District Court Imposes Injunction Requiring Non-U.S. Parent of Infringing Party To Include Statement of Infringement in Noninfringing Sales Outside the U.S.

The World in U.S. Courts: Spring 2016 - Intellectual Property: Patent

Asetek Danmark A/S v. CMI USA, Inc., U.S. District Court for the Northern District of California, January 4, 2016

A U.S. company obtained a permanent injunction against another U.S. company prohibiting the sale or offering for sale of infringing products in the U.S., and requiring that a notice of infringement in connection with U.S. sales be included with all sales of the infringing products anywhere in the world. The injunction extended to the defendant's non-U.S. parent, which the Court found to be "in active concert" with the defendant and therefore subject to the injunction under U.S. law, even though it had earlier been dismissed from the case. The defendant appealed. The parent then sought to intervene in the case to exempt itself from the required addition of a U.S.-infringement notice its non-U.S. sales, which it said were not infringing and as to which it said it was not "in active concert" with the defendant.

The District Court in California permitted the parent to intervene but denied its request that it be freed from the effects of the injunction pending appeal, using a test that required among other things an assessment of likelihood that the parent would ultimately succeed in its arguments. The Court acknowledged that the non-U.S. sales did not themselves violate U.S. law, and that injunctions based on violations of U.S. patent laws should not extend to non-U.S. sales where there is little risk of subsequent U.S. sale or offer for sale. It concluded, however, that its injunction requiring inclusion of the notice was properly extended to non-U.S. sales because the products might find their way back to the U.S.

The Court also rejected the parent's argument that its non-U.S. sales were not made "in active concert" with its U.S. sub. The Court cited evidence of the parent's "active concert" with its sub as to U.S. domestic sales was a sufficient ground on which to restraining all of the parent's sales worldwide.

Finding the parent unlikely to succeed on the merits, and none of the other relevant factors favoring a contrary decision, the Court refused to give the parent the relief it requested.

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