Preliminary Injunction and Patent License Disputes

by Dennis Crouch

Symbiont Nourishment, LLC v. BJM Feed Ingredients, LLC, 1 CA-CV 21-0218 (Ariz. App. 1st Div. Could 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 process leads to amplified digestion of the starch information.  The inventor Mark Holt is also operator of Symbiont. Holt was portion of forming two extra providers, BJM and Matrix and Symbiont licensed the technological innovation (together with the patent) to all those corporations.  The arrangement incorporated a quantity of provisions — generally a license with royalties for feed marketed using the course of action.

Issues fell aside in 2019 with Matrix dissolving and BJM terminating its license.  BJM then started to function with an additional firm (Garner) to manufacture feed products.  The resulting lawsuit in Arizona state court alleged: (1) breach of NDA (2) conversion of “assets, monies, and mental property” and (3) breach of fiduciary responsibility.

The district courtroom issued a preliminary injunction prohibiting BJM from advertising its feed product utilizing the ‘094 patent or from soliciting other to do the exact same.  On enchantment nevertheless, the Arizona Court of Appeals has vacated and remanded–holding that the district court erred by presuming irreparable damage because of to patent infringement.  The appellate court docket pointed out the transform in law under eBay, but also went on to describe that  Arizona Regulation “does not presume irreparable damage.”  On remand, the district courtroom will will need to come to a decision irrespective of whether the potential ongoing infringement causes any damage to the patentee that can not be remedied by damages by itself.

The appellate court also resolved the dilemma of jurisdiction.  All conditions “arising under” the U.S. patent legal guidelines are matter to distinctive jurisdiction of the Federal Court docket procedure. Here, nonetheless, the lawsuit asserts only point out regulation claims of breach & conversion.  Making use of Gunn v. Minton, 568 U.S. 251 (2013), the courtroom concluded that the underlying patent regulation challenges were being not considerable plenty of to warrant Federal jurisdiction.

While troubles of federal patent legislation may be embedded in Plaintiffs’ statements, the resolution of their claims rests eventually on the application of Arizona regulation, not federal patent regulation. To triumph on counts 1 and two, Plaintiffs have to show the existence and validity of the licensing and nondisclosure agreements, that these agreements governed Defendants’ conduct, and that Defendants’ perform violated the agreements. In the same way, Plaintiffs’ conversion declare turns on a demonstrating of Plaintiffs’ possession or ideal to possession of particular house and Defendants’ wrongful interference with that property. At last, Plaintiffs’ fiduciary duty claim rests on Plaintiffs proving the existence of these types of a responsibility and Defendants’ breach of that duty. Arizona regulation, not federal patent regulation, is dispositive of each individual of these promises.

. . . Though the adjudication of Plaintiffs’ statements could call for the courtroom to ascertain no matter if Defendants utilized a feed-production system that infringed on Plaintiffs’ patented procedure, there is little to suggest that the condition court’s analysis of this issue will have an effect on uniformity in patent regulation.  Without a doubt, the embedded patent problems in this case are truth-certain and condition-precise and will have no precedential effect on federal courts or federal patent legislation typically. Nor do Plaintiffs’ promises raise novel patent issues. To the extent they elevate patent issues, they are ones of standard infringement.

Slip Op. (inside citations removed).