Celgard, LLC v. Lg Chem, Ltd.

NOTE: This disposition is nonprecedential.

United States Court of Appeals
for the Federal Circuit
______________________

CELGARD, LLC,
Plaintiff-Appellee

v.

LG CHEM, LTD., LG CHEM AMERICA, INC.,
Defendants-Appellants
______________________

2014-1675
______________________

Appeal from the United States District Court for the
Western District of North Carolina in No. 3:14-cv-00043-
MOC-DCK, Judge Max O. Cogburn, Jr.
______________________

Decided: August 12, 2015
______________________

MARTIN RICHARD LUECK, Robins, Kaplan, Miller &
Ciresi, LLP, Minneapolis, MN, argued for plaintiff-
appellee. Also represented ANDREW DOUGLAS HEDDEN,
JAMIE R. KURTZ; BRYAN J. VOGEL, Robins Kaplan LLP,
New York, NY.

MICHAEL J. MCKEON, Fish & Richardson, P.C., Wash-
ington, DC, argued for defendants-appellants. Also repre-
sented by KEVIN WHEELER, LEAH A. EDELMAN; JOHN A.
DRAGSETH, Minneapolis, MN.
2 CELGARD, LLC v. LG CHEM, LTD.

MARK S. DAVIES, Orrick, Herrington & Sutcliffe LLP,
Washington, DC, for intervenor Apple Inc.

MARK MICHAEL SUPKO, Crowell & Moring, LLP,
Washington, DC, for amicus curiae General Motors LLC.

DOMINIC FRANCIS PERELLA, Hogan Lovells US LLP,
Washington, DC, for amicus curiae Ford Motor Company.
______________________

Before O’MALLEY, WALLACH, and HUGHES, Circuit
Judges.
O’MALLEY, Circuit Judge.
Celgard, LLC (“Celgard”) brought suit against LG
Chem, Ltd. and LG Chem America, Inc. (collectively,
“LG”) in the United States District Court for the Western
District of North Carolina, asserting infringement of
certain claims of U.S. Patent No. 6,432,586 (“the ’586
patent”) and several state law claims. LG appeals the
district court’s entry of a preliminary injunction prohibit-
ing LG from making, using, selling, or offering for sale its
products that potentially infringe the asserted claims in
the ’586 patent. For the reasons explained below, we
reverse the preliminary injunction and remand.
I. BACKGROUND
From 2005 through 2008, Celgard supplied LG with
uncoated “base films” for use in LG’s batteries for con-
sumer-electronic products (“CE products”). LG would coat
the Celgard base films with ceramic for use as “separa-
tors” in the batteries. The separators are used to separate
the anode from the cathode in a battery. In 2008, the
parties entered into discussions regarding Celgard becom-
ing LG’s exclusive supplier of base films for batteries to be
used in electric vehicles (“EVs”). It is undisputed that LG
CELGARD, LLC v. LG CHEM, LTD. 3

executed this ceramic coating process on the base films
supplied by Celgard for both the CE products and EVs.
The parties began negotiating the terms of a potential
agreement, and the parties eventually agreed to a Memo-
randum of Understanding (“MOU”) in anticipation of
entering into a long term supply agreement. After the
parties entered into the MOU, however, the relationship
between the parties began to fall apart over disputes
about the price of the base films. In June 2014, LG gave
Celgard notice that it was being phased out as a supplier
for its EV program beginning in September 2013. Celgard
sent its final shipment of base film to LG in July of 2013
and then filed this suit in January 2014.
LG moved to dismiss for lack of personal jurisdiction
and improper venue, and Celgard moved for a preliminary
injunction. In the same order, on July 18, 2014, the
district court addressed both motions. Regarding LG’s
motion to dismiss, without ruling on the merits, the
district court allowed Celgard’s motion for jurisdictional
discovery into whether LG had minimum contacts in
North Carolina. The district court referred the case to the
magistrate judge for limited discovery and disposition on
the issue of personal jurisdiction.
Turning to Celgard’s motion for a preliminary injunc-
tion, the district court performed the four-factor test for
evaluating a motion for a preliminary injunction. Regard-
ing the likelihood of success on the merits, the district
court stated only that, “[h]aving reviewed [the] descrip-
tion of the claims detailed in the claim charts, it appears
likely that the SRS sold, offered for sale, used, and im-
ported into this country by defendant infringes at least
claim 1 of the ’586 patent.” Celgard, LLC v. LG Chem,
Ltd., No. 3:14-cv-43, 2014 WL 3699999, at *4 (W.D.N.C.
July 18, 2014) (“Preliminary Injunction Order”). As to the
second factor, the district court “concluded that if the
alleged infringing activity were allowed to continue, it is
4 CELGARD, LLC v. LG CHEM, LTD.

