(1)] Trebro failed to prove a likelihood that FireFly infringes the ’638 patent, that [(2)] FireFly raised a substantial question of the ’638 patent’s validity, and that [(3)] Trebro failed to prove a likelihood of irreparable harm. Trebro Mfg., Inc. at *10 (text added). | |
Holdings | [1] Likelihood of Infringement | The only basis on which the district court found no likelihood of success was the erroneous requirement that a bed frame be moved vertically. Absent an explicit claim construction favorable to FireFly (which, of course, does not include a “bed frame”), this court holds that the district court erred. Id. at *14. |
| [2] Substantial Question of Validity | [T]he record does not contain a single prior art reference that raises a substantial question as to the ’638 patent’s validity. Without even a reference to call validity into question, the district court abused its discretion in concluding there was no likelihood of success on the merits on the basis of validity. Id. at *16. | |
| [3] Likelihood of Irreparable Harm | The district court clearly erred in finding as speculative the harm Trebro is likely to suffer if its direct competitor is able to sell an infringing product in the small, niche sod harvester market . . . Further, the district court committed legal error by giving no weight to Trebro’s evidence of likely loss of market share and customers. Id. at *16. | |
| Procedural History | The United States District Court for the District of Montana denied plaintiff-appellant Trebro Manufacturing, Inc.’s (Trebro) motion for a preliminary injunction against defendants-appellees FireFly Equipment, LLC and Steven R. Aposhian (collectively, FireFly) for infringement of U.S. Patent No. 8,336,638 (the ’638 patent). Trebro Mfg., Inc. at *2 (citation omitted). | |
| Legal Reasoning (Rader, Lourie, Prost) | ||
| Background | ||
Preliminary Injunctions | Legal Standard | “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2009). An accused infringer can defeat a showing of likelihood of success on the merits by demonstrating a substantial question of validity or infringement. See Aria Diagnostics, Inc. v. Sequenom, Inc., 726 F.3d 1296, 1304 (Fed. Cir. 2013). Trebro Mfg., Inc. at *8. |
| High Bar for Reversing a Denial | Because a plaintiff must prove each element of the preliminary injunction test to prevail at the district court, Trebro’s appeal can only succeed here if this court reverses the district court’s ruling in its entirety. Id. at *10. | |
| (1) Likelihood of success | ||
| Legal Standard | To prove a likelihood of success on the merits, a patentee must prove that success in establishing infringement is “more likely than not.” Trebro Mfg., Inc. at *10 (citation omitted). | |
| Claim 1 | Claim 1 is pertinent for this appeal: 1. A sod harvester for harvesting a sod piece from a ground surface and stacking said sod piece on a support, the sod harvester comprising: a) a sod cutting knife for cutting said sod piece from said ground surface; b) at least one inclined conveyor movable at faster than ground speed; c) a substantially horizontal conveyor, wherein said at least one inclined conveyor is adapted to carry said sod piece from said cutting knife to said substantially horizontal conveyor; and d) a sod carrier movable between a first position above said horizontal conveyor and a second position, wherein, in said first position, said sod carrier is adapted to removably secure said sod piece to said sod carrier when said sod piece is on said horizontal conveyor, wherein said sod carrier is adapted to release said sod piece at said second position, wherein said horizontal conveyor is moveable in a vertical direction toward said sod carrier. Id. at *3-4. | |
| Arguments and District Court Decision | The parties’ infringement dispute focuses on whether the ProSlab 150 practices the last limitation of claim 1: “wherein said horizontal conveyor is moveable in a vertical direction toward said sod carrier.” The district court did not engage in explicit claim construction, but nevertheless held that “rais[ing] the horizontal bed frame . . . is required by the ’638 Patent.” Id. at *10. | |
| Specification Not Read Into Claim | The district court erred in construing claim 1 to require a “bed frame.” First, nothing in the language of claim 1 mentions or implies that a “bed frame” must be part of, or otherwise attached to, the claimed “horizontal conveyor.” Second, imposing the use of a bed frame in claim 1 improperly imports a limitation into the claim from a preferred embodiment. Id. at *11 (internal citations omitted). | |
| Claim Differentiation | [C]onvincingly, claim 10 (which depends from claims 1 and 9) is explicitly limited to the “bed frame” embodiment envisioned by the district court. Namely, claim 10 specifies “said horizontal conveyor being mounted on said bed frame, wherein said bed frame is movable in a vertical direction toward and away from said sod carrier, thereby vertically moving said horizontal conveyor.” To read the bed frame limitation from claim 10 into claim 1 (even though claim 10 also includes moving the bed frame “away from” the sod carrier) renders the term redundant and offends principles of claim differentiation. Id. at *12. | |
