Luminara Worldwide, LLC v. Liown Electronics Co. Ltd. , 814 F.3d 1343 ( 2016 )

United States Court of Appeals
for the Federal Circuit
______________________
LUMINARA WORLDWIDE, LLC,
Plaintiff-Appellee
v.
LIOWN ELECTRONICS CO. LTD., LIOWN
TECHNOLOGIES/BEAUTY ELECTRONICS, LLC,
SHENZHEN LIOWN ELECTRONICS CO. LTD.,
BOSTON WAREHOUSE TRADING CORP., ABBOTT
OF ENGLAND (1981), LTD., BJ’S WHOLESALE
CLUB, INC., VON MAUR, INC., ZULILY, INC.,
SMART CANDLE, LLC, TUESDAY MORNING
CORP., THE LIGHT GARDEN, INC., CENTRAL
GARDEN & PET COMPANY,
Defendants-Appellants
AMBIENT LIGHTING, INC.,
Defendant
______________________
2015-1671
______________________
Appeal from the United States District Court for the
District of Minnesota in No. 0:14-cv-03103-SRN-FLN,
Judge Susan Richard Nelson.
______________________
Decided: February 29, 2016
______________________
2 LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD.
JON WRIGHT, Sterne Kessler Goldstein & Fox, PLLC,
Washington, DC, argued for plaintiff-appellee. Also repre-
sented by DAVID K.S. CORNWELL, RICHARD D. COLLER, III;
COURTLAND COLLINSON MERRILL, DANIEL RYAN HALL,
Anthony Ostlund Baer & Louwagie P.A., Minneapolis,
MN.
DAN L. BAGATELL, Perkins Coie LLP, Phoenix, AZ, ar-
gued for all appellants. Defendants-appellants Liown
Electronics Co. Ltd., Liown Technologies/Beauty Electron-
ics, LLC, Shenzhen Liown Electronics Co. Ltd. also repre-
sented by KENNETH J. HALPERN, Palo Alto, CA; JOSEPH P.
REID, THOMAS N. MILLIKAN, San Diego, CA.
ALAN GARY CARLSON, Carlson, Caspers, Vandenburgh,
Lindquist & Schuman, P.A., Minneapolis, MN, for de-
fendants-appellants BJ’s Wholesale Club, Inc., Central
Garden & Pet Company. Also represented by TARA
CATHERINE NORGARD.
______________________
Before MOORE, O’MALLEY, and TARANTO, Circuit Judges.
MOORE, Circuit Judge.
Appellants Liown Electronics Co.; Shenzhen Liown
Electronics Co.; and Liown Technologies/Beauty Electron-
ics, LLC (collectively, “Liown”), and enjoined distributors
Boston Warehouse Trading Corp.; Abbott of England
(1981), Ltd.; BJ’s Wholesale Club., Inc.; Von Maur, Inc.;
Zulily, Inc.; Smart Candle, LLC; Tuesday Morning Corp.;
Ambient Lighting, Inc.; The Light Garden, Inc.; and
Central Garden & Pet Co. (collectively, “Distributors”)
appeal from the district court’s grant of a preliminary
injunction barring Liown from supplying Distributors
with artificial candle products that infringe Disney En-
terprises, Inc.’s U.S. Patent No. 8,696,166. We vacate and
remand for further proceedings.
LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD. 3
BACKGROUND
The patents asserted in this case—the ’166 patent and
U.S. Patent Nos. 7,837,355; 8,070,319; and 8,534,869—
teach improved techniques for making the light from
artificial candles flicker like the flames of real candles.
These techniques were first developed for the “Haunted
Mansion” ride at Disneyland. Disney Enterprises, Inc., a
wholly-owned subsidiary of The Walt Disney Company, is
the owner of the asserted patents, which claim priority to
2008.
