Opinion ID: 4522703
Heading Depth: 2
Heading Rank: 1

Heading: The Requirement of “Bad Faith”

Text: When considering a motion for a preliminary injunction, courts must balance: (1) Whether the movant has a strong likelihood of success on the merits; (2) Whether the movant would suffer irreparable injury without the injunction; (3) Whether the issuance of the injunction would cause substantial harm to others; and (4) Whether the public interest would be served by issuance of the injunction. Id. But when a preliminary injunction prevents a patentee from communicating its patent rights, a court applies “federal patent law and precedent relating to the giving of notice of patent rights.” GP Indus., Inc. v. Eran Indus., Inc., 500 F.3d 1369, 1373 (Fed. Cir. 2007). In such cases, the grant of a preliminary injunction is reviewed “in the context of whether, under applicable federal law, the notice of patent rights was properly given.” Id. We have further held that “federal law requires a showing of bad faith” before a patentee can be enjoined from communicating his patent rights. Id. A showing of “bad faith” must be supported by a finding that the claims asserted were objectively baseless. See id. at 1374. An asserted claim is objectively baseless if no reasonable litigant could realistically expect success on the merits. Id. (citing Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60 (1993)).
Speech Without a Finding of Bad Faith The district court abused its discretion when it granted a preliminary injunction enjoining patentee speech without a finding of bad faith. Although a district court’s Case: 19-2374 Document: 42 Page: 16 Filed: 04/03/2020 16 MYCO INDUSTRIES, INC. v. BLEPHEX, LLC discretion to enter a preliminary injunction is entitled to substantial deference, the patent laws permit a patentee to inform a potential infringer of the existence of its patent. See, e.g., 35 U.S.C. § 287 (“Patentees . . . may give notice to the public that [a patented article] is patented . . . .”); Va. Panel Corp. v. MAC Panel Co., 133 F.3d 860, 869 (Fed. Cir. 1997) (“[A] patentee must be allowed to make its rights known to a potential infringer so that the latter can determine whether to cease its allegedly infringing activities, negotiate a license if one is offered, or decide to run the risk of liability and/or the imposition of an injunction.”). Therefore, “communication to possible infringers concerning patent rights is not improper if the patent holder has a good faith belief in the accuracy of the communication.” Mikohn Gaming Corp. v. Acres Gaming, Inc., 165 F.3d 891, 897 (Fed. Cir. 1998). In this case, the district court neither made a finding of bad faith nor even adverted to the requirement. To the extent the court made any factual findings relevant to bad faith, moreover, the court expressly declined to find that any of BlephEx’s statements were either false or misleading. Myco, 2019 WL 4023789, at . This alone warrants reversal. 4 See Coursey v. Comm’r of Soc. Sec., 843 F.3d 1095, 1097 (6th Cir. 2016) (“A district court abuses its discretion when it relies on clearly 4 Myco argues that BlephEx waived its argument that a showing of bad faith is a prerequisite to injunctive relief. Appellee Br. 26–28. We disagree. “While a party can waive his or her ability to appeal a ruling for failure to object, there can be no waiver here of the Judge’s duty to apply the correct legal standard.” United States v. Ali, 508 F.3d 136, 144 n.9 (3d Cir. 2007); see also Brown v. Smith, 551 F.3d 424, 428 n.2 (6th Cir. 2008) (“[T]he district court was ill-served in this regard by the petitioning party, who never argued that AEDPA deference did not apply until this appeal. Nevertheless, a party cannot ‘waive’ the proper standard of review by failing to argue it.”). Case: 19-2374 Document: 42 Page: 17 Filed: 04/03/2020 MYCO INDUSTRIES, INC. v. BLEPHEX, LLC 17 erroneous findings of fact, when it improperly applies the law, or uses an erroneous legal standard.”). ii. Section 287(c) Does Not Mean That Allegations of Infringement Directed to Medical Practitioners Are Made in Bad Faith Myco does not dispute that the district