Allegations of Infringement Should not have been Enjoined without Evidence of Bad Faith

In Myco Industries, Inc. v. Blephex. LLC, [2019-2374] (April 3, 2020), the Federal Circuit reversed the district court’s preliminary injunction enjoining BlephEx from making allegations of patent infringement and also from threatening litigation against Myco’s potential customers over U.S. Patent No. 9,039,718, entitled “Method and Device for Treating an Ocular Disorder,”

The Federal Circuit said that when a preliminary injunction prevents a patentee from communicating its patent rights, a court applies federal patent law and precedent relating to the giving of notice of patent rights. In such cases, the grant of a preliminary injunction is reviewed in the context of whether, under applicable federal law, the notice of patent rights was properly given. The Federal Circuit further said that federal law requires a showing of bad faith before a patentee can be enjoined from communicating his patent rights. A showing of “bad faith” must be supported by a finding that the claims asserted were objectively baseless, and an asserted claim is objectively baseless if no reasonable litigant could realistically expect success on the merits.

The Federal Circuit concluded that the district court abused its discretion when it granted a preliminary injunction enjoining patentee speech with-out a finding of bad faith. The Federal Circuit said that although a district court’s discretion to enter a preliminary injunction is entitled to substantial deference, the patent laws permit a patentee to inform a potential infringer of the existence of its patent. The Federal Circuit found that the district court neither made a finding of bad faith nor even adverted to the requirement. The Federal Circuit added that to the extent the district court made any factual findings relevant to bad faith, the court expressly declined to find that any of BlephEx’s statements were either false or misleading.

The Federal Circuit rejected Myco’s argument that it would be bad faith to accuse physicians with infringement in view of 35 U.S.C. § 287(c)(1), but the Federal Circuit said the statute did not make physicians “immune from infringement,” it merely prevents the patent owner from seeking a remedy. Further, the District Court found no evidence that any threats were made.

Finally the Federal Circuit vacated the finding that Myco was likely to succeed on the merits, finding several lapses in the district court’s efforts at claim construction.

The Federal Circuit concluded:

Speech is not to be enjoined lightly. Here, there is not even a finding, let alone a finding supported by evidence and a correct view of the law, that the speech restrained was either false or misleading. The district court abused its discretion when it granted a preliminary injunction en-joining BlephEx from making allegations of patent infringement without a finding of bad faith and with no adequate basis to conclude that allegations of patent infringement would be false or misleading.