In 2008, Disney Enterprises granted Candella, LLC, 1
a four-year worldwide license to “make, have made, use,
sell, offer for [sale], and import” products practicing
“Artificial Flame Technology,” which was defined to
include Disney’s patents and know-how relating to “creat-
ing a unique artificial flickering flame effect.” J.A. 368,
370. In May 2012, Disney Enterprises and Candella
renewed the license until 2020 on similar terms. The
original terms of the license restricted Candella’s rights to
the Artificial Flame Technology in several ways. For
example, Candella could not assign, sublicense, or trans-
fer ownership of its rights without Disney’s consent, nor
could Candella sue to enforce the patents or settle litiga-
tion without Disney’s consent.
The dispute between the parties in this case stems
from early 2010, when Candella first approached Liown to
manufacture its candles. Negotiations between the
companies soon broke down, and Liown subsequently filed
a patent application in China on flameless candles.
Allegedly, Liown based this application on confidential
information about the Artificial Flame Technology it
1 Candella, the former plaintiff in this case, merged
in late 2014 with Luminara Worldwide, LLC, the party
bringing this appeal.
4 LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD.
obtained during its negotiations with Candella. In 2012,
Liown began selling its flameless candles in the United
States.
On October 31, 2012, Disney Enterprises and Candel-
la amended the license agreement to grant Candella more
rights, including (1) the right to sublicense its interest in
the Artificial Flame Technology according to the terms of
the license agreement; (2) the right to assign its interest
with Disney’s consent, not to be withheld unreasonably;
and (3) the right to sue without Disney’s consent. J.A.
439–46 (“2012 Amendment”). The license agreement has
since been amended three more times, each time to grant
Candella more rights in the Artificial Flame Technology.
On July 26, 2013, Disney Enterprises and Candella
amended the agreement to give Candella the option of
extending the agreement in successive periods until six
years after the expiration of the last of the licensed pa-
tents. On December 20, 2013, Disney Enterprises and
Candella amended the agreement to give Candella the
right to select and retain counsel to respond to any peti-
tion for post grant review or reexamination of the licensed
patents. And on September 9, 2014, Disney Enterprises
and Candella amended the agreement to give Candella
rights to additional patents. We refer to the license
agreement, as amended by all four amendments, as the
“Amended Agreement.”
Two days after the 2012 Amendment, Candella sued
Liown for patent infringement. The parties settled, and
Liown agreed to stop selling infringing candles in the
United States. Following the settlement, Candella and
Liown reopened negotiations for Liown to manufacture
flameless candles having the Artificial Flame Technology.
However, the relationship again deteriorated. Days after
receiving its own U.S. patent covering similar artificial
flame technology, Liown advised Candella that it would
no longer comply with the terms of the settlement agree-
ment. Liown then allegedly began selling its own flame-
LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD. 5
less candles to Candella’s exclusive customers based on
information it learned about those customers in the
period after the settlement proceedings.
Candella again filed suit against Liown, alleging pa-
tent infringement, tortious interference, and trademark
infringement. After filing this suit, Candella merged into
Luminara. Luminara now possesses all of the rights
formerly held by Candella.
Shortly after the suit was filed, Liown moved to dis-
miss for lack of standing. The district court denied
Liown’s motion, finding that Luminara had both constitu-
tional and prudential standing. Luminara Worldwide,
LLC v. Liown Elecs. Co., No. 14-CV-3103 SRN/FLN (D.
Minn. Apr. 3, 2015), ECF No. 143; J.A. 1–59 (“Standing
Order”). Luminara moved for a preliminary injunction
based on Liown’s alleged infringement of claim 1 of the
’166 patent and Liown’s alleged tortious interference with
Luminara’s customers. The court granted Luminara’s
motion based on the alleged infringement without reach-
ing the alternative ground of tortious interference. Lu-
minara Worldwide, LLC v. Liown Elecs. Co., No. 14-CV-
3103 SRN/FLN, 2015 WL 1967250 (D. Minn. May 1,
2015), ECF No. 147; J.A. 60–114 (“Preliminary Injunction
Order”), order clarified by Luminara Worldwide, LLC v.
