United States Court of Appeals for the Federal Circuit
2008-1105
THE PROCTER & GAMBLE COMPANY,
Plaintiff-Appellant,
v.
KRAFT FOODS GLOBAL, INC.,
Defendant-Appellee.
William C. Rooklidge, Howrey LLP, of Irvine, California, argued for plaintiff-appellant.
With him on the brief was Henry A. Petri, Jr., of Houston, Texas.
Claude M. Stern, Quinn Emanuel Urquhart Oliver & Hedges, LLP, of Redwood Shores,
California, argued for defendant-appellee. With him on the brief was Evette D. Pennypacker.
Appealed from: United States District Court for the Northern District of California
Judge Phyllis J. Hamilton
United States Court of Appeals for the Federal Circuit
2008-1105
THE PROCTER & GAMBLE COMPANY,
Plaintiff-Appellant,
v.
KRAFT FOODS GLOBAL, INC.,
Defendant-Appellee.
Appeal from the United States District Court for the Northern District of California in
case no. 07-CV-4413, Judge Phyllis J. Hamilton.
_______________________
DECIDED: December 5, 2008
________________________
Before BRYSON, GAJARSA, and DYK, Circuit Judges.
GAJARSA, Circuit Judge.
Although this is a patent infringement case, this appeal turns on a procedural
issue regarding the issuance of a stay and the denial of a preliminary injunction. The
Procter & Gamble Company (“P&G”) appeals from the trial court’s interlocutory order
granting Kraft Foods Global, Inc.’s (“Kraft’s”) motion for a stay pending inter partes
reexamination before the United States Patent and Trademark Office (“PTO”) of P&G’s
U.S. Patent No. 7,169,418 (“the ’418 patent”). In particular, P&G argues that the stay
order either directly denied its motion for a preliminary injunction or had the effect of
denying the motion. This case therefore presents the issue of whether we have
jurisdiction to hear this interlocutory appeal, and if so, whether the district court abused
its discretion with respect to Kraft’s motion to stay and/or P&G’s motion for a preliminary
injunction. Because the stay order effectively denied P&G’s motion, jurisdiction is
proper. Further, we hold that the district court abused its discretion by effectively
denying P&G’s motion without proper consideration of the merits. Therefore, we vacate
the stay and remand for consideration of the merits of P&G’s motion for a preliminary
injunction.
BACKGROUND
P&G owns the Folgers brand of ground, roast coffee; Kraft owns the competing
Maxwell House brand. P&G’s ’418 patent is directed to a plastic container, intended to
replace conventional metal cans for marketing and storing ground, roast coffee. The
’418 patent issued on January 30, 2007. Kraft filed a request for inter partes
reexamination of that patent on March 8, 2007. On June 7, 2007, the PTO granted
Kraft’s request for reexamination but simultaneously confirmed the patentability of every
claim of the ’418 patent.
In July 2007, Kraft introduced a plastic coffee container for the Maxwell House
brand ground, roast coffee. P&G filed this action on August 8, 2007. On September 14,
2007, P&G filed a motion seeking a preliminary injunction against Kraft’s continued use
of its plastic containers. Kraft, in turn, filed a motion for a stay pending its appeal to the
Board of Patent Appeals and Interferences (“BPAI”) of the examiner’s decision on
reexamination confirming the patentability of the claims of the ’418 patent. Procter &
2008-1105 2
, No. 3:07-CV-04413, slip op. at 1, 12 (N.D. Cal.
Oct. 11, 2007) (hereinafter “Stay Order”). At a hearing on October 3, 2007, the trial
court removed from its calendar the scheduled hearing for P&G’s preliminary injunction
motion, reasoning that it could not determine P&G’s likelihood of success on the merits
without construing the claims. Stay Hr’g Tr. 33–35 (Oct. 3, 2007). The court further
stated that it would reschedule the hearing (1) if it did not grant Kraft’s motion to stay;
and (2) after any claim construction disputes had been resolved. Id. On October 11,
2007, the district court granted Kraft’s motion to stay the case and concluded without
any analysis that “plaintiff’s pending motion for preliminary injunction is moot.” Stay
Order at 1–2.
