Recently, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Myco Industries, Inc., et al. v. BlephEx, LLC, et al., 2019-2374 (April 3, 2020), holding it was error for the district court to grant a preliminary injunction enjoining a patent owner from threatening a competitor’s customers with infringement litigation. BlephEx owns a patent covering a method of treating a damaged eye. Myco sells a medical instrument that, when used by optometrists, allegedly infringes BlephEx’s patent. At a 2019 trade show, BlephEx personnel made “loud accusations of infringement within earshot of prospective [Myco] customers” and repeated those claims to potential customers at the BlephEx booth. Myco sued BlephEx for a declaratory judgment of non-infringement and invalidity, and requested a preliminary injunction enjoining BlephEx “from making allegations of patent infringement” and “from threatening litigation against Myco’s potential customers.” The district court granted the injunction. Myco appealed.
The decision on appeal turned on whether the alleged threats of infringement litigation constituted free speech. The Federal Circuit held the statements were protected free speech, and vacated the injunction as an illegal prior restraint. “‘[F]ederal law requires a showing of bad faith’ before a patentee can be enjoined from communicating his patent rights. . . . A showing of ‘bad faith must be supported by a finding that the claims asserted were objectively baseless. . . . An asserted claim is objectively baseless if no reasonable litigant could realistically expect success on the merits. . . . Therefore, ‘communication to possible infringers concerning patent rights is not improper if the patent holder has a good faith belief in the accuracy of the communication.’”
The Court determined BlephEx’s statements were neither false nor misleading, which went a long way in vacating the injunction. The Court also noted that the district court made no finding of bad faith, which alone would have been enough to vacate under the federal test. Instead, the district court had relied heavily on its narrow construction of the scope of the BlephEx patent, which it said supported a strong likelihood that Myco and its customers would not infringe—implying some bad faith for alleging otherwise. The Federal Circuit concluded the patent was entitled to a broader scope, which also meant that Myco’s potential infringement was not objectively baseless, let alone false or misleading.