Liown Elecs. Co., No. 14-CV-3103 SRN/FLN, 2015 WL
3559273 (D. Minn. May 22, 2015), ECF No. 210; J.A. 115–
48 (“Clarification Order”). Liown appealed, challenging
the court’s holding that Luminara had standing to bring
the suit and its grant of a preliminary injunction. We
have jurisdiction under 28 U.S.C. § 1295(a)(1).
DISCUSSION
I. Disney Has Not Retained the Right to License the
Patent Through the “Affiliate” Clause
Under our precedent, only parties with exclusionary
rights to a patent may bring suit for patent infringement.
6 LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD.
See Morrow v. Microsoft Corp., 499 F.3d 1332, 1339 (Fed.
Cir. 2007); WiAV Sols. LLC v. Motorola, Inc., 631 F.3d
1257, 1264–65 (Fed. Cir. 2010). The Amended Agreement
sets out the scope of Candella’s rights to the Artificial
Flame Technology; thus, we look to it to determine
whether Candella had exclusionary rights to the asserted
patents at the time this suit was filed. California law
governs the interpretation of the Amended Agreement.
Under California law, “[a] contract must be so interpreted
as to give effect to the mutual intention of the parties as it
existed at the time of contracting, so far as the same is
ascertainable and lawful.” Cal. Civ. Code § 1636. We
review the district court’s interpretation of a contract de
novo. DVD Copy Control Ass’n v. Kaleidescape, Inc., 97
Cal. Rptr. 3d 856, 869 (Cal. Ct. App. 2009).
Liown argues that Candella does not have exclusion-
ary rights to the asserted patents because Disney re-
tained the right to freely license the technology to any
entity by creating new Affiliates. In § 2.2 of the Amended
Agreement, Disney Enterprises retained the right for its
Affiliates to practice the Artificial Flame Technology:
Reservation of Rights. Notwithstanding the ex-
clusive license grant above, Disney expressly re-
serves for itself and its Affiliates the right
throughout the world to make, have made, use,
sell, offer for sale and import the Licensed Prod-
ucts, within and outside the Product Categories.
J.A. 422. Thus, whether Candella could bring suit for
patent infringement turns on the interpretation of Affili-
ate in the Amended Agreement. If Disney Enterprises
could indeed license any entity to manufacture and sell
candles having Artificial Flame Technology, Candella
would not have had exclusionary rights to the asserted
patents. However, if Disney Enterprises did not retain
the effective right to license the Artificial Flame Technol-
ogy to any entity through the Affiliate provision, Candella
LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD. 7
would have had exclusionary rights, and therefore could
sue to prevent Liown from infringing the asserted pa-
tents.
Section 1 of the Amended Agreement defines “Affili-
ate” as:
“Affiliate” means any entity controlling or con-
trolled by or in common control with a Party,
where “control” is defined as the ownership of at
least 50% of the equity or beneficial interest of
such entity or the right to vote for or appoint a
majority of the board of directors or other govern-
ing body of such entity. For purposes of this
Agreement, a Licensor Affiliate shall include: (1)
any other entity with respect to which Licensor or
any of its Affiliates has management or opera-
tional responsibility (even though Licensor or its
Affiliate may own less than 50% of the equity of
such entity); and (2) any other entity, theme park,
or venue operated by or under license from The
Walt Disney Company or any of its Affiliates.
J.A. 420. This provision lays out three categories of
Disney Enterprises’ Affiliates. First, an Affiliate can be
“any entity controlling or controlled by or in common
control with” Disney Enterprises. J.A. 420. Second, a
Disney Enterprises Affiliate includes “any other entity
with respect to which [Disney Enterprises] or any of its
Affiliates has management or operational responsibility
(even though [Disney Enterprises] or its Affiliate may
own less than 50% of the equity of such entity).” J.A. 420.
