IP Law Daily, PATENT—Fed. Cir.: District court properly refused to enjoin ITC proceedings over wireless network devices, (Jul 13, 2022)

By Brian Craig, J.D.

Speculative harm from the International Trade Commission (ITC) proceedings that caused several customers to “voice concerns” did not justify a preliminary injunction.

In a case between two companies that design and manufacture telecommunications equipment involving wireless network patents, the U.S. Court of Appeals for the Federal Circuit has ruled that a German telecommunications manufacturer, Thales DIS AIS Deutschland GMBH, failed to show that it would suffer irreparable harm without a preliminary injunction. In affirming the federal district court in Delaware’s denial of the preliminary injunction request seeking an exclusion from the International Trade Commission (ITC) proceedings, the Federal Circuit held that the German telecommunications manufacturer did not present any evidence of harm to its business because of the ongoing ITC proceedings. The Federal Circuit held that speculative harm that caused several customers to “voice concerns” does not justify the rare and extraordinary relief of a preliminary injunction (Koninklijke Philips N.V. v. Thales Dis Ais Deutschland GmbH, July 13, 2022, Moore, K.).

Thales DIS AIS Deutschland GMBH (“Thales”) and Koninklijke Philips N.V (“Philips”) both design and manufacture telecommunications equipment and related technologies, including those related to various generations of wireless networks. Thales maintains its headquarters in Germany and Philips is a Dutch company with its headquarters in the Netherlands. Philips and Thales have been engaged in negotiations over what Philips asserts are standard essential patents (SEPs) that Thales has implemented according to European Telecommunications Standards Institute (ETSI) specifications. After negotiations did not yield an agreed upon fair, reasonable, and nondiscriminatory (FRAND) license for the SEPs, Philips filed an infringement and declaratory action against Thales in the Delaware federal district court and an ITC action seeking an exclusion order. Thales filed a breach of contract counterclaim and declaratory counterclaim for a FRAND rate determination and moved for a preliminary injunction barring Philips from pursuing its ITC action. The district court denied Thales’ motion for a preliminary injunction. Thales appealed the denial of the motion for preliminary injunction.

Irreparable harm. The Federal Circuit agreed with the district court in Delaware that the German telecommunications manufacturer failed to show irreparable harm to receive a preliminary injunction. To obtain a preliminary injunction, a party must establish that it is likely to succeed on the merits, that it is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in its favor, and that an injunction is in the public interest.

Here, the German telecommunications manufacturer did not present any evidence that it lost customers, had customers delay purchases, or struggled to acquire new business because of the ongoing ITC proceedings. Thales submitted affidavits stating only that the threat of an ITC exclusion order caused several customers to “voice concerns” and express doubt regarding the company’s ability to deliver products. During oral argument, Thales characterized its alleged harm as living under the “cloud on the business” of a potential exclusion order and the potential loss of business that may occur if it loses at the ITC. The Federal Circuit held that this type of speculative harm does not justify the rare and extraordinary relief of a preliminary injunction. The district court did not clearly err in finding that there was no evidence of likely irreparable harm, the Federal Circuit ruled. Therefore, the appeals court affirmed the denial of the motion seeking a preliminary injunction.

The Case is No. 21-2106.

Attorneys: Eley Thompson (Foley & Lardner LLP) for Koninklijke Philips N.V. and Philips RS North America, LLC. Paul Zeineddin (Axinn Veltrop & Harkrider LLP) for Thales DIS AIS Deutschland GmbH.

Companies: Thales USA, Inc.; Philips RS North America, LLC; Thales DIS AIS Deutschland GmbH

Cases: Patent FedCirNews