By Jason Rantanen
Kimberly-Clark Worldwide, Inc. v. First Quality Baby Products, LLC (precedential order denying rehearing en banc) Download 10-1382 order
Newman, O'Malley and Reyna dissenting
During the last few years a significant intra-circuit split has developed at the Federal Circuit over the appropriate standard to apply to likelihood of success determinations made in the context of requests for a preliminary injunction. Last week the Federal Circuit declined to take the issue en banc in a move that prolongs the uncertainty but perhaps paves the way for Supreme Court review.
As in other areas of the law, the determination of whether to grant a preliminary injunction requires the applicant to establish four factors: a likelihood of success on the merits, irreparable harm in the absence of preliminary relief, that the balance of equities tips in the applicant's favor, and that an injunction is in the public interest. The judges of the Federal Circuit disagree, however, about the standard for demonstrating a likelihood of success on the merits, as well as whether such a showing is a necessary prerequisite for entry of a preliminary injunction.
On this issue, several of the judges (including Judges Dyk and Prost, who participated on the panel in this case) apply the standard that an applicant fails to establish a liklihood of success on the merits if the accused party raises a defense that "does not lack substantial merit," and that such a failure precludes entry of a preliminary injunction. This was the standard applied in the Kimberly-Clark opinion itself, in which the panel vacated a district court's entry of a preliminary injunction with respect to three patents (although it did affirm an injunction based on a fourth patent, concluding that the accused infringer "failed to raise a substantial issue of patentability"). Download 10-1382
Other judges, most vocally Judge Newman, take the view that a defense that does not "lack substantial merit" does not equate with a failure to establish a likelihood of success on the merits, and in any event should not automatically preclude entry of a preliminary injunction. In her dissent in the denial of rehearing en banc in Kimberly-Clark, for example, Judge Newman – joined by Judges O'Malley and Reyna – criticizes the alternate rule as an absurdity. "This standard essentially negates the possibility of grant of a preliminary injunction to preserve the status quo during patent litigation, for in today’s complex patent law it is hard to imagine a case in which a defense that is “not substantially meritless” cannot be devised at the preliminary stage." Dissent at 5-6. In support of her view, Judge Newman points to the disconnect between "lacks substantial merit" and the standard applied by everyone besides the Federal Circuit. "The panel's approach is in conflict with not only the Supreme Court, but with every other circuit." Id. at 6. Nor should a defense that lacks substantial merit automatically preclude entry of a preliminary injunction if the balancing of the four factors necessitates otherwise. See id. at 10-12. Judge O'Malley, writing separately, expressed her strong agreement with the points raised by Judge Newman, as well as concerns about the difficulties faced by district courts in resolving the court's precedent in this area.
Regardless who is correct on the appropriate standard for a preliminary injunction, it is apparent that a sharp split exists within the Federal Circuit that it will be unable to resolve on its own in the near future. The denial of the en banc request suggests two possible outcomes: (1) that success of a preliminary injunction appeal to the Federal Circuit will continue to be heavily panel-dependant for foreseeable future, or (2) that the Supreme Court will intervene in this case or another to resolve the split and restore some predictability to the area of preliminary injunctions.