| Alleged Infringing Device Meets Claim Requirement | The district court also clearly erred in finding that the ProSlab 150’s horizontal conveyer is not “moveable in a vertical direction toward [its] sod carrier.” The record shows otherwise. . . . Even Mr. Aposhian[, Firefly's owner,] testified that “[t]here’s an element of up” in moving the sod piece toward the sod carrier. Id. at *12-13 (text added). | |
| (2) Substantial Question of Validity | ||
| Legal Standard | Even if a patentee shows the likelihood of proving infringement, the accused infringer can defeat the likelihood of success on the merits by raising a substantial question as to the validity of the patent in suit. Trebro Mfg., Inc. at *14 (internal citation omitted). | |
| Products Sold After Priority Date Are Not Invalidating | [T]he district court’s conclusion that the vertically-moving horizontal conveyor “was not a novel or non-obvious feature” is clearly erroneous. The district court based this conclusion solely on Mr. Tvetene’s testimony about other sod harvesters that had been on the market—but without regard to the ’638 patent’s priority date. Mr. Tvetene testified undisputedly that the only two sod harvesters having a vertical-moving horizontal conveyor were not on the market until 2006 or later. Neither party challenges that the ’638 patent’s priority dates back, at least, to the February 2005 provisional application. Thus, these later-sold sod harvesters (the Kesmac Slabmatic 3000 and 1500) cannot be considered prior art. Id. at *15 (internal citations omitted). | |
| Patents That Do Not Qualify As Prior Art Are Not Invalidating | Finally, the parties on appeal initially heavily disputed the scope and content of two prior patents invented by the same inventors of the ’638 patent, Brouwer and Milwain—the ’362 and ’610 patents. However, as the PTO recognized after initially granting ex parte reexamination based on these patents, neither reference is prior art. Both patents have the same inventive entity as the ’638 patent and thus cannot qualify as prior art under (previous) 35 U.S.C. § 102(a) or § 102(e). And both patents emerged less than a year prior to February 2005 and thus cannot qualify as prior art under the version of § 102(b) in effect for this case. Id. at *15-16 (internal citation omitted). | |
| (3) Likelihood of Irreparable Harm | ||
| Non-Speculative Harm | First, the uncontroverted testimony of Mr. Tvetene showed that harm to Trebro is not speculative. The sod harvester market at issue in this case is a tiny market with only three players—Trebro, FireFly, and Mr. Brouwer’s company (a licensee of the ’638 patent). Trebro sells only roughly eight sod harvesters per year. The opportunities to attract customers and make sales are thus scarce in this tight market. . . . “[O]nce a farmer buys a sod harvester, they’re not going to replace it for many years in the future.” . . . Given the realities of this business, the record shows that an infringing product in this market inflicts a real nonspeculative harm on Trebro. Trebro Mfg., Inc. at *16-17 (internal citations omitted). | |
| Loss of Market Share and Customers Relevant to Irreparable Harm | Second, Trebro is very likely to lose significant market share as well as customers. . . . Even though Trebro may be able to estimate the price of sod harvesters, how much profit it makes per sod harvester, and how many sod harvester sales it makes (and thus may lose) per year, that does not automatically mean money damages are adequate. Rather, the record shows that a loss of market share and customers is a loss that Trebro is not likely to recover. Additionally, Trebro asserted that it will have to lay people off in a company with eighteen employees worldwide due to FireFly’s alleged infringement. This record evidence further supports the conclusion that money damages are likely inadequate in this market. Id. at *17-18. | |
| Not Practicing Patent Does Not Preclude Irreparable Harm | Finally, on this record, the fact that Trebro does not presently practice the patent does not detract from its likely irreparable harm. To the contrary, Trebro and FireFly are direct competitors selling competing products in this market. Thus, the record strongly shows a probability for irreparable harm. In multiple instances, this court has held that a party that does not practice the asserted patent may still receive an injunction when it sells a competing product. Id. at *18 (internal citations omitted). | |
| Conclusion | ||
| Vacated and Remanded | Because the district court abused its discretion in denying a preliminary injunction, and because the district court did not consider the final two Winter factors, this court vacates the district court’s order and remands the case for further proceedings consistent with this opinion. Trebro Mfg., Inc. at *20. | |
| Contributor's Notes: | ||
| The Court also provided certain observations with respect to the final two Winter factors. For further reading, pp. 19-20 of the case can be read here. | ||
