Presidio Components, Inc. v. American Technical Ceramics Corp.

Filing 533

ORDER denying Defendant's 522 Motion for Partial Stay of Permanent Injunction Pending Appeal. Signed by Judge Marilyn L. Huff on 10/9/2018. (jah)

1
2
3
4
5
6
7
8
UNITED STATES DISTRICT COURT

9

SOUTHERN DISTRICT OF CALIFORNIA

10
11
12

PRESIDIO COMPONENTS, INC.,
Plaintiff,

13
14
15

Case No.: 14-cv-02061-H-BGS
ORDER DENYING DEFENDANT’S
MOTION FOR STAY PENDING
APPEAL

v.
AMERICAN TECHNICAL CERAMICS
CORP.,

16

[Doc. No. 522.]

Defendant.

17
18

On September 12, 2018, Defendant American Technical Ceramics Corp. filed a

19

motion for an order partially staying the Court’s permanent injunction pending its appeal

20

to the Federal Circuit. (Doc. No. 522.) On September 13, 2018, the Court took the

21

matter under submission. (Doc. No. 527.) On September 26, 2018, Plaintiff Presidio

22

Components, Inc. filed a response in opposition to ATC’s motion to stay. (Doc. No.

23

532.) For the reasons below, the Court denies ATC’s motion for a stay of the permanent

24

injunction pending appeal.

25

Background

26

On September 2, 2014, Plaintiff Presidio filed a complaint for patent infringement

27

against Defendant ATC, alleging infringement of U.S. Patent No. 6,816,356 (“the ’356

28

patent”). (Doc. No. 1, Compl.) The ’356 patent is entitled “Integrated Broadband
1
14-cv-02061-H-BGS

1

Ceramic Capacitor Array.” U.S. Patent No. 6,816,356 B2, at 1:1-2 (filed Apr. 14, 2003).

2

The patent issued on November 9, 2004 and claimed priority to an application filed on

3

May 17, 2002. See id. (See Doc. No. 276-3 ¶ 4; Doc. No. 356-1 at 5.)

4

On December 8, 2015, the United States Patent and Trademark Office issued a

5

reexamination certificate for the ’356 patent, amending certain claims of the patent.1

6

(Doc. No. 170-2, FAC Ex. 2.) On December 22, 2015, Presidio filed a first amended

7

complaint, alleging infringement of the ’356 patent as amended by the reexamination

8

certificate. (Doc. No. 170, FAC.) Specifically, Presidio alleged that ATC’s 550 line of

9

capacitors infringes claims 1, 3, 5, 16, 18, and 19 of the ’356 patent. (Id. ¶ 26.) On

10

December 22, 2015, ATC filed a second amended answer and counterclaims to the first

11

amended complaint, adding an affirmative defense of absolute and equitable intervening

12

rights and an affirmative defense and counterclaim of unenforceability due to inequitable

13

conduct. (Doc. No. 171.)

14

On January 12, 2016, the Court denied Presidio’s motions for: (1) summary

15

judgment of definiteness; (2) summary judgment of infringement; (3) summary judgment

16

of ATC’s equitable affirmative defenses; and (4) summary judgment of no acceptable

17

non-infringing alternatives. (Doc. No. 210.) In the order, the Court also denied ATC’s

18

motions for: (1) partial summary judgment of non-infringement; (2) summary judgment

19

of indefiniteness; and (3) summary judgment of no willful infringement. (Id.) On

20

February 10, 2016, the Court granted ATC’s motion for summary judgment of its

21

affirmative defense of absolute intervening rights and held that Presidio is entitled to

22

infringement damages only for the time period following the issuance of the

23

reexamination certificate on December 8, 2015. (Doc. No. 234 at 28.) In that order, the

24

Court also dismissed with prejudice ATC’s affirmative defense and counterclaim that the

25

’356 patent is unenforceable due to inequitable conduct. (Id. at 33.)

26
27
28

1

The PTO previously issued a reexamination certificate for the ’356 patent on September 13,
2011. (Doc. No. 170-1, FAC Ex. 1.) This reexamination certificate did not alter any of the claims at
issue in the present action. (Id.)
2
14-cv-02061-H-BGS

1

The Court held a jury trial on Presidio’s claim beginning on April 5, 2016. (Doc.

