Federal Circuit Rejects Procedurally and Substantively Defective Preliminary Injunctions

In ABC Corporation I v. Partnership & Unincorporated Associations, No. 21-2150 (Fed. Cir. Oct. 28, 2022), the Federal Circuit vacated the district court’s initial preliminary injunction and motion to amend. In a related appeal, ABC Corporation I v. Partnership & Unincorporated Associations, No. 22-1071 (Fed. Cir. Oct. 28, 2022), the Federal Circuit reversed and remanded the district court’s second preliminary injunction.

ABC Corporation sued several entities for infringement of four of its design patents through the sale of their hoverboards. The defendants were identified in Schedule A to the complaint. In November 2020, the district court entered a preliminary injunction against the then-named defendants. In May 2021, the district court granted ABC Corporation’s motion to amend Schedule A. The newly named defendants were thereby bound by the November 2020 injunction. In response to a motion to set aside the preliminary injunction for procedural defects, the district court permitted ABC Corporation to file a renewed motion for a preliminary injunction, which was granted in October 2021.

In the first appeal, the Federal Circuit determined that it had jurisdiction to hear the appeal because the underlying case arose under the patent laws and the Court has jurisdiction to address injunctions and orders “modifying” an injunction under 28 U.S.C. § 1292. The Court then vacated the district court’s November 2020 injunction and the May 2021 motion to amend for failure to provide the notice required under Rule 65(a).

In the second appeal, the Federal Circuit held that the district court erred in determining that ABC Corporation had shown a likelihood of success on the issue of infringement. Specifically, the Federal Circuit determined that the district court erred in four respects: (1) it applied the wrong legal standard in finding a likelihood of success merely because the products were not “sufficiently dissimilar” or “plainly dissimilar” from the patented design; (2) the district court failed to conduct the required three-way analysis comparing the accused product, the patented design, and the prior art; (3) the district court did not apply the ordinary observer test on a product-by-product basis; and (4) the language of the injunction is overbroad because it was not limited to the products actually found likely to infringe. The Court thus reversed and remanded.