NOTE: This disposition is nonprecedential. 

## United States Court of Appeals for the Federal Circuit

2006-1615

CANON, INC., Plaintiff-Appellee,

v.

GCC INTERNATIONAL LIMITED, GCC MANAGEMENT LIMITED, GATEHILL INTERNATIONAL LIMITE D, Q-IMAGING (USA), INC., and TALLYGENICOM LP, Defendants-Appellants.

Nicholas M. Cannella , Fitzpatrick, Cella, Harper & Scinto, of New York, New York, argued for plaintiff-appellee. With him on the brief were Brian V. Slater , and Joseph B. Divinagracia . Of counsel on the brief was Edmund J. Haughey , of Washington, DC. Michael N. Rader , Wolf, Greenfield & Sacks, P. C., of Boston, Massachusetts, argued for defendants-appellants. Wi th him on the brief were Michael A. Albert and James J. Foster

. Appealed from: United States District Cour t for the Southern District of New York Judge P. Kevin CastelNOTE: This disposition is nonprecedential. 

## United States Court of Appeals for the Federal Circuit

2006-1615

CANON, INC., Plaintiff-Appellee,

v. GCC INTERNATIONAL LIMITED, GCC MANAGEMENT LIMITED, GATEHILL INTERNATIONAL LIMITED, Q-IMAGING (USA) INC., and TALLYGENICOM LP, Defendants-Appellants.

Appeal from the United States District Court for the Southern District of New York in case no. 06-CV-3324, Judge P. Kevin Castel.

__________________________

DECIDED: January 25, 2008

_______________ ___________ Before MICHEL, Chief Judge , DYK, Circuit Judge , and GARBIS, District Judge

. * GARBIS, District Judge

. Plaintiff Canon, Inc. ("Canon") sued GCC International Limited, GCC Management Limited, Gatehill International Limited, Q-Imagi ng (USA) Inc., and TallyGenicom LP (collectively, "Defendants") for infringement of U.S. Patent No. 6,336,018 ("the '018 Patent") , entitled "Electrophotographi c Image Forming Apparatus, Process Cartridge, and Drive Mount for Photosensitive Drum."

* Honorable Marvin J. Garbis, Senior District Judge, United States District Court for the District of Mary land, sitting by designation.2006-1615 2 On August 29, 2006, the district c ourt issued its Memorandum and Order granting Canon a Prelim inary Injunction enjoining Defe ndants from, among other things, "making, using, offering for sale, or selling in the United States, or importing into the United States, any product that falls within the scope of cl aim 58 of U.S. Patent No. 6,336,018, including, without limit ation, [certain id entified] toner cart ridges . . . ." Canon Inc. v. GCC Int'l Ltd. , No. 06-3324 (S.D.N.Y. Aug. 29, 2006). Defendants appeal from the grant of a preliminary injunction. 1 For the reasons discussed herein, this court det ermines that the district c ourt did not abuse its discretion and, therefore, affirms

. I. BACKGROUND At all times relevant hereto, Canon has engaged in the business of producing and selling, inter alia , laser printers and laser fax machines with replaceable toner cartridges. A user purchasing a Canon printer receives t he printer with a replaceable toner cartridge. When the toner in the ca rtridge is exhausted, the user can easily remove and replace the exhausted toner cart ridge. The sale of replacement toner cartridges is a profitable aspect of Canon's business. At all times relevant hereto, Defendants have engaged in the bus iness of selling (among many other products) toner cartridges that can be used as replacements in Canon laser printers and laser fax machines. Canon is the assignee of the '018 Patent. Claim 58 of the '018 Patent claims: A process cartridge detachably mountable to a main assembly of an electrophotographic image forming app aratus, wherein said main

1 Defendants also seek reversal of the District Court's denial of their motion for summary judgment. However, the denial of summary judgment was not an appealable Order and will not be addressed herein.assembly includes a motor, a drivi ng rotatable member for receiving driving force from said motor, and a hole defined by twisted surfaces, said hole being substantially co axial with said driving rotatable member, said process cartridge comprising: a cartridge frame; an electrophotographic photosensitive drum; process means actable on said photos ensitive drum, said process means including a developing roller for devel oping a latent image formed on said photosensitive drum, and a charging member for electrically charging said photosensitive drum; a projection provided at a longitudinal end of said photosensitive drum, wherein said projection has an engagi ng portion for engagement with the twisted surfaces and a supporting porti on for supporting said engaging portion, wherein said end of said photosensitive drum is provided with a shaft for supporting said photosensitive drum on said cartridge frame, and said engaging portion is support ed on said shaft by said supporting portion, and a cross section of said supporting portion in a direction crossing with a longitudinal direction of said photosensitive drum is smaller than a cross section of said engagi ng portion, and said supporting portion is capable of entering sa id hole, and wherein when said driving rotatable member rotates with said hole, and said engaging portion of said projection engaged with each other, rotati onal driving force is transmitted from said driving rotatable member to said photosensitive drum through engagement between said hole and said pr ojection, and said projection is urged inwardly of said hol e, wherein said engaging portion is contacted to said twisted surfaces at least three points, and wherein sa id end of said photosensitive drum is pr ovided with a drum gear which is effective to transmit a driving force received by said engaging portion from the main assembly to said developing roller. Canon asserts that Def endants' toner cartridges (" the Accused Products"), usable in Canon laser printers and laser fax machines, infringe Claim 58 of the '018 Patent. Defendants sought an early claim construc tion holding that Claim 58 covers the combination of a "main assembly" consisting, according to Defendant s, of the entire printer or fax machine with a toner cartridge. Defendants contend that if Claim 58 is so