2

No. 297.) On April 18, 2016, the jury returned a verdict finding direct infringement and

3

induced infringement of claims 1, 3, 5, 16, 18, and 19 of the ’356 patent by ATC as to all

4

of the accused products in the action: the 550L, the 550S, the 550U, and the 550Z

5

capacitors. (Doc. No. 328 at 2-3.) In addition, the jury found that Presidio had proven by

6

clear and convincing evidence that ATC’s infringement of the asserted claims was

7

willful. (Id. at 4.) The jury awarded Presidio $2,166,654 in lost profit damages. (Id.)

8

On June 17, 2016, the Court issued a memorandum decision finding in favor of

9

Presidio and against ATC on all issues submitted to the Court, including indefiniteness,

10

equitable intervening rights, equitable estoppel, and laches. (Doc. No. 368.) On June 17,

11

2016, the Court entered judgment in favor of Presidio on all causes of action and awarded

12

Presidio $2,166,654 in damages. (Doc. No. 369.)

13

Following the Court’s entry of judgment, the parties filed various post-trial

14

motions. On August 17, 2016, the Court issued an order ruling on the parties’ post-trial

15

motions. (Doc. No. 440.) In the order, the Court denied ATC’s Rule 50(b) motions for

16

judgment as a matter of law and Rule 59(e) motions for a new trial. (Id. at 7-27.) The

17

Court also granted Presidio’s motion for a permanent injunction; denied Presidio’s

18

motion for enhanced damages and attorney’s fees; and granted Presidio’s motion for

19

supplemental damages and interest. (Id. at 27-48.) In granting Presidio’s motion for a

20

permanent injunction, the Court denied ATC’s request to stay the injunction pending

21

appeal, but included a 90-day sunset provision in the injunction. (Id. at 38-39.) On

22

August 27, 2016, the Court entered the permanent injunction. (Doc. No. 441.)

23

The parties cross-appealed to the Federal Circuit. (Doc. Nos. 443, 453.) On

24

November 21, 2017, the Federal Circuit issued an opinion in the above case: (1)

25

affirming the Court’s finding of definiteness, grant of absolute intervening rights, and

26

denial of enhanced damages; (2) reversing the award of lost profits and instructing that on

27

remand, the damages award should be limited to a reasonable royalty, and a new trial

28

should be conducted as necessary to determine the reasonable royalty rate; and (3)
3
14-cv-02061-H-BGS

1

vacating the permanent injunction and remanding with instructions to consider the

2

relevant evidence and determine whether Plaintiff Presidio has established irreparable

3

injury. Id. at 1384.

4

Following the Federal Circuit’s decision on appeal in this case, on February 14,

5

2018, the Court held an appeal mandate hearing and a telephonic case management

6

conference. (Doc. No. 464.) On April 23, 2018, the Court granted the parties’ joint

7

motion for the entry of judgment on the reasonable royalty rate for the accused products,

8

and the Court vacated the scheduled damages retrial. (Doc. No. 485.) On August 13,

9

2018, the Court granted Presidio’s renewed motion for a permanent injunction, and the

10

Court entered a permanent injunction enjoining the manufacture, offer of sale, and sale of

11

the accused products. (Doc. Nos. 517, 518.) On August 15, 2018, the Court entered an

12

amended judgment. (Doc. No. 519.)

13

On September 6, 2018, Presidio filed a notice of appeal, and on September 12,

14

2018, ATC filed a notice of appeal. (Doc. Nos. 520, 521.) By the present motion, ATC

15

moves for an order partially staying the Court’s August 13, 2018 permanent injunction

16

pending ATC’s appeal to the Federal Circuit.

17

requests that it be permitted to continue selling its 550 capacitors to existing customers

18

that purchased 550 capacitors before August 13, 2018 while the Federal Circuit addresses

19

the merits of the ATC’s appeal. (Id. at 1.)

20
21
22

(Doc. No. 529.)