And third, a Disney Enterprises Affiliate includes “any
other entity, theme park, or venue operated by or under
license from The Walt Disney Company or any of its
Affiliates.” J.A. 420.
Liown does not argue that Disney Enterprises can
freely create Affiliates through the first two of these
categories, both of which require Disney Enterprises to
8 LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD.
have management or operational control over the Affili-
ate. Instead, Liown points to the third category, which
defines Affiliate to include any entity “operated by or
under license from The Walt Disney Company or any of its
Affiliates.” J.A. 420 (emphasis added). Liown contends
that any entity “under license” from Disney Enterprises
can practice the patent as an Affiliate, effectively allowing
Disney Enterprises to freely license the patent. 2 It argues
that this provision only requires Affiliates to obtain a
license to the Artificial Flame Technology with “any other
technology . . . no matter how trivial that technology may
be and no matter whether the licensee pays any extra
consideration for the additional technology.” Appellants’
Br. 32–33. It argues there is no explicit requirement for
Disney Enterprises to have operational or management
control over Affiliates that operate under license from it.
In support of its interpretation, it points to § 2.2 of the
Amended Agreement, which provides:
For purposes of this section 2.2 the term “Affili-
ate” does not include an entity operated under li-
cense from the Walt Disney Company where such
license is only a license to Artificial Flame Tech-
nology.
J.A. 422. It argues that the fact that the Amended
Agreement explicitly excludes an entity operated under a
license to the Artificial Flame Technology from the defini-
tion of Affiliate “necessarily implies that Disney may
license any entity to use Artificial Flame Technology . . .
when any other technology is included within the license.”
Appellants’ Br. 32.
2 As a wholly owned subsidiary of The Walt Disney
Company, Disney Enterprises is one of The Walt Disney
Company’s Affiliates. As a result, an Affiliate may fall
under this provision if it were operated by or under li-
cense from Disney Enterprises.
LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD. 9
Like the district court, we conclude that “Affiliate”
does not have the broad meaning that Liown claims. The
first two categories of Affiliates require operational con-
trol, as does the “operated by” provision in the third
category. And the plain language of the “operated . . .
under license” provision requires the license to relate to
the operation of the Affiliate in some way, such as with a
franchise agreement. Moreover, the Amended Agreement
repeatedly states that Candella would have “exclusive”
rights to the Artificial Flame Technology. See J.A. 422
§§ 2.1, 2.2; J.A. 440, art. 2(a), 2(b); J.A. 441, art. 2(c), 2(d);
J.A. 608, art. 2(a); J.A. 614, art. 2(a). If Disney Enterpris-
es could license the Artificial Flame Technology to any
other entity merely by licensing some additional technolo-
gy to that entity, Candella’s promise of an “exclusive”
license would be a fiction.
Candella and Disney Enterprises amended their orig-
inal license agreement four times. Each time, Disney
Enterprises gave Candella more rights to the Artificial
Flame Technology. Liown itself avers that the parties’
intent in agreeing to the 2012 Amendment was to “confer
standing on Candella,” and thereby allow it to bring suit
against Liown. Appellants’ Br. 13. Any interpretation of
the Amended Agreement that permits Disney Enterprises
to license any entity as an Affiliate, such that it can freely
practice the Artificial Flame Technology, runs counter to
the parties’ intent as expressed in the Amended Agree-
ment. We hold that Candella had exclusionary rights to
the Artificial Flame Technology when this suit was
brought. Disney did not retain the broad licensing rights
proposed by Liown.
Liown’s next standing argument is that Disney re-
tained substantial rights which prevent Luminara from
bringing suit in its own name without joining Disney. If a
party (exclusive licensee) has “all substantial rights” to a
patent, it “may be deemed the effective ‘patentee’ under
35 U.S.C. § 281,” and thus may maintain an infringement
10 LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD.
suit in its own name, without joining the patentee. Prima
Tek II, LLC v. A-Roo Co., 222 F.3d 1372, 1377 (Fed. Cir.
