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Magistrate Judge Thynge: Request for Preliminary Injunction Denied

Magistrate Judge Thynge recently issued a report and recommendation in Neology, Inc. v. Federal Signal Corp., C.A. No. 11-672-LPS/MPT (D. Del. June 18, 2012), recommending that the Court deny Neology’s motion for a preliminary injunction against infringing the patents-in-suit. The patents-in-suit cover RFID (radio frequency identification) tags, readers, and systems for us in the U.S. highway tolling industry. In considering whether the plaintiffs had a reasonable likelihood of prevailing on the merits at trial, Judge Thynge construed several terms and considered infringement and invalidity arguments. Although Neology demonstrated a likelihood of success on the merits for some of the patents-in-suit, Judge Thynge denied a preliminary injunction with respect to all of the patents in suit because she found no irreparable harm.

In concluding that there was no irreparable harm, Judge Thynge first found that Neology had delayed substantially in seeking a preliminary injunction, as it was first aware of a defendant’s alleged infringement in fall of 2009 and its first loss of sales to the defendant in spring of 2011, but did not file suit until July 2011 and did not seek an injunction until December 2011. Such delay weighed against granting an injunction. Id. at 40. She next rejected Neology’s arguments that the defendants had denied or would deny Neology entry into the relevant product market and that the defendants’ alleged infringement had caused Neology financial harm. She did find, however, the Neology’s apparent financial strength and attractiveness to investors may have been somewhat illusory and did not undercut its assertion of irreparable harm. Id. at 53.

Judge Thynge also rejected Neology’s argument that it would suffer irreparable reputational harm because defendants’ inferior products could jeopardize the market’s transition to the RFID technology in question. She determined both that the defendants’ products were not necessarily inferior, as they had been compared favorably by independent parties, and that the defendants’ products had not caused any reputational harm to Neology’s products. Id. at 62. Finally, Judge Thynge rejected Neology’s price erosion argument based on defendants’ putting downward pressure on the price of the technology in question. She did not find persuasive evidence that defendants were pricing their products improperly and did not agree with Neology’s assertion that its own pricing was relevant to the appropriateness of defendants’ pricing. Furthermore, Judge Thynge found that even if price erosion had occurred, damages could properly compensate Neology for this harm. Id. at 69.

Neology, Inc. v. Federal Signal Corp., C.A. No. 11-672-LPS/MPT (D. Del. June 18, 2012).

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