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Aevoe Corp. v. Ae Tech Co., Ltd.

United States District Court, D. Nevada

March 18, 2014

AEVOE CORP., a California corporation, Plaintiff,
v.
AE TECH CO., LTD., a Taiwan corporation; S&F Corporation dba SF PLANET CORPORATION, a Minnesota corporation, and GREATSHIELD INC., a Minnesota corporation, Defendants.

ORDER

GLORIA M. NAVARRO, Chief District Judge.

Pending before the Court is the Motion to Dissolve the Preliminary Injunction (ECF No. 494) filed by Defendants AE Tech Co., LTD, S&F Corporation, and Greatshield, Inc. (collectively, "Defendants"). Plaintiff Aevoe Corp. ("Plaintiff") filed a Response (ECF No. 495) and Defendants filed a Reply (ECF No. 501).

Also pending before the Court is Defendants' Motion to Increase Injunction Bond. (ECF No. 273.) Plaintiff filed a Response (ECF No. 306) and Defendants filed a Reply (ECF No. 312).

I. BACKGROUND

This case arises from Defendants' alleged infringement of United States Patent No. 8, 044, 942 ("the '942 Patent"). (Am. Compl. ¶¶ 35-44, ECF No. 44.) Specifically, the '942 Patent relates to touch screen protection products. ( Id. at ¶ 36, ECF No. 44.) See generally United States Patent No. 8, 044, 942 (filed June 14, 2011) (issued Oct. 25, 2011).

Plaintiff initiated this action on January 11, 2012. (Compl., ECF No. 1.) Plaintiff also filed an Ex Parte Motion for Temporary Restraining Order. (Mot. for TRO, ECF No. 3.) The Court granted that motion, entered a Temporary Restraining Order on January 12, 2012, (TRO, ECF No. 8), and entered Preliminary Injunction on January 24, 2012 (Prelim. Inj., ECF No. 16).

After numerous motions for reconsideration or clarification and orders to show cause, the Court issued the current Preliminary Injunction on May 2, 2012. (ECF No. 66.) In addition, on May 3, 2012, Defendants filed their Notice of Appeal appealing this Court's issuance of the preliminary injunction. (ECF No. 70.) Ultimately, the Federal Circuit dismissed Defendants' Notice of Appeal holding that it lacked jurisdiction over the appeal and dismissed Defendants' Notice of Appeal. Aevoe Corp. v. AE Tech Co., 727 F.3d 1375, 1383-84 (Fed. Cir. 2013).

Prior to the Federal Circuit's dismissal of Defendants' Notice of Appeal, Defendants filed the instant motion in which Defendants request that the Court increase the injunction bond from the initial $10, 000 bond imposed in the Court's January 12, 2012 Order (ECF No. 8) to $4, 575, 000. ( See Mot. to Increase Inj. Bond 1:23-2:4, ECF No. 273.)

Concurrent with the instant litigation, the parties are also engaging in reexamination proceedings in front of the United States Patent and Trademark Office ("USPTO"). ( See Mot. to Stay 1:22-26, ECF No. 296 (requesting a stay of proceedings pending the outcome of Reexamination No. 95/002, 073 before the USPTO).) In May 2013, the USPTO issued an Action Closing Prosecution, under 37 C.F.R. § 1.949, in which the examiner set forth its rejection of Claims 1-15 of the '942 Patent. (Mot. to Increase Prelim. Inj. Bond Ex. A, ECF No. 273-1.) Thereafter, pursuant to 37 C.F.R. § 1.951, both parties filed comments regarding the issues raised by the USPTO in the Action Closing Prosecution. (Mot. to Dissolve Prelim. Inj. Ex. 4, ECF No. 494-4 ("Patent Owner Response After Action Closing Prosecution"); Mot. to Dissolve Prelim. Inj. Ex. 5, ECF No. 494-6 ("Third Party Requester's Comments on the Patent Owner Response").) In December 2013, after considering the additional comments, the examiner issued its Right of Appeal Notice, pursuant to 37 C.F.R. 1.953, in which the examiner again rejected Claims 1-15 of the '942 Patent. ( Id. at Ex. 6.) In response to receiving the Right of Appeal Notice rejecting all asserted claims, Defendants filed the instant Motion to Dissolve the Preliminary Injunction. (ECF No. 494.)

For the reasons that follow, the Court declines to dissolve the preliminary injunction, but will increase the preliminary injunction bond from $10, 000 to $500, 000. Thus, Defendants' Motion to Dissolve the Preliminary Injunction (ECF No. 494) is DENIED, but Defendants' Motion to Increase the Preliminary Injunction Bond (ECF No. 273) is GRANTED-IN-PART.

II. MOTION TO DISSOLVE PRELIMINARY INJUNCTION

The Court first turns to Defendants' more recently filed Motion to Dissolve the Preliminary Injunction. (ECF No. 494.) "A party seeking modification or dissolution of an injunction bears the burden of establishing that a significant change in facts or law warrants revision or dissolution of the injunction." Sharp v. Weston, 233 F.3d 1166, 1170 (9th Cir. 2000). Furthermore, the Ninth Circuit has held that, in the context of a preliminary injunction, "a district judge always has power to modify or to overturn an interlocutory order or decision while it remains interlocutory." Credit Suisse First Bos. Corp. v. Grunwald, 400 F.3d 1119, 1123 (9th Cir. 2005) (quotation marks omitted).

In this case, Defendants first assert that this Court must "weigh the same factors for dissolving a preliminary injunction as with the grant of a preliminary injunction." (Mot. to Dissolve Prelim. Inj. 5:14-23, ECF No. 494.) To support this assertion, Defendants provide only one controlling case, Alto v. Black, in which the Ninth Circuit affirmed the district court's denial of a motion to dissolve a preliminary injunction. 738 F.3d 1111, 1119-20 (9th Cir. 2013). In so holding, the Ninth Circuit first noted that the appellant in Alto became a party to the litigation only after the district court entered the preliminary injunction. Id. at 1120. Therefore, the Ninth Circuit determined that "the usual limitation on motions to dissolve injunctions [was] inapposite." Id. The Ninth Circuit further recognized that the appellant in Alto was challenging whether the district court lacked subject matter jurisdiction over the appellant, rather than actually "challeng[ing] the substance of the district court's analysis as to whether injunctive relief was warranted." Id.

Thus, even to the extent the Ninth Circuit indicated that the same four-prong test for the issuance of a preliminary injunction may also apply to motions to dissolve preliminary injunctions, which this Court doubts, Alto v. Black is easily distinguished. First, Defendants have had their opportunities to challenge the preliminary injunction through the original motion, through motions to reconsider, and through appeal to the Federal Circuit. Additionally, Defendants in the instant case are not merely raising jurisdictional challenges, but are actually challenging the substance of the preliminary injunction. Thus, the Court concludes that nothing in this case or in the controlling case law warrants the Court departing from the standard for analyzing a motion to dissolve a preliminary injunction that the Ninth Circuit previously announced in Sharp ...


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