Specifically, ATC

Discussion
I.

Legal Standards
In deciding whether to grant a stay pending appeal, a court should consider the

23

following four factors:

24

he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured

25

absent a stay; (3) whether issuance of the stay will substantially injure the other parties

26

interested in the proceeding; and (4) where the public interest lies.’” Standard Havens

27

Prod., Inc. v. Gencor Indus., Inc., 897 F.2d 511, 512 (Fed. Cir. 1990) (quoting Hilton v.

28

Braunskill, 481 U.S. 770, 776 (1987)); see also E.I. du Pont de Nemours & Co. v. Phillips

“‘(1) whether the stay applicant has made a strong showing that

4
14-cv-02061-H-BGS

1

Petroleum Co., 835 F.2d 277, 278 (Fed. Cir. 1987) (“In considering whether to grant a

2

stay pending appeal, this court assesses movant’s chances for success on appeal and

3

weighs the equities as they affect the parties and the public.”). “Each factor, however,

4

need not be given equal weight.” Standard Havens, 897 F.2d at 512.

5

In addition, “likelihood of success in the appeal is not a rigid concept.” Id. “When

6

harm to applicant is great enough, a court will not require ‘a strong showing’ that

7

applicant is ‘likely to succeed on the merits.’” Id. at 513 (quoting Hilton, 481 U.S. at

8

776). Therefore, to obtain a stay pending appeal, a movant must establish a strong

9

likelihood of success on appeal, or, failing that, “‘demonstrate a substantial case on the

10

merits,’ provided the other factors militate in movant’s favor.” Id. (emphasis removed)

11

(quoting Hilton, 481 U.S. at 778).

12

II.

Analysis

13

A.

14

The sole issue in ATC’s current appeal is whether the Court properly entered a

15

permanent injunction in this action.2 (Doc. No. 531.) ATC argues that it will succeed on

16

appeal because the Court erred in its order granting the permanent injunction by finding

17

that there was irreparable harm and by finding that money damages are inadequate.

18

(Doc. No. 529 at 14-20.) The Court disagrees.

Likelihood of Success on the Merits

19

The Court’s finding of irreparable harm was well supported by the evidence in the

20

record showing that Presidio experienced increased sales for its BB capacitors during the

21

time the injunction was in place that was due at least in part to the accused products being

22

removed from the market, and that Presidio has suffered decreased sales after the

23

injunction was lifted. (Doc. No. 507-6, Ex. M; see Doc. No. 507-2, Ex. I; Doc. No. 507-3

24

Ex. J.) That evidence is the precise type of evidence that the Federal Circuit instructed

25

the Court to examine on remand when evaluating irreparable harm. See Presidio II, 875

26
27
28

2

The Court notes that Presidio has also filed an appeal in this action related to damages. (Doc.
No. 530.)
5
14-cv-02061-H-BGS

1

F.3d at 1384. The Court’s irreparable harm finding was further supported by the fact that

2

ATC and Presidio are direct competitors, and ATC has never licensed the ’356 patent to

3

anyone. (Doc. No. 517 at 8-9.)

4

The evidence in the record showing that Presidio experienced increased sales for

5

its BB capacitors during the time the injunction was in place that was due at least in part

6

to the accused products being removed from the market also supports the Court’s finding

7

that money damages are inadequate. See Apple Inc. v. Samsung Elecs. Co., 809 F.3d

8

633, 645 (Fed. Cir. 2015); ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694

9

F.3d 1312, 1340 (Fed. Cir. 2012).

The Court’s finding that money damages are

10

inadequate was also supported by the fact that the accused products operate in a design-

11

win market, and Presidio’s decision not to license the ’356 patent to anyone. As a result,

12

ATC has failed to make a strong showing that it is likely to succeed on the merits of its

13

appeal, and, thus, this factor does not weigh in favor of a stay.

14

B.

