Likelihood of Success and Difficulty to Measure Damages or Collect Them Supports Preliminary Injunction

Canon, Inc. v. GCC International Ltd., [2006-1615](November 16, 2007)[GARBIS, Michel, Dyk] The Federal Circuit affirmed the grant of a preliminary injunction against defendant's sale of accused printer toner cartridges.
SIGNIFICANCE: Repair versus reconstruction is determined by the relative value of the replacement parts and the parts not replaced.
BRIEF: The Federal Circuit does not encourage interlocutory appeals from claim construction decisions. However, sometimes early construction of terms is necessary to resolve a motion for a preliminary injunction. At issues was whether the claim was limited to the replacement cartridges themselves or to a combination including the replacement cartridges. The Federal Circuit found that on the present record there was a reasonably debatable question of whether the claim should be construed to cover the cartridge alone or the cartridge as part of a combination. However, the Federal Circuit said that even if the claim were construed to cover the cartridge as part of a combination, Canon would still have a substantial likelihood of success.
If Claim 58 were construed as covering a combination, it is unlikely that the covered combination would include the toner cartridge and the entirety of the printer or fax machine since most of the components of such machines are not claimed. In respect to such a combination, it is apparent that the replacement of the toner cartridge part of the combination would not constitute a permissible repair because the extent of the refurbishment would be disproportionate to the overall value of the parts that were not replaced. Thus the Federal Circuit concluded that Canon had established a substantial likelihood—albeit not a certainty—of success. Regarding the balance of harm, the Federal Circuit said that due to the difficulty (if not impossibility) of determining the damages resulting from price erosion and loss of market share, an award of money damages would not be sufficient, and to the extent that money damages against Defendants were awarded, there appears to be a reasonable basis for the district court’s finding that there would be little probability that Canon could effect the collection of a money judgment. As to the question of public interest, the Federal Circuit noted the public benefits from lower prices resulting from free market competition, but the public also has an interest in the enforcement of patents, so public interest favors neither side.