Preliminary Injunction and Patent License Disputes

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by Dennis Crouch

Symbiont Nutrition, LLC v. BJM Feed Components, LLC, 1 CA-CV 21-0218 (Ariz. App. 1st Div. May well 19, 2022)

Symbiont’s US Patent No. 9,446,094 addresses a approach of extruding corn into a ensuing “hydrophilic, very low-vitreous, gelatinous feedstuff” that is fed to dairy cattle. Evidently this procedure sales opportunities to greater digestion of the starch articles.  The inventor Mark Holt is also operator of Symbiont. Holt was part of forming two additional providers, BJM and Matrix and Symbiont certified the technological know-how (like the patent) to all those firms.  The arrangement included a number of provisions — mostly a license with royalties for feed sold making use of the process.

Factors fell aside in 2019 with Matrix dissolving and BJM terminating its license.  BJM then commenced to work with another business (Garner) to manufacture feed solutions.  The ensuing lawsuit in Arizona condition court alleged: (1) breach of NDA (2) conversion of “assets, monies, and intellectual property” and (3) breach of fiduciary responsibility.

The district court docket issued a preliminary injunction prohibiting BJM from selling its feed solution making use of the ‘094 patent or from soliciting other to do the same.  On appeal nevertheless, the Arizona Court docket of Appeals has vacated and remanded–holding that the district court erred by presuming irreparable harm thanks to patent infringement.  The appellate court docket observed the transform in regulation beneath eBay, but also went on to make clear that  Arizona Legislation “does not presume irreparable hurt.”  On remand, the district court will require to decide whether the opportunity ongoing infringement leads to any harm to the patentee that simply cannot be remedied by damages alone.

The appellate courtroom also tackled the concern of jurisdiction.  All instances “arising under” the U.S. patent regulations are issue to exclusive jurisdiction of the Federal Court program. Right here, even so, the lawsuit asserts only condition legislation promises of breach & conversion.  Implementing Gunn v. Minton, 568 U.S. 251 (2013), the court concluded that the fundamental patent legislation troubles had been not sizeable enough to warrant Federal jurisdiction.

Whilst difficulties of federal patent regulation may well be embedded in Plaintiffs’ statements, the resolution of their claims rests in the end on the application of Arizona legislation, not federal patent regulation. To be successful on counts one and two, Plaintiffs will have to demonstrate the existence and validity of the licensing and nondisclosure agreements, that these agreements governed Defendants’ conduct, and that Defendants’ perform violated the agreements. Likewise, Plaintiffs’ conversion claim turns on a demonstrating of Plaintiffs’ possession or appropriate to possession of particular house and Defendants’ wrongful interference with that home. At last, Plaintiffs’ fiduciary obligation assert rests on Plaintiffs proving the existence of such a responsibility and Defendants’ breach of that responsibility. Arizona legislation, not federal patent regulation, is dispositive of every of these statements.

. . . Although the adjudication of Plaintiffs’ claims may perhaps require the court to identify irrespective of whether Defendants employed a feed-manufacturing procedure that infringed on Plaintiffs’ patented course of action, there is minimal to suggest that the point out court’s assessment of this issue will have an effect on uniformity in patent legislation.  Certainly, the embedded patent concerns in this situation are fact-bound and predicament-particular and will have no precedential effect on federal courts or federal patent legislation normally. Nor do Plaintiffs’ promises elevate novel patent concerns. To the extent they elevate patent difficulties, they are types of standard infringement.

Slip Op. (interior citations eliminated).

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