very likely that plaintiff will suffer irreparable harm in
the absence of preliminary relief. This harm includes
plaintiff losing goodwill, laying off employees, and loss of
market share to at least some competitors who appear to
be engaged in infringing activity.” Id. at *5. In balancing
the equities for the third factor, the court considered LG’s
right to source materials from the supplier with the
lowest price and Celgard’s right to protect misappropria-
tion of its patented technology. The district court found
that, absent injunction, “plaintiff is likely to be shut out of
[the] automotive marketplace,” whereas LG can simply
pay a slightly higher cost to source its materials from
Celgard with the injunction. Id. at *5.
With respect to the public interest, the district court
explained that, although the public is interested “in being
able to buy products at the lowest possible price through a
free and robust market,” Celgard’s patent was “for a very
important technological development that ultimately
benefits consumers by allowing for the delivery of safe
electric power to mobile devices by reducing the risk of
fire posed by dendrite growth.” Id. The district court
reasoned that an injunction that prevents an infringer
from profiting from theft of protected technology is not a
hardship because the law already prohibits his actions.
Furthermore, the district court stated that it “has no
reason to believe that defendant’s ability to produce goods
will be in any way impacted as it appears that plaintiff is
able to provide the products necessary for production.” Id.
Because it concluded that all four factors weighed in favor
of granting Celgard’s request for a preliminary injunction,
the district court granted the motion. The court then
stayed the injunction pending appeal.
LG appeals the district court’s grant of Celgard’s mo-
tion for a preliminary injunction. We have jurisdiction
over this interlocutory appeal under 28 U.S.C.
§§ 1292(c)(1) and 1295(a)(1) (2012).
CELGARD, LLC v. LG CHEM, LTD. 5

II. DISCUSSION
We apply regional circuit law—here, Fourth Circuit
law—when reviewing a district court’s decision to grant a
preliminary injunction. Abbott Labs. v. Sandoz, Inc., 544
F.3d 1341, 1367 (Fed. Cir. 2008). The Fourth Circuit
reviews the district court’s decision for abuse of discretion.
Pashby v. Delia, 709 F.3d 307, 319 (4th Cir. 2013). “Pur-
suant to this standard, we review the district court’s
factual findings for clear error and review its legal conclu-
sions de novo.” Id. As explained below, in this case, the
district court abused its discretion granting Celgard’s
motion for a preliminary injunction.
A. Jurisdiction
LG argues that the district court legally erred by fail-
ing to consider whether it had personal jurisdiction over
LG before granting the preliminary injunction. We agree.
Although we subsumed the issue of a district court’s
jurisdiction in the likelihood of success prong of the pre-
liminary injunction test in the past, we also explained
that “[f]ailing to consider [the district court’s jurisdiction]
was legal error.” U.S. Ass’n of Importers & Textiles &
Apparel v. U.S. Dep’t of Commerce (“USA-ITA”), 413 F.3d
1344, 1348 (Fed. Cir. 2005). This is for good reason. A
district court cannot enjoin a party if it does not have
jurisdiction over that party. See, e.g., Enterprise Int’l, Inc.
v. Corporacion Estatal Petrolera Ecuatoriana, 762 F.2d
464, 471 (5th Cir. 1985) (“We hold, therefore, that the
district court should not have issued the preliminary
injunction against [the defendant] without determining
whether it had jurisdiction over the party enjoined.”); cf.
Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guin-
ee, 456 U.S. 694, 711 n.1 (1982) (Powell, J., concurring)
(“A district court must have personal jurisdiction over a
party before it can enjoin its actions”). At a minimum, the
district court must determine that there is a “substantial
probability” that it has jurisdiction over the claim that
6 CELGARD, LLC v. LG CHEM, LTD.

