Kimberly-clark Global Sales Llc. v. First Quality Baby Prod.s Llc. .

• Decision Date: 20 May 2010
• Docket Number: Case No. 09-C-916.
• Parties: KIMBERLY-CLARK WORLDWIDE, INC. and Kimberly-Clark Global Sales LLC, Plaintiffs, v. FIRST QUALITY BABY PRODUCTS, LLC, et al., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

714 F.Supp.2d 919

KIMBERLY-CLARK WORLDWIDE, INC. and Kimberly-Clark Global Sales LLC, Plaintiffs,

v.FIRST QUALITY BABY PRODUCTS, LLC, et al., Defendants.

Case No. 09-C-916.

United States District Court,E.D. Wisconsin.

May 20, 2010.

COPYRIGHT MATERIAL OMITTED.

Aimee B. Kolz, Jonathan Pieter van Es, Katie L. Becker, Marc S. Cooperman, Matthew P. Becker, Michael L. Krashin, Banner & Witcoff Ltd., Chicago, IL, Anthony S. Baish, Godfrey & Kahn SC, Milwaukee, WI, Daniel T. Flaherty, Godfrey & Kahn SC, Appleton, WI, Vicki Margolis, Kimberly-Clark Corporation, Neenah, WI, for Plaintiffs.

Brian A. Comack, Ira E. Silfin, Kenneth P. George, Michael V. Solomita, Amster Rothstein & Ebenstein, New York, NY, Gregory B. Conway, Thomas Wickham Schmidt, Liebmann Conway Olejniczak & Jerry SC, Green Bay, WI, for Defendants.

ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION

WILLIAM C. GRIESBACH, District Judge.

Based on the Court's Findings of Fact and Conclusions of Law issued this day, Defendants First Quality Baby Products, LLC, and First Quality Retail Services, LLC (collectively “First Quality”) are enjoined from making, using, selling or offering to sell in the United States, or importing into the United States the methods of manufacturing disposable training pants with refastenable side seams that infringe on U.S. Patent Nos. 6,514,187, 6,776,316, 6,888,143 and 7,156,939, currently assigned to Plaintiff Kimberly-Clark Worldwide, Inc. (“K-C”), as described therein.

This Order shall be stayed for a period of thirty days to allow First Quality to seek a further stay from the Federal Circuit in the event it chooses to appeal.

Prior to the Order taking effect, K-C shall post a bond in the amount of $39 million.

FINDINGS OF FACT, CONCLUSIONS OF LAW IN SUPPORT OF ORDER GRANTING RENEWED MOTION FOR PRELIMINARY INJUNCTION

I. Procedural History

1. On September 21, 2009, Plaintiffs Kimberly-Clark Worldwide, Inc., and Kimberly-Clark Global Sales, LLC, (collectively “K-C”) filed this action for patent infringement against Defendants First Quality Baby Products, LLC, and First Quality Retail Sales, LLC (collectively “First Quality”) alleging that First Quality was preparing to market and sell a new brand of disposable training pants with refastenable side seams that infringed various patents held by K-C. K-C sought but was denied a preliminary injunction enjoining First Quality from proceeding with its new entry into the $900 million disposable training pants market. Although the Court found that K-C had established a likelihood of irreparable harm if the injunction was not granted, it was unconvinced that K-C had established a likelihood of success on the merits because of the substantial questions First Quality had raised over the validity of K-C's patents. The Court's decision denying K-C's motion is currently on appeal to the Federal Circuit.

2. On March 1, 2010, K-C filed a First Amended Complaint, in which it alleged that in addition to infringing K-C's patents relating to the product itself, First Quality was also infringing four process patents K-C held relating to the method K-C had invented to manufacture its disposable training pants with refastenable sideseams: U.S. Patent Nos. 6,514,187 (“the '187 patent”), 6,776,316 (“the '316 patent”), 6,888,143 (“the '143 patent”) and 7,156,939 (“the '939 patent”). K-C also brought claims for breach of contract and breach of the implied duty of good faith. At the same time, K-C filed a renewed motion for a preliminary injunction seeking to enjoin First Quality from, inter alia, using the infringing manufacturing methods. An expedited briefing schedule was set by the Court, and following a two-day hearing and the parties' closing arguments on April 8, 2010, the Court took the matter under advisement. Having considered the evidence presented at both of the preliminary injunction hearings, and the briefs, affidavits, exhibits and argument of counsel, the Court enters the following findings of fact and conclusions of law in support of its order granting K-C's motion for a preliminary injunction against the defendants.

