Court Rejects “Repair” Defense, Presumes Irreparable Harm For Preliminary Injunction
Posted on | February 16, 2010 | 63 Comments
2010-1146 BorgWarner v. Dorman Products
ED/MI 09-cv-11602
Judge John Corbett O’Meara
Dorman appeals from the preliminary injunction order entered against it by Judge O’Meara stopping sales of its regenerative air pumps, used in automobile emission controls systems, as a likely infringement of BorgWarner’s 5,527,149 and 6,422,808 patents.
The court’s rejection of the “permissible repair” defense and its use of a presumption of irreparable harm are the substantive highlights of this case.
Infringement: The asserted claims essentially all require (a) an impeller housing; (b) an impeller; (c) motor, (d) a flow chamber; and (e) a casing enclosing the impeller. Dorman’s product consisted of everything but the casing (e), and was sold to customers so that they would combine it with the casing from an original BorgWarner unit. Dorman’s defense to indirect infringement is the permissible repair doctrine.
Permissible repair is a defense derived from the first sale of a patented article that gives the buyer “an implied license to use the device for its useful life,” which includes “the right to repair the patented article and necessarily to purchase repair parts from others.” Order, p. 5 citing Kendall Co. v. Progressive Medical Tech., 85 F.3d 1570, 1573-74 (Fed. Cir. 1996). However, as the court noted, the line at which permissible repair turns to infringing reconstruction is hard to define. Id.
BorgWarner contended (un-rebutted) that the only component of its product that could fail and need repair is the motor–which can be replaced by simply removing the impeller and 4 screws. Dorman, however, was replacing not only the motor, but also the impeller, impeller housing and flow chamber. The court held the wide-spread replacement of the components to be a reconstruction of the patented article and found that the repair defense was unlikely to succeed. Order, p. 7.
PATracer Note: The court appears to be saying that Dorman could have permissibly sold just a replacement motor, but instead infringes because it included with the motor some additional components that did not need to be replaced. But why would the gratuitous and apparently unnecessary replacement of functioning parts turn an otherwise non-infringing repair into an infringing reconstruction?
Irreparable Harm: BorgWarner argued that its market share, goodwill and reputation were being injured by Dorman’s competing product, and also that it was facing price erosion. Dorman countered that there was no actual evidence presented, only conclusory allegations.
The Court nevertheless found irreparable harm because Dorman had not rebutted the presumption of irreparable harm. The court found this presumption under Smith Int’l, Inc. v. Hughs Tool Co., 718 F.2d 1573, 1581 (Fed. Cir. 1983), Atlas Powder Co. v. Ireco Chems., 773 F.2d 1230, 1233 (Fed. Cir. 1985) and Polymer Techs. Inc. v. Bridwell, H.A., 103 F.3d 970, 975 (Fed. Cir. 1996). See Order, p. 9.
PATracer Note: Of course, all of the cases relied upon by Judge O’Meara significantly pre-date the Supreme Court’s decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392-94 (2006), which rejected the presumption in permanent injunction cases. While a few Federal Circuit case post eBay avoided addressing the presumption issue vis-a-vis preliminary injunctions, Dennis Crouch at Patently-O recently covered (link) a non-precedential CAFC decision in Automated Merchandising Systems v. Crane, 2009-1158, where Chief Judge Michel (with Judges Clevenger and Dyk) held that there was no presumption.
It will be interesting to see if another panel at the CAFC reaches the same conclusion– or, for that matter, whether it gets to this issue at all.
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