Before 2017

DoubleDay Loses on Three Out of Four Preliminary Injunction Factors

DoubleDay Acquisitions LLC v. Envirotainer AB et al., Civil Action No. 1:21-cv-03749-SCJ (N.D. Ga. May 31, 2022)

Plaintiff DoubleDay Acquisitions LLC d/b/a CSafe Global filed suit against Defendants Envirotainer AB and Envirotainer Inc. on September 10, 2021 in the Northern District of Georgia (Atlanta Division). Plaintiff and Defendants are direct competitors who develop “active” shipping containers that control temperature for sensitive items, including pharmaceuticals and vaccines, using refrigeration or other methods. Plaintiff obtained two patents for its inventions (U.S. Patent Nos. 7,263,855 and 7,913,511), which includes using a box-shaped composite outer shell for receiving a box-shaped inner shell, vacuum insulated panel (“VIP”) technology, and air flow designs for temperature control. Defendants’ containers also use a box-like composite outer and inner shells with VIP technology and airflow control between the shells. Plaintiff asked the Court for a preliminary injunction in the Complaint but did not move for a preliminary injunction until March 3, 2022–after discovery had begun and Defendants had moved to stay the case pending two requests for inter partes review. In the Motion, DoubleDay acknowledged that Defendants had been selling temperature-controlled containers using VIP technology since at least May 2021, when Plaintiff first sent Defendants a cease and desist letter, but it was not until Defendants launched a new “RAP” size of its containers on February 9, 2022 that Plaintiffs were threatened with immediate and irreparable harm. Plaintiff further argued that they would suffer lost sales and price erosion if Defendants were permitted to sell their RAP-sized containers in the small, highly competitive market. Defendants, in turn, argued that Plaintiff’s Motion was untimely in so far as Plaintiff had been aware of, and accused Defendants of infringing the Asserted patents, since at least 2013 and that the Asserted Patents were likely invalid. The Court held a hearing on Plaintiff’s motion for preliminary injunction on May 13.

In an Order dated May 31, 2022, the Court denied Plaintiff’s request for a preliminary injunction, addressing each of the four injunctive relief factors in turn.

Likelihood of success. First, the Court determined that Plaintiff demonstrated a likelihood of success of infringement of the “shell” limitations in the Asserted Patents (as in “box-like . . . shell,” “box-like outer shell,” and/or “box-like inner shell”), although the factor only weighed slightly in Plaintiff’s favor. Specifically, the Court found that even though Defendants’ containers were made of multiple parts, its construction “result[ed] in inner three-dimensional rectangular shape similar to a box placed within a larger, outer three-dimensional rectangular shape similar to a box,” which “comport[ed] with the [shell] terms’ ordinary and customary meaning” as used in the Asserted Patents. However, Plaintiff was not likely to succeed in showing that Defendants used Plaintiff’s VIP technology because, unlike the Asserted Patents which incorporated multiple layers of VIP panels, Defendants’ containers only used a single layer.

On the second prong of likelihood of success, the Court found that Defendants raised a substantial question regarding validity. While Plaintiff was able to demonstrate a likelihood of success under its proposed, broad construction of “shell” preliminary adopted by the Court, such a broad construction also brought the Asserted Patents within the scope of prior art references teaching “similar structures with outer walls, inner walls, and even other similar insulation features.” Based on these “validity concerns,” the Court determined that a person of ordinary skill in the art likely would have anticipated Plaintiff’s use of two box-like shells with thermal insulation. The Court also was not persuaded by Plaintiff’s proffered evidence of copying and commercial success and agreed with Defendants that “Plaintiff has offered inconsistent priority dates and weak evidence to support the earlier dates” it sought. In sum, the first preliminary injunction factor–likelihood of success–did not weigh in Plaintiff’s favor.

Irreparable harm. Plaintiff made several arguments regarding irreparable harm. First, Plaintiff argued it was likely to suffer lost customer relationships, sales, and market share because it and Defendants are direct competitors in a small and highly competitive market. Plaintiff also argued that it would be forced to lower its prices and would suffer loss of good will and reputation if Defendants were allowed to sell their technology. While the Court agreed with Plaintiff that it was a direct competitor of Defendants in a “narrow market,” “[t]hat consideration alone . . . does not show irreparable harm,” and the second factor did not weigh in its favor. Significantly, while Plaintiff had levied infringement allegations against Defendants for years, it waited four months after serving a cease and desist letter to file suit and another six months before moving for a preliminary injunction. The Court found that this “course of events,” and Plaintiff’s delay, heavily weighted against a finding of irreparable harm, writing:

“Plaintiff alleged in the Complaint that it was already suffering irreparable harm . . . [t]hat undermines Plaintiff’s argument that it only recently became subjected to the threat of irreparable harm. Further, Plaintiff cannot reasonably say that it waited to move for a preliminary injunction until it had market-based proof of irreparable harm because Plaintiff’s arguments . . . and Plaintiff’s revenue are also speculative.”

The Court also did not find Plaintiff’s arguments regarding lost customer relationships persuasive at least because the evidence suggested that customers may choose to purchase or lease a non-VIP container instead of Plaintiff’s or Defendants’ containers; in other words, “customers readily switch among providers competitors based on container availability,” and any sales or customers Plaintiff lost may not necessarily go to Defendants. In total, Plaintiff failed to demonstrate irreparable harm.

Balance of the equities. This factor did not weigh in Plaintiff’s favor. Even accepting as true that Plaintiff spent considerable time and resources into developing its patented technology, “the Court must recognize that Defendants also spent significant time and resources developing the [accused] containers.” In so finding, the Court was heavily influenced by the fact that an an injunction could “harm Defendants by preventing them from growing this new line of its business,” which currently represented only a small (but growing) portion of its business. Because Plaintiff failed to demonstrate a likelihood of success on the merits, issuing the injunction was not worth the risk of “stymieing [Defendants] potential growth.”

Public interest. The public interest weighed only slightly in Plaintiff’s favor. As is typical in patent cases, the Court found that “the public interest favors protecting intellectual property rights to thereby encourage innovation,” as illustrated by Plaintiff’s investment of significant time, resources, and money into developing its patented technology. However, the Court was also influenced by the fact that Defendants’ containers form part of the critical supply chain to ship vaccines “in a time when the efficient distribution of vaccines is a great public need.” For their part, however, Defendants, failed to demonstrate that Plaintiff would not be able to meet market demand and, as a result, “the Court hesitate[d] to subordinate important property interests to perceived market demand simply because that market serves a critical public need.” To do so, the Court cautioned, would “encourage an open season on patent infringement in, for example, the pharmaceutical market whenever events cause demand to spike”–a step too far based on the evidence presented in this case.

Ultimately, the “nominal” public interest that weighed in favor of Plaintiff was not sufficient to tip the scales. Based on Plaintiff’s failure to demonstrate a likelihood of success on the merits or irreparable harm, and the “significant factual issues” that remained, the Court declined to grant Plaintiff’s request for a preliminary injunction.

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