Circle R, Inc. v. Smithco Mfg., Inc.
| Decision Date | 20 March 1996 |
| Docket Number | No. C 96-4002.,C 96-4002. |
| Citation | 919 F. Supp. 1272 |
| Parties | CIRCLE R, INC., a Nebraska Corporation, Plaintiff, v. SMITHCO MFG., INC., an Iowa corporation, and Greg Smith, an individual, Defendants. |
| Court | U.S. District Court — Northern District of West Virginia |
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Dennis L. Thomte of Zarley, McKee, Thomte, Voorhees & Sease, Omaha, Nebraska, for Plaintiff Circle R, Inc.
G. Brian Pingel of Sherer, Templer, Pingel & Kaplan, P.C., West Des Moines, Iowa, and Richard H. Moeller of Berenstein, Moore, Moser, Berenstein & Heffernan, Sioux City, Iowa, for Defendants Smithco Mfg., Inc., and Greg Smith.
TABLE OF CONTENTS
I. INTRODUCTION AND BACKGROUND ...................................... 1278
A. Procedural Background ......................................... 1278
B. Factual Background ............................................ 1280
II. LEGAL ANALYSIS ................................................... 1286
A. Standards For Preliminary Injunctions In Patent Cases ......... 1287
1. Factors in the analysis .................................... 1287
2. Relationship of the factors ................................ 1288
3. Provisional determinations ................................. 1289
B. Individual Factors And Their Application ...................... 1289
1. Likelihood of success on the merits ........................ 1289
a. Validity ............................................... 1289
i. The "on-sale" bar ................................. 1290
ii. "Obviousness." .................................... 1294
iii. Inventorship ...................................... 1294
iv. Inequitable conduct ............................... 1295
b. Infringement ........................................... 1295
i. Literal infringement .............................. 1297
ii. "Doctrine of equivalents." ........................ 1297
2. Irreparable harm ........................................... 1300
a. Availability of a presumption ........................... 1300
b. When the presumption is not available ................... 1301
3. Balance of harms ........................................... 1303
4. Public interest ............................................ 1304
III. CONCLUSION ........................................................ 1304
A motion for a preliminary injunction in a patent infringement case often involves the court in a precarious balance of presumptions, inferences, and equitable concerns based on only a thinly developed record and preliminary findings of fact and conclusions of law, all in the interest of forestalling irreparable harm and maintaining the status quo. Although the court's preliminary determination is subject to ultimate revision following trial on the merits, if the question of whether or not to issue a preliminary injunction is wrongly decided at this nascent stage of the proceedings, the court's preliminary determination may inflict as much irreparable harm as it forestalls. In this case, the court must consider how far presumptions will carry the plaintiff patentee in its demand for a preliminary injunction to enjoin production of allegedly infringing side-dump semi-trailers. Specifically, the plaintiff has invoked the presumptions of patent validity and of irreparable harm if a preliminary injunction is not issued to enjoin sales of the allegedly infringing side-dump trailers made by defendants. Defendants have countered these presumptions with evidence they contend shows neither presumption can properly stand, because the patent is neither valid nor infringed. The court here enters the ruling on plaintiff's application for a preliminary injunction the court concludes will best serve to prevent irreparable harm and to maintain the status quo.
Plaintiff Circle R, Inc., filed this patent infringement action on January 5, 1996, against defendants "The Smith Co." and "Gregg Smith," asserting that defendants are infringing Circle R's patent for a side-dump trailer.1 Defendants answered the complaint and asserted a counterclaim on January 29, 1996. In their answer, defendants asserted, inter alia, that the corporate defendant had been incorrectly titled by Circle R, and that the company's name is properly Smithco Mfg., Inc. Following a hearing on plaintiff's motion for a preliminary injunction, the court entered an order granting the parties' oral request to amend the caption in the case to identify the defendants properly as "Smithco Mfg., Inc.," and "Greg Smith." The defendants will therefore be referred to herein collectively as "Smithco," except when individual acts or statements of Mr. Smith are under discussion.
