Hafco Foundry and Machine Company, Incorporated v. GMS Mine Repair and Maintenance, Inc.
MEMORANDUM OPINION setting forth the reasons for the court's 98 Order entered on 3/30/2018 wherein the court GRANTED Hafco's motion for preliminary injunction. Given the court's 99 ruling on GMS's motion for a new trial, Hafco's motion for enhanced damages, attorney fees, prejudgment interest and post-judgment interest was DENIED without prejudice. Signed by Senior Judge David A. Faber on 4/10/2018. (cc: counsel of record) (arb)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
HAFCO FOUNDRY AND MACHINE
CIVIL ACTION NO. 1:15-16143
GMS MINE REPAIR AND
By Order entered on March 30, 2018, the court granted
plaintiff’s motion for a permanent injunction and denied its
motion for enhanced damages, attorney fees, and prejudgment and
The reasons for that decision follow.
Plaintiff Hafco Foundry and Machine Company, Inc. (“Hafco”)
filed the instant action for patent infringement on December 15,
Hafco owns the patent for a Rock Dust Blower, U.S. Design
Patent No. D681,684S.
In 2014, Hafco entered into an agreement
with Pioneer Conveyor, an affiliate of GMS Mine Repair and
Maintenance, Inc. (“GMS”), by which Pioneer Conveyor was to
distribute Hafco rock dust blowers to mining customers. The
distribution agreement between Hafco and Pioneer Conveyor was
terminated in or around early May 2015.
According to Hafco,
following termination of the aforementioned distribution
agreement, GMS began selling infringing rock dust blowers within
the Southern District of West Virginia.
GMS, on the other hand,
contends that its rock dust blower did not infringe the ‘684
Trial of this matter began on May 15, 2017.
After a three-
day trial, the jury returned a verdict finding that GMS had
infringed Hafco’s `684 patent and that the infringement was
The jury awarded Hafco damages in the amount of
On May 18, 2017, the court entered judgment in
plaintiff’s favor in the amount of $123,650.00.
II. Permanent Injunction
The Patent Act gives courts the power to “grant injunctions
in accordance with the principles of equity to prevent the
violation of any right secured by patent, on such terms as the
court deems reasonable.”
35 U.S.C. § 283.
seeking a permanent injunction must satisfy a four-factor test
before a court may grant such relief.
A plaintiff must
(1) that it has suffered an irreparable injury; (2)
that remedies available at law, such as monetary damages, are
inadequate to compensate for that injury;
(3) that, considering
the balance of hardships between the plaintiff and defendant, a
remedy in equity is warranted; and (4) that the public interest
would not be disserved by a permanent injunction.”
v. Geertson Seed Farms, 561 U.S. 139, 156-57 (2010) (quoting eBay
Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006)).
injunction should issue only where the intervention of a court of
equity ‘is essential in order effectually to protect property
rights against injuries otherwise irremediable.’”
Romero–Barcelo, 456 U.S. 305, 312 (1982)(quoting Cavanaugh v.
Looney, 248 U.S. 453, 456 (1919)).
“Of course, the axiomatic remedy for trespass on property
rights is removal of the trespasser.”
Presidio Components, Inc.
v. American Technical Ceramics Corp., 702 F.3d 1351, 1362 (Fed.
Equity sets forth the four-factor test for removal
of a trespasser from property infringement. eBay, 547
U.S. at 391, 126 S. Ct. 1837. This analysis proceeds
with an eye to the “long tradition of equity practice”
granting “injunctive relief upon a finding of
infringement in the vast majority of patent cases.”
Id. at 395, 126 S. Ct. 1837 (Roberts, C.J.,
concurring). This historical practice of protecting
the right to exclude through injunctive relief is not
surprising given the difficulties of protecting this
right solely with monetary relief. Indeed, a
calculating infringer may thus decide to risk a delayed
payment to obtain use of valuable property without
prior negotiation or the owner's permission. While a
patentee is not entitled to an injunction in every
case, “it does not follow that courts should entirely
ignore the fundamental nature of patents as property
rights granting the owner the right to exclude.”
Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142,
1149 (Fed. Cir. 2011).
Id. at 1362-63.
The propriety of an injunction in this case will now be
considered under the rubric of the four-factor test set out
Hafco argues that it will be irreparably harmed if a
permanent injunction is not granted because it will continue to
lose sales to GMS.