court failed to make an express finding of bad faith. Myco maintains, however, that the district court’s analysis was appropriate because the injunction “merely precludes BlephEx from alleging infringement and threatening litigation against Myco’s AB Max potential customers,” who are purportedly immune from infringement under 35 U.S.C. § 287(c). Appellee Br. 23. Myco argues that, under this narrower scope, “threatening [Myco’s potential customers] with infringement of the ’718 patent is objectively baseless and in bad faith.” Myco asks us to infer a finding of bad faith from the language of the injunction itself. But the injunction is not limited to allegations of patent infringement against Myco’s potential customers. Rather, the district court’s injunction enjoins BlephEx from both: (1) making allegations of patent infringement in general; and (2) threatening litigation against Myco’s potential customers. Myco, 2019 WL 4023789, at –9. In addressing whether Myco demonstrated a strong likelihood of success with respect to its ’718 patent non-infringement claims, the court considered whether “[Myco] or a third party” directly or indirectly infringed the method claims. Id. at . If the district court’s injunction was as narrow as Myco now claims, the court would have restricted its analysis to a discussion of induced infringement based on the actions of Myco’s medical-practitioner customers. Indeed, the record reflects that Myco sought a broader injunction. For example, Myco’s motion for a preliminary injunction “asks the Court to enjoin Bleph[E]x, its officers, agents, and those in active concert with it, from (1) making false allegations that Myco’s AB Max infringes the ’718 patent, and Case: 19-2374 Document: 42 Page: 18 Filed: 04/03/2020 18 MYCO INDUSTRIES, INC. v. BLEPHEX, LLC (2) making baseless threats to sue Myco’s medical-practitioner potential customers of AB Max.” J.A. 104. The plain text of Myco’s request makes clear that Myco not only sought to preclude BlephEx from communicating with its medical-practitioner customers, but from making any “false allegations that Myco’s AB Max infringes the ’718 patent.” Id. 5 Even assuming the district court’s injunction is narrowly tailored to allegations of infringement and threats of litigation against Myco’s potential customers, the “medical practitioner immunity” provision of § 287(c) does not blanketly preclude a patent owner from stating that a medical practitioner’s performance of a medical activity infringes a patent. Section 287(c) recites: With respect to a medical practitioner’s perfor- mance of a medical activity that constitutes an infringement under section 271(a) or (b), the provisions of sections 281, 283, 284, and 285 shall not apply against the medical practitioner or against a related health care entity with respect to such medical activity. 35 U.S.C. § 287(c)(1). The plain text of the statute does not state that a medical practitioner is “immune from infringement,” as the district court found and Myco urges. Rather, the text establishes that, if a medical practitioner’s performance of a medical activity infringes a patent claim, the patentee cannot seek a remedy for such infringement against the practitioner or related health care entity. See 35 U.S.C. 5 As noted above, while Myco only sought to enjoin false allegations regarding patent infringement, the district court expressly found that the record did not permit a conclusion that any of BlephEx’s claims were either false or misleading. Case: 19-2374 Document: 42 Page: 19 Filed: 04/03/2020 MYCO INDUSTRIES, INC. v. BLEPHEX, LLC 19 §§ 281 (remedies), 283 (injunctions), 284 (damages), 285 (attorneys’ fees). The act provides immunity to certain infringers, but it does not render them non-infringers. As we have explained, moreover, a medical practitioner’s direct infringement of a method claim may form the basis for a claim of indirect infringement against a medical device manufacturer. Barry v. Medtronic, Inc., 914 F.3d 1310, 1334 (Fed. Cir. 2019) (finding that “[s]ubstantial evidence supports the jury’s finding of underlying direct infringement by surgeons,” as relevant to the