P&G filed a notice of appeal, and Kraft filed a motion for this court to dismiss the
appeal for lack of jurisdiction. Kraft argued that (1) the appeal is premature because the
district court’s stay order is not a final judgment on the merits and does not expressly
deny an injunction; and (2) P&G cannot demonstrate that it will suffer irreparable harm
without an immediate appeal. A motions panel of the court denied Kraft’s motion to
dismiss, reasoning that (1) the district court’s statement characterizing P&G’s
preliminary injunction motion as moot might be an express denial; and (2) “an order
argued to have the effect of denying a request for a preliminary injunction ‘readily
satisfies’ the requirement to show irreparable harm.” Procter & Gamble Co. v. Kraft
Food Global, Inc., No. 2008-1150, slip op. at 2 (Fed. Cir. Feb. 28, 2008) (quoting
Woodard v. Sage Products, Inc., 818 F.2d 841, 851 (Fed. Cir. 1987) (en banc)). The
court also noted that the parties remained free to present jurisdictional arguments to a
2008-1105 3
merits panel for an ultimate disposition. Id. at 2. As set forth below, we conclude that
we have jurisdiction over this appeal pursuant to 28 U.S.C. § 1292(c)(1).
DISCUSSION
When jurisdiction is proper, a district court’s decision to issue a stay is reviewed
for an abuse of discretion. See Gould v. Control Laser Corp., 705 F.2d 1340, 1341
(Fed. Cir. 1983); cf. Am. Life Ins. Co. v. Stewart, 300 U.S. 203, 215 (1937) (“In the
exercise of a sound discretion [the district court] may hold one lawsuit in abeyance to
abide the outcome of another, especially where the parties and the issues are the
same.”). We also review the denial of a preliminary injunction for an abuse of
discretion. See Chamberlain Group, Inc. v. Lear Corp., 516 F.3d 1331, 1339 (Fed. Cir.
2008); Novo Nordisk of N. Am., Inc. v. Genentech, Inc., 77 F.3d 1364, 1367 (Fed. Cir.
1996). “An abuse of discretion in granting or denying a preliminary injunction may be
found ‘by showing that the court made a clear error of judgment in weighing relevant
factors or exercised its discretion based on an error of law or clearly erroneous factual
findings.’” Abbott Labs. v. Andrx Pharms., Inc., 452 F.3d 1331, 1335 (Fed. Cir. 2006)
(quoting Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 973 (Fed. Cir. 1996)).
I. JURISDICTION
Our jurisdiction over an interlocutory appeal such as that brought by P&G in this
case is governed by 28 U.S.C. § 1292(a)(1) and (c)(1). Taken together, these
subsections provide that this court has exclusive jurisdiction over appeals from
interlocutory orders “granting, continuing, modifying, refusing or dissolving injunctions,”
28 U.S.C. § 1292(a)(1), in any case over which this court would have jurisdiction of an
appeal under § 1295. 28 U.S.C. § 1292(c)(1). The Supreme Court has interpreted
2008-1105 4
§ 1292(a)(1) as providing a limited exception to the final judgment rule that is only
available when “a litigant can show that an interlocutory order of the district court might
have a ‘serious, perhaps irreparable, consequence,’ and that the order can be
‘effectually challenged’ only by immediate appeal.” Carson v. Am. Brands, Inc., 450
U.S. 79, 84 (1981) (quoting Balt. Contractors, Inc. v. Bodinger, 348 U.S. 176, 181
(1955)); see also Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271,
287–88 (1988) (“Section 1292(a)(1) will, of course, continue to provide appellate
jurisdiction over orders that grant or deny injunctions and orders that have the practical
effect of granting or denying injunctions and have serious, perhaps irreparable,
consequence.” (internal quotation marks omitted)). In Woodard, this court stated that
“[a]n order which is deemed to deny a preliminary injunction readily satisfies the Carson
requirements.” 818 F.2d at 851; see also id. at 853. Accordingly, we have jurisdiction
over P&G’s appeal if the trial court’s stay order had the practical effect of denying P&G’s
motion for a preliminary injunction.