The court agrees.
The evidence adduced at trial showed that Hafco and GMS are
direct competitors in the can duster market.
in the same market is certainly one factor suggesting strongly
the potential for irreparable harm without enforcement for the
right to exclude.”
Presidio Components, Inc. v. Am. Tech.
Ceramics Corp., 702 F.3d 1351, 1363 (Fed. Cir. 2012); see also
Trebro Mfg., Inc. v. Firefly Equip., LLC, 748 F.3d 1159, 1171
(Fed. Cir. 2014) (“Trebro and FireFly are direct competitors
selling competing products in this market.
Thus, the record
strongly shows a probability for irreparable harm.”); Douglas
Dynamics, LLC v. Buyers Prods. Co., 717 F.3d 1336, 1345 (Fed.
Cir. 2013) (“Where two companies are in competition against one
another, the patentee suffers the harm – often irreparable – of
being forced to compete against products that incorporate and
infringe its own patented inventions.”); I4I Ltd. P’ship v.
Microsoft Corp., 598 F.3d 831, 861 (Fed. Cir. 2010) (“The
district court concluded that i4i was irreparably injured by
Microsoft’s infringement, based on its factual findings that
Microsoft and i4i were direct competitors . . . and that i4i lost
market share as a result of the infringing Word products.”).
potential for irreparable harm between direct competitors is
especially true where, as here, GMS had access to Hafco’s
Indeed, William Fornaci testified at trial that,
during the year in which the distributorship agreement was in
place, ninety (90) percent of GMS’s sales of the Hafco rock dust
blower were to preexisting Hafco customers.
Furthermore, without an injunction, it is likely that GMS
will continue to sell its infringing rock dust blower and this
fact counsels in favor of a permanent injunction.
erosion, loss of goodwill, damage to reputation, and loss of
business opportunities are all valid grounds for finding
Celsis In Vitro, Inc. v. Cellzdirect, Inc.,
664 F.3d 922, 930 (Fed. Cir. 2012); see also Robert Bosch LLC v.
Pylon Mfg. Corp., 659 F.3d 1142, 1152 (Fed. Cir. 2011) (“[T]he
district court committed a clear error in judgment when it
concluded that Bosch failed to demonstrate irreparable harm.
record here contains undisputed evidence of direct competition in
each of the market segments identified by the parties.
also introduced unrebutted evidence of loss of market share and
access to potential customers. . . .”).
A final factor weighing in support of the court’s finding of
irreparable harm in this case is that “in the absence of an
injunction, other potential infringers will be encouraged to
Hybritech Inc. v. Abbott Labs., 849 F.2d 1446, 1456
(Fed. Cir. 1985).
For all of the foregoing reasons, the court
concludes that the first factor weighs in favor of an injunction.
Inadequate Remedy at Law
Hafco argues that it has an inadequate remedy at law because
it will be forced to bring successive lawsuits to recover damages
based upon future sales of the infringing GMS product if its
request for injunctive relief is not granted.
inadequacy of monetary damages when future infringement is
likely, the United States Court of Appeals for the Federal
Circuit has opined:
With respect to the adequacy of money damages,
Bosch argues that it will continue to suffer
irreparable harm due to lost market share, lost
business opportunities, and price erosion unless Pylon
is permanently enjoined. According to Bosch, money
damages alone cannot fully compensate Bosch for these
harms. We agree. There is no reason to believe that
Pylon will stop infringing, or that the irreparable
harms resulting from its infringement will otherwise
cease, absent an injunction.
Id. at 1155.
As discussed above, it is likely that GMS will
continue to sell its infringing product absent an injunction.
Furthermore, “[h]arm to reputation resulting from confusion
between an inferior accused product and a patentee’s superior
product is a type of harm that is often not fully compensable by
money because the damages caused are speculative and difficult to
Reebok Int’l, Ltd. v. J. Baker, Inc., 32 F.3d 1552,
1558 (Fed. Cir. 1994).
With respect to damage to Hafco’s
reputation, William Fornanci testified that he believed that the
GMS product was inferior to Hafco’s and that people were confused
by the two products.
The similarity between the two products,
coupled with the prior distributorship arrangement between Hafco
and GMS, could lead to confusion between the two products and
harm to Hafco’s reputation.