jury’s finding that Medtronic induced others to infringe). Accordingly, Myco cannot simply hide under the umbrella of § 287(c) and argue that any alleged statements regarding medical practitioner infringement were made in bad faith. Rather, Myco must establish that BlephEx’s patent infringement statements, whether made generally or to medical practitioners, were objectively baseless. With respect to threats of litigation against Myco’s potential customers, there is no evidence that BlephEx or Rynerson ever made such a threat. The parties submitted conflicting testimony regarding Rynerson’s actions at the SECO 2019 trade show, but even Choate’s memory of the events fails to recall Rynerson threatening Myco’s potential customers with either patent infringement or litigation relating thereto. J.A. 113 (“Dr. Rynerson approached the Myco booth and became hostile and combative stating that the AB Max infringes Dr. Rynerson’s patent.”). And when Dr. Farkas, a fellow SECO 2019 attendee, sent an email to describe his observations of Rynerson’s statements, he could only report that “[Rynerson] said that the AB Max technology was ‘totally infringing on his patents’ and that he’d be ‘taking action.’” J.A. 522. Myco insists that Dr. Farkas’s email demonstrates that BlephEx threatened potential customers with litigation because a customer, overhearing Rynerson’s intent to “take action,” would infer a threat of litigation. See Oral Arg. at 28:50 (“A doctor hearing a statement that ‘I’m going to take Case: 19-2374 Document: 42 Page: 20 Filed: 04/03/2020 20 MYCO INDUSTRIES, INC. v. BLEPHEX, LLC action on this patent’ that covers exactly what [she does] in [her] office—I think . . . that would be a threat on a doctor, or could be taken as a threat on a doctor, certainly.”), http://oralarguments.cafc.uscourts.gov/default.aspx?fl= 2019-2374.mp3. But Myco’s argument asks the court to assume, without any supporting evidence, that a doctor would have interpreted Rynerson’s general statements about the AB Max as both an accusation of patent infringement and a threat of litigation against the doctor herself. Because the record lacks any evidence that BlephEx or Rynerson “threaten[ed] [Myco’s potential customers] with infringement of the ’718 patent” or, more specifically, with litigation relating thereto, Myco’s implied “bad faith” argument fails. Appellee Br. 23. Where there was no finding of bad faith, let alone an acknowledgment of that requirement, the district court’s decision to enjoin BlephEx’s patent speech was an abuse of discretion. Myco finally argues that, regardless of whether the district court made a finding of bad faith—either express or implied—the district court properly enjoined BlephEx from making general allegations of infringement because “[the Federal Circuit] has affirmed the grant of an injunction to plaintiffs in patent-based declaratory judgment cases.” Appellee Resp. Br. 29. In support of its argument, Myco cites to Unitronics (1989) (R”G) Ltd. v. Gharb, 318 Fed. App’x 902 (Fed. Cir. 2008), where the district court granted Unitronics’ summary judgment motion of non-infringement and, as part of the final judgment, enjoined Gharb from “threatening Unitronics and its customers with infringement litigation.” 318 Fed. Appx. at 903–04. In a nonprecedential decision, we affirmed the district court’s final judgment of non-infringement, addressing the merits of the infringement issue—not the propriety of its injunction. Id. at 905. Unitronics does not address the injunction issue at all and does not establish precedent, contrary to GP Industries, that a district court may enjoin patentee speech without a finding of bad faith. See, e.g., Elbit Sys. Land & C4I Case: 19-2374 Document: 42 Page: 21 Filed: 04/03/2020 MYCO INDUSTRIES, INC. v. BLEPHEX, LLC 21 Ltd. v. Hughes Network Syst., LLC, 927 F.3d 1292, 1305 (Fed. Cir. 2019); Arthrex, Inc. v. Smith & Nephew, Inc., 880 F.3d 1345, 1349 (Fed. Cir. 2018); Special Devices, Inc. v. OEA, Inc., 269 F.3d 1340, 1346 (Fed. Cir. 2001). iii. The District Court’s Conclusion that Myco Has a “Strong Likelihood of Success on the Merits” of its Non-Infringement Claim Must Be Vacated To the extent the court enjoined general allegations of infringement—no matter where directed—that injunction is predicated on the court’s conclusion that use of Myco’s product likely does not directly infringe the claims of the ’718 patent. That conclusion, like all conclusions regarding infringement, could only be reached after a two-step process: a construction of the claims of the patent and a conclusion that use of BlephEx’s product does not likely read on those claims. 