Leaving nomenclature aside, and returning to more significant matters, Circle R's complaint alleges that Circle R is the owner of United States Patent No. 5,480,214 (hereinafter, "the '214 patent"), entitled "SIDE DUMP TRAILER," and that Smithco is infringing one or more claims of that patent by manufacturing, marketing, and selling truck and/or trailer bodies covered by the '214 patent. Jurisdiction over the complaint is asserted under 28 U.S.C. ? 1338 (patent jurisdiction). The complaint asserts that the '214 patent is valid and enforceable, that Smithco is literally infringing the patent-in-suit, that infringement by Smithco is "willful," and that Circle R is entitled to a permanent injunction against such infringement, whether direct, contributory, or by inducement. The complaint seeks damages adequate to compensate Circle R for infringement of its patent that are in no event less than a reasonable royalty, plus interest and costs, enhancement of damages up to three times the amount assessed as the result of the asserted "willfulness" of the infringement, payment of costs and attorneys fees, and such other relief as the court deems just and equitable.
On January 18, 1996, Circle R also moved for a preliminary injunction "enjoining Defendants and their servants and agents from manufacturing, using or selling side dump trailer bodies which infringe one or more claims of U.S. Patent No. 5,480,214." Circle R attached to its application for a preliminary injunction various "evidentiary materials," including photographs of an allegedly infringing trailer made by Smithco and a copy of the '214 patent. Circle R also attached an affidavit of its patent expert, registered patent attorney John A. Beehner, stating his opinion that the Smithco side-dump trailer infringes each limitation of claims one and two of the '214 patent, and an affidavit of Ralph Rogers, the President of Circle R and the named inventor of the '214 patent, in which Mr. Rogers describes a purported business partnership with Greg Smith of Smithco, breach of that partnership arrangement, and subsequent infringement of Circle R's patent by Smithco.
In the brief in support of its motion for a preliminary injunction, Circle R argues that Smithco's trailers literally infringe each and every limitation of at least claims 1 and 2 of the '214 patent, and that Smithco has no right whatsoever to make, use, or sell such trailers. Circle R also argues that the hardship to it of not issuing a preliminary injunction is the impingement of its limited-in-time property right to exclusivity under the patent, while any hardship to Smithco of such an injunction, which is a result of Smithco's election to build a business on an infringing product, should be disregarded. As to likelihood of success on the merits, Circle R relies on both its expert's opinion that Smithco is infringing the patent and the presumption of validity of United States patents. A further presumption figures in Circle R's assertion of irreparable harm, in that it contends that "irreparable harm is presumed when a clear showing has been made of patent validity and infringement." Plaintiff's Memorandum In Support Of Its Motion For A Preliminary Injunction, p. 9 (citing H.H. Robertson Co. v. United Steel Deck, Inc., 820 F.2d 384, 390 (Fed.Cir.1987), overruled on other grounds, Markman v. Westview Instruments, Inc., 52 F.3d 967, 977 (Fed.Cir.1995)). Circle R also contends that the public interest favors enforcement of patent rights, and therefore all pertinent considerations favor the grant of a preliminary injunction in this case.
On January 29, 1996, Smithco answered Circle R's complaint, asserting both affirmative defenses and a counterclaim to the effect that the '214 patent is invalid and unenforceable. Specifically, in its affirmative defenses, Smithco contends that the '214 patent has been "anticipated" under 35 U.S.C. ? 102, that it is "obvious" under 35 U.S.C. ? 103, and that the inventorship of the '214 patent has been misrepresented to the Patent and Trademark Office (PTO) in violation of 35 U.S.C. ? 116. Smithco contends that the co-inventor of the patent is Joe Garthright, an employee of Smithco, and that Smithco has an implied license to a shop right to make, use, or sell the alleged invention in the patent. In its counterclaim, Smithco reasserts the allegations in its affirmative defenses, arguing that the '214 patent is invalid and unenforceable, and that Ralph Rogers is not the sole inventor of the patent, but that he was instead assisted in developing the alleged invention by Joe Garthright, who is therefore a co-inventor of the patent. As relief on its counterclaim, Smithco seeks a declaration that the '214 patent is invalid and/or not infringed by Smithco, that the patent is unenforceable, and that Joe Garthright is a co-inventor of...
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