Under this standard, we conclude that jurisdiction is proper. The trial court
explicitly refused to consider the merits of P&G’s motion for a preliminary injunction.
Indeed, the judge concluded it was moot. Even if this statement is merely a refusal to
consider the merits of P&G’s motion until after the stay is lifted, such a decision “cannot
effectually be reviewed after the trial.” Woodard, 818 F.2d at 851 (“By that time the
question of relief or of maintaining the status quo during trial will have become moot.”).
Accordingly, we conclude that the stay order, as implemented in this case, can be
deemed to have denied P&G’s motion for a preliminary injunction, meets the Carson
requirements, and is therefore reviewable under § 1292(a)(1) and (c)(1).
2008-1105 5
Because we have jurisdiction to review the effective denial of P&G’s motion for a
preliminary injunction, we also have jurisdiction over the trial court’s decision to stay this
case pending reexamination proceedings before the PTO. When this court reviews a
properly appealable interlocutory order, “other interlocutory orders, which ordinarily
would be nonappealable standing alone, may be reviewed.” Intermedics Infusaid, Inc.
v. Regents of Univ. of Minn., 804 F.2d 129, 134 (Fed. Cir. 1986). “Whether an appellate
court exercises this ‘doctrine of pendent jurisdiction at the appellate level’ is a matter of
discretion.” Id. “[T]he major factor in determining whether to exercise this jurisdiction is
the extent that review of the appealable order will involve consideration of factors
relevant to the otherwise nonappealable order.” Id.
In this case, our consideration of the denial of P&G’s preliminary injunction
motion necessarily implicates the district court’s imposition of the stay. As the Ninth
Circuit reasoned in Privitera v. California Board of Medical Quality Assurance,
Under the unique circumstances of this case, we conclude
that the portion of the order staying the action is appealable
under 28 U.S.C. § 1292(a)(1). To hold otherwise would
mean that the denial of the preliminary injunction would be
effectively unappealable because a reversal on that issue
would have no effect. Our mandate would return to a black
hole. A stay should not insulate the denial of a request for
preliminary injunction from appellate review in this way. For
this reason, the denial of the preliminary injunction and the
stay must be considered together.
926 F.2d 890, 892–93 (9th Cir. 1991); cf. Slip Track Sys., Inc. v. Metal Lite, Inc.,
159 F.3d 1337, 1339 (Fed. Cir. 1998) (citing Privitera’s rule that “when a stay order
accompanies a denial of injunctive relief, the entire order is subject to appellate review,”
and noting the role of Ninth Circuit opinions in providing “useful guidance” for this court’s
2008-1105 6
jurisdictional inquiries). 1 Accordingly, we exercise our discretion to consider the stay in
conjunction with the effective denial of the preliminary injunction.
II. PRELIMINARY INJUNCTION
The district court abused its discretion by effectively denying P&G’s motion for a
preliminary injunction without considering and balancing the required factors. “A
decision to grant or deny a preliminary injunction is within the sound discretion of the
district court, based upon its assessment of four factors: (1) the likelihood of the
patentee’s success on the merits; (2) irreparable harm if the injunction is not granted;
(3) the balance of hardships between the parties; and (4) the public interest.” Oakley,
Inc. v. Sunglass Hut Int’l, 316 F.3d 1331, 1338–39 (Fed. Cir. 2003) (citing Amazon.com,
Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001)). In this case,
the district court expressly refused to consider the first three factors. First, the court
stated that it could not evaluate P&G’s likelihood of success without first construing the
claims. Stay Hr’g Tr. 34. Second, the court refused to consider arguments regarding
irreparable harm and the balance of hardships, stating that such arguments were
relevant only to the preliminary injunction motion and would be considered only if the
stay was not granted. Stay Hr’g Tr. 19, 33. We therefore conclude that the district court
abused its discretion by issuing the stay, thereby effecting a denial of P&G’s preliminary
injunction motion, without balancing the four factors. See Abbott Labs. v. Andrx
Pharms., Inc., 452 F.3d 1331, 1334–35 (Fed. Cir. 2006); see also Amazon.com, 239
F.3d at 1350 (“‘These factors, taken individually, are not dispositive; rather, the district
1
Slip Track distinguished Privitera on the ground that Slip Track never
properly requested a preliminary injunction, 159 F.3d at 1339, but there is no dispute
that P&G’s motion was properly before the trial court in this case.
