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AL-SITE CORP. v. CABLE CAR SUNGLASSES

August 11, 1994

AL-SITE CORPORATION, Plaintiff,
v.
CABLE CAR SUNGLASSES, Defendant. CABLE CAR SUNGLASSES, Counter-claimant, v. AL-SITE CORPORATION, Counter-defendant.



The opinion of the court was delivered by: WILKEN

 Plaintiff's Motion for Preliminary Injunction and Defendant's Motion for Partial Summary Judgment were heard by this Court on May 13, 1994. Peter T. Cobrin of Cobrin, Gittes & Samuel appeared on behalf of Plaintiff Al-Site Corporation. Michael N. Berg of Phillips, Moore, Lempio & Finley appeared on behalf of Defendant Cable Car Sunglasses Company.

 Having considered the papers filed by the parties and oral argument on the motion, and good cause appearing, the Court hereby DENIES both motions in all respects for the following reasons.

 I. STATEMENT OF FACTS AND PROCEDURAL HISTORY

 This is a patent infringement case, filed December 9, 1993. The accused device is a plastic tag which holds eyeglasses at the temple and which contains a hole to allow the glasses to be hung on a display device in a vertical position. The history of the patents involved is as follows.

 On December 11, 1990, Plaintiff obtained grandparent patent '532 for its "Hanger for Displaying Eyeglasses," which is described in the disclosure abstract as a hanger made of stiff resilient plastic material, with a relatively wide main section containing an aperture to receive a cantilevered support arm, and a narrow extension which passes through the nose gap of eyeglasses and bends backwards to form a loop around the eyeglass frame bridge and is attached by a rivet or snap to maintain the loop closed and prevent casual removal of the hanger. The purposes for the patent were to increase sales by providing a method for displaying multiple pairs of glasses of the same magnification strength simultaneously (as opposed to the prior art cubby hole method, in which only one pair was displayed at a time), and to discourage theft.

 The application for '532 was initially rejected in part and objected to in part by the patent examiner. The majority of the claims were rejected for obviousness in light of prior art, including the Valiulis patent for a display hanger from which to hang merchandise (similar to the cantilever on which the '532 hanger was to be hung), the Govang patent for a merchandising display assembly with a display and advertising card with apertures to receive merchandise hangers (cantilevers) and the capacity to hold specially packaged merchandise, and the Smilow patent for a plastic hanger which cannot be casually removed for apparel belts. The remaining claims were objected to as being dependent on the rejected independent base claim.

 At the time this patent application was pending, the patent office was unaware of a 1982 German patent, the '306 Gebrauchsmuster, for a holding and hanging device for eyeglasses. This system included a plastic hanger card with an aperture at the top to be hung on a hook, the card being large enough to contain product information and deter theft, and being attached to a portion of the eyeglasses securely in such a way that eyeglasses' frame can be opened and closed and can be comfortably tried on without removal of the tag. The '306 teaches that the eyeglasses may be attached at any location on the card, in any orientation (horizontal, vertical, or any other position), and may protrude on one side or two sides of the card.

 On October 31, 1990, while the '526 patent was pending, Plaintiff filed a continuation application which ultimately resulted in the issuance of patent '345. Before the continuation application was examined, Plaintiff asked to amend it. The amendment contained the limiting language that the glasses would hang with a horizontal orientation when hung on the hanging card from the cantilever. The remarks in support of the amendment specified that "the fact that the eyeglasses are hung from a cantilever support in a horizontal manner forms part of the essence of the present invention," and that such horizontal orientation is important because it is aesthetically pleasing and therefore results in more sales. The cantilever support assembly is directed to consist of two parallel rods or one flat bar, as distinguished from a single support rod, so that the hanging card does not tip and thereby affect the perfect horizontal position required. The securing means and aperture are each directed to be symmetrical, also to prevent dipping.

