Power Survey, LLC v. Premier Util. Servs., LLC

61 F.Supp.3d 477

POWER SURVEY, LLC, Plaintiff

v.PREMIER UTILITY SERVICES, LLC, et al., Defendants.

Civil Action No. 13–5670FSH.

United States District Court, D. New Jersey.

Signed Nov. 21, 2014.

Liza M. Walsh, Katelyn O'Reilly, Tricia B. O'Reilly, Connell Foley, LLP, Roseland, NJ, for Plaintiff.

Jura C. Zibas, Wilson Elser, David J. Sheehan, Baker Hostetler LLP, New York, NY, for Defendants.

OPINION

HOCHBERG, District Judge.

This matter comes before the Court upon a Motion for a Preliminary Injunction filed by Plaintiff Power Survey, LLC (hereinafter “Power Survey” or “Plaintiff”). The Court has reviewed the submissions of the parties and held an evidentiary hearing on the motion on September 4, 2014.

I. BACKGROUND

Power Survey sued Defendant L–3 Communications Holdings, Inc. d/b/a Narda Safety Test Solutions (hereinafter “Narda”) and Defendant Premier Utility Services, LLC (hereinafter “Premier” or “Premier Utility”) (collectively, “Defendants”) for patent infringement under the patent laws of the United States, 35 U.S.C. §§ 100 et seq. Power Survey holds three issued patents and has several patents pending in the United States Patent and Trademark Office (USPTO) relating to methods and systems for detecting contact or stray voltage (hereinafter “stray voltage”).¹ The three patents at issue in this case are: (1) 8,482,274; (2) 8,536,856; and (3) 8,598,864. All three patents were invented by David Kalokitis, Leonard J. Schultz, Christos A. Polyzois, and Vincent Paragano. Power Survey has owned the patents at all relevant times.

Prior to Power Survey's invention, utility companies manually inspected for stray voltage. This required field technicians with handheld probes to test potentially hazardous structures on foot. Manual detection proved ineffective because it did not detect stray voltage from buried cables, a common source of stray voltage, and it was limited to surfaces directly touched by the probe.

Power Survey increased the effectiveness and increased the efficiency of the process when it developed a vehicle-mounted detection system called the SVD2000. The SVD2000 was designed to locate any stray voltage hazards within an entire geographic region from a moving vehicle, hence not limited to surfaces it manually contacts. Since its development, the SVD2000 has successfully serviced clients in the United States, Canada, and Europe. Power Survey currently maintains thirty-two SVD2000 systems, eleven of which are typically not in use and thus available to service new business. Power Survey also has five complete sets of SVD2000 hardware available to build an additional five units.

Narda makes, uses, offers for sale, sells, or imports the Narda Models 8950/10 and 8950/20. The Narda machines are essentially identical to Plaintiff's SVD2000 system.

Narda's 8950/10 system is designed to be mounted on a vehicle to perform mobile-stray-voltage detection, and Premier uses the systems to provide mobile-stray-voltage-detection services. Plaintiff alleges that these products infringe their patents-in-suit. Power Survey also alleges that Premier makes, uses, offers for sale, sells, or imports its own Mobile Contact Voltage Detection System that infringes on one or more of its patents.

Power Survey's core business is mobile contact voltage detection, which comprises essentially all of its revenue. Power Survey has limited its business to providing these services directly to utility companies. Power Survey does not license its technology and has never sold any of its systems.²

A study conducted by Power Survey compared the Narda 8950/10 with their SVD2000 after Premier conducted a mobile survey using the Narda 8950/10 in Rochester, NY. Premier only detected 40 energized structures. Power Survey ran a concurrent survey and detected 251 energized structures, some of which were energized at full-line voltage. This represented an 84% false negative rate in the Premier/Narda vehicle mounted product. According to a 2012 report by National Testing Systems, an independent testing laboratory, Premier detected only 30 hazards using Narda's 8950/10 in an area where Power Survey's SVD2000 detected 230, an 87% false negative rate for Premier/Narda.

Power Survey alleges that it has suffered irreparable harm from Defendants' infringement that will continue as long as they continue to infringe their patents. Power Survey argues that detecting stray voltage is their only line of work and that Defendants are larger corporations with more diverse product lines, which allows them to provide similar services at a lower cost for the sake of attracting new customers.

