Solutran, Inc. v. U.S. Bancorp

Background

On December 11, 2018, the court granted Solutran a permanent injunction after finding that the factors identified in eBay Inc. v. MercExchange, LLC favored an injunction. The injunction barred U.S. Bank from continuing to use or sell electronic check-processing services through its allegedly infringing ECS-OSI service, including to its ten current ECS-OSI merchant clients. It was scheduled to take effect on January 10, 2019.

On December 13, 2018, U.S. Bancorp filed an expedited motion for a partial stay of the permanent injunction pending its appeal to the Federal Circuit. U.S. Bancorp asked to continue servicing existing ECS-OSI customers, but not to take additional customers. It argued that it might succeed on appeal, that immediate enforcement could cause irreparable harm to its merchant clients and their check-carrying customers, that a stay would not substantially harm Solutran, and that the public interest favored a stay because of the effect on check transactions during the holiday season.

Solutran opposed the motion. It argued that U.S. Bancorp had not made the required strong showing that it was likely to succeed on appeal, that the court had already balanced the parties’ harms when it issued the injunction, and that delaying enforcement would not materially reduce the transition problems faced by U.S. Bancorp’s clients.

Legal standard

The court explained that Federal Rule of Civil Procedure 62(d) permits a court to suspend an injunction while an appeal is pending. The court considered four factors: whether the applicant made a strong showing of likely success on the merits, whether the applicant would suffer irreparable injury without a stay, whether a stay would substantially injure the other party, and whether the public interest favored a stay.

Court’s analysis

The court concluded that U.S. Bancorp had not made the required strong showing that it would succeed on appeal. Although the Federal Circuit would review the court’s validity and non-infringement summary-judgment decisions independently, the court noted prior Patent Trial and Appeal Board and Federal Circuit rulings upholding the patent’s validity. The court also rejected the argument that independent review of claim construction, by itself, justified a stay.

The court likewise found that the balance of harms did not support staying the injunction. It relied on its earlier conclusion that U.S. Bancorp’s size and access to non-infringing check-processing services weighed against it. The court acknowledged that U.S. Bancorp could lose goodwill with its ten ECS-OSI merchant clients, but found that this did not establish irreparable injury because the clients could use U.S. Bancorp’s other check-processing or financial services.

The court did find that U.S. Bancorp’s clients and their check-carrying customers could face practical difficulties if the injunction took effect on the 30-day schedule during the busy holiday shopping season. The court therefore found that the public-interest factor supported delaying enforcement for about 90 days, but not for the entire potentially lengthy appeal.

Disposition

The court GRANTED IN PART Defendants’ expedited motion for a partial stay of the permanent injunction pending appeal. The portion of the injunction described in the December 11, 2018 order that applied to both defendants’ current and future ECS-OSI customers was STAYED UNTIL MARCH 31, 2019.