Federal Circuit Stays Relief Pending Appeal

By Dennis Crouch

Sciele Pharma v. Lupin (Fed. Cir. 2012)

In a December 2011 order, the Delaware district court awarded preliminary injunctive relief to Sciele and Shionogi and forcing Lupin to stop selling generic versions of the patentee’s diabetes drug Fortamet (metformin). After an emergency motion, the district court refused to stay relief pending appeal. Based upon a separate emergency motion, the Court of Appeals for the Federal Circuit has now vacated the preliminary injunction and remanded the case for a new hearing.

Pre-hearing motions to the Federal Circuit are normally decided by a designated motions judge. Typically, the Federal Circuit judges rotate through that position on a monthly basis. Simple procedural motions are pushed-down to the clerk to handle. At times, more complex motions are pushed-up to the merits panel who will hear the substantive portion of the case. Motions for emergency stay of injunctive relief are typically in the latter category being pushed to the merits panel because judging the motion typically requires a substantive review of the merits of the appeal. In this case, Judges Lourie, Prost, and Moore decided the motion.

Under the Federal Rules of Civil Procedure, a losing party has a right to delay (stay) payment of monetary damages pending appeal of the decision. That right, however, does not extend to staying an order for injunctive relief. Thus, in those cases the losing party must file emergency motions for a stay pending appeal.

Along the lines of eBay, appellate courts apply a four factor test to determine whether to issue a stay of injunctive relief pending appeal. The party requesting the stay must show (1) a likelihood of success on the merits of the appeal; (2) that the requesting party will suffer irreparable injury absent a stay; (3) that the stay will not unduly harm other parties interested in the proceeding; and (4) that a stay serves the public interest. The Federal Circuit has held that either of the first two factors can be (and often are) dispositive. Namely, the court has held that the party can be awarded a stay based upon either (1) a strong likelihood of success on the merits of the appeal or (2) a substantial case on the merits coupled with harm factors that “militate in its favor.”

Here, the district court had rejected the defendant’s obviousness argument but did not make any proper finding of facts or conclusions of law regarding that argument. On appeal, the Federal Circuit held that the district court should have made “an independent assessment” of the obviousness defense and that failure prevents the Federal Circuit from “engaging in a meaningful review of the issue.” As such the court vacated and remanded “for a proper analysis.”

In the separate decision of Midtronics v. Aurora Performance (Fed. Cir. 2012), the Federal Circuit has also awarded an emergency stay of relief pending appeal. In the Midtronics case, Judge Shadur of the Northern District of Illinois ordered the adjudged infringer to issue a general recall of its battery testing devices and pay end users to return the infringing product. BPPower appealed and also requested an emergency stay of the order pending resolution of the appeal. Without substantive opinion, the same panel of Judges Lourie, Prost, and Moore issued a stay of relief pending the outcome of the appeal.

22 thoughts on “Federal Circuit Stays Relief Pending Appeal

  1. 22

    We can advise the accused person or their family about the legislative criteria for bail to be granted; whether a surety might be required; about reporting to a police station; the sorts of conditions that might be imposed and generally the requirements the Court will need to be satisfied of before bail can be granted. Affray

  2. 16

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  3. 11

    District of Illinois ordered the adjudged infringer to issue a general recall of its battery testing devices and pay end users to return the infringing product.-the given order is satisfactory to me as a patent law.Thanks nice blog

  4. 10

    Two steps:
    1) assess the movant’s chance of success on the merits.
    2) weigh the equities.

    If all the DC did was what you think is enough (but clearly did not do the actual steps required), then you need a Civ Pro lesson as well.

    Clearly, a presumption (no matter how strong), is not enough to complete the proper two steps.

  5. 9

    Civ. Pro., if that is all the DC said, I still think the DC said enough. There is a presumption that the USPTO got it right if the reference “was before the Examiner.” What is the Court to do on preliminary motion.

    Well now we see that a patent is not presumed valid at all.

  6. 8

    Civ Pro Lesson:

    In deciding whether to grant a stay, pending appeal, this court “assesses the movant’s chances of success on the merits and weighs the equities as they affect the parties and the public.” E. I. du Pont de Nemours & Co. v. Phillips Petroleum Co., 835 F.2d 277, 278 (Fed. Cir. 1987). See also Standard Havens Prods. v. Gencor Indus., 897 F.2d 511 (Fed. Cir. 1990).

  7. 7

    From the Decision:

    “Lupin relied upon prior art that was before the Examiner…..and therefore Lupin failed to raise a substantial question that its obviousness argument is likely to succeed at trial.”

    in which I think C+C and highlight the “therefore” and the “likely”.

    If the accused embodiment was clearly within the ambit of the duly issued claim, well then the DC was right, wasn’t it?

  8. 6

    Not yet read the Decision but already I’m wondering what use is equity, Rule 56 the Presumption of Validity, if a DC judge cannot take the prima facie position that the claim being asserted is not invalid. Given the way applications are tested at the USPTO, it is inconceivable (isn’t it) that the asserted claim would recite “”a wheel”.

  9. 4

    but did not make any proper finding of facts or conclusions of law regarding that argument.

    More slipshod “WHATEV” type of lazy jurisprudence. The panel made the correct decision. C’mon judges, you cannot operate your courtrooms like trainwreck blogs and pass insubstantive orders.

  10. 3

    If a patent cannot be enforced, what incentive is there for an infringer to settle?

    You are aware, I presume, that we’re talking about cases where the infringer is likely to prevail on appeal. That is to say, cases where it’s likely that the patent shouldn’t be enforced at all.

    Must be a hold-over from your military career that you think whoever draws first blood should win the fight. The whole point of appeals is to make sure the right party wins.

    If appeals aren’t meaningful, what incentive is there to have a justice system at all?

  11. 2

    I don’t see this as a particularly earth-shattering decision: if you’re going to get (or issue) a Preliminary Injunction, you have to show a likelihood of success on the merits. The judge didn’t even address (per the opinion) one of the most obvious defenses to infringement: obviousness.

    To make the case simpler, consider this example: a case involving claim to just “a wheel.” The defendant a bicycle company, essentially conceding infringement, raises the defense of obviousness. The judge finds that bicycle company likely infringes and issues a preliminary injunction on that basis alone and without considering the defense.

  12. 1

    If a patent cannot be enforced, what incentive is there for an infringer to settle? These decisions are nothing new… they simply encourage infringement and discourage innovation.

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