Automated Merchandising Systems, Inc. v. Crane Co., 121609 FEDFED, 2009-1158

Docket Nº:2009-1158, 2009-1164
Opinion Judge:MICHEL, Chief Judge, CLEVENGER, and DYK, Circuit Judges
Party Name:AUTOMATED MERCHANDISING SYSTEMS, INC., Plaintiff-Cross Appellant, v. CRANE CO., Defendant-Appellant, and SEAGA MANUFACTURING, INC., Defendant-Appellee.
Attorney:James D. Berquist, Davidson Berquist Jackson & Gowdey, LLP, of Arlington, Virginia, argued for plaintiff-cross appellant. With him on the brief was Donald L. Jackson. Jamil N. Alibhai, Munck Carter, LLP, of Dallas, Texas, argued for defendant-appellant. With him on the brief was William A. Munck....
Judge Panel:Before MICHEL, Chief Judge, CLEVENGER, and DYK, Circuit Judges.
Case Date:December 16, 2009
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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AUTOMATED MERCHANDISING SYSTEMS, INC., Plaintiff-Cross Appellant,

v.

CRANE CO., Defendant-Appellant,

and

SEAGA MANUFACTURING, INC., Defendant-Appellee.

Nos. 2009-1158, 2009-1164

United States Court of Appeals, Federal Circuit

December 16, 2009

This disposition is nonprecedential.

Appeals from the United States District Court for the Northern District of West Virginia in case no. 3:08-CV-97, Chief Judge John Preston Bailey.

James D. Berquist, Davidson Berquist Jackson & Gowdey, LLP, of Arlington, Virginia, argued for plaintiff-cross appellant. With him on the brief was Donald L. Jackson.

Jamil N. Alibhai, Munck Carter, LLP, of Dallas, Texas, argued for defendant-appellant. With him on the brief was William A. Munck. Of counsel were Ryan C. Hudson and Laura A. Russell.

William A. Rinehart, II, Reinhart Boerner Van Dueren s.c., of Milwaukee, Wisconsin, argued for defendant-appellee. On the brief was David G. Hanson.

Before MICHEL, Chief Judge, CLEVENGER, and DYK, Circuit Judges.

MICHEL, Chief Judge.

In this patent infringement case, the district court entered a preliminary injunction against sales of the allegedly infringing products. The district court simultaneously stayed all infringement and other claims pending the outcome of ongoing reexamination proceedings in the United States Patent and Trademark Office (USPTO). The parties have brought dueling interlocutory appeals, arguing that the district court should not have entered these simultaneous orders, although the parties disagree about which order was correct. Because we find that the district court erred by granting the preliminary injunction but not by staying the case, we affirm in part, vacate in part, and remand.

I. BACKGROUND

Automated Manufacturing Systems, Inc. (AMS), Crane Co. (Crane), and Seaga Manufacturing, Inc. (Seaga) all make and sell glass-front automatic vending machines. AMS holds several patents relating to systems that use optical technology to detect whether a product that the user of the machine has purchased has actually been delivered by the machine.

During 2003 and 2004, AMS and Crane filed four separate patent-related lawsuits against one another in the Northern District of West Virginia. These four earlier cases are all stayed pending reexamination of the relevant patents. In June 2008, AMS filed the present case against Crane, alleging that Crane infringed two other, later-issued AMS patents and that Crane tortiously interfered with AMS's contractual and business relationships. AMS also sued Seaga for infringement of several AMS patents. During the early stages of the litigation, Crane asked the USPTO to reexamine the patents it was alleged to have infringed, and Crane subsequently asked the court to consolidate this case with the four earlier stayed cases and thereby also stay this litigation pending the outcome of the reexamination proceeding.

At about the same time, AMS moved for a preliminary injunction, arguing essentially that Crane's sales of infringing products were costing AMS so much market share that, were Crane not enjoined from making infringing sales, AMS was likely to go out of business before the litigation could conclude. In December 2008, the court granted AMS's motion for a preliminary injunction, and, in the same order, the court simultaneously granted Crane's motion to consolidate the case with the earlier cases and to stay the litigation pending reexamination of the asserted patents. Both AMS and Crane appealed the portions of this order that were adverse to them. Seaga did not appeal.

After the original notices of appeal were filed, the district court decided on the amount of a preliminary injunction bond. AMS amended its notice of appeal to include this decision, because AMS contends the district court set the injunction bond amount without considering AMS's ability to pay. In its papers seeking reconsideration of the bond amount order, AMS stated that it did not intend to pay the bond unless the court reduced the amount of the bond AMS would be required to post. After setting the bond amount, the district court stayed entry of the preliminary injunction pending the outcome of this appeal. The district court also clarified that the bond would not have to be posted until the injunction became effective, thereby apparently causing AMS to reconsider its...

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