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Inc. v. Meras Engineering Inc.

United States District Court, C.D. California

May 2, 2017

CH2O, Inc.
v.
Meras Engineering, Inc.

          Present: The Honorable John A. Kronstadt, United States district Judge.

          CIVIL MINUTES - GENERAL

         Proceedings: (IN CHAMBERS) PLAINTIFF'S MOTION FOR PERMANENT INJUNCTION (DKT. 481)

         I. INTRODUCTION

         CH2O, Inc. (“Plaintiff” or “CH2O”) commenced this patent infringement action in 2013. It contends that Houweling's Nurseries Oxnard, Inc., HNL Holdings Ltd., Houweling Utah Operations, Inc., and Houweling's Nurseries Ltd. (collectively, “Houweling's”) and Meras (collectively with Houweling's, “Defendants”) infringed claims 1, 2, and 7 of U.S. Patent No. 6, 767, 470 (“the '470 Patent”). See First Am. Compl., Dkt. 107; Def.'s Motion, Dkt. 166-1, at 1. Following a jury trial, on September 6, 2016, a verdict was entered in favor of CH2O and against Meras and Houweling's on all claims. The verdict awarded $12.5 million in damages for infringement. Dkt. 426. Subsequently, Plaintiff brought this motion for the issuance of a permanent injunction (“Motion”). Dkt. 481. It seeks to enjoin Meras and Houweling's from further infringement of the '470 Patent.

         A hearing on the Motion was conducted on March 6, 2017, and the matter was taken under submission. Dkt. 514. For the reasons stated in this Order, the Motion is GRANTED IN PART.

         II. ANALYSIS

         A. Legal Standards

         An injunction barring ongoing patent infringement may be entered where the traditional equitable factors have been satisfied. Where a party has prevailed at trial on a claim of infringement, a permanent injunction may be imposed where that party can 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.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).

         B. Application

         1. Irreparable Harm

         Plaintiff submitted evidence that it competes with Meras in the market for services to growers and others, and that Defendants' infringing actions caused substantial harm to CH2O. Plaintiff identifies the following bases for its claim of irreparable harm: (1) it had spent significant resources developing the '470 technology, establishing a commercial market for the licensing of that technology, and training its employees to install and service equipment associated with that technology; (2) Defendants' infringement caused substantial damage to the business of CH2O, whose upward growth curve in this market segment “nosedived”; and (3) the infringement caused significant erosion of prices for the technology embodied in the '470 Patent, thereby reducing substantially Plaintiff's profits from sales. If this conduct continues, it could have a substantially adverse effect on the market that could be permanent. Dkt. 481-1 at 8-10.

         Defendants respond that the scope of any infringement was trivial and that any competitive harm to Plaintiff was a result of Defendants' lawful production of chlorine dioxide in Houweling's reaction chamber. Dkt. 492 at 10-11. Meras also argues that CH2O has not proven that Meras's infringement caused CH2O to lose the trust of hydroponic farmers or that monetary damages are inadequate to compensate CH2O for all claimed injuries. Dkt. 492 at 11.

         Defendants do not dispute that Meras and CH2O are direct competitors. Nor do they challenge Plaintiff's claim that Defendants' infringement caused a sharp drop in sales by CH2O and in the associated revenues. “Past harm to a patentee's market share, revenues, and brand recognition is relevant for determining whether the patentee has suffered an irreparable injury.” i4i Ltd. Partnership v. Microsoft Corp., 598 F.3d 831, 861 (Fed. Cir. 2010) (quotation marks omitted).

         Considering this evidence in light of the jury verdict, Plaintiff has made a sufficient showing of a nexus between the patented features and the demand for the infringing products and related services. The benefits of the patented technology, which include less water usage through recirculation and lower bacterial counts, were sufficient to cause Houweling's and other hydroponic farmers to utilize Meras's services. Dkt. 507 at 2-3. Thus, Houweling's ...


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