2000). If not, however, an exclusive licensee must join the
patentee to bring suit. 3 This joinder requirement exists
for two reasons. First, joinder protects the alleged in-
fringer from facing multiple lawsuits on the same patent.
Aspex Eyewear, Inc. v. Miracle Optics, Inc., 434 F.3d 1336,
1343 (Fed. Cir. 2006). Second, joinder protects the pa-
tentee from losing substantial rights if its patent claims
are invalidated or the patent rendered unenforceable in
an action in which it did not participate. Id.Because one purpose of the joinder requirement is to
protect the alleged infringer from multiple lawsuits, the
transfer of the right to sue for infringement is critical.
See Alfred E. Mann Found. for Sci. Research v. Cochlear
Corp., 604 F.3d 1354, 1361 (Fed. Cir. 2010) (explaining
that the right to sue is frequently “the most important
consideration”); Aspex Eyewear, 434 F.3d at 1342 (describ-
ing the right to sue as “[a] key factor”). If the patentee
retains the right to sue, the infringer could face multiple
suits for the same alleged infringement—in one suit
defending itself against the patentee, and in another
defending itself against the exclusive licensee. To prevent
this, we require joinder of the patentee if it has retained
the right to sue for infringement.
Disney Enterprises has not retained the right to sue
here. Instead, Luminara has the “sole and exclusive
right” to sue infringers of the patents-in-suit under the
Amended Agreement. J.A. 608, 614. Thus, Disney En-
terprises need not be joined to protect Liown against the
possibility of facing multiple lawsuits on the same patent.
3 We have commonly referred to this concept as
“prudential standing.” See, e.g., Prima Tek II, 222 F.3d at
1377.
LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD. 11
The second purpose of joinder is to protect the patent-
ee from losing substantial rights if its claims are invali-
dated or the patent is rendered unenforceable in an action
in which it did not participate. Aspex Eyewear, 434 F.3d
at 1343. Thus, an exclusive licensee that does not have
“all substantial rights” to a patent must join the patentee
to bring suit. For example, if the patentee has retained
the right to freely license the patent, it stands to lose
substantial rights if the claims are held invalid or the
patent held unenforceable. Other considerations include:
the scope of the licensee’s right to sublicense, the
nature of license provisions regarding the rever-
sion of rights to the licensor following breaches of
the license agreement, the right of the licensor to
receive a portion of the recovery in infringement
suits brought by the licensee, the duration of the
license rights granted to the licensee, the ability of
the licensor to supervise and control the licensee’s
activities, the obligation of the licensor to continue
paying patent maintenance fees, and the nature of
any limits on the licensee’s right to assign its in-
terests in the patent.
Mann Found., 604 F.3d at 1360–61.
Luminara has extensive rights under the Amended
Agreement, including its exclusionary rights. It has a
worldwide license to “make, have made, use, sell, offer for
[sale], and import” products practicing the Artificial
Flame Technology. J.A. 422. It has the sole right to
sublicense the asserted patents—Disney Enterprises did
not retain the right to license the asserted patents
through the “Affiliate” provision, as discussed supra pp.
6–10. And it has the reasonable right to assign its rights
under the Amended Agreement.
The rights that Liown argues Disney Enterprises re-
tains are: the right for Disney Enterprises and its Affili-
ates to practice the patents; title to the patents; the
12 LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD.
responsibility to pay maintenance fees to keep the patents
in force; a financial interest in litigation and licensing;
and a right to notice of litigation and licensing activities. 4
None of these retained rights individually or cumula-
tively are substantial enough to preclude Luminara from
bringing suit in its name alone. Although Disney Enter-
prises retains the right for it and its Affiliates to practice
the patents, this is not a substantial right requiring
joinder. This is because Disney Enterprises will not lose
this right if the claims are invalidated or the patent held
unenforceable. Rather, if the claims were invalidated or
the patent held unenforceable, everyone, including Disney
Enterprises and its Affiliates, could freely practice the
patent. A patentee that merely retains the right to prac-
tice the patent does not risk losing a substantial right if
the claims are invalidated or the patent held unenforcea-
ble. The retained right to practice a patent is not the
same as a retained right to exclude others from doing so.