2006-1615 3construed, they would not infri nge Claim 58 because they sell only the cartridge, not the combination. Accordingly, Defendants assert that their production and sale of the accused toner cartridges would not infri nge Claim 58 by virtue of the doctrine of permissible repair. Under the doctrine of permissible repair, th e owner of patented property has a lawful right to repair or replace his property. See Aro Mfg. Co. v. Convertible Top Co. , 365 U.S. 336 (1961); see also Everpure, Inc. v. Cuno, Inc. , 875 F.2d 300, 302 (Fed. Cir. 1989), cert. denied , 493 U.S. 853 (198 9). Defendants alternatively advance a theory of implied license, relying upon Hewlett-Packard Co. v. Repeat-O-Type Stencil Mfg. Corp. , 123 F.3d 1445, 1 455 (Fed. Cir. 1997), cert. denied , 523 U.S. 1022 (1998) ("[W]hen a patentee sells a device without condition, it parts with the right to enforce any patent that the parties might reasonably have contemplated would interfere with the use of the purchased device."). The district court held that Claim 58 cl aimed the cartridge alone and not as part of a combination. Therefore, the doctrine of permissible r epair was not applicable. The district court further held t hat Canon's sale of a printer or fax machine with a toner cartridge therein did not constitute an implied license to manufacture and sell the toner cartridge. Thus, the district court concl uded that Canon had a lik elihood of success on its infringement claim. Upon further finding that a ba lance of the hardships and consideration of the public interest favo red Canon, the district court issued the preliminary injunction at issue.

2006-1615 4II. DISCUSSION In patent cases, traditional ru les of equity apply to reques ts for injunctive relief. eBay, Inc. v. MercExchange, L.L.C. , ____ U.S. ____, ____, 126 S.Ct. 1837, 1839 (2006). As stated in Pfizer, Inc. v. Teva Pharms. USA, Inc. : [District courts] have the power to grant injunctions to prevent the violation of patent rights. See 35 U. S.C. § 283 (2000). In considering whether to grant a prelim inary injunction, a court must consider whether the patent owner has shown: (1) a r easonable likelihood of success on the merits; (2) the prospect of irreparabl e harm to the patent owner in the absence of the injunction; (3) that this harm would exceed harm to the alleged infringer when subj ect to the injunction; an d (4) that granting the injunction is in the public interest. Jeneric/Pentron, In c. v. Dillon Co. , 205 F.3d 1377, 1380 (Fed. Cir. 2000); Nutrition 21 v. United States , 930 F.2d 867, 869 (Fed. Cir. 1991). We review the grant of a prel iminary injunction for abuse of discretion. Novo Nordisk of N. Am., Inc. v. Genentech, Inc. , 77 F.3d 1364, 1367 (Fed. Cir. 1996). To overturn the grant of a preliminary injunction, we must find that the district cour t made a clear error of judgment in weighing the relevant factors or based on its exercise of discretion on an error of law or on clearly erroneous factual findings. Id. 429 F.3d 1364, 1372 (Fed. Cir. 2005). A. Likelihood of Success on the Merits This court does not encourage interlocut ory appeals from claim construction decisions. Moreover, it is not always appropriate for trial courts to single out particular terms in a claim for "early" construction out side of the contextual setting provided by consideration of all disputed cl aim terms. Nevertheless, it can be necessary to consider the construction of some claim terms in the process of resolving a request for a preliminary injunction. In its preliminary injunction decision, t he district court construed Claim 58 to cover the toner cartridge alone and not as part of a combination. If Claim 58 is so