 At some point during prosecution of the '345 patent, Plaintiff amended the continuation application again to eliminate the references to the horizontal orientation. On June 4, 1992, the patent examiner modified claims 51, 53 and 55 to restore the limitation to the horizontal orientation. "Providing a selected" and "providing a pre-selected" were restored to "securing a horizontal," and the language "with the temples in a substantially horizontal position" was reinserted into the claims.

 In the meantime, on June 12, 1991, while the Plaintiff's application for '345 was pending, Defendant applied for a patent for its own hanger means and installation method which would hang glasses in a vertical position by a plastic hanger attached to a temple. Defendant disclosed the '532 patent and claimed that the attachment to the temple rather than the bridge was an improvement over the prior art because the glasses could be tried on and viewed without the distraction of a label on the forehead of the customer. Defendant commercialized its hanger system while its application was pending, beginning June 16, 1991. The patent was granted July 14, 1992, explicitly over the '532 patent.

 One month after Defendant's patent was issued, Plaintiff applied for a continuation patent of its still pending parent patent '345. The '345 patent was issued September 1, 1992, and the continuation patent, '726, the patent in suit herein, issued on November 9, 1993. As in the predecessor patents, the '726 abstract recited that the hanger is attached to the bridge of the glasses, and the drawings and description of the preferred embodiment also showed and described hanging the glasses from their bridges in a horizontal position. However the claims utilized the broader language, rejected in '345, that the hanger would maintain the glasses "in a selected orientation", and further stated broadly that the hanger would attach to "a portion of said frame" of the glasses.

 Shortly before the '726 patent was issued, Plaintiff wrote to Defendant demanding that it discontinue using its eyeglass hanger card system. Defendant responded requesting a copy of the patent and clarification as to which of its hang tags was alleged to infringe the patent. Plaintiff responded with the filing of this action on December 9, 1993.

 With respect to the balance of hardships, the parties agree that the non-prescription eyeglass industry is highly competitive, and that marketing techniques that provide commercial advantages affect a company's market share. In addition, Plaintiff claims that Defendant's alleged infringement encourages others to infringe. Defendant makes a showing that in connection with its vertical hang-tag system, it has invested $ 15,000 in patent fees and costs, over $ 100,000 in advertising and promotion, $ 5,000 to $ 7,000 in freight and shipping, $ 20,000 to $ 30,000 in tag costs, and $ 300,000 to $ 400,000 in point-of-purchase display cases. Defendant further declares that roughly 70% of last year's four million dollar revenue from Defendant's "Dr. Dean Edell" non-prescription glasses program involved vertical hang-tag glasses. An injunction preventing Defendant from selling the accused product would require the expense of retagging already distributed glasses and changing the advertising and promotional campaigns. Defendant claims it would be difficult to measure its damages resulting from an injunction if Defendant later prevailed.

 II. LEGAL STANDARDS

 Injunctive relief in patent cases is statutorily authorized by 35 U.S.C. ยง 238. On a motion for preliminary injunction, Plaintiff must show: (A) a reasonable likelihood that it will succeed on the merits, (B) that irreparable injury will result if the injunction is not granted, (C) that the balance of hardships weighs in plaintiff's favor, and (D) that the granting of the injunction will not disserve the public interest. Hybritech Inc. v. Abbott Laboratories, 849 F.2d 1446, 1451 (Fed.Cir. 1988).

 Summary judgment is properly granted when no genuine and disputed issues of material fact remain; or, when viewing the evidence most favorably to the non-moving party, the movant is clearly entitled to prevail as a matter of law. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Eisenberg v. Insurance Co. of North America, 815 F.2d 1285, 1288-89 (9th Cir. 1987). The moving party bears the burden of showing that there is no material factual dispute. Therefore, the Court must regard as true the opposing party's evidence, if supported by affidavits or other evidentiary material. Celotex, 477 U.S. at 324; Eisenberg, 815 F.2d at 1289. The Court must draw all reasonable inferences in favor of the party against whom summary judgment is sought. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986); Intel Corp. v. Hartford Accident and Ins. Co., 952 F.2d 1551, 1558 (9th Cir. 1991). Material facts which would preclude ...


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