2008-1105 7
court must weigh and measure each factor against the other factors and against the
form and magnitude of the relief requested.’” (quoting Hybritech, Inc. v. Abbott Labs.,
849 F.2d 1446, 1451 (Fed.Cir.1988))).
We further note that, on remand, the district court should consider the current
posture of the inter partes reexamination proceedings at the PTO when evaluating
P&G’s likelihood of success on the merits. To the extent that Kraft would challenge the
validity of the claims of the ’418 patent in the district court on the same bases it raised in
the reexamination, the examiner’s confirmation of the patentability of every claim in the
’418 patent may be relevant to P&G’s likelihood of success. We would, however,
caution the court that the PTO does not appear to equate the “substantial new question
of patentability” standard for whether reexamination should take place, see 35 U.S.C.
§ 312(a)(1), with the “substantial question of validity” standard by which a defendant
may prevent a patentee from demonstrating a likelihood of success on the merits, see,
e.g., E.I. du Pont de Nemours & Co. v. MacDermid Printing Sol’ns L.L.C., 525 F.3d
1353, 1358 (Fed. Cir. 2008). In particular, the PTO considers the standard for
reexamination met when “there is a substantial likelihood that a reasonable examiner
would consider the prior art patent or printed publication important in deciding whether
or not the claim is patentable.” Manual of Patent Examination and Procedure § 2642
(8th ed. Rev. 7 2008) (emphasis in original). “Thus, ‘a substantial new question of
patentability’ as to a patent claim could be present even if the examiner would not
necessarily reject the claim as either anticipated by, or obvious in view of, the prior art
patents or printed publications.” Id. As this court has observed, a requestor’s burden to
show that a reexamination order should issue from the PTO is unrelated to a
2008-1105 8
defendant’s burden to prove invalidity by clear and convincing evidence at trial. See In
re Etter, 756 F.2d 852, 857 n.5 (Fed. Cir. 1985). Additionally, we note that, on remand,
the district court’s consideration of the four factors may require it to interpret the claims,
which are presently under review by the PTO. The district court should monitor the
proceedings before the PTO to ascertain whether its construction of any of the claims
has been impacted by further action at the PTO or any subsequent proceedings.
III. STAY
At the outset, P&G argues that the district court’s stay order violated 35 U.S.C.
§ 318. Section 318 reads:
Once an order for inter partes reexamination of a patent has
been issued under section 313, the patent owner may obtain
a stay of any pending litigation which involves an issue of
patentability of any claims of the patent which are the subject
of the inter partes reexamination order, unless the court
before which such litigation is pending determines that a stay
would not serve the interests of justice.
35 U.S.C. § 318 (emphasis added). P&G argues that the statute only authorizes a stay
upon request of the patentee and, therefore, that the court lacked the authority to stay
the case on Kraft’s (the accused infringer’s) request. The district court rejected this
argument, reasoning that “[a]lthough true that § 318 does not expressly provide for an
automatic stay of parallel district court proceedings, the statute in no way impacts the
inherent powers of the court to control the litigation before it, and to grant a stay in the
interests of justice when so required.” Stay Order at 2. We agree with the district court.