Harm that cannot be remedied by
See Douglas Dynamics, 717 F.3d at 1345 (finding
“remedies at law inadequate to compensate [patentee] for at least
the reputation loss [patentee] has suffered from [defendant]’s
As one court explained:
The violation of a patent owner’s right to exclude
can present a situation where monetary damages cannot
adequately compensate the patent holder for that
injury. For example, when an infringer saturates the
market for a patented invention with an infringing
product or damages the patent holder’s good will or
brand name recognition by selling infringing products,
that infringer violates the patent holder’s
exclusionary right in a manner that cannot be
compensated through money damages. This is because it
is impossible to determine the portions of the market
the patent owner would have secured but for the
infringer’s actions or how much damage was done to the
patent owner’s brand recognition or good will due to
Commonwealth Sci. and Indus. Research Organisation v. Buffalo
Tech. Inc., 492 F. Supp. 2d 600, 605 (E.D. Tex. 2007).
The court concludes there are inadequate remedies at law to
compensate Hafco for its injuries.
Balance of Hardships
“[T]he `balance of hardships’ assesses the relative effect
of granting or denying an injunction on the parties.”
P’ship, 598 F.3d at 862.
“[T]he balance considered is only
between a plaintiff and a defendant, and thus the effect on
customers . . . is irrelevant under this prong on the injunction
test.” Acumed LLC v. Stryker Corp., 551 F.3d 1323, 1330 (Fed.
Cir. 2008). Factors a court should consider in this analysis are
“the parties’ sizes, products, and revenue sources.”
In opposing Hafco’s motion for injunctive relief, GMS
addresses only the irreparable harm and public interest factors.
See ECF No. 95 at pp. 4-5.
In so doing, GMS does not discuss any
harm that it will suffer should it be permanently enjoined from
selling its rock dust blower.
The evidence at trial was that GMS did not begin selling its
infringing rock dust blower until 2015.
From that date through
the date of trial, GMS sold 55 rock dust blowers and realized
gross revenues in the amount of $123,650.
Operations Manager for GMS and Pioneer Conveyor, testified that
the sales of the GMS rock dust blower was only a small amount of
GMS’s total company sales.
According to Helbig, total sales for
GMS/Pioneer were around 80 million in 2015 and 50 million in
Helbig testified that GMS employed around 100 people as of
the trial date.
Hafco, on the other hand, is a small family-owned company
with only seven employees.
According to William Fornaci, Hafco’s
co-owner, Hafco’s rock dust blower was a quick success and
entering into the distributorship agreement with GMS was an
effort to build on that early success.
GMS will continue to market its infringing rock dust blower
in direct competition with Hafco’s products if not enjoined.
so doing, Hafco will be forced to compete against its own patent,
in itself, a significant hardship.
See Robert Bosch LLC v. Pylon
Mfg. Corp., 659 F.3d 1142, 1156 (Fed. Cir. 2011) (finding that
requiring a patentee to compete against its own patented
invention places a “substantial hardship” on the patentee);
Evonik Degussa GMBH v. Materia, Inc., Civ. No. 09-636 (NLH/JS),
2017 WL 3434156, *3 (D. Del. Aug. 10, 2017) (“Forcing [patentee]
to continue competing with its own patented technology would
impose a weighty hardship under the circumstances of this case,
and would be simply inequitable.”).
Without a permanent
injunction, Hafco will continue to suffer irreparable injury to a
not insignificant portion of its business, and will lose future
opportunities, goodwill, and potential revenue.
In contrast, the
rock dust blower market is but a small part of GMS’s overall
business and the negligible harm inflicted on GMS by the
injunction is outweighed by the potential harm to Hafco in
denying the injunction.
In the context of a permanent
injunction, the overall balance of hardships favors Hafco
especially where, as here, the injunction only affects a small
segment of GMS’s business.
See I4I Ltd. P’ship, 598 F.3d at 863
(finding balance of hardships weighs in favor of granting
permanent injunction where infringing product “relates to only a
small fraction of Microsoft’s sizeable business”); Pfizer, Inc.
v. Teva Pharms. USA, Inc., 429 F.3d 1364, 1382 (Fed. Cir. 2005)
(“Simply put, an alleged infringer’s loss of market share,
without more, does not rise to the loss of exclusivity
experienced by a patent owner due to infringing conduct.”).
