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Unicorn Global, Inc. v. Golabs Inc.

United States District Court, N.D. Texas, Dallas Division

November 18, 2019

UNICORN GLOBAL, INC., HANGZHOU CHIC INTELLIGENT TECHNOLOGY CO., LTD., and SHENZEN UNI-SUN ELECTRONIC CO., LTD., Plaintiffs and Counterdefendants,
v.
GOLABS, INC., d/b/a GOTRAX, WALMART INC., WAL-MART STORES TEXAS, LLC, and WAL-MART.COM USA LLC, Defendants and Counterclaimants.

          MEMORANDUM OPINION AND ORDER

          DAVID C. GODBEY UNITED STATES DISTRICT JUDGE

         This Memorandum Opinion and Order addresses Defendant Golabs, Inc.'s ("Golabs") motion for preliminary injunction [38]. Because Golabs has not established a likelihood of success on the merits of its tortious interference counterclaim or shown that Plaintiffs Unicorn Global, Inc., Hangzhou Chic Intelligent Technology Company, Ltd., and Shenzen Uni-Sun Electronic Company, Ltd.'s (collectively, "Plaintiffs") infringement claims are baseless, the Court denies Golabs's motion.

         I. Origin of the Dispute

         The parties' litigation arises out of a dispute regarding utility and design patents for hoverboard products. Plaintiffs have the rights to three hoverboard patents: patent numbers 9, 376, 155 ('155 patent); 9, 452, 802 ('802 patent); andD737, 723 ('723 patent). Pltfs.' Resp. Brief Opposing Golab's Mot. Prelim. Inj. 2-3 [106]. These patents claim a "three-layer hoverboard" structure that Plaintiffs argue is unique from prior hoverboard designs. Id. at 3. Golabs sells several hoverboard models through online retailers, primarily Amazon. Golab's Brief Support Mot. Prelim. Inj. 2 [102]. These products are manufactured by Golabs's parent company, to which Plaintiffs licensed the right to manufacture hoverboards. Pltfs.' Resp. Brief Opposing Golab's Mot. Prelim. Inj. 5 [106]. Plaintiffs allege that Golabs's parent company subsequently violated the licensing restrictions. Id.

         In March 2019, Plaintiffs filed suit against Golabs, alleging infringement of their hoverboard patents. Id. at 6. Plaintiffs also filed claims against Amazon, which it had previously asked to cease selling the accused products, but nonsuited those claims after Amazon delisted Golabs's hoverboards. Id. Golabs filed a counterclaim alleging tortious interference with its contract with Amazon. Golabs now seeks an injunction ordering Plaintiffs both to refrain from filing complaints with Golabs's customers alleging that Golabs's hoverboards infringe Plaintiffs' patents and to inform Amazon that Plaintiffs' retract their notices of infringement and request that Golabs's products be reinstated.

         II. Legal Standards

         A. Preliminary Injunction

         To obtain a preliminary injunction, a movant must show (1) a substantial likelihood that it will prevail on the merits; (2) a substantial threat that it will suffer irreparable injury if the injunction is not granted; (3) that the threatened injury to it outweighs the threatened harm to the party it seeks to enjoin; and (4) that granting the preliminary injunction will not disserve the public interest. Bluefield Water Ass 'n, Inc. v. City of Starkville, Miss., 577 F.3d 250, 252-53 (5th Cir. 2009). The party seeking the injunction bears the burden of proof on all four elements. Id. at 253. If a party requests a mandatory injunction, the moving party must show "a clear entitlement to the relief under the facts and the law." Justin Indus., Inc. v. Choctaw Sees., L.P., 920 F.2d 262, 268 n.7 (5th Cir. 1990) (internal citation omitted). "Mandatory preliminary relief, which goes well beyond simply maintaining the status quo pendente lite, is particularly disfavored." Martinez v. Mathews, 544 F.2d 1233, 1243 (5th Cir. 1976).

         A litigant may seek a mandatory injunction ordering a patentee to refrain from communicating about its patent with third parties. Patent owners, however, have the "right to inform potential infringers of a patent and potentially infringing activity unless the communication is made in bad faith." GP Indus., Inc. v. Eran Indus., Inc., 500 F.3d 1369, 1374 (Fed. Cir. 2007); see 35 U.S.C. § 287(a). Thus, movants must show that the patentee's infringement claims are "objectively baseless." GP Indus., Inc., 500 F.3d at 1374. A claim is objectively baseless if "no reasonable litigant could realistically expect success on the merits." Prof 7 Real Estate Inv'rs, Inc. v. Colum. Pictures Indus., Inc., 508 U.S. 49, 60 (1993). The standard is difficult to meet, and the Federal Circuit has observed "the rarity of an injunction being granted against communicating with others concerning one's patent rights." GP Indus., Inc., 500 F.3d at 1373.

         B. Tortious Interference with Contract

         Under Texas law, a party claiming tortious interference with contract must show "(1) an existing contract subject to interference; (2) a willful and intentional act of interference with the contract; (3) that proximately caused the plaintiffs injury; and (4) caused actual damages or loss." Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000). Some early Texas cases suggest it is possible to tortiously interfere with contracts even if they could be ended at-will without breach. See Juliette Fowler Homes, Inc. v. Welch Assocs., Inc., 793 S.W.2d 660, 666 (Tex. 1990); Sterner v. Marathon Oil Co., 767 S.W.2d 686, 689 (Tex. 1989). The Texas Supreme Court has recently reiterated, however, that tortious interference with contract requires a breach of contract. El Paso Healthcare Ltd. v. Murphy, 518 S.W.3d 412, 421 (Tex. 2017). In El Paso Healthcare Ltd. v. Murphy, the Court did not overrule its earlier cases but did synthesize prior caselaw that suggested the "terminable-at-will status of a contract is no defense to an action for tortious interference with its performance" by noting those cases "involved claims for interference with prospective business relations." Id. at 421 n.6.

         III. The Court Denies Plaintiffs' Motion for Preliminary Injunction

         To obtain a preliminary injunction, Golabs must show it will likely succeed on the merits of its underlying claim. In this case, Golabs's claim for tortious interference centers on Plaintiffs' communications with Amazon alleging infringement of Plaintiffs' patents. Patentees generally have a right to communicate about their patents to potential infringers unless their infringement claims are objectively baseless. Consequently, to show it will likely succeed on the merits of its tortious interference claim, Golabs must both show a likelihood of success in proving the elements of tortious interference and show that Plaintiffs' infringement claims are objectively baseless. The Court finds that Golabs has not met either of these burdens.

         A. Golabs Has Not Shown a Likelihood of Success on Its ...


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