Apple's Main Argument in '381 Patent Case

Apple’s main argument in support of the likely validity of its ‘381 patent was that the patent had survived a PTO re-examination. In prior litigation against Nokia, the PTO re-examined the ‘381 patent claims against all of the prior art that Nokia had asserted would invalidate the patent. However, the PTO confirmed the ‘381 patent claims during re-exam. Since the patent survived re-exam, Apple argued that it would be likely to defeat any of Samsung’s validity challenges. Case law supports Apple’s argument.

Apple cited to an unreported case to support its proposition that “grant of reexamination certificate supports clear case of validity for preliminary injunction” (Apple’s Motion for a Preliminary Injunction at 23). Other cited case law also referred to the fact that successful re-exam of a patent helped establish likely validity for preliminary injunction determinations.

Please see the previous post Tracking Apple's '381 Patent Infringement Case for more on this topic.

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Illinois Injunctions Case - Part 3

In our prior two posts, we considered Five Mile Capital Westin North Shore SPE, LLC v. Berkadia Commercial Mortgage, LLC, and other defendants, rendered by the Appellate Court of Illinois, First District, on December 24, 2012.  

Participant C objected to selling the property after it was acquired by a credit bid at a foreclosure sale because it would recoup none of its investment, and its appraisers claimed that the appraisal of the property obtained by the servicer was undervalued by about $14 million, and that if the property were held for a few more years, it would appreciate another $6 million.   In making that claim, the participant added credibility to its complaint--it had specific figures, backed by experts--but sowed the seeds of its own defeat in requesting a preliminary injunction, for by quantifying the damages that it was about to sustain by reason of what it claimed was a premature sale, it showed what money damages would compensate it for what it claimed was a breach of contract.   

An essential element of a preliminary injunction action is the inadequacy of a legal remedy.  You cannot on the one hand claim that your opponent has damaged you by a specific amount (the amount the property should be sold for less what the other participants would get from that sale) and then claim that amount is too speculative to support a money damages remedy, which is what this participant argued in trying to get an injunction that (either by getting itself appointed a special servicer or by directly stopping the sale) would enjoin the sale.   

For the plaintiff's sake, I hope none of its injunction court papers, when arguing that its money damages were speculative, impeached the value of the evidence it will need to introduce at the money damages trial.  

Illinois Injunction Case - Part 2

In our prior post, we set forth the facts of Five Mile Capital Westin North Shore SPE, LLC v. Berkadia Commercial Mortgage, LLC, and other defendants, rendered by the Appellate Court of Illinois,First District, on December 24, 2012, and whether the quashing of a lis pendens could be appealed before the final judgment in the case under Supreme Court Rule 307.  The court ruled that it could not be interlocutorily appealed, and then considered the refusal of the lower court to grant the requested preliminary injunction preventing the sale of the foreclosed on property.  The second interesting issue presented by the appeal was the standard of review.

The parties complicated the matter.  The defendant apparently filed only a motion to dismiss the injunction counts or prayers of the complaint.  The lower court treated the arguments of the parties as a request by the plaintiff for a preliminary injunction, opposed by the defendant based on the court papers filed. Ah, but motions to dismiss are appealed under a de novo standard, whereas preliminary injunction decisions are appealed under the abuse of discretion standard of review.

The appellate court stated that the lower court's handling of the issues was proper, although "unusual," and noted in a footnote that neither party objected and that interlocutory review would have been impossible had the court treated the paperwork and the arguments as merely a motion to dismiss, the granting of which would not have been appealable until the end of the case.  In fact, the lower court (Judge Flynn) handled the case more efficiently than the parties had presented it.  In light of these circumstances, the abuse of discretion standard of review was applied on appeal.

Improper Lis Pendens Filing in Illinois Injunction Case

 The case of Five Mile Capital Westin North Shore SPE, LLC v. Berkadia Commercial Mortgage, LLC and other defendants, rendered by the Illinois Appellate Court, First District, on December 24, 2012, presents several interesting injunction issues.

The Westin North Shore, a hotel in Wheeling, Illinois, obtained a loan from JPMorgan Chase Bank, N.S., but JPMorgan offloaded much of the risk of the loan to three other participants.  The "A" participant had the lowest risk and return; the "B" participant had more risk and a higher return; and the "C" participant had the highest risk and the best return.  Alas, the loan went into default.

The contract provided for that eventuality by appointing a "special servicer," which would, in the event of a default, handle the foreclosure and foreclosure sale, subject to contractual obligations to promptly sell the property and to take the best interests of the participants into account.  Depending on the appraised value of the property, one of the three participants would be the controlling participant with the power to veto any of the servicer's decisions that might adversely affect its investment. 

In this case, after the foreclosure and sale, at which the servicer obtained title with a credit bid, it decided to sell the property.  The appraisal it obtained showed that participant A would fully recoup its investment, participant B would recoup all but about $4 million, and participant C would get nothing, so participant C sued, alleging that the appraisal of the servicer was wrong and it the property were held for a few years it would appreciate in value.  But the servicer believed that participant B was the controlling participant, and it sided with the servicer in believing that an immediate sale should occur.  

When the lawsuit was filed, participant C filed a lis pendens against the property.  The lower court quashed the lis pendens, and the plaintiff filed an interlocutory appeal from that order, and the first of the interesting issues presented by this opinion is whether the order quashing the lis pendens was appealable.  The court held that it could not be appealed before the final judgment was issued.  Although Illinois Supreme Court Rule 307, which authorizes interlocutory appeals from orders granting, modifying, refusing, dissolving or refusing to dissolve or modify an injunction, a lis pendens is not an injunction, and the argument that quashing a lis pendens functions similarly to an injunction because the plaintiff is prevented from informing potential real estate purchasers about the existence of a lawsuit by way of the lis pendens would "stretch the meaning of an injunction beyond all recognition . . . ."  

The court believed the better analogy was to motions that refuse to quash subpoenas, which are not appealable, and further noted that quashing a lis pendens might not necessarily be an equitable order:  a lis pendens (a "creature of statute") improperly filed in conjunction with an automobile negligence action, for example, might be quashed by a court not sitting in equity.  We consider other interesting issues presented by this opinion in future posts.