“The fourth eBay factor requires the patentee to show that
`the public interest would not be disserved by a permanent
Apple Inc. v. Samsung Elecs. Co., Ltd., 809 F.3d
633, 646 (Fed. Cir. 2015) (quoting eBay, 547 U.S. at 391).
is an “important public interest in protecting patent rights” and
the public’s interest in this regard was explained as follows:
The district court did not abuse its discretion in
finding that the public interest favors an injunction.
Indeed, the public interest strongly favors an
injunction. Samsung is correct–-the public often
benefits from healthy competition. However, the public
generally does not benefit when that competition comes
at the expense of a patentee’s investment-backed
property right. To conclude otherwise would suggest
that this factor weighs against an injunction in every
case when the opposite is generally true. We base this
conclusion not only on the Patent Act’s statutory right
to exclude, which derives from the Constitution, but
also on the importance of the patent system in
encouraging innovation. Injunctions are vital to this
system. As a result, the public interest nearly always
weighs in favor of protecting property rights in the
absence of countervailing factors. . . .
Id. (emphasis in original); see also Broadcom Corp. v. Qualcomm
Inc., 543 F.3d 683, 704 (Fed. Cir. 2008) (“[I]t is generally in
the public interest to uphold patent rights.”).
“[T]he touchstone of the public interest factor is whether
an injunction, both in scope and effect, strikes a workable
balance between protecting the patentee’s rights and protecting
the public from the injunction’s adverse effects.”
P’ship, 598 F.3d at 863.
As a result, this factor weighs against
granting injunctive relief prohibiting infringement only “where
the product at issue is of unusual social benefit.”
Components Inc. v. Am. Tech. Ceramics Corp., No. 08-cv-335-IEGNLS, 2013 WL 4068833, *7 (S.D. Cal. Aug. 12, 2013) (citing
Advanced Cardiovascular Sys., Inc. v. Medtronic Vascular, Inc.,
579 F. Supp. 2d 554, 560 (D. Del. 2008)); see also Cardsoft, Inc.
v. Verifone Holdings, Inc., Case No. 2:08-CV-98-RSP, 2013 WL
5862762, *1 (E.D. Tex. Oct. 30, 2013) (“The public interest
factor appears to be otherwise neutral, as the technology and
products at issue do not implicate health or safety concerns.”).
GMS alleges that the public interest would be disserved by
an injunction herein because the use of rock dust blowers
increases safety in coal mines.
However, as Joshua Helbig
himself testified, there are “thousands” of rock dust blowers on
Therefore, enjoining the manufacture and sale of
GMS’s rock dust blower would not necessarily lead to a shortage
of rock dusters.
Under these circumstances, the public interest
would be served by issuing an injunction to protect Hafco's
See Celsis In Vitro, Inc. v. Cellzdirect, Inc.,
664 F.3d 922, 932 (Fed. Cir. 2012) (“Though LTC argues that it
sells products for drug research and development such that the
public interest would disfavor enjoining LTC, both LTC and Celsis
sell the same products and are in direct competition.
words, the public can obtain the products from Celsis.”); Streck,
Inc. v. Research & Diagnostic Sys., Inc., 8:06CV458, 2010 WL
11530582, *4 (D. Neb. Sept. 30, 2010) (“[T]he court finds the
public interest will not be disserved by an injunction.
medical care is involved, there has been no showing that
restraining R&D from selling integrated controls would implicate
public health and safety concerns.
Streck has shown it has the
ability to supply the market with necessary quantities of the
If there were any shortage, laboratories, hospitals,
and clinics have the reasonable alternative of testing
instruments with nonintegrated controls.
An injunction strikes a
workable balance between protecting Streck’s rights as a patentee
and protecting the public.”).
Accordingly, this factor weighs in
favor of granting injunctive relief.
Having considered Hafco’s request for injunctive relief
under the traditional four-factor test, the court concludes that
Hafco is entitled to the injunction it seeks.
For all the
foregoing reasons, Hafco’s motion for a preliminary injunction
Given the court’s ruling on GMS’s motion for a new
trial,* the motion for enhanced damages, attorney fees,
prejudgment interest, and post-judgment interest was DENIED
The Clerk is directed to send copies of this Memorandum
Opinion to counsel of record.
IT IS SO ORDERED this 10th day of April, 2018.
David A. Faber
Senior United States District Judge
By Memorandum Opinion and Order entered on March 30, 2018,
the court granted GMS’s motion for a new trial nisi remittitur.
(ECF No. 99).
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