M-I LLC v. Fpusa, LLC ( 2015 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
M-I LLC,
Plaintiff-Appellee
v.
FPUSA, LLC,
Defendant-Appellant
______________________
2015-1870
______________________
Appeal from the United States District Court for the
Western District of Texas in No. 5:15-CV-00406, Senior
Judge David A. Ezra.
______________________
Decided: September 24, 2015
______________________
STEPHEN BURTON CRAIN, Bracewell & Giuliani, LLP,
Houston, TX, argued for defendant-appellant. Also repre-
sented by CHRISTOPHER DODSON, JEFFREY L. OLDHAM,
ANDREW WILLIAM ZEVE; DOUGLAS FRED STEWART, Seattle,
WA.
JOHN R. KEVILLE, Winston & Strawn LLP, Houston,
TX, argued for plaintiff-appellee. Also represented by
MICHELLE REPLOGLE; TED DALTON LEE, Gunn, Lee &
2 M-I LLC V. FPUSA, LLC
Cave, P.C., San Antonio, TX; RICHARD L. STANLEY, Law
Office of Richard L. Stanley, Houston, TX.
______________________
Before PROST, Chief Judge, BRYSON and HUGHES, Circuit
Judges.
HUGHES, Circuit Judge.
FPUSA, LLC, appeals from an order of the district
court granting M-I LLC’s motion for a preliminary injunc-
tion. The district court enjoined FPUSA from promoting,
selling, or renting a system for recovering drilling fluid
that infringes claims 1 and/or 16 of M-I’s patent. Because
the district court did not abuse its discretion in granting
an injunction with respect to claim 16, we affirm the
preliminary injunction as to claim 16, vacate as to claim
1, and remand with instructions to reform the injunction
consistent with this opinion.
I
M-I filed suit in the United States District Court for
the Western District of Texas alleging that FPUSA’s Vac-
Screen system infringes U.S. Patent No. 9,004,288. The
’288 patent is directed to recovering drilling fluid by using
an improved shaker. Drilling fluid facilitates the oil-
drilling process, and becomes contaminated with solid
particulates during use. The disclosed invention uses
pressure differential devices on screens to improve the
rate and efficiency of separating drilling fluid from con-
taminants, and may include a degassing chamber to
degas the recovered fluid. The district court granted M-I’s
motion for a preliminary injunction, denied FPUSA’s
subsequent motion for reconsideration, and in a third
order, clarified the enjoined activities.
The district court found that M-I met its burden to
show that it will likely prove that FPUSA infringes at
M-I LLC V. FPUSA, LLC 3
least claim 16 of the ’288 patent, and that this claim is
valid and enforceable. 1 Claim 16 recites, in relevant part:
A system comprising:
a first screen having an upper side and a lower
side for separating drill cuttings and drilling fluid
within a shaker;
a pressure differential generator configured to
pull air or vapor through the first screen to en-
hance the flow of drilling fluid through the first
screen with respect to a second screen within the
shaker in which the pressure differential genera-
tor does not create a pressure differential between
an area above and an area below the second
screen; and . . .
a degassing chamber in fluid communication with
the pressure differential generator and the sump
and located external to the shaker for collecting
all of the air or vapor and the drilling fluid in the
sump and removing air or vapor from the drilling
fluid.
’288 patent, col. 12 ll. 47–65 (emphasis added).
The district court held that the modifiers “first” and
“second” merely “distinguish between repeated instances
of an element or limitation, and [did] not construe them to
denote spatial location relative to the shaker’s inlet.” J.A.
14. The district court determined that because the Vac-
Screen applies a pressure differential to only one of mul-
tiple screens in a shaker, it satisfies the “first screen”
limitation.
1 We decline to reach the merits of the district
court’s findings with respect to claim 1 because the dis-
trict court did not complete its infringement analysis on
that claim. See FED. R. CIV. P. 65(d)(1).
4 M-I LLC V. FPUSA, LLC
In assessing whether the Vac-Screen products contain
the “degassing chamber” limitation of claim 16, the dis-
trict court relied on FPUSA’s patent, U.S. Patent No.
9,015,959, which FPUSA concedes covers the Vac-Screen
system; and a “Technology Evaluation Report” that was
prepared by one of FPUSA’s experts. J.A. 21. The ’959
patent describes accumulator tanks that provide “flu-
id/gas separation.” ’959 patent, col. 8 ll. 61–64. The
report states that “[a]ttached to the manifold is a vacuum
line with a fluid or air separator.” J.A. 695. Based on
these disclosures, the district court concluded that the
Vac-Screen system includes a system by which drilling
fluid is separated from residual air or gas, as required by
the “degassing chamber” limitation of claim 16.
In addition to its non-infringement contentions,
FPUSA argued that the ’288 patent is invalid because it is
only entitled to a 2013 priority date, and the Vac-Screen
system had been on sale since 2010. The district court
determined that the claims are properly entitled to a 2006
priority date, and that FPUSA failed to raise a substan-
tial question as to the validity of the patent. In light of
the evidence supporting a finding of infringement and
validity, the district court concluded that M-I’s likelihood
of success on the merits weighs in favor of granting a
preliminary injunction.
