Prefacing Note on Intellectual Property Tests and Standards (Part 1 of 4)

                Before we further analyze Apple’s motion and the Court’s denial of it, we must first examine some of the tests and standards used in intellectual property law.  These tests and standards are key to understanding the reasonable likelihood of success prong.  For the reasonable likelihood of success on merits prong, Apple must demonstrate that it would be likely to prove infringement at trial and that Samsung would not be likely to prove invalidity at trial.

                With respect to three design patents (D’677, D’087, D’899), the test for infringement asks: “would an ordinary observer perceive the design of the accuse device to be ‘substantially the same’ as the design of the patent?”  This ‘substantially the same’ (or substantial similarities) standard is met when “‘the resemblance [between the accused device’s design and design patent] is such to deceive such an observer, inducing him to purchase one supposing it to be the other.’”  Court Order Denying Motion for Preliminary Injunction at 24. With respect to software patent ‘381, Apple must prove likely infringement of at least one the claims of the ‘381 patent.  A patent claim is infringed if the accused device reads on every element of the claim.

Apple v. Motorola: Injunction Hearing - General Point of Interest for Practitioners

 Another note of interest to IP practitioners also came up during Judge Posner’s questioning of Apple’s argument about Motorola’s infringement causing harm in the form of loss of consumer goodwill.  Apple’s attorneys had sought to bring in multiple news articles and reviews of the iPhone as evidence.  Judge Posner questioned Apple as to the relevance of these articles, because they generally did not relate to the specific features that were the technology of the four patents at issue.  He asked for articles that dealt specifically with the features that were being protected in the patents, because such articles could demonstrate how important those specific features were to consumers and their purchasing decisions.  For example, one of the patents at issue had to do with a feature for a notification bar.  The Judge seemed highly dubious of the value or importance of that feature to consumers, and he indicated that he would have wanted to see some articles about the notification bar feature, which could support Apple’s argument that infringement of that feature harmed its goodwill or market share.

One suggestion is that parties should really focus on providing concrete, direct proof of how the infringement is leading to the harms being asserted.  Especially with patents that deal with one tiny part of a larger machine and/or device; some direct evidence of the importance of the patented technology to consumers would be helpful.  Apple argued that Judge Posner was being too “granular” in his focus.   I am not sure that persuaded him.  

Our First Post About An Injunction Issued In Another Country

Apple versus Samsung.  Samsung unveiled its new Galaxy Tab 7.7, a new Android tablet, but had to remove it from a convention show and from its German website after a court in Germany issued an injunction against Samsung and in favor of Apple.  Very brief details were contained in the Engadget September 4th post by Amor Toor.  We are trying to locate the court papers and ruling for further comment.

Re:Exactly Which Trade Secrets Am I Enjoined From Using?

In an excellent blog post , attorney Michael R. Greco refers to case IDG USA v. Kevin Schupp and the need to be specific when requesting an injunction and when drafting an order. This often presents a quandary in trade secret litigation because a detailed description reveals the trade secret you want to conceal. In some cases, filing under seal may be the answer.

Amylin Pharm. v. Eli Lilly Part II

 This is Part II of a post on the Amylin v. Eil Lilly Litigation.  For background on the case and to read about the original TRO see Part I of the post.

 

Denial of Preliminary Injunction

After granting the temporary restraining order, the parties further briefed the matter and a preliminary injunction hearing was held on June 2, 2011.  As a result, the Court vacated the TRO and denied the preliminary injunction.

The main thrust of the Court’s reversal comes from a more careful analysis of the irreparable harm factor. The Court did not address the remaining elements of the preliminary injunction after determining that Amylin failed to show irreparable harm: 

Under Winter, Amylin “must establish that irreparable harm is likely, not just possible, in order to obtain a preliminary injunction.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011). “‘Irreparable harm is the single most important prerequisite for the issuance of a preliminary injunction. . . . Accordingly, the moving party must first demonstrate that such injury is likely before other requirements for the issuance of an injunction will be considered.’” Freedom Holdings, Inc. v. Spitzer, 408 F.3d 112, 114 (2d Cir. 2005) (alteration in original) (quoting Rodriguez ex rel. Rodriguez v. DeBuono, 175 F.3d 227, 233–34 (2d Cir. 1999)).

In footnote 2 of its order, the Court repudiated the presumption of irreparable harm from the original TRO.  Instead, the Court examined Amylin’s injury claims: (1) harm attributable to Defendant’s misuse of Amylin’s confidential information and (2) loss of prospective customer and goodwill. 

