Lead Creation Inc. v. The Partnerships and Unincorporated Associations…

Background

Lead Creation Inc. alleged that the defendants infringed its flashlight patent. The court granted Lead Creation’s temporary restraining order on January 26, 2023, extended it on February 9, and granted a preliminary injunction on February 23. On March 2, Shenzhen Sen Zhi Run Dian Zi Shang Wu Co., Ltd. and Haikoushi Lvzuan Trading Co., Ltd. moved to vacate both orders and to dismiss the complaint.

The court gave Lead Creation until March 6 to oppose the motion, warning that the temporary restraining order and preliminary injunction would be vacated if no opposition was filed. Lead Creation filed its opposition shortly after midnight on March 7. Although the filing was technically late, the court considered it.

Reason for Vacating the Injunctions

A party seeking to vacate an injunction must present new evidence showing a change in circumstances indicating that the injunction is no longer justified or has become oppressive. The court found that the defendants met that standard.

First, decisions by foreign courts and patent offices, together with the reasons underlying those decisions, raised a substantial question about the validity of the patent. Those decisions were not binding on the court, but the court concluded that the validity concerns were sufficient to undermine the preliminary injunction.

Second, the court found some basis to believe that Lead Creation may have violated its duty to deal candidly and in good faith with the United States Patent and Trademark Office. The patent had been reinstated after expiration for nonpayment of maintenance fees based on a representation that the delay was unintentional. The patent office had questioned whether the person signing that statement had relevant firsthand knowledge and had ordered an inquiry if the statement was not based on a reasonable inquiry. The court noted that Lead Creation’s opposition did not address whether the nonpayment was intentional or whether an inquiry had occurred.

Third, the court noted that there was no evidence Lead Creation manufactured or sold the flashlights at issue. That absence undermined a finding of irreparable harm because any injury could be remedied with money damages.

Order

Judge Furman granted the defendants’ motion to vacate. The temporary restraining order and preliminary injunction were immediately vacated not only as to the two moving defendants, but as to all defendants.

The opinion did not rule on the motion to dismiss. It also did not decide the defendants’ motion to recover against the bond Lead Creation had posted in connection with the temporary restraining order. The court ordered the defendants to file a motion to seal and an unredacted declaration and exhibits under seal, and set deadlines for the parties’ further filings on the bond and dismissal motions. The clerk was directed to terminate the docket entry for the motion to vacate, and Lead Creation’s counsel was directed to serve the opinion on three defendants who had not appeared and file proof of service.