DexCom, Inc. v. Abbott Diabetes Care, Inc., et al., No. 2023-1795 (Fed. Cir. (D. Del.) Jan. 3, 2024). Opinion by Stoll, joined by Dyk and Hughes.
DexCom and Abbott are competing manufacturers of continuous glucose monitoring systems. After years of patent litigation, they entered into a settlement and license agreement. The agreement included mutual covenants not to challenge each other’s patents during a “Covenant Period.” But an exception allowed either company to challenge a patent asserted against it by the other during the Covenant Period. The agreement also contained a forum selection clause for disputes over the agreement.
After the Covenant Period expired, DexCom sued Abbott for patent infringement. Abbott moved to transfer the case per the forum selection clause, and Abbott also filed a breach-of-contract suit against DexCom for violating the forum selection clause. DexCom’s case was transferred and consolidated with Abbott’s breach-of-contract action. Then, while the consolidated case was pending, Abbott filed IPRs challenging the DexCom patents. DexCom responded by filing a claim for breach-of-contract alleging that Abbott breached the forum selection clause by pursuing IPRs.
Next, DexCom moved for a preliminary injunction, asking the court to prohibit Abbott from proceeding with the IPRs. The district court denied the motion, finding that while DexCom had shown a likelihood of success on the merits and there is a public interest in completing the IPRs, DexCom did not show irreparable harm and the balance of hardships weighed against an injunction. DexCom appealed.
The Federal Circuit affirmed the denial of the preliminary injunction. The court focused on the first factor, likelihood of success on the merits. The Federal Circuit disagreed with the district’s court finding that DexCom had shown a likelihood of success.
The Federal Circuit explained that the agreement allowed Abbott to file IPRs during the Covenant Period because DexCom had asserted the patents against Abbott. Thus, the parties’ only dispute was whether the forum selection clause prohibited the IPRs after the Covenant Period expired. The Federal Circuit ruled that the forum selection clause governs both during and after the Covenant Period, and so “it necessarily follows” that “the clause cannot operate to prohibit the filing of IPRs after the Covenant Period if it allowed them during the Covenant Period.” Thus, the parties’ agreement “allowed the filing of IPR petitions under certain circumstances notwithstanding the existence of the forum selection clause.”
Even though the Federal Circuit concluded that the district court erred in finding that DexCom showed a likelihood of success, the court deemed the error to be “harmless” since the court’s “conclusion that DexCom failed to demonstrate a likelihood of success favors the district court’s ultimate denial of the preliminary injunction.” The Federal Circuit thus affirmed. The court did not reach the remaining factors because under both Federal Circuit and Third Circuit precedent, the likelihood-of-success factor “is a necessary showing to establish entitlement to a preliminary injunction.”
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