requires preliminary injunctive relief. United States v.
First Nat’l City Bank, 379 U.S. 378, 390 (1965) (“It is
basic to traditional notions of equity that[,] to justify the
issuance of a protective temporary injunction[,] there
must exist a substantial probability that jurisdiction,
judgment, and enforcement will be obtained with respect
to the person sought to be affected.” (emphasis added)).
In this case, the district court addressed LG’s motion
to dismiss for lack of personal jurisdiction and Celgard’s
motion for a preliminary injunction in the same order.
Rather than resolve LG’s motion to dismiss, however, the
district court allowed jurisdictional discovery and referred
the case to the magistrate judge. Preliminary Injunction
Order, 2014 WL 3699999, at *3–4. In other words, the
district court did not determine whether it had personal
jurisdiction over LG for the patent infringement claim
before it issued the preliminary injunction. Nor did the
district court determine whether there was a substantial
probability that it had personal jurisdiction over LG for
the patent infringement claim. See First Nat’l City Bank,
379 U.S. at 390. Accordingly, because LG contested the
district court’s jurisdiction, it was legal error for the
district court to issue this injunction without making any
findings with respect to its jurisdiction over LG. See
USA-ITA, 413 F.3d at 1348. This alone requires that we
at least vacate the preliminary injunction. 1

1 After briefing for this case was completed, on May
21, 2015, the district court found that it had personal
jurisdiction over LG for all of Celgard’s claims, including
the patent infringement claim. Celgard, LLC v. LG
Chem, Ltd., No. 3:14-cv-43, 2015 WL 2412467 (W.D.N.C.
May 21, 2015). Although Celgard argued at oral argu-
ment that we should take judicial notice of this order and
reach the merits of the district court’s personal jurisdic-
tion order without further briefing from the parties, we
CELGARD, LLC v. LG CHEM, LTD. 7

B. The Preliminary Injunction
“A preliminary injunction is an extraordinary remedy
never awarded as of right.” Winter v. Natural Res. Def.
Council, Inc., 555 U.S. 7, 24 (2008). The party seeking a
preliminary injunction must establish that “[1] he is likely
to succeed on the merits, [2] that he is likely to suffer
irreparable harm in the absence of preliminary relief, [3]
that the balance of equities tips in his favor, and [4] that
an injunction is in the public interest.” Id. at 20.
1. Likelihood of Success on the Merits
In discussing the likelihood of success of Celgard’s
patent infringement claim, the district court only stated
that, “[h]aving reviewed description of the claims detailed
in the claim charts, it appears likely that the SRS sold,
offered for sale, used, and imported into this country by
defendant infringes at least claim 1 of the ’586 patent.”
Preliminary Injunction Order, 2014 WL 3699999, at *3–4.
This single sentence fails to construe the claims or make
any findings of fact regarding infringement or invalidity.
See Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d
1372, 1379 (Fed. Cir. 2009) (“Thus the trial court first
must weigh the evidence both for and against validity
that is available at this preliminary stage in the proceed-
ings.”); Chamberlain Grp., Inc. v. Lear Corp., 516 F.3d
1331, 1340 (Fed. Cir. 2008) (“Therefore, a correct claim
construction is almost always a prerequisite for imposi-
tion of a preliminary injunction.”); Nutrition 21 v. United
States, 930 F.2d 867, 869 (Fed. Cir. 1991) (“Sufficient
factual findings on the material issues are necessary to
allow this court to have a basis for meaningful review.”).

decline to do so. Oral Arg. at 23:17, Celgard, LLC v. LG
Chem, Ltd., 2014-1675, available at, http://oralarguments.
cafc.uscourts.gov/default.aspx?/fl=2014-1675.mp3.
8 CELGARD, LLC v. LG CHEM, LTD.

