Lack of Meaningful Competition Between the Parties Weighed Against Conclusion of Irreparable Harm, Leading to Denial of Permanent Injunction

Nichia Corp. v. Everlight Americas, INC., No. 2016-1585, 2016-1618 (Fed. Cir. April 28, 2017) (precedential).  On appeal from E.D. Tex.  Before Reyna, Hughes and Stoll.

Takeaway:

  • Lack of meaningful competition between the parties weighs against conclusion of irreparable harm.

Procedural Posture:

Nichia, the owner of U.S. Patent Nos. 8,530,250, 7,432,589, and 7,462,870, appealed the district court’s refusal to award permanent injunction. Everlight cross-appealed the court’s decision that Everlight infringed Nichia’s three patents, and that the patents are not invalid. The CAFC affirmed on all counts.

Synopsis:

  • Claim Construction: Regarding the ‘250 patent, the Federal Circuit agreed with the district court that a “lead” is “the portion of the device that conducts electricity,” and that that “planar” means “in a substantially same plane.”
  • Infringement: Based on its claim construction findings, the accused products met the “lead” and “planar” limitations, and the CAFC therefor affirmed that Everlight infringed the ‘250 patent. With respect to the ‘870 and ‘589 patents, the CAFC reasoned that the court correctly concluded that Everlight’s products infringe where the leads are exposed through gaps in the resin.
  • Obviousness: The CAFC affirmed the district court’s finding that there was no motivation to combine the references cited against the ‘250 patent. Regarding the ‘870 patent, the CAFC agreed with the district court that the asserted prior art references disclose different structures, resolve dissimilar problems, and propose dissimilar solutions, which results in a lack of motivation to combine them. Regarding the ’589 patent, the CAFC then affirmed the district court’s conclusion that one of ordinary skill in the art would not have been motivated to combine the asserted prior art references, and that thus the references did not render the ’589 patent obvious.
  • Permanent Injunction: The Federal Circuit left the district court’s finding of an absence of meaningful competition between the parties undisturbed. Everlight’s competition accounted for the proverbial “drop in the bucket,” when compared to Nichia’s total sales. Further, Nichia failed to establish that it had suffered even a single lost sale from Everlight’s infringement, or that it suffered price erosion because of Everlight’s infringement. Nichia thus failed to establish that it would suffer irreparable harm absent an injunction. Because Nichia failed to establish one of the four equitable factors required for a permanent injunction, the district court did not abuse its discretion in denying Nichia’s request for an injunction. (The Federal Circuit also discussed the district court’s finding that Nichia’s prior licenses to significant competitors weighed against a finding of irreparable harm, noting that a patent owner’s prior licensing activities can carry weight in the irreparable-harm analysis. However, it affirmed on the basis of the absence of competition.)

 

Authored by Georg C. Reitboeck, Zaed M. Billah, and Dragan Plavsic

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