IP Law Daily, PATENT—M.D.N.C.: Clutch patent owner secures preliminary injunction against off-road vehicle manufacturer, (Jan 28, 2026)

By Saurabh Kashyap, B.A., M.A., LL.B., LL.M.

The court found likely infringement, irreparable harm from lost sales in a two-player market, and that the balance of equities and public interest favored injunctive relief.

A federal district court in North Carolina granted a motion for preliminary injunction filed by Tapp MFG, Inc., concluding that it was likely to succeed on the merits of its infringement claims against Speed UTV, LLC. The court held that Speed was likely infringing Tapp’s clutch patent, that no express license had ever been formed between the parties, and that although an implied license arose from their course of dealing, that license was terminated no later than the filing of the infringement complaint. The court further found that Tapp would suffer irreparable harm in the absence of injunctive relief due to lost sales in a two-player replacement-clutch market, that the balance of equities favored enforcement of patent rights, and that the public interest supported an injunction (Tapp MFG, Inc. v. Speed UTV, LLC, No. 1:24-cv-00944-WO-JLW (M.D.N.C. Jan. 27, 2026)).

Background. The plaintiff, Tapp MFG, Inc., is a Canadian corporation that designs and supplies automotive components, including clutches and related accessories, to the off-road and performance vehicle industry. Tapp was founded by David Forsyth, who also serves as its chief executive officer and is the sole inventor of the patent asserted in this case. The defendant, Speed UTV, LLC, is a Delaware limited liability company headquartered in North Carolina that manufactures and sells off-road utility terrain vehicles (UTVs).

The dispute centers on U.S. Patent No. 12,104,695 (the ’695 patent) which covers a clutch design intended for use in off-road vehicles, including primary and secondary clutches used in UTV drivetrains. Forsyth is listed as the sole inventor. Speed was aware of the pending patent application during the parties’ collaboration and of the patent’s issuance.

The parties first engaged in discussions in October 2020 regarding the possible integration of a Tapp-designed clutch into Speed’s UTVs. Following an in-person meeting, Tapp sent Speed an email on November 4, 2020, outlining proposed commercial terms, including royalty rates and intellectual property ownership, while expressly characterizing the terms as interim and anticipating that formal agreements would later be drafted by counsel. Speed responded that it agreed with the listed terms but added a five-year duration and renewal provision that had not appeared in Tapp’s proposal. Although Tapp delivered a prototype clutch, provided technical assistance, and accepted payments, the parties never executed a formal license agreement and continued exchanging draft agreements without reaching consensus.

Speed began manufacturing and selling UTVs incorporating the clutch design developed during the collaboration in 2023. It also sold replacement clutches for those vehicles. In March 2024, Tapp demanded payment and an accounting, citing Speed’s failure to meet minimum production and payment expectations. After the ’695 patent issued in October 2024, Tapp filed suit in November 2024 and moved for a preliminary injunction, asserting that Speed’s continued manufacture and sale of the clutches constituted patent infringement.

Likelihood of success on the merits. Applying the four-factor test articulated in Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008), the court first examined whether Tapp was likely to succeed on the merits. The court found that Tapp had made a sufficient showing of likely infringement. Although Speed attacked the sufficiency of Tapp’s claim chart, the court relied on admissions by Speed’s chief executive that Speed incorporated Tapp’s clutch design into all of its vehicles. Citing Centrak, Inc. v. Sonitor Technologies, Inc., 915 F.3d 1360 (Fed. Cir. 2019), the court held that these admissions supported a finding that the accused products likely practiced every limitation of the asserted claims.

The court then addressed Speed’s contention that it was shielded from infringement liability by a license. Applying North Carolina contract law, the court rejected the existence of an express license. The November 4, 2020, email exchange did not result in a meeting of the minds because Speed’s response added a material term not contained in Tapp’s proposal, constituting a counteroffer that Tapp never accepted. The court relied on Normile v. Miller, 313 N.C. 98 (1985), to conclude that negotiations contemplating a future formal agreement do not create a binding contract. The subsequent exchange of draft license agreements likewise failed to establish mutual assent.

Implied license and termination. Although no express license existed, the court concluded that an implied license arose from the parties’ course of conduct. Tapp delivered prototypes, provided technical drawings and assistance, and accepted payments, even though Speed was using the clutch design in commercial products. Relying on De Forest Radio Telephone & Telegraph Co. v. United States, 273 U.S. 236 (1927), the court held that such conduct amounted to consent sufficient to create an implied license.

The court nevertheless found that the implied license was freely terminable. Tapp had consistently rejected Speed’s efforts to include durational and renewal terms during negotiations, indicating that any license was not intended to be perpetual. While the court was unpersuaded that Tapp clearly terminated the license through its March 2024 demand letter, it held that the implied license terminated at least upon the filing of the infringement complaint. Citing KPR U.S., LLC v. LifeSync Corp., 2023 WL 5529176 (S.D. Fla. Aug. 27, 2023), the court reasoned that once a patentee affirmatively asserts infringement, the alleged infringer can no longer reasonably believe it remains licensed. Accordingly, Speed’s post-filing conduct likely constituted infringement.

Validity and enforceability. Speed argued that substantial questions existed regarding the validity of the ’695 patent based on allegedly uncited prior art. The court acknowledged that certain elements of the claimed clutch design appeared in earlier references but emphasized that obviousness requires more than a showing that each element was known. Quoting KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007), the court held that Speed failed to articulate a reason why a person of ordinary skill would have combined the cited references to arrive at the claimed invention. Allegations that the inventor failed to disclose his own prior art were deemed unsupported. Given the presumption of validity under 35 U.S.C. § 282, the court concluded that Tapp was likely to withstand Speed’s invalidity challenges.

Irreparable harm. The court next considered irreparable harm. It rejected generalized claims of reputational injury but credited Tapp’s argument that it competed with Speed in a two-player market for replacement clutches practicing the ’695 patent. Relying on Robert Bosch LLC v. Pylon Manufacturing Corp., 659 F.3d 1142 (Fed. Cir. 2011), the court held that each infringing replacement-clutch sale by Speed likely displaced a sale by Tapp, constituting irreparable harm not fully compensable by monetary damages.

Balance of equities and public interest. The court found that the balance of equities favored Tapp because allowing Speed to continue selling the accused clutches would force Tapp to compete against its own patented invention. Although Speed argued that an injunction would disrupt its supply chain, the court noted evidence that Speed had begun transitioning to an alternative clutch design. On the public interest factor, the court concluded that enforcing presumptively valid patent rights served the public interest.

The Case is No. 1:24-cv-00944-WO-JLW.

Judge: Osteen, Jr., W.

Attorneys: Samuel A. Long, Jr. (Shumaker, Loop & Kendrick, LLP) for Tapp MFG, Inc. Richard M. McDermott (McDermott IP Law) for Speed UTV, LLC.

Companies: Tapp MFG, Inc.; Speed UTV, LLC

Cases: Patent NorthCarolinaNews