P&G’s position is flawed for two reasons. First, it ignores the state of the law as
it existed at the time § 318 was enacted. Cf. Morgan v. Principi, 327 F.3d 1357, 1361
(Fed. Cir. 2003) (“Congress is presumed to legislate against the backdrop of existing
law.” (citing Cannon v. Univ. of Chi., 441 U.S. 677, 698–99 (1979))). Second, it
2008-1105 9
presumes that by enacting § 318, Congress altered the backdrop of existing law sub
silentio. Cf. Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967,
982–83 (2005) (“Congress is not presumed to overrule existing law sub silentio.”). The
Supreme Court has long recognized that district courts have broad discretion to manage
their dockets, including the power to grant a stay of proceedings. See, e.g., Landis v. N.
Am. Co., 299 U.S. 248, 254–55 (1936) (“[T]he power to stay proceedings is incidental to
the power inherent in every court to control the disposition of causes on its docket . . . .
How this can best be done calls for the exercise of judgment, which must weigh
competing interests and maintain an even balance.”). And by the time § 318 was
enacted in 1999, this court had consistently recognized the inherent power of the district
courts to grant a stay pending reexamination of a patent. See, e.g., Gould v. Control
Laser Corp., 705 F.2d 1340, 1341 (Fed. Cir. 1983) (noting that “because district courts
have broad discretionary powers to control their dockets, stays will not be vacated
unless they are immoderate or of an indefinite duration.” (internal quotation marks
omitted)); Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426 (Fed. Cir. 1988) (reviewing
legislative history of ex parte reexamination, which stated that the statute lacked
language authorizing district courts to grant stays pending reexamination because
“‘such power already resides with the Court.’” (quoting 1980 U.S. Code Cong. & Admin.
News at 6463)). Against this backdrop of existing law, § 318 must be read as enabling
a patentee to obtain a stay of district court proceedings more readily than it could
otherwise when its patent is subjected to inter partes reexamination by the PTO. A
holding to the contrary would rest on a conclusion that Congress intended to strip
district courts of the full scope of their inherent power with no mention of that effect.
2008-1105 10
Thus, when an order granting inter partes reexamination issues, a patentee may move
for a stay under § 318, but the defendant may nevertheless seek a stay under the
district court’s inherent power.
With regard to whether the district court properly granted the stay in this case,
our conclusion necessarily follows that which we made regarding the preliminary
injunction. Cf. Privitera, 926 F.2d at 892–93 (“To hold otherwise would mean that the
denial of the preliminary injunction would be effectively unappealable because a
reversal on that issue would have no effect.”). Accordingly, we vacate the stay and
remand to the district court for a determination on the merits of P&G’s request for a
preliminary injunction. Upon completing that determination, including such underlying
proceedings (e.g., claim construction) as are necessary, the district court of course
remains free to exercise its discretion and stay this case pending reexamination should
either party so move.
However, we note that the district court ordinarily should not grant both a
preliminary injunction and a stay. A preliminary injunction should not be granted if there
is a substantial issue of patent validity. See Amazon.com v. Barnesandnoble.com, Inc.,
239 F.3d 1343, 1350–51 (Fed. Cir. 2001). Similarly, a stay should ordinarily not be
granted unless there is a substantial patentability issue raised in the inter partes
reexamination proceeding. Thus, both a preliminary injunction and a stay ordinarily
should not be granted at the same time. A grant of a preliminary injunction followed by
2008-1105 11
a stay of the district court proceedings could subject an accused infringer to unfair and
undesirable delay in reaching a final resolution. 2
CONCLUSION
The district court abused its discretion by imposing a stay that effectively denied
P&G’s motion for a preliminary injunction without considering the merits of that motion.
Accordingly, we vacate the stay and remand for a determination on the merits of
whether P&G is entitled to a preliminary injunction.
VACATED AND REMANDED
COSTS
No costs.
2
If a preliminary injunction is denied, and a stay is granted, as the inter
partes reexamination moves forward it may appear that the invalidity challenge is, in
fact, insubstantial. If that occurs, the district court would then be free to lift the stay and
grant a preliminary injunction, without waiting for a final conclusion of the PTO
proceedings.
2008-1105 12