Substantial Questions About Validity; Not Likelihood of Success, Defeat Preliminary Injunction

Erico International Corporation v. Vutec Corporation, [2007-1168](February 19, 2008) [RADER, Newman, Dyk] The Federal Circuit vacated a preliminary injunction because the defendant raised substantial questions about the validity of plaintiff's U.S. Patent No. 5,740,994 on a fastener for wires and cables.
SIGNIFICANCE: A showing of a substantial question of invalidity to defeat a preliminary injunction requires less proof than a clear and convincing showing of invalidity needed to invalidate the patent.
BRIEF: The Federal Circuit noted that the decision to grant a preliminary injunction is based on four factors: (1) the likelihood of the patentee's success on the merits; (2) irreparable harm if the injunction is not granted; (3) the balance of hardships between the parties; and (4) the public interest. To show a likelihood of success on the merits, plaintiff must show a likelihood that defendant infringes a valid claim of the patent. Conversely to defeat a preliminary injunction, the defendant must show a substantial question of invalidity to avoid a showing of likelihood of success. In the present case, defendant raised three defenses: (1) inequitable conduct in obtaining the patent, (2) on-sale bar under 35 U.S.C. § 102(b), and (3) obviousness under 35 U.S.C. § 103. The Federal Circuit said that validity challenges during preliminary injunction proceedings can be successful, that is, they may raise substantial questions of invalidity, on evidence that would not suffice to support a judgment of invalidity at trial. In other words, a defendant need not prove actual invalidity. On the contrary, a defendant must put forth a substantial question of invalidity to show that the claims at issue are vulnerable. Thus, a showing of a substantial question of invalidity requires less proof than the clear and convincing standard to show actual invalidity.
Judge Newman in dissent stated: "My colleagues have applied an incorrect criterion. The correct criterion is not whether there is a "substantial question"; it is whether the defendants have shown that they are likely to succeed on the merits, on the standards and burdens of proof as would prevail at trial."