15

ATC argues that absent a stay of the permanent injunction, it will suffer

16

reputational damage in the market, and it will suffer harm from its inability to sell its

17

overstock. (Doc. No. 529 at 7-9.) This is insufficient to establish irreparable injury

18

sufficient to support a stay of the injunction. These two alleged harms are simply harm

19

that results from ATC avoiding future infringement of the ’356 patent. “[H]arm from

20

avoiding infringement has long been recognized as an insufficient basis for staying an

21

injunction.”3 Sealant Sys. Int’l, Inc. v. TEK Glob., S.R.L., No. 5:11-CV-00774-PSG,

22

2014 WL 5141819, at *4 (N.D. Cal. Oct. 13, 2014); see also Stryker Corp. v. Zimmer

23

Inc., No. 1:10-CV-1223, 2013 WL 6231533, at *26 (W.D. Mich. Aug. 7, 2013), vacated

Whether ATC Has Establish Irreparable Injury

24
25
26
27
28

3

The Court notes that in Standard Havens Prod., Inc. v. Gencor Indus., Inc., the Federal Circuit
determined that the equities weighed in favor of a stay pending appeal where there was evidence in the
record showing that “without a stay [the defendant] [wa]s likely to suffer irreparable harm in the form of
employee layoffs, immediate insolvency, and, possibly, extinction.” 897 F.2d at 515. Here, ATC has
failed to present any evidence showing that the denial of a stay could result in employee layoffs,
immediate insolvency, or possible extinction of the company.
6
14-cv-02061-H-BGS

1

on other ground by Stryker Corp. v. Zimmer, Inc., No. 2013-1668, 2016 WL 4729504, at

2

*1 (Fed. Cir. Sept. 12, 2016) (“[A]n immediate injunction will only injure [defendant] to

3

the extent [defendant] will no longer be allowed to infringe [plaintiff]’s patents,

4

something it had no right to do in the first place.”).

5

Moreover, ATC’s claim of reputational harm is entirely speculative. ATC asserts

6

that the removal of its 545 capacitor from the market and the unpredictable availability of

7

its 550 capacitor have irreparably injured its reputation in the broadband capacitor

8

market. (Doc. No. 529 at 8.) But ATC fails to identify any concrete reputational harm

9

that it purportedly suffered as a result of the prior two injunctions, and ATC fails to

10

provide the Court with any evidence in support of this alleged harm. The evidence in the

11

record shows that once the Federal Circuit vacated the prior injunction in this action,

12

ATC resumed selling the 550 capacitor to its customers. (Doc. No. 529 at 2.)

13

ATC also argues that it will suffer harm from the Court’s permanent injunction

14

because the notice provision in the injunction violates its First Amendment rights. (Doc.

15

No. 529 at 9-12.) The Court rejects this argument. The notice provision in paragraph 4

16

of the Court’s permanent injunction was adopted word-for-word from Presidio’s

17

proposed permanent injunction that it filed along with its renewed motion for a

18

permanent injunction. (Compare Doc. No. 518 with Doc. No. 498-33, Ex. AG.) ATC

19

never challenged the proposed injunction’s notice provision on First Amendment grounds

20

or any other grounds in its opposition to Presidio’s renewed motion or at the hearing on

21

the renewed motion. In addition, ATC did not file a motion for reconsideration of the

22

Court’s permanent injunction challenging the notice provision, the time for filing a

23

motion for reconsideration under the Court’s local rules had passed, see Civ. L.R.

24

7.1(i)(2), and ATC has now appealed the Court’s permanent injunction to the Federal

25

Circuit. Further, the Court notes that the original permanent injunction that it entered in

26

this action also contained an identical notice provision. (Doc. No. 441 at 2) ATC never

27

challenged the notice provision in the original injunction before this Court or the Federal

28

Circuit.

ATC cannot assert that it will be harmed by a notice provision it never
7
14-cv-02061-H-BGS

1

challenged, and ATC cannot now attempt to challenge it through a motion to stay. In

2

sum, this factor does not weigh in favor of a stay.

3

C.

4

ATC argues Presidio will not suffer any harm from a partial stay of the injunction.

5

(Doc. No. 529 at 22-25.) The Court does not find this assertion to be credible in light of

6

the evidence in the record.