We express no opinion regarding the likelihood of
success of Celgard’s patent infringement claims. We
merely hold that the district court’s single conclusory
sentence was insufficient to support its conclusion that
Celgard was likely to succeed on the merits of its patent
infringement claim. Like the district court’s failure to
address its own jurisdiction prior to granting the prelimi-
nary injunction, the district court’s lack of findings on the
likelihood of success prong also requires that we at least
vacate the injunction.
2. Irreparable Harm
LG argues that Celgard failed to demonstrate a causal
nexus between Celgard’s alleged harms and infringement
of the ’586 patent. LG contends that it has been doing the
same coating process for the batteries for its CE products
for years without any complaint by Celgard. We agree
with LG that the district court improperly found that
Celgard would suffer irreparable harm because of the
alleged infringement. In addition to establishing that it
will be at risk of irreparable harm, “the patentee must
also establish that the harm is sufficiently related to the
infringement.” Apple Inc. v. Samsung Elecs. Co. (“Apple
II”), 695 F.3d 1370, 1373 (Fed. Cir. 2012). In other words,
“[t]o show irreparable harm, it is necessary to show that
the infringement caused harm in the first place.” Apple
Inc. v. Samsung Elecs. Co. (“Apple I”), 678 F.3d 1314,
1324 (Fed. Cir. 2012) (emphasis added).
In this case, even accepting the district court’s finding
that Celgard will suffer irreparable harm, that harm is
not caused by LG’s infringement of the patent. It is
undisputed that the base film that Celgard sold to LG
does not practice the ’586 patent. Indeed, Celgard does
not sell any products that embody the claims in the ’586
patent. See Oral Arg. at 20:38. LG creates the allegedly
infringing separators using a coating method that it has
used for years and that Celgard has known about since
CELGARD, LLC v. LG CHEM, LTD. 9

Celgard was LG’s base film supplier. Celgard does not
claim it was harmed by those activities during that time
frame. It is clear, accordingly, that all of the harm Cel-
gard asserts it is now suffering stems, not from LG’s
process of coating the base films to create the allegedly
infringing separator, but from LG’s decision not to pur-
chase base films from Celgard.
In other words, Celgard is attempting to use the ’586
patent, not to prevent LG from competing against its own
product, but to mandate that LG purchase an unpatented
component from Celgard. In its brief, Celgard makes
clear that it is really trying to obtain the injunction to
force LG to purchase base film from it. See Appellee’s Br.
52–53 (“That success, in a separate market (A1427–34),
does not remedy Celgard’s exclusion from [LG’s] 56%
market share for ceramic-coated plug-in EV battery
separators.”). Although a patent gives the patentee the
legal right to exclude others from practicing his invention,
it does not allow him to create a monopoly over an un-
claimed component of that invention—here, the base film.
See Abbott Labs. v. Sandoz, Inc., 566 F.3d 1282, 1298–98
(Fed. Cir. 2009) (affirming the denial of a preliminary
injunction because the claims did not cover the accused
product). We understand Celgard’s assertions that LG
has a large share of the EV battery field, and that some of
LG’s batteries include separators that allegedly infringe
claims of the ’586 patent, but Celgard’s alleged irrepara-
ble harm—“losing goodwill, laying off employees, and loss
of market share,” Preliminary Injunction Order, 2014 WL
3699999, at *5—is not caused by LG’s manufacture or
sale of those allegedly infringing separators. All of these
alleged harms are caused by LG’s decision not to use
Celgard as its supplier for the unpatented base films. 2

2 This, of course, does not preclude Celgard from ob-
taining a royalty if LG is found to infringe any of the
10 CELGARD, LLC v. LG CHEM, LTD.

Celgard’s admission that LG has been creating in-
fringing separators ever since Celgard began to supply
base film to LG indicates that monetary damages are
adequate. At oral argument, Celgard asserted that LG
had an “implied license” to practice the ’586 patent when
it purchased the base film from Celgard. Oral Arg. at
15:16. In other words, Celgard’s position is that, in the
past, it licensed LG to perform the same coating process
that it now accuses of infringement. Celgard’s arguments
that it will be irreparably harmed by LG’s continued use
of that coating process—even though Celgard had im-
pliedly licensed that activity in the past—are unpersua-
sive. Celgard insists that the past license was tied to LG’s
purchase of Celgard’s base film, but Celgard acknowl-
edged at oral argument that it cannot get a positive
injunction to force LG to buy Celgard’s base film. See
Oral Arg. at 20:25. And, as mentioned earlier, Celgard
cannot use the ’586 patent to redress alleged irreparable
harm stemming from LG’s decision to purchase unpatent-
ed base film elsewhere. Accordingly, Celgard can be
adequately compensated for LG’s use of the coating pro-
cess to create allegedly infringing separators by money
damages if the district court finds infringement.
Celgard has, therefore, failed to establish that it will
suffer any irreparable harm caused by infringement of the
claims in the ’586 patent. Indeed, the undisputed evi-
dence shows that money damages are adequate to com-
pensate Celgard for LG’s alleged infringement of the
claims in the patent. Thus, the district court abused its
discretion in determining that the irreparable harm factor
favored granting the preliminary injunction. Because
there is no irreparable harm attributable to infringement,
which either Celgard or the district court has identified,