The district court also determined that M-I would
likely suffer irreparable harm in the absence of a prelimi-
nary injunction. The district court noted M-I’s potential
loss of market share, and that the parties did not dispute
that they are each other’s sole competitors. J.A. 26. The
district court also determined that FPUSA is a small
subsidiary of a foreign corporation, and that district
courts often find that money damages are insufficient in
cases involving foreign infringers. J.A. 28. With respect
to the remaining factors, the court weighed M-I’s patent
rights against FPUSA’s business concerns, and ultimately
M-I LLC V. FPUSA, LLC 5
concluded that the balance of equities is neutral, and that
the public interest weighs in favor of an injunction.
FPUSA appeals the district court’s orders on the pre-
liminary injunction. We have jurisdiction under 28 U.S.C.
§ 1292(a)(1) and (c)(1).
II
We apply the standard of the regional circuit in re-
viewing preliminary injunctions. Abbott Labs. v. Sandoz,
Inc., 544 F.3d 1341, 1367 (Fed. Cir. 2008). The Fifth
Circuit reviews a district court’s ultimate decision to
grant or deny a preliminary injunction for abuse of discre-
tion. Janvey v. Alguire, 647 F.3d 585, 591-92 (5th Cir.
2011). As to each element of the district court’s prelimi-
nary injunction analysis, findings of fact are reviewed for
clear error, and conclusions of law are subject to broad
review and will be reversed if incorrect. Id. at 592.
The district court did not abuse its discretion in grant-
ing a preliminary injunction as to claim 16. The district
court did not err in finding that M-I is likely to prove
infringement of a valid claim. The court’s construction of
the “first” and “second” modifiers was proper in light of
the claim language and the specification. And based on
FPUSA’s representation that the Vac-Screen system only
applies a vacuum to one screen, the one closest to the
shaker outlet, the district court’s finding that the Vac-
Screen system meets the “first screen” limitation was not
clearly erroneous. Nor was the district court’s determina-
tion that the Vac-Screen likely meets the “degassing
chamber” limitation, based on the disclosures in the ’959
patent and Technology Evaluation Report.
The district court also did not err in finding that
FPUSA had not raised a substantial question of invalidi-
ty. There is a statutory presumption that issued patents
are valid. 35 U.S.C. § 282. The district court did not err
in determining that the claims of the ’288 patent are
6 M-I LLC V. FPUSA, LLC
supported by the written description in the parent appli-
cation, which was filed in 2006.
Further, the district court did not err in determining
that irreparable harm would likely result based on the
evidence in the record. FPUSA admitted in its briefing
before the district court that enjoining FPUSA would
“leav[e] M-I as the sole source of a substitute technology,”
J.A. 480, which means that absent an injunction, M-I
would likely suffer an irreparable loss of market share.
See Robert Bosch LLC v. Pylon Mfg. Corp., 659 F.3d 1142,
1151 (Fed. Cir. 2011) (“[The existence of a two-player
market] creates an inference that an infringing sale
amounts to a lost sale for the patentee.”). M-I only start-
ed marketing its product in 2015, while FPUSA has been
on the market since 2010. And while FPUSA faulted
M-I’s reliance on a third-party report as evidence of
FPUSA’s inability to satisfy a judgment, FPUSA did not
offer any evidence of its profitability. Finally, the district
court did not err in finding that the balance of equities is
neutral, and that the public interest weighs in favor of an
injunction.
III
FPUSA argues that the preliminary injunction order
is procedurally defective and should be vacated independ-
ent of the merits. Although we affirm the injunction with
regard to claim 16, we agree that the form of the injunc-
tion must be corrected on remand. First, the preliminary
injunction is overbroad and should not include “other
products.” As we have previously held, broad injunctions
that merely instruct the enjoined party not to infringe are
improper because such an order frustrates the remedy of
contempt, which is available only with respect to devices
“which are no more than colorably different [from the
enjoined product] and which clearly are infringements of
the patent.” Int’l Rectifier Corp. v. IXYS Corp., 383 F.3d
M-I LLC V. FPUSA, LLC 7
1312, 1316 (Fed. Cir. 2004) (internal quotation marks
omitted).
We also note that on remand, the district court should
be mindful that the Fifth Circuit “strictly construe[s]”
Federal Rule of Civil Procedure 65(d)’s requirement that a
preliminary injunction order must “describe in reasonable
detail—and not by referring to the complaint or other
document—the act or acts restrained or required.” Seat-
tle-First Nat’l Bank v. Manges, 900 F.2d 795, 800 (5th Cir.
1990). The district court did not fully comply with Rule
65(d), because the description of the enjoined acts was set
forth in a separate document from the preliminary injunc-
tion order.
IV
We have considered FPUSA’s remaining arguments
and find them unpersuasive. Because the district court
did not abuse its discretion in granting the preliminary
injunction as to claim 16, we affirm on the merits. We
vacate the preliminary injunction as to claim 1 because
the district court did not complete its infringement analy-
sis. Further, we remand to the district court with instruc-
tions to reform the preliminary injunction consistent with
this opinion.
AFFIRMED IN PART, VACATED IN PART, AND
REMANDED IN PART