Sundance v DeMonte Fabricating Limited

__Name: Sundance, Inc. v. DeMonte Fabricating Limited

__Cite: 2007 U.S. Dist. LEXIS 158 (D. Mich. Jan. 4, 2007)


Lexis: 2007 U.S. Dist. LEXIS 158

• __Court: District of Michigan

• __Facts and Holding: Sundance, Inc., Merlot Tarpaulin, and Sidekit Manufacturing Company, Inc. (collectively, Sundance) are the holders of U.S. Patent No. 5,026,109 (‘109 patent) covering a retractable segmented tarp cover for truck trailers. DeMonte Fabricating, Ltd. and Quick Draw Tarpaulin Systems Inc. (collectively, DeMonte) are accused of infringing the ‘109 patent. The case was tried to a jury and infringement was found but the Court denied the permanent injunction.

• __Procedural Posture: In 2001, Sundance filed suit against DeMonte claiming that the Quick Draw system infringes the '109 patent. Sundance seeks a permanent injunction against DeMonte.

• __Background and Description: The Supreme Court recently made clear that when considering whether to award permanent injunctive relief to a prevailing plaintiff in a patent infringement dispute, courts should apply the traditional four-factor test used by courts of equity. See eBay, Inc. v. MercExchange, LLC, U.S. , , 126 S. Ct. 1837, 1839, 164 L. Ed. 2d 641 (2006). The prevailing plaintiff must demonstrate: "(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction." The Supreme Court held "the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards."

• __Critical Analysis:_Sundance argued that it would suffer irreparable harm in the absence of an injunction because DeMonte competes with licensees who are at a disadvantage because of the infringement. The Court was not persuaded by Sundance’s argument for several reasons. The Court noted that the market for tarp systems is filled with several competitors and tarp systems without segments cover a larger percentage of the market than segmented system which was at issue in this case. More importantly, DeMonte stated that the segmented cover is only one feature of its Quick Draw System. Lastly, Sundance delayed filing a lawsuit and seeking injunctive relief. The Court could not agree that Sundance’s licensees were losing sales to DeMonte because of its infringement of the cover because the court could establish other reasons for the lost sales, such as customers desiring other features of the Quick Draw System and sales lost to other competitors in the marketplace. Similarly, Sundance licenses the ‘109 patent to others, and offered to license it to DeMonte prior to this lawsuit indicating the adequacy of monetary damages.

The Eastern District of Michigan also focused on the business of the infringer in considering the balance of the hardships. The Court agreed with DeMonte’s argument that it would suffer hardship if an injunction were entered because it would affect its ability to compete with other tarp competitors and could force the company out of business. The balance of the harms favored DeMonte according to the Judge Cohn. The public interest also weighed in favor of DeMonte’s because an injunction would harm third parties, such as DeMonte’s employees and customers.