Monday, July 7, 2014

Conair Corp. v. Barbar, Inc. - Preliminary Injunctions in Design Patent Cases After eBay

A few weeks ago, we posted about a series of design patent cases filed by Conair Corp. against multiple defendants in the Middle District of Florida, relating to a design patent for a curling iron (see below for images).  On Thursday, Judge Gregory Presnell ruled on Conair's motion for a preliminary injunction in its case against Barbar, Inc. with some surprising results.  

In his July 3 order, Judge Presnell began his analysis by acknowledging the visible similarities between the Barbar curling iron and the curling iron depicted in the '456 Patent.  According to Judge Presnell, the product and design appeared "similar."  2014 WL 2993724, at * 1.  However, the Judge Presnell did not launch into a discussion of the likelihood of success on the merits, as one might expect in a preliminary injunction order.  Rather, he first discussed the likelihood of any irreparable harm, concluding that "the lack of a preliminary injunction will not cause irreparable injury to the Plaintiff," Conair.  

The key to Judge Presnell's reasoning is the wide disparity in the economic footprint of Conair versus that of Babar: 

While the products appeared similar, there was a striking difference in the volume of sales between the Plaintiffs' product and the Defendants' product. Specifically, the Plaintiffs estimated that the sales of their hair curling product resulted in over a million units sold in 2013 and more than two million units are projected to be sold in 2014. (Doc. 30 at 27:24–28:16). The Defendants' sales, however, were in the range of approximately 500 units, with a total production of only 2500 units. (See Id. at 106:25–107:6). Currently, the Defendants' total sales represent .025% of the Plaintiffs' projected sales this year. Even if the Defendants were to sell their entire inventory of 2500 units, that would represent only .125% of the Plaintiffs' projected sales for 2014.

The court's reasoning closely tracked the Supreme Court's decision in eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), where the Supreme Court held that the Federal Circuit erred by applying a categorical injunction where patent infringement was proved at trial.  See id. at 394 ("Just as the District Court erred in its categorical denial of injunctive relief, the Court of Appeals erred in its categorical grant of such relief.").  Judge Presnell found that eBay precludes the Federal Circuit's assumption that a preliminary injunction should normally issue if the plaintiff appears likely to prove design patent infringement on the merits.  Therefore, the Court opted to first analyze the likelihood of irreparable harm first, which the court found lacking, based on the relative sales volumes of the parties.  The court was unpersuaded by Conair's alleged injuries, finding that "assertions that the Defendants' product would be tarnished in a non-compensable manner are speculative."  Id. at *2.  

Conair Corp. v. Barbar, Inc. is noteworthy in design patent law for several reasons.  First, it will be exceedingly difficult for design patent holders to prove a likelihood of irreparable harm against smaller competitors who's sales are deemed "de minimis," as is often the case with a "knock-off" competitor.  Second, the Conair decision further shows that the standards for issuing an injunction in design patent cases is no different than in utility patent cases, despite the fact that design patent holders are entitled to a de facto injunction in the form of disgorged profits.  We commented on this issue previously with regard to the Apple v. Samsung case

The court's decision in the Barbar action likely dooms Conair's request for an injunction in its other cases in M.D. Fla. relating to the same design patent.  We will continue to monitor the "Conair cases" and update on any other interesting developments.