6 Myco, 2019 WL 4023789, at –5. But the key predicate for the court’s finding that use of the AB Max likely does not directly infringe the ’718 patent is the conclusion that the AB Max is promoted for the treatment of anterior blepharitis, while the claims of ’718 patent are directed to posterior blepharitis. Id. at . There are several problems with that predicate. The court’s claim construction that limits the scope of the claims to the treatment of posterior blepharitis is faulty 6 Although Myco argues in its brief that the district court “did not construe any claim terms to decide the preliminary injunction motion,” Appellee Br. 30, it conceded during oral argument that the district court necessarily conducted claim construction in order to determine whether Myco directly or indirectly infringed the ’718 patent claims. See Oral Arg. at 25:38 (“I don’t disagree that for purposes of finding whether the court erred in finding non-infringement, the court will have to look at the meaning of the term, the context of the limitation, specifically.”). Case: 19-2374 Document: 42 Page: 22 Filed: 04/03/2020 22 MYCO INDUSTRIES, INC. v. BLEPHEX, LLC in a number of ways, ignoring key governing principles of law. In concluding that use of the AB Max likely does not infringe the ’718 patent, the district court determined that the ’718 patent claims are limited to “the treatment of posterior blepharitis” because “the ’718 patent routinely describes the swab of the Bleph[E]x contacting the ‘inner edge portion of the eyelid margin.’” Id. at –5. But the plain language of the ’718 patent claims does not state that the swab must contact the inner edge or that the claimed method is limited to treatment of posterior blepharitis. For example, claim 1 recites a swab “having at least a portion thereof configured to access an inner edge portion of the eyelid margin,” but does not state that any contact by the swab must be limited to the inner edge portion of the eyelid margin. ’718 patent, col. 7 ll. 34–37. And unlike claims 14, 15, and 17, claim 1 does not require contacting or accessing “at least an inner edge portion of the eyelid margin.” Compare ’718 patent, col. 7 ll. 34–37, with ’718 patent, col. 8 l. 40, and ’718 patent, col. 8 l. 43, and ’718 patent, col. 8 ll. 54–55. Accordingly, reading such a limitation into claim 1 would appear to violate the doctrine of claim differentiation and render dependent claims 14, 15, and 17 superfluous. See Aspex Eyewear, Inc. v. Marchon Eyewear, Inc., 672 F.3d 1335, 1348 (Fed. Cir. 2012) (“[T]he presence of a dependent claim that adds a particular limitation gives rise to a presumption that the limitation in question is not present in the independent claim.”). 7 7 We also remind the district court that limitations from different dependent claims should not be interpreted as if they were general statements of disavowal from the written description. Compare Myco, 2019 WL 4023789, at  (combining separate limitations from claims 1, 14, 15, and 17 as evidence that “the patent consistently states that the Bleph[E]x is for use with the ‘inner edge portion of the eyelid margin.’”). Case: 19-2374 Document: 42 Page: 23 Filed: 04/03/2020 MYCO INDUSTRIES, INC. v. BLEPHEX, LLC 23 During prosecution of the patent application, the applicant rejected the examiner’s suggestion to add “contacting at least an inner edge portion of the eyelid margin” to claim 1. J.A. 331, 338, 392. Instead, the applicant and examiner compromised with the limitation, “contacting a portion of the eye between the eye lashes and the inner edge of the eyelid margin,” implying that claim 1 recites a method of using a device with the