2006-1615 5construed, the doctrine of permissible r epair would be inapplic able altogether. See Fuji Photo Film Co., LTD v. Int'l Trade Comm'n , 474 F.3d 1281, 1296 (Fed. Cir. 2007). On the present record, there is a r easonably debatable question of whether Claim 58 should be construed to cover the cartridge alone or the cartridge as part of a combination. Therefore, this court is not now reaching its final conclusion as to the matter. However, even if Claim 58 were c onstrued to cover the cartridge as part of a combination, Canon would still have a substantia l likelihood of success. If Claim 58 were construed as covering a combination, it is unlikely that the covered combination would incl ude the toner cartridge and the entirety of the printer or fax machine since most of t he components of such machines are not claimed. On the contrary, as appears from the claims, t he most likely combination would be one consisting of the toner cart ridge and the claimed "hole defin ed by twisted surfaces." '018 Patent cl.58. In respect to such a combination, it is likely that the repl acement of the toner cartridge part of the combinatio n would not constitute a pe rmissible repair. We have divided permissible repair into two categorie s—replacement of readily replaceable parts and refurbishment. In each instance the conc ept of proportionality is pertinent, though less so in the case of readily replaceable parts. A part is not readily replaceable if the part in question constitutes the bulk of the value of the patented item. And refurbishment is not a permissibl e repair if, for example, "the extent of the refurbishment . . . [would be] disproportionate to the overall va lue of the parts that were not replaced." Fuji Photo Film , 474 F.3d at 1296; see also Husky Injection Molding Sys., Ltd. v. R & D Tool & Eng'g Co. , 291 F.3d 780, 786-87 (F ed. Cir. 2002) (noting that replacing the

2006-1615 6entirety of a patented car except for its spark plugs would be impermissible reconstruction). Thus, it appears that under t he facts of this case, the replacement of the toner cartridge would constitute impe rmissible reconstruction because it would essentially be a "second creatio n of the patented entity." Aro Mfg. Co. , 365 U.S. at 346 (citations omitted). In sum, Canon has established a substant ial likelihood—albeit not a certainty—of success on its claim that Defendants have infringed Claim 58 of the '018 Patent. B. Irreparable Harm Balance At the preliminary injuncti on stage, irreparable harm cons ists of harm that could not be sufficiently compensated by money damages or avoided by a later decision on the merits. D AN B. D OBBS , L AW OF R EMEDIES 193-94 (2d ed. 1993). To reach an irreparable harm balance, a trial court com pares the irreparable harm that would be sustained by the movant if a preliminary injunction were erroneously denied with the irreparable harm that would be sustained by t he non-movant if a preliminary injunction were granted in error. Id. at 187. As the trial court found, competition fr om Defendants will li kely result in substantial price erosion of Canon's patented product as well as loss of Canon's market share. Due to the difficulty (if not impos sibility) of determining the damages resulting from price erosion and loss of market share, an award of money damages would not be sufficient. Moreover, Defendants' business oper ations are geographic ally "far-flung," making the enforcement of a money j udgment "exceedingly difficult." Canon Inc. v. GCC Int'l, Ltd. , 450 F. Supp. 2d 243, 255 (S.D.N.Y. 2006). Thus, to the extent that money damages against Defe ndants were awarded, there appears to be a reasonable

2006-1615 7basis for the district court's finding that t here would be little probability that Canon could effect the collection of a money judgment. On the other hand, as the district court found, there is little, if any, harm that would be suffered by Defendants by virt ue of an erroneous grant of a preliminary injunction that could not be fully com pensated by a money damage award against Canon under Fed. R. Civ. P. 65(c). In light of Canon's demons tration of the potential of substantial irreparable harm, and Defendants' failure to make any such demonstration, this court agrees with the district court's conclusion that the irreparable harm balance favors Canon. C. Public Interest As the district court noted, the public b enefits from lower prices resulting from free market competition. Howe ver, the public also has an inte rest in the enforcement of patents. Hence, consideration of the public interest favors neither side. D. The Ultimate Balance The ultimate decision in a preliminary injunction context requires a flexible balancing of the parties' respective sho wings of potential irreparable harm and the movant's likelihood of success on the merits. "If, after balancing [the irreparable harm to plaintiff against that of the defendant], t he balance tips decidedly in favor of the plaintiff, a preliminary injuncti on will be granted if the plaintiff has ra ised questions going to the merits so serious, substantial, difficult and doubtful, as to make them fair ground for litigation and thus for more deliberate investigation." Direx Israel, Ltd. v. Breakthrough Med. Corp. , 952 F.2d 802, 813 (4th Cir. 1991) (internal quotation marks omitted). "A request for a preliminary in junction is evaluated in accordance with a

2006-1615 82006-1615 9 'sliding scale' approach: the more the bal ance of irreparable harm inclines in the plaintiff's favor, the smaller the likelihood of prev ailing on the merits he need show in order to get the injunction." Kowalski v. Chicago Tribune Co. , 854 F.2d 168, 170 (7th Cir. 1988). In the instant case, the district cour t reasonably evaluated Canon's likely success on the merits and the irreparable harm balanc e and did not abuse its discretion in granting the prelim inary injunction. CONCLUSION For the foregoing reasons, the district cour t's grant of the pre liminary injunction is affirmed. COSTS No costs.