claims in the ’586 patent. Nor does it limit the damages
for any of Celgard’s state law claims.
CELGARD, LLC v. LG CHEM, LTD. 11

this factor weighs strongly against the grant of a prelimi-
nary injunction.
3. Balance of the Equities
The district court also abused its discretion in balanc-
ing the equities. As explained above, Celgard’s harm that
is caused by LG’s alleged infringement of the claims in
the ’586 patent is adequately compensable by money
damages. Furthermore, because Celgard does not sell any
products that embody the claims in the ’586 patent, it will
not be forced to compete against its own product. See
Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142,
1156 (Fed. Cir. 2011) (“[R]equiring [the patentee] to
compete against its own patented invention, with the
resultant harms described above, places a substantial
hardship on [the patentee].”). Celgard will, therefore, not
be harmed if the district court does not enter the prelimi-
nary injunction because it can recoup adequate money
damages if it successfully proves infringement. If, on the
other hand, the district court were to enter a preliminary
injunction, LG may have to stop production or sales,
which could affect its relationships with its customers.
Accordingly, the balance of equities weighs against the
entry of an injunction.
4. Public Interest
Additionally, the district court abused its discretion in
finding that the public interest weighs in favor of granting
the injunction. The public has a very strong interest in
guaranteeing that innovative products are available in
the market. As discussed above, Celgard does not pro-
duce any products that embody the claims in the ’586
patent. If LG were enjoined, the public may be completely
denied the availability of any products that practice this
invention, which the district court characterized as “a
very important technological development that ultimately
benefits consumers.” Preliminary Injunction Order, 2014
WL 3699999, at *5. For this reason, most injunctions
12 CELGARD, LLC v. LG CHEM, LTD.

granted for patent infringement claims involve situations
where the patentee also practices the invention, so that
the public will still have access to the patented technolo-
gy. E.g., Tebro Mfg. v. Firefly Equip. LLC, 748 F.3d 1159
(Fed. Cir. 2014); Douglas Dynamics, LLC v. Buyers Prods.
Co., 717 F.3d 1336 (Fed. Cir. 2013). In this case, moreo-
ver, third party EV manufactures may also be negatively
affected if LG is enjoined. See Br. of Amici Curiae Gen-
eral Motors LLC & Ford Motor Co., at 6–15; see also
Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 704
(Fed. Cir. 2008) (considering the adverse effect on third
party network carriers and manufacturers).
We therefore conclude that the public interest factor
counsels against a preliminary injunction in this case.
***
In sum, three of the four factors weigh against enter-
ing a preliminary injunction, including the irreparable
harm factor, which weighs strongly against granting an
injunction because Celgard has failed to claim any irrepa-
rable harm caused by the alleged infringement. No
matter how the district court was to resolve the likelihood
of success prong, our determinations on the other three
factors precludes entry of a preliminary injunction.
Accordingly, even though the district court failed to
consider its jurisdiction over LG with respect to the
patent infringement claim, and even though the district
court did not adequately make findings regarding the
likelihood of success, we hold that the district court erred
in granting Celgard’s motion for a preliminary injunction
based on a proper analysis of the other three preliminary
injunction factors.
III. CONCLUSION
For the foregoing reasons, we reverse the district
court’s entry of the preliminary injunction and remand for
proceedings consistent with this opinion.
CELGARD, LLC v. LG CHEM, LTD. 13

REVERSED AND REMANDED