We have previously held that a financial interest in
litigation and licensing without more does not amount to
a substantial right forcing joinder of the patentee. See,
e.g., Propat Int’l Corp. v. RPost, Inc., 473 F.3d 1187, 1191
(Fed. Cir. 2007) (“[T]he fact that a patent owner has
retained a right to a portion of the proceeds of the com-
mercial exploitation of the patent, . . . does not necessarily
defeat what would otherwise be a transfer of all substan-
tial rights in the patent.”); Vaupel Textilmaschinen KG v.
Meccanica Euro Italia SpA, 944 F.2d 870, 875 (Fed. Cir.
1991) (holding that “a right to receive infringement dam-
ages” was not “so substantial as to reduce the transfer to
a mere license or indicate an intent not to transfer all
substantial rights”). And title to the patents, the respon-
sibility to pay maintenance fees on the patents, and a
4 This decision is limited to these rights argued by
Liown.
LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD. 13
right to notice of litigation and licensing activities are not
substantial rights that the patentee risks losing if the
claims are invalidated or the patent held unenforceable.
We hold that Luminara has all substantial rights to
the patent and therefore it is not necessary to join Disney
Enterprises in this lawsuit. Thus, we reject the standing
arguments raised by Liown. 5
II. Preliminary Injunction
We review the grant of a preliminary injunction for
abuse of discretion. Amazon.com Inc. v. Barnesandno-
ble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001). To
5 We note that the same facts upon which we rely to
conclude that Luminara can proceed in the absence of
Disney also support a finding that Disney is not an indis-
pensable party within the meaning of Rule 19 of the
Federal Rules of Civil Procedure. See Fed. R. Civ. P.
19(a). The Advisory Committee Notes to Rule 19 discuss
the concerns that Rule 19 is intended to address:
The first factor brings in a consideration of what a
judgment in the action would mean to the absen-
tee. Would the absentee be adversely affected in a
practical sense, and if so, would the prejudice be
immediate and serious, or remote and minor? The
possible collateral consequences of the judgment
upon the parties already joined are also to be ap-
praised. Would any party be exposed to a fresh
action by the absentee, and if so, how serious is
the threat?
Fed. R. Civ. Pro. 19 advisory committee’s note (1966)
(citing A. L. Smith Iron Co. v. Dickson, 141 F.2d 3 (2d Cir.
1944); Caldwell Mfg. Co. v. Unique Balance Co., 18 F.R.D.
258 (S.D.N.Y. 1955)). These are the very factors we
consider here.
14 LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD.
obtain a preliminary injunction, a party must show “that
[it] is likely to succeed on the merits, that [it] is likely to
suffer irreparable harm in the absence of preliminary
relief, that the balance of equities tips in [its] favor, and
that an injunction is in the public interest.” Winter v.
Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). Fur-
thermore, a patentee must establish a causal nexus
between the infringement and the alleged harm. Apple,
Inc. v. Samsung Elecs. Co., 678 F.3d 1314, 1324 (Fed. Cir.
2012). We review claim construction de novo except for
subsidiary facts based on extrinsic evidence, which we
review for clear error. Teva Pharm. USA, Inc. v. Sandoz,
Inc., 135 S. Ct. 831, 841–42 (2015).
Liown argues that the preliminary injunction was im-
properly granted because there is a substantial question
of validity—namely, whether Disney Enterprises’ earlier
U.S. Patent No. 7,261,455 anticipates claim 1 of the ’166
patent. We agree.