Injury to Presidio

7

In evaluating Presidio’s renewed motion for a permanent injunction, the Court

8

found that the evidence in the record demonstrates that Presidio experienced increased

9

sales in the absence of the infringing products during the time the prior injunction was in

10

place, and that it suffered decreased sales after the injunction was lifted. (Doc. No. 517 at

11

13, 15 (citing Doc. No. 507-6, Ex. M; Doc. No. 507-11, Ex. S).) This evidence strongly

12

demonstrates that Presidio will suffer further economic harm in the form of decreased

13

sales if the Court stays the permanent injunction. As a result, this factor weighs heavily

14

against granting a stay of the injunction.

15

D.

16

The Court has previously concluded that the public interest factor favors entry of a

17

permanent injunction against ATC. (Doc. No. 517 at 18-19.) “[T]he public is best

18

served by enforcing patents that are likely valid and infringed.” Abbott Labs. v. Andrx

19

Pharm., Inc., 452 F.3d 1331, 1348 (Fed. Cir. 2006). “As a result, the public interest

20

nearly always weighs in favor of protecting property rights in the absence of

21

countervailing factors.” Apple, 809 F.3d at 647. 4

Public Interest

22

In support of its contention that the public interest favors a stay, ATC relies on

23

essentially the same evidence it previously presented to the Court with respect to this

24
25
26
27
28

4

ATC argues that the public interest factor for evaluating a motion for a stay pending appeal is
different from the public interest factor for evaluation a motion for an injunction, but the case law ATC
cites in its motion does not actually support ATC’s position. (Doc. No. 529 at 21 n.10.) Neither of the
cited cases holds that the two standards are different with respect to the public interest factor or holds
that to support a stay, the infringer’s products need not provide “unusual societal benefits.” See
Standard Havens, 897 F.2d at 512; Apple, 809 F.3d at 647.
8
14-cv-02061-H-BGS

1

factor in opposing Presidio’s renewed motion for a permanent injunction. (Doc. No. 529

2

at 20-22.) The Court has previously noted that:

3

the evidence ATC presents in support of this contention only shows that
ATC has certain government and infrastructure clients that have purchased
550 capacitors and would prefer to be able to continue to purchase them in
the future. (Doc. No. 505-10, Rabe Decl. ¶¶ 10-14; Doc. No. 505-13,
Tessaro Decl. ¶¶ 5-6.) ATC fails to identify any specific government,
military, space or infrastructure projects that would actually suffer if the 550
capacitors were removed from the market. In addition, ATC has not
established that these unnamed projects could not continue with the use of
other products.

4
5
6
7
8
9
10

(Doc. No. 517 at 18-19.)
Further, the Court notes that ATC’s inability to specifically identify any concrete

11
12
13
14
15
16
17
18
19
20

harm to the public that would occur from the injunction significant in light of the fact that
ATC previously discontinued its 545L capacitor after that capacitor was found to infringe
the ’356 patent in the prior litigation, and ATC has previously pulled the 550 capacitor
off the market during the time when the prior injunction was in place. Yet ATC cannot
identify any concrete harm that has resulted from either of those events. Accordingly,
this factor does not weigh in favor of a stay.
///
///
///

21
22
23
24
25
26
27
28
9
14-cv-02061-H-BGS

1

Conclusion

2

In sum, none of the relevant factors weigh in favor of ATC’s motion for a stay of

3

the injunction pending appeal. Accordingly, the Court, after considering the relevant

4

factors and exercising its sound discretion, denies ATC’s motion for a stay of the

5

permanent injunction pending ATC’s appeal.5

6
7

IT IS SO ORDERED.
DATED: October 9, 2018

8

MARILYN L. HUFF, District Judge
UNITED STATES DISTRICT COURT

9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
5

27
28

In the alternative to a stay pending ATC’s full appeal, ATC also requests a stay pending ATC’s
planned emergency motion for a stay pursuant to Fed. R. App. P. 8(a)(2) that it will file with the Federal
Circuit. (Doc. No. 529 at 1.) The Court, exercising its sound discretion, denies ATC’s alternative
request. As explained above, the relevant factors do not weigh in favor of a stay.
10
14-cv-02061-H-BGS