Backman et al v. Goggin et al

Filing 56

ORDER Denying 29 Motion for Preliminary Injunction. Signed by Judge James C. Mahan on 8/31/16. (Copies have been distributed pursuant to the NEF - ADR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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IRVING A. BACKMAN et al.,

Case No. 2:16-CV-1108 JCM (PAL)

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Plaintiff(s),

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ORDER

v.

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CHRISTOPHER M. GOGGIN, et al.,

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Defendant(s).

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Presently before the court is defendants C2 Engineering Services, Inc.’s and Christopher

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Goggin’s (collectively, as “defendants”) motion for preliminary injunction. (ECF No. 29).1

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Plaintiffs Irving Backman, Irving Backman & Associates, and G&B Energy, Inc. (collectively, as

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“plaintiffs”) have filed a response (ECF No. 44), to which defendants replied (ECF No. 46).

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I.

Facts

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Plaintiff Backman, individually and through Backman & Associates, claims to have over

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thirty-five years of experience in marketing new products and business entities relating to

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emerging technologies. (ECF No. 1).

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Defendant Goggin claims to have designed, developed, and patented or has patents pending

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upon technology that purportedly offers a low-cost alternative to traditional sources of energy such

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as hydrogen fuel cells or lithium batteries. (Id.). Defendant Goggin, individually and on behalf

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of defendant C2 Engineering Services, Inc., claimed that his technology, “Energy Bank,” was a

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feasible, cost-effective, and superior alternative to other energy generation and storage

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technologies.

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James C. Mahan
U.S. District Judge

Pursuant to Local Rule IC 2-2(b), a separate document must be filed on the docket for each
purpose. Defendants filed the instant motion as a motion for preliminary injunction and the court
will construe it as such.

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In early 2012, the parties discussed a potential joint business venture to develop

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defendant’s Energy Bank technology. (Id.). The parties agreed that working prototypes of Energy

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Bank would be necessary to demonstrate the attributes and advantages of the technology to

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potential investors and customers. On April 20, 2012, plaintiff Backman & Associates and

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defendant entered into an “Agreement of Confidentiality, Non-Competition, and Non-

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Circumvention.” (ECF No. 1, Exh. A). Plaintiffs agreed to introduce Energy Bank technology to

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potential investors and end users, with a goal of assisting in the funding, development, and

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marketing of Energy Bank technology. Defendant agreed not to enter into any contracts or

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business arrangements with those persons or entities introduced by plaintiffs or those considered

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to be co-workers or competitors. (Id.).

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In June 2012, plaintiff Backman orally agreed to provide funds to defendant for the purpose

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of building at least three Energy Bank fuel cells in different sizes and that each unit would be made

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available to plaintiff G&B and its agents for demonstration purposes. (Id.). Plaintiffs and

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defendant Goggin also discussed and agreed that they would form a new fuel cell company with

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joint ownership and profit allocation evenly divided between plaintiff Backman, defendant

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Goggin, and a third party known as the DATT Group. (ECF No. 8). The parties also agreed that

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plaintiff G&B Energy would own all of the intellectual property rights. Based upon these

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representations, plaintiffs claim that plaintiff Backman provided defendant approximately

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$1,042,965.00 for research and the development of Energy Bank. (Id.).

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On or about May 15, 2015, the parties executed a confirmation agreement similar to and

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consistent with their June 2012 oral agreement. (ECF No. 7). On July 13, 2015, defendant Goggin

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signed a patent application assignment and an intellectual property rights assignment, assigning to

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plaintiff G&B Energy all of his intellectual property rights relating to the provisional patent

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application and the patent for the invention “Hybrid Metal Fueled Fuel Cell and Battery.” (Id.).

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Plaintiffs claim that defendants have breached these contracts by refusing to produce a

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working prototype and failing to provide any information about defendant Goggin’s progress in

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developing a working prototype. Plaintiffs assert that defendants have also failed to inform

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plaintiffs of whether defendant Goggin has filed a non-provisional patent application for Energy

James C. Mahan
U.S. District Judge

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Bank or whether the provisional patent application for Energy Bank has expired. Plaintiffs believe

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that defendant Goggin did not file a final patent application for Energy Bank within one year of

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the initial application. If that is the case, plaintiffs assert that the provisional patent has expired,

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violating both the patent application and intellectual property assignments.

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Defendants maintain that plaintiff Backman has sent representatives to inspect Goggin’s

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progress on numerous occasions, during which defendant Goggin claims he gave demonstrations

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of the technology and provided samples of the technology to take back to Backman. Defendants

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claim that Goggin has sent plaintiff Backman regular invoice as set forth in their agreement.

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Defendants allege that plaintiff Backman, however, has failed to make the promised payments,

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causing Goggin to contribute his own funds.

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In the instant motion, defendants request that the court grant a preliminary injunction

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preventing plaintiff “Backman from further attempting to steal trade secrets and damaging

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[d]efendants’ and G&B’s intellectual property. (ECF No. 29). Defendants allege that plaintiff

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Backman hired a research company to reverse engineer “some or all of the technology invented

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by Mr. Goggin as part of the Venture, and owned by G&B.” (ECF No. 29 at 5).

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II.

Legal Standard

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Federal Rule of Civil Procedure 65 provides that the court may issue a preliminary

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injunction on notice to the adverse party. Fed. R. Civ. P. 65(a)(1). A preliminary injunction seeks

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to preserve the status quo and prevent irreparable harm from occurring before a judgment is issued.

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Textile Unlimited Inc. v. BMH & Co., 240 F.3d 781, 786 (9th Cir. 2001).