Although Luminara alleges infringement of four pa-
tents in this suit, claim 1 of the ’166 patent forms the sole
basis for the district court’s grant of a preliminary injunc-
tion. Claim 1 recites (emphasis added):
A pendulum member for generating a flickering
flame effect, comprising:
a body with upper and lower portions;
a flame silhouette element extending outward
from the upper portion of the body; and
a hole in the body below the flame silhouette ele-
ment, wherein the hole is configured to receive a
flame support element such that the flame sup-
port element passes through the hole and the body
is free to pivot when supported by the flame sup-
port element.
LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD. 15
The ’455 patent is also directed to artificial flame technol-
ogy. This patent teaches a flame element above a sup-
porting two-axis gimbal, such that the flame element may
rotate around two axes. The parties agree that the ’455
patent discloses every element of claim 1 of the ’166
patent except the requirement that “the body is free to
pivot when supported by the flame support element.” But
the parties dispute whether rotation around two axes
using gimbals (as taught in the ’455 patent) satisfies this
limitation.
In considering whether there is a substantial question
of invalidity, the district court construed “free to pivot” to
mean “to run on, or as if on, a pivot.” Preliminary Injunc-
tion Order at *6. The district court then wrote that the
specification teaches that the pendulum described in
claim 1 of the ’166 patent “is suspended using a V-shaped
wire passing through a larger hole.” Id. at *11. This
“relatively loose suspension allows the pendulum to rotate
around three axes” and “slide along the wire,” among
other movements. Id. The court concluded that the
pendulum “moves in at least four different ways, and
moves in a random, unpredictable manner.” Id. Because
the ’455 patent teaches a body that moves in only two
ways (that is, rotates around only two axes), the court
held that it did not satisfy the “free to pivot” limitation.
Id. at *11–12. In essence, the district court construed
“free to pivot” to include two additional limitations:
(1) chaotic movement and (2) movement that is more than
rotation around two axes.
The ordinary meaning of “free to pivot” does not plain-
ly require either of these limitations. Pivoting includes
rotation around a single axis—for example, when a door
pivots on its hinges, a dancer turns on a pivot foot, or a
lever pivots on a fulcrum. And being “free to pivot” does
not require chaotic motion.
16 LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD.
Absent lexicography or disavowal, we do not depart
from the plain meaning of the claims. Thorner v. Sony
Computer Entm’t Am. LLC, 669 F.3d 1362, 1365 (Fed. Cir.
2012). The standards for finding lexicography and disa-
vowal are “exacting.” GE Lighting Sols., LLC v. AgiLight,
Inc., 750 F.3d 1304, 1309 (Fed. Cir. 2014). To act as a
lexicographer, a patentee must “clearly set forth a defini-
tion of the disputed claim term” and “clearly express an
intent to redefine the term.” Thorner, 669 F.3d at 1365
(internal quotation marks omitted). Similarly, disavowal
requires that “the specification [or prosecution history]
make[] clear that the invention does not include a particu-
lar feature.” SciMed Life Sys. Inc. v. Advanced Cardio-
vascular Sys., Inc., 242 F.3d 1337, 1341 (Fed. Cir. 2001).
While such disavowal can occur either explicitly or implic-
itly, it must be clear and unmistakable. See Trs. of Co-
lumbia Univ. v. Symantec Corp., No. 2015-1146, 2016 WL
386068, at *2–3 (Fed. Cir. Feb. 2, 2016). We have found
disavowal or disclaimer based on clear and unmistakable
statements by the patentee that limit the claims, such as
“the present invention includes . . .” or “the present inven-
tion is . . . ” or “all embodiments of the present invention
are . . . .” See, e.g., Regents of the Univ. of Minn. v. AGA
Med. Corp., 717 F.3d 929, 936 (Fed. Cir. 2013); Honeywell
Int’l, Inc. v. ITT Indus., Inc., 452 F.3d 1312, 1316–19
(Fed. Cir. 2006); SciMed Life Sys., Inc., 242 F.3d at 1343–
44. When a patentee “describes the features of the ‘pre-
sent invention’ as a whole,” he implicitly alerts the reader
that “this description limits the scope of the invention.”
