Case Information
*2 O’M ALLEY , Circuit Judge .
Cеlgard, 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. B ACKGROUND 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 executed this ceramic coating process on the base films supplied by Celgard for both the CE products and EVs.
The parties bеgan 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 pricе 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 bоth 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 pеrformed 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 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 comрetitors 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 becаuse 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).
II. D ISCUSSION 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
,
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 [thе 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 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
,
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
,
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 impropеrly 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
”),
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 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- сhase 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 compоnent of that invention—here, the base film.
See Abbott Labs. v. Sandoz, Inc.
,
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.
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 cоurt 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
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
,
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. C ONCLUSION For the foregoing reasons, we reverse the district court’s entry of the preliminary injunction and remand for proceedings consistent with this opinion.
REVERSED AND REMANDED
Notes
[1] After briefing for this сase 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
[2] This, of course, does not preclude Celgard from ob- taining a royalty if LG is found to infringe any of the