II. Legal Standard Governing Preliminary Injunctions In Patent Cases

3. In deciding whether to grant a motion for a preliminary injunction, the Court must consider four factors: 1) likelihood of success on the merits; 2) irreparable harm if an injunction is not granted; 3) the balance of hardships; and 4) the impact on the public interest. See Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed.Cir.2001). No single factor, taken individually, mandates such relief. Each factor must be weighed in view of the other factors and against the relief requested. Id. However, as the First Circuit has observed, “[t]he sine qua non of this four-part inquiry is likelihood of success on the merits: if the moving party cannot demonstrate that he is likely to succeed in his quest, the remaining factors become matters of idle curiosity.” New Comm Wireless Servs., Inc. v. SprintCom, Inc., 287 F.3d 1, 9 (1st Cir.2002) (citation omitted).

[1] 4. To establish a reasonable likelihood of success on the merits in a patent case, a plaintiff must show that in light of the presumptions and burdens that will inhere at trial on the merits: 1) the plaintiff will likely prove that the defendant infringes the patent, and 2) the plaintiff's infringement claim will likely withstand the defendant's challenges to the validity and enforceability of the patent. See Amazon.com, 239 F.3d at 1350. “If [the defendant] raises a substantial question concerning either infringement or validity, i.e., asserts an infringement or invalidity defense that the patentee cannot prove ‘lacks substantial merit,’ the preliminary injunction should not issue.” Id. at 1350-51; see also Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1379 (Fed.Cir.2009) (“[I]f the trial court concludes there is a ‘substantial question’ concerning the validity of the patent, meaning that the alleged infringer has presented an invalidity defense that the patentee has not shown lacks substantial merit, it necessarily follows that the patentee has not succeeded in showing it is likely to succeed at trial on the merits of the validity issue.”).

III. Likelihood of Success On the Merits at Trial

A. Background of the Patents

5. All four of the patents that are the subject of K-C's current motion are the result of K-C's efforts to bring to market a disposable training pant with refastenable side seams. Based on the consumer testing and market research it conducted in the late 1990s, K-C concluded that a significant demand existed, or could be created, for disposable training pants with refastenable side seams. K-C had first introduced disposable training pants to the market under its PULL-UPS® trademark in 1989. The new training pant products had the appearance of underwear, and thus were attractive to young children as their parents attempted to transition them out of diapers, which older children identified with babies. At the same time, they had the convenience of disposable diapers in that they were leakproof and could simply be thrown away if accidents occurred or at the end of the day. Unlike disposable diapers, however, K-C's original PULL-UPS® were permanently sealed, or bonded, at the sides. This made removal and clean-up more difficult if the child had an accident. It also required complete removal of the child's shoes and outer pants whenever a parent wanted to put on a new training pant, even when it was inconvenient to do so. K-C's consumer testing showed that parents would prefer disposable training pants with refastenable sides, which made cleanup or simply checking the condition of the training pant easier and afforded the option of replacing the training pant without removing the child's shoes and outer clothing. After investing significant resources into its research and testing, K-C developed a side seam that was easy to open and could be securely re-fastened. The fasteners consisted of a hook type material on the outer side of each front side panel that matched up with a loop material located on the inner side of the back side panels. When pressed together, they create a refastenable seam. In order to maintain the appearance of training pants, which was crucial from a marketing standpoint, however, K-C realized it would be necessary to package and sell its new PULL-UPS® with its “Easy Open Sides” feature with the sides pre-fastened. And for the product to be commercially successful, K-C realized it would need machines capable of producing and packaging the training pants in a pre-fastened condition at a high rate of speed.

6. K-C found that its proposed new product posed a number of challenges to the existing manufacturing technology for disposable garments. Existing diaper machines produced disposable diapers in an unfastened condition so there was no need for the machine to match the inside of one side panel with the outside of another during the folding process so as to fasten them together. The same was true of the machines that had been designed to manufacture disposable training pants with permanently bonded seams on a commercial scale. The product could simply be folded in half with the sides held together until they were bonded. Given the design of its product, however, and the desire to package them in a prefastened condition, K-C needed a machine that would keep the side panels separated until the hook fastener on the outside of the front side panels could be matched up, or aligned, with the loop fastener on the inside of the back side panels and brought together to form the refastenable side seams. And given the windy conditions created by the high speed at which the training pants would move through the machine and the light weight of the material they were made of, it was difficult to maintain the control needed to properly fasten the seams and fold them for packaging. Once the...