Regents of the Univ. of Minn., 717 F.3d at 936.
At this preliminary stage, we see no definition and no
disavowal or disclaimer in the specification requiring
motion in four different ways or directions. Certainly, the
specification teaches that in some embodiments, the body
has a hole that is larger than the diameter of the support-
ing wire, allowing it to move side-to-side and to rotate
around the support element. ’166 patent, col. 7 ll. 22–35.
LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD. 17
However, the specification also teaches that in other
embodiments, it is preferable to have a rigid or semi-rigid
support element—not a wire. Id. at col. 7 ll. 35–37. In
these embodiments, the body would rotate around the
support elements, but would not flutter or move side-to-
side or in the other ways required by the district court.
Thus, the specification teaches that non-rotational motion
is optional. We have been shown no prosecution history
that is to the contrary. As a result, we see no basis for
departing from the plain meaning of the term “free to
pivot.”
By contrast, the specification disclaims non-chaotic
pivoting. It explains that solitary flames are “complex
kinetic interactions” that “produce a continuously and
randomly moving light.” ’166 patent, col. 1 ll. 39–41. It
teaches that flame displays in the prior art “are relatively
poor imitations of a real flame and have not been widely
adopted by the commercial or retail markets.” Id. at col. 2
ll. 13–16. The specification further explains that “[t]he
present description addresses the above and other prob-
lems by providing kinetic flame devices that create light-
ing effects driven by real but chaotic physical movements.”
Id. at col. 2 ll. 23–25 (emphasis added); see also id. at col.
4 ll. 52–58 (“The present description involves devices that
create lighting effects driven by real, chaotic, and physical
movements.”), col. 4 l. 62–col. 5 l. 2 (“[T]he present inven-
tion stimulates and/or perturbs a complex interaction
between gravity, mass, electromagnetic field strength,
magnetic fields, air resistance, and light, but the complex
interaction is not directly modulated or controlled.”). By
teaching that the “present description” solves the prob-
lems associated with the prior art candle devices because
it is driven by “real but chaotic movements,” the patentee
disclaims devices driven by rhythmic or metronomic
patterns.
Thus, we preliminarily construe claim 1 of the ’166
patent to require chaotic pivoting, with no further re-
18 LUMINARA WORLDWIDE, LLC v. LIOWN ELECTRONICS CO. LTD.
quirements on movement. The ’455 patent undisputedly
teaches pivoting in two axes. Furthermore, the ’455
patent teaches that the flame reflector, balanced on a
gimbal mechanism allowing movement on a minimum of
two axes, is “articulated by a natural and chaotic external
or internal force (such as wind, magnetism)” to “randomly
simulat[e] blowing in the wind.” ’455 patent, col. 6 ll. 53–
62 (J.A. 1410). The final limitation in claim 1 of the ’166
patent—chaotic movement—seems to be met with this
discussion of chaotic forces that can articulate the flame
reflector of the candle device in the prior art ’455 patent.
As a result, we conclude that Liown’s argument that the
’455 patent anticipates claim 1 of the ’166 patent raises a
substantial question of validity.
Luminara asks us to maintain the preliminary injunc-
tion on the basis of its claim for tortious interference or on
the basis of Liown and the Distributors’ infringement of
other patent claims (such as claim 14 of the ’166 patent)
not decided by the district court. We will not consider
these claims in the first instance on appeal; however,
nothing in this opinion should be taken to prejudice these
arguments. Our analysis as to whether there is a sub-
stantial question of validity is limited to claim 1 of the
‘166 patent, the only claim upon which the district court
based the preliminary injunction. And to be clear, this
holding is based on our preliminary claim construction
ruling.
CONCLUSION
We vacate the district court’s grant of a preliminary
injunction and remand for further proceedings.
VACATED AND REMANDED
COSTS
Costs to Luminara.