capability of accessing the inner edge, but not requiring such contact during use. J.A. 392. Based on this back-and-forth, the court concluded that the “inner edge portion of the eyelid” language was important to allowance of the patent claims, and determined that the applicant’s statements and amendments had narrowed the scope of the claims. J.A. 3, 12. But the court did not decide whether the patentee had clearly and unmistakably disavowed the claim scope, as would be required to depart from the meaning of the term provided in the claims and the written description. See Sorensen v. Int’l Trade Comm’n, 427 F.3d 1375, 1378–79 (Fed. Cir. 2005) (“Disclaimers based on disavowing actions or statements during prosecution . . . must be both clear and unmistakable.”). Such a finding would be necessary before prosecution history may constitute a disclaimer of claim scope. 8 8 That is not to say that prosecution actions or statements must be “clear and unmistakable” in order to inform a court's claim construction. If a claim term is ambiguous based on the plain language of the claims and the written description, we may look to the prosecution history for guidance. For example, in Personalized Media Comm'cns, LLC v. Apple, Inc., Case No. 18-1936 (Fed. Cir. Mar. 13, 2020), we held that an applicant's ”repeated and consistent statements during prosecution, along with its amendment to the same effect, are decisive as to the meaning of the disputed claim term—even if those statements do not rise to the level of a disclaimer.” Slip op. at 18. Our precedent Case: 19-2374 Document: 42 Page: 24 Filed: 04/03/2020 24 MYCO INDUSTRIES, INC. v. BLEPHEX, LLC The district court’s non-infringement analysis also frequently conflates the invention claimed in the ’718 patent with the BlephEx product. See, e.g., Myco, 2019 WL 4023789, at  (“However, the ’718 patent routinely describes the swab of the Bleph[E]x contacting the ‘inner edge portion of the eyelid margin.’”); id. (“Further, adding the ‘inner edge portion of the eyelid margin’ language was necessary in order for the PTO to issue a patent on the Bleph[E]x.”); id. at  (“Defendant’s Bleph[Ex] tool, according to the ’718 patent, is for use for the treatment of posterior blepharitis.”). The law is clear, however, that “infringement is determined on the basis of the claims, not on the basis of a comparison with the patentee’s commercial embodiment of the claimed invention.” Int’l Visual Corp. v. Crown Metal Mfg. Co., 991 F.2d 768, 772 (quoting ACS Hosp. Sys., Inc. v. Montefiore Hosp., 732 F.2d 1572, 1578 (Fed. Cir. 1984)). Similarly, claim construction, from which an infringement analysis depends, focuses on the recited limitations of the claims, not on the features of a commercial embodiment of the invention. While we “will not lightly intrude upon a district court’s discretionary decision to issue only a tentative claim construction and to base its resolution of a preliminary injunction motion upon that tentative claim construction,” Jack Guttman, Inc. v. Kopykake Enters., Inc., 302 F.3d 1352, 1361 (Fed. Cir. 2002), our conclusion that there are errors in the claim construction analysis employed requires that we vacate that claim construction and remand for further addressing the general role of intrinsic evidence in claim construction, however, can be distinguished from the doctrine of prosecution disclaimer, wherein a patentee may narrow the scope of a claim term after he has clearly and unmistakably disavowed a certain meaning to receive a notice of allowance. Tech. Props. Ltd. LLC v. Huawei Techs. Co., 849 F.3d 1349, 1357-58 (Fed. Cir. 2017). Case: 19-2374 Document: 42 Page: 25 Filed: 04/03/2020 MYCO INDUSTRIES, INC. v. BLEPHEX, LLC 25 consideration of what precisely is claimed in the claims of the ’718 patent. Vacating the court’s claim construction necessitates that we also vacate the court’s finding regarding Myco’s likelihood of success on its non-infringement contentions. In turn, that requires that we vacate the court’s preliminary injunction with respect to BlephEx’s ability to make generalized allegations of infringement with respect to the’718 patent.