August 11, 2009
After more than fifteen years of ad hoc formulations that differed more or less from the familiar four-part test for issuing preliminary injunctions, the Federal Circuit has brought some much-needed clarity to its confused standard for preliminary injunctions in patent cases with its decision in Titan Tire Corp. v. Case New Holland, Inc. Following Titan, it will be harder for alleged infringers to fend off meritorious preliminary injunction motions. A mere “whiff” of invalidity will no longer suffice. Instead, the alleged infringer will be unable to escape an injunction without showing that it has a likelihood of success on the merits of its invalidity defense in light of the clear and convincing burden of proof it bears at trial.
Since the early 1990s, the Federal Circuit has used the unique phrase “substantial question” of invalidity to describe what an alleged infringer must show to overcome the patentee’s likelihood of success on the merits (the first prong of the traditional four-part test that also includes a showing of irreparable harm, balancing of the equities, and a look at the public interest). This seemingly innocuous “substantial question” standard has created confusion among district courts regarding the amount of evidence needed for an alleged infringer to defeat a preliminary injunction. The Federal Circuit has compounded that confusion by employing the phrases “vulnerability” and “casting of doubt” in its attempt to explain the meaning of its “substantial question” phrase.
Some district courts have interpreted the “substantial question” standard as allowing an alleged infringer to show something less than a fifty percent chance of success on the issue of invalidity. Such a result makes nonsense of the very concept of “likelihood of success” and disregards the Supreme Court’s 2006 decision in eBay, Inc. v. MercExchange, LLC, which held that the traditional four-part test for injunctive relief applies in patent cases as in all other cases.
In Titan, the Court finally made some headway in explaining that “substantial question” of invalidity is simply a re-articulation of the “likelihood of success on the merits” factor of the preliminary injunction test. The Court began by confirming that there is no special preliminary injunction standard for patent cases per eBay. The “substantial question” analysis simply acts as a tool for evaluating the primary issue at the preliminary injunction stage—has the patentee established a “likelihood of success” on the merits?:
Asking whether the challenger has raised a substantial question of invalidity in the manner we have described may be a useful way of initially evaluating the evidence, but the ultimate question regarding the first preliminary injunction factor remains that of the patentee’s likelihood of success on the merits.
When analyzing whether there is a “substantial question” of invalidity, a trial court is therefore making a substantive determination as to the likelihood of prevailing on the validity/invalidity issue. While the patentee bears the burden of showing it is likely to overcome any validity challenge, the alleged infringer bears the ultimate burden of showing it is likely to prove invalidity at trial. That is, the burden does not just rest with the patentee to overcome any possibility of invalidity conjured up by the alleged infringer. Instead, the trial court “must determine whether it is more likely than not that the challenger will be able to prove at trial, by clear and convincing evidence, that the patent is invalid.”
In short, the Court explained that “substantial question of invalidity” is simply another way of expressing the requirement that a patentee establish a likelihood of success on the merits with respect to validity in order to obtain an injunction. Such a demonstration, in turn, means that the alleged infringer has not established a likelihood of success on the merits with respect to invalidity. This follows because the issue of validity/invalidity sums to zero: there can be only one likelihood of success on the merits of this issue and, thus, only one winner.
Titan’s holding that “substantial question” equals “likelihood of success” should eliminate any debate about the evidence of invalidity an alleged infringer needs to muster to defeat an otherwise meritorious preliminary injunction motion. This holding favors patentees because it should make it more difficult for alleged infringers to use flimsy invalidity challenges to avoid preliminary injunctive relief.
To read more about the history of “substantial question” and its interpretation by different courts, see the article calling for the Federal Circuit to abandon the standard published by Nutter attorneys in the Summer 2009 ABA Intellectual Property Newsletter.
This advisory was prepared by Nutter’s Intellectual Property Litigation Practice Group. For more information, please contact your Nutter attorney at 617.439-2000.
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