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The Supreme Court has stated that courts must consider the following elements in

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determining whether to issue a preliminary injunction: (1) likelihood of success on the merits; (2)

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likelihood of irreparable injury if preliminary relief is not granted; (3) balance of hardships; and

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(4) advancement of the public interest. Winter v. N.R.D.C., 555 U.S. 7, 20 (2008). The test is

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conjunctive, meaning the party seeking the injunction must satisfy each element.

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Additionally, post-Winter, the Ninth Circuit has maintained its serious question and sliding

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scale tests. See Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011).

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James C. Mahan
U.S. District Judge

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“Under this approach, the elements of the preliminary injunction test are balanced, so that a

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stronger showing of one element may offset a weaker showing of another.” Id.

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“Serious questions going to the merits and a balance of hardships that tips sharply towards

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the plaintiff can support issuance of a preliminary injunction, so long as the plaintiff also shows

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that there is a likelihood of irreparable injury and that the injunction is in the public interest.” Id.

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at 1135.

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III.

Discussion

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Defendants seeking a preliminary injunction have a burden to satisfy each of the four

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elements above. See Winter, 555 U.S. at 20. In the instant motion, defendants dedicate two pages

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to their legal argument and analysis, under which defendants merely restate each element while

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providing little to no support as to how each element has been satisfied. (ECF No. 29 at 5–6).

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Nevertheless, the court will address each element in turn to determine whether defendants’ claim

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for a preliminary injunction has merit.

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A.

Likelihood of irreparable injury

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Before a preliminary injunction may issue, the seeking party must show that he will suffer

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an irreparable injury and otherwise lacks an adequate remedy at law to prevent such injury.

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“Irreparable harm is traditionally defined as harm for which there is no adequate legal remedy.”

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Arizona Dream Act Coal. v. Brewer, 757 F.3d 1053, 1068 (9th Cir. 2014).

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The mere “possibility” of irreparable harm is not enough to justify a preliminary injunction.

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Winter, 555 U.S. at 22.

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As the Supreme Court made clear in Winter, “[i]ssuing a preliminary injunction based only

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on a possibility of irreparable harm is inconsistent with our characterization of injunctive relief as

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an extraordinary remedy that may only be awarded upon a clear showing that the [seeking party]

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is entitled to such relief.” Id.; see also Alliance for the Wild Rockies, 632 F.3d at 1131 (“Under

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Winter, plaintiffs must establish that irreparable harm is likely, not just possible, in order to obtain

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a preliminary injunction.”) (emphasis omitted). The threat of irreparable harm must also be

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“immediate” to warrant preliminary injunctive relief. Caribbean Marine Servs. Co. v. Baldrige,

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844 F.2d 668, 674 (9th Cir. 1988).

James C. Mahan
U.S. District Judge

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Defendants allege that plaintiff Backman hired a research and development company,

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American Technology Co., “to reengineer the technology of the Venture and deprive [d]efendants

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of their interest in the valuable intellectual property.” (ECF No. 29 at 5). Defendants maintain

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that by doing so, “Backman is putting at risk years of Mr. Goggin’s hard work and $1.27 million

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of [d]efendants’ invested funds” because reengineering is unnecessary and causing needless

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indebtedness to G&B. (ECF No. 29 at 5).

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Defendants provide no support for their allegations of irreparable harm, nor do they discuss

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other available remedies at law. See Stanley v. Univ. of S. Cal., 13 F.3d 1313, 1320 (9th Cir. 1994)

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(citing Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 506–07 (1959); Aronoff v. Katleman, 345

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P.2d 221 (Nev. 1959)). Rather, defendants provide that “[i]f injunctive relief is not immediately

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provided, [d]efendants will continue to suffer immediate, severe, and irreparable harm for which

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compensatory damages are an inadequate remedy.” (ECF No. 29 at 5). Therefore, defendants

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have not established a likelihood of irreparable injury if preliminary relief is not granted as required

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under Winter.

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B.

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Defendants generally assert that they are likely to prevail on the merits in the case because

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they have performed on all aspects of the contracts between defendants and plaintiffs. (ECF No.

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29 at 6). Defendants maintain that defendant Goggin has put forth his own money to keep the

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venture moving forward. (ECF No. 29 at 6).
In response, plaintiffs argue that defendants provide no evidence to support their assertion.

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Likelihood of success on the merits

(ECF No. 44).

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C. Balance of hardships

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Defendants’ motion provides no argument for this prong. (ECF No. 29). In their reply,

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defendants broadly assert that they face great harm if an injunction is not issued while plaintiffs

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are unlikely to be damaged in any way. (ECF No. 46 at 3).

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...

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...

James C. Mahan
U.S. District Judge

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D. Advancement of the public interest

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Defendants assert that public interest weighs in their favor because granting the preliminary

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injunction prevents resources from being wasted and allows parties to work out their issues in court

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without causing one another damage. (ECF No. 29 at 6).
In response, plaintiffs assert that the public’s interest would be best served by

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acknowledging G&B’s right to use, protect, and evaluate its own property. (ECF No. 44 at 7).

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Taken as a whole, defendants’ allegations are insufficient to meet the requisite burden for

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a preliminary injunction. An “injunction is a matter of equitable discretion” and “an extraordinary

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remedy that may only be awarded upon a clear showing that the [seeking party] is entitled to such

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relief.” Winter, 555 U.S. at 22, 32. Defendants have not adequately established the four elements

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required for a preliminary injunction—in particular, defendants have not adequately met the

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irreparable injury prong necessary for the issuance of a preliminary injunction. Based on the

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foregoing, the court will deny the instant motion.

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IV.

Conclusion

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, and DECREED that defendants’ motion for

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preliminary injunction (ECF No. 29) be, and the same hereby is, DENIED.
DATED August 31, 2016.
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UNITED STATES DISTRICT JUDGE

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James C. Mahan
U.S. District Judge

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