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Court Upholds Preliminary Injunction in Sunglasses Case

January 09, 2003
Yang, Ming-Tao

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Last Month at the Federal Circuit - February 2003

Judges: Lourie (author), Newman, and Dyk (concurring)

In Oakley, Inc. v. Sunglass Hut International, No. 02-1132 (Fed. Cir. Jan. 9, 2003), the Federal Circuit affirmed a district court’s grant of preliminary injunction, holding that the district court did not abuse its discretion in ordering the injunction.

Oakley, Inc. (“Oakley”) owns U.S. Patent No. 5,054,902 (“the ’902 patent”), which claims a sunglass lens comprising three layers for producing a “vivid colored appearance” by an interference “differential effect” of light reflected from the lens. Oakley manufactures “Emerald” and “Ice” sunglasses allegedly covered by the ’902 patent. Sunglass Hut International (“SHI”) marketed those sunglasses for Oakley before Luxottica Group S.p.A., Oakley’s largest competitor, purchased SHI. After the purchase, SHI began selling sunglasses manufactured by other Defendants. Oakley sued SHI and others (collectively “Sunglass Hut”) for infringement of the ’902 patent and sought a preliminary injunction. The district court first entered the preliminary injunction, enjoining the Defendants from making, using, or selling the Emerald (green) or Ice (blue) sunglasses.

On appeal, the Federal Circuit reviewed the district court’s assessment of the likelihood of success concerning both invalidity and infringement. The Federal Circuit concluded that Oakley is reasonably likely to succeed on the merits at trial against all of Sunglass Hut’s invalidity challenges. Raising an indefiniteness argument, Sunglass Hut first argued that the claimed phrase “vivid colored appearance,” which is based on the disclosed “differential effect,” is indefinite. The Court concluded, however, that even though the numerical value of the “differential effect,” which is a feature that distinguished Oakley’s patent over the prior art, is not defined with mathematical precision, one skilled in the art would understand the term based on the specification. Inserting its own claim construction, the Federal Circuit reasoned that the dividing line of the differential value for producing a “vivid colored appearance” must be somewhere between 2.3% and 5.45%, the values that the specification provides respectively for the prior art and for the invention.

Having so construed this limitation, the Federal Circuit affirmed the district court’s finding of a likelihood of infringement.

Regarding the factors of irreparable harm and balance of hardships, the Federal Circuit concluded that the determination of the district court was not clearly erroneous. For irreparable harm, the Federal Circuit agreed that Oakley had made a sufficiently strong showing of likelihood of success on the merits to entitle Oakley to a presumption of irreparable harm. The district court’s finding that Sunglass Hut was poised to release huge numbers of enjoined sunglasses also supported such presumption. For the balance of hardships, Oakley attacked Sunglass Hut’s claim of irreparable harm from having to recall products, stating that Sunglass Hut admitted in its press release following the temporary restraining order (“TRO”) that sales to that point had been insignificant. The Federal Circuit concluded that ample evidence supported the district court’s determination that the harm to Oakley without issuance of the injunction would be greater.

Sunglass Hut also argued that the injunctive order failed to satisfy the specificity requirement of Fed. R. Civ. P. 65(d) by referring only to Oakley’s trade names. The Federal Circuit ruled that the language of the order is sufficiently specific and that the reference to Oakley’s trade names amounts to no more than harmless error. The Court reasoned that the purpose of Rule 65(d) is to minimize confusion and minimize needless contempt proceedings. Here, Sunglass Hut had publicly commented in a press release that the TRO, which uses the same language as the injunctive order, applied to only three models.

Concurring with the majority’s opinion, Judge Dyk wrote separately to stress three points. First, he pointed out that the majority’s tentative claim construction in response to the indefiniteness argument may or may not be correct. Second, he disagreed with the majority on applying a new claim construction to uphold the district court’s discretionary preliminary injunction. According to Judge Dyk, the uncontradicted expert testimony in the district court is sufficient to establish a likelihood of success on infringement. Accordingly, the district court did not err in failing to provide an explicit formal claim construction when Sunglass Hut offered no claim construction. Therefore, Judge Dyk stressed that the parties at trial are free to offer new claim constructions to the district court and evidence as to why the accused lenses do or do not infringe under those claim constructions.