Gogo Continues In-Flight Services as Federal Circuit Rejects SmartSky’s Preliminary Injunction Appeal

by Dennis Crouch

In SmartSky Networks, LLC v. Gogo Business Aviation, LLC, No. 2023-1058 (Fed. Cir. Jan. 31, 2024), the Federal Circuit has affirmed a lower court denial of a preliminary injunction sought by the patentee SmartSky against Gogo.  SmartSky sued Gogo in 2022 for patent infringement, alleging that Gogo’s 5G wireless network infringed several of SmartSky’s patents related to in-flight internet wireless connectivity.  See U.S. Patent Nos. 9,312,947, 11,223,417, 10,257,717, and 9,730,077.  Along with its complaint, SmartSky moved to preliminarily enjoin Gogo from providing its in-flight network.  SmartSky argued it had shown a likelihood of success on the merits and that it would suffer irreparable harm without an injunction, but the D.Del. district court Judge Gregory Williams disagreed.  A grant or denial of preliminary injunctive relief can be immediately appealed, but the patentee’s appeal has also failed.

The preliminary injunction motion was associated with a new 5G network that Gogo had announced in 2019.  That network is, according to Gogo, “still in a pre-launch phase.”  Although customers are not yet actively using the service, the network itself is actually complete and the final step is including the chipsets within the planes.  This aspect of the case was the most critical for the Federal Circuit who concluded that the current status of Gogo’s operation was not definite enough to create irreparable harm.

The Supreme Court in Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008) explained its four factor test for preliminary injunctive relief that requires a movant to show:

1. Likelihood of success on the merits;
2. Irreparable harm to the movant in the absence of preliminary relief;
3. The balance of equities tips in the movant’s favor; and
4. The injunction is in the public interest.

The district court here found that the patentee had failed to prove irreparable harm and likelihood of success on the merits.  The appeal focused on these two factors, with the Federal Circuit deciding the case solely on the lack of proven irreparable harm.

Regarding irreparable harm, SmartSky argued several theories, including lost sales and market share to Gogo’s larger existing market presence, price erosion from Gogo’s ability to undercut SmartSky’s prices, and harm to SmartSky’s business reputation and goodwill. During oral argument, SmartSky’s counsel, Ryan Corbett, emphasized competitive dynamics in the market for in-flight connectivity systems and the threat Gogo’s 5G network posed to SmartSky if not enjoined.

The Federal Circuit affirmed solely based on SmartSky’s failure to demonstrate irreparable harm, without reaching the issue of likelihood of success on the merits. The court explained that speculative or theoretical harms are insufficient; rather, irreparable harm must be likely and imminent. “The mere possibility or speculation of harm is insufficient.” quoting Koninklijke Philips N.V. v. Thales DIS AIS USA LLC, 39 F.4th 1377 (Fed. Cir. 2022).

Regarding the potential lost market share, the court found SmartSky’s arguments about Gogo’s unreleased 5G network “unpersuasive,” noting that SmartSky conceded the 5G network was not yet operational. The court also rejected SmartSky’s price erosion theory as speculative and unsupported by evidence that SmartSky actually lowered its prices. Finally, the court distinguished cases where evidence of irreparable harm was more substantial. See, for example, Douglas Dynamics, LLC v. Buyers Prods. Co., 717 F.3d 1336 (Fed. Cir. 2013) and Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142 (Fed. Cir. 2011)).

Denial of a preliminary injunction is given substantial deference on appeal based upon the abuse-of-discretion standard, although any potential legal errors made by the lower court are effectively reviewed de novo.  Thus, a preliminary injunction denial will not be disturbed absent either “clearly erroneous fact finding” or “an error of law.”  The Federal Circuit found neither in this case and thus affirmed.

The non-precedential opinion was authored by Judge Cunningham and joined by Judges Chen and Hughes.  Ryan Corbett (Burr & Forman) argued the case for appellant-patentee SmartSky with Nathan Love (Sidley) for Gogo.

Back at the district court, the case has been assigned to the newest D.Del. Judge, Jennifer L. Hall, who is a former patent litigator with a PhD in biochemistry and molecular biology.  Judge Hall has been a magistrate judge in the district for the past several years. She assumed her new role on January 4, 2024.  The parties are in the midst of discovery with a Markman hearing likely to be scheduled soon.

Most recently, the parties are fighting over whether Gogo should be compelled to include its CEO, Oakleigh Thorne, as an ESI (electronically stored information) custodian. SmartSky argues that Thorne has unique, relevant information not available from Gogo’s other custodians (See Fed. R. Civ. P. 26(b)(2)(C)(i)). Gogo counters that Mr. Thorne’s information would be cumulative of the 50,000+ documents already produced from 10 other custodians, and that “apex doctrine” limits discovery from high-level executives like Thorne absent a showing they have non-cumulative personal knowledge of relevant facts. See British Telecomms. PLC v. IAC/Interactivecorp, No. 1:18-cv-00366-WCB, 2020 WL 1043974, at *8 (D. Del. Mar. 4, 2020).  The patentee though provided some evidence (including interrogatory responses from the defendant) that show Thorne’s intimate knowledge of the issues being litigated.  Including the CEO as an ESI custodian under the local procedure would expand the discovery obligations for the CEO by requiring more complete preservation and retention, searching emails, and then reviewing those for privilege.