The Court found Amylin’s claim of harm—misuse of confidential information— was too speculative.  “Speculative injury does not constitute irreparable injury sufficient to warrant granting a preliminary injunction.” Carribean Marine Servs. Co. v. Baldrige, 844 F.2d 668, 674 (9th Cir. 1988).  The Court does not do a great job explaining this finding.  Instead, it passes the buck to the two points below.

Secondly, the Court points to Food and Drug Administration’s regulations that prohibit Lilly’s sales representatives from making any potentially misleading statement regarding Amylin’s product without adequate supporting data, including statements comparing the attributes of the other product.  Amylin’s argument that the Defendant’s sales representatives would intentionally mislead consumers to the detriment of Amylin is clearly specious.  The Court concluded that the sales representatives would not risk FDA sanctions to maximize sales of a competing product.

Finally, in order to prevail in a preliminary injunction, damages cannot be monetarily compensable: “[E]conomic injury alone does not support a finding of irreparable harm, because such injury can be remedied by a damage award.” Rent-A-Center, Inc. v. Canyon Television & Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991).  The Court relied on Defendant’s economic expert who asserted money damages were sufficient to cover any harm arising from Defendant’s actions:

To the extent that Amylin would suffer from the alleged actions, the resulting loss would take the form of profits on lost exenatide sales. Losses of this nature are generally calculable through the use of standard economic analyses undertaken in the calculation of economic harm generally and, specifically, in antitrust actions.  Amylin Pharmaceuticals, Inc. v. Eli Lilly and Company, Case No. 11-CV-1061 JLS (NLS) (S.D. Cal. June 8, 2011)

The courts do not enjoin actions that would result in a calculable economic injury. Accordingly, misappropriation of a trade secret can be remedied with money damages.

Finding no irreparable harm, the Court ended its analysis.    

 

Amylin Pharm. v. Eli Lilly Part I

By Jay Lewis

Amylin Pharmaceuticals, Inc. v. Eli Lilly and Company, Case No. 11-CV-1061 JLS (NLS) (S.D. Cal. June 8, 2011)

Background

Amylin Pharmaceuticals (“Amylin”) and Eli Lilly (“Defendant”) entered into a business relationship in 2002 to develop and commercialize exenatide, a drug used for treatment of type-2 diabetes.  In early 2011, Defendant announced that it was entering a similar alliance with Boehringer Ingelheim GmbH (“Boehringer”) to develop and commercialize linagliptin, also a drug used for treatment of type-2 diabetes.  Amylin and Boehringer are direct competitors so needless to say, Amylin was opposed to Defendant’s entering into the second agreement.

Amylin and Defendant held private negotiations regarding the Boehringer alliance.  The parties were unable to resolve the matter so Amylin filed for a temporary restraining order (“TRO”) and preliminary injunction.  Amylin requested the Court to restrain and enjoin Defendant and others acting in concert from 1) disclosing any of Amylin’s confidential information; 2) using the same sales force used for Amylin’s drug; and 3) falsely describing Amylin’s products.

Legal Standard

The Court applied the appropriate legal standard, citing Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) for the general factors a plaintiff must show to obtain a preliminary injunction:

  1. A likelihood of success on the merits of the legal claim,
  2. Irreparable harm in the absence of preliminary relief,
  3. The balance of equities tips in the favor plaintiff’s favor, and
  4. The relief is in the public interest.

The Court further applied the 9th Circuit’s sliding scale balancing test as articulated in Alliance for Wild Rockies v. Cottrell, 622 F.3d 1045 (9th Cir. 2010).  Under this test, a stronger application of one factor may offset a weaker application of another. Alliance, 1049-53.

Original TRO

The Court granted Amylin’s request for a TRO but would later deny all of Amylin’s requests in a subsequent hearing.  The Court’s analysis in the original TRO decision was focused on Amylin’s likelihood of success on the merits.  Specifically, the Court found that Amylin would likely prove that the Defendant-Boehringer alliance would violate the confidentiality clause in Defendant-Amylin’s existing agreement.  The Court reasoned that the sales force for Defendant was already privy to Amylin’s confidential information and to task that same individuals with the sale of the Boehringer drug ostensibly puts Amylin’s confidential information in the hands of its competitor.

After finding a likely success on the merits, the Court briefly discussed irreparable harm by reiterating the risk of loss of confidential information to a competitor.  The Court quoted TMX Funding, Inc., v. Impero Technologies, Inc., 2010 WL 1028254, at *8 (N.D. Cal. March 18, 2010), “California courts have presumed irreparable harm when proprietary information is misappropriated.”  The Court was similarly brief in discussing the balance of equities and public interest and held in favor of preventing the sales force from promoting Boehringer’s products.

Part II will discuss the subsequent denial of the preliminary injunction.