Power Survey argues that monetary damages cannot adequately remedy these harms because Defendants' infringement is preventing it from growing the market. Power Survey claims to have stopped spending money lobbying for the enactment of new regulations requiring mobile contact voltage detection because it felt that doing so would lead to more business for Premier. Power Survey further argues that the use of Narda's system in the manner used by Defendants, which has been shown to detect less stray voltage, poses serious safety risks. Lastly, Power Survey asks for an injunction because the next round on annual contract bids will be solicited soon.

II. STANDARD OF REVIEW

Federal Circuit law governs the standards for granting an application to preliminarily enjoin alleged patent infringement. See Hybritech, Inc. v. Abbott Labs., 849 F.2d 1446, 1451 n. 12 (Fed.Cir.1988). “The decision to grant or deny ... injunctive relief is an act of equitable discretion by the district court.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). A preliminary injunction is an “extraordinary remedy.” Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1375 (Fed.Cir.2009). “[A]ll findings of fact and conclusions of law at the preliminary injunction stage are subject to change upon the ultimate trial on the merits.” Purdue Pharma L.P. v. Boehringer Ingelheim GmbH, 237 F.3d 1359, 1363 (Fed.Cir.2001).

A plaintiff seeking a preliminary injunction must establish the following four factors: (1) that he is likely to succeed on the merits; (2) that he is likely to suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in his favor; and (4) that an injunction is in the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). To establish an entitlement to this type of relief, a plaintiff must make a “clear showing” of that entitlement. Id. at 22, 129 S.Ct. 365.

III. DISCUSSION

A. Likelihood of Success on the Merits

The likelihood of success on the merits is based on the validity of the patent and the infringement of said patent. Hybritech, Inc. v. Abbott Labs., 849 F.2d 1446, 1451 (Fed.Cir.1988) ; Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed.Cir.2001). A preliminary injunction should not be granted “if the alleged infringer raises a substantial question regarding either infringement or validity” of the patent. AstraZeneca LP v. Apotex, Inc., 633 F.3d 1042, 1050 (Fed.Cir.2010).

1. Infringement

Power Survey seeks to demonstrate that Premier directly infringes its patents under 35 U.S.C. § 271(a) and that Narda directly and indirectly infringes their patents under 35 U.S.C. § 271(a), (b), and (c). “Literal infringement involves a two-step determination: the proper construction of the asserted claim and a determination whether the claim as properly construed reads on the accused product or method.” Bell & Howell Document Mgmt. Products Co. v. Altek Sys., 132 F.3d 701, 705 (Fed.Cir.1997) (citing Markman v. Westview Instruments, Inc., 52 F.3d 967, 976 (Fed.Cir.1995) (en banc), aff'd, 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996) ). The relevant determination for the court in granting a preliminary injunction is a substantial likelihood of success on the merits, “not a legal conclusion as to the ultimate issue of infringement.” Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1355–56 (Fed.Cir.2001).

a. Claim Construction

In a patent infringement preliminary injunction analysis, the first step is to analyze the likely meaning and scope of the claims of the patent. Markman, 52 F.3d at 976. At this stage of the litigation, the Court has not yet had the benefit of a Markman hearing, which is scheduled to occur in March, 2015. For purposes of this preliminary injunction motion, the standard is the likely claim construction of key terms of the patent claims. When the parties later argue their Markman positions, the Court will conduct a classic Markman analysis, according to the well-known legal standards set by the Federal Circuit.

For purposes of this preliminary injunction motion, the Court will tentatively construe the only disputed patent claim term that the parties agree is relevant to the Preliminary Injunction analysis: “voltage anomaly.” All parties agree that the Court should adopt the plain and ordinary meaning of “voltage anomaly.” However, the parties disagree as to what is that plain and ordinary meaning. Power Survey argues that the Court should construe voltage anomaly as a “detected electric field signal above a threshold or background.” Defendants contend that this Court should construe “voltage anomaly” to mean “unexpected voltage.”

Defendants posit that Power Survey has not shown that it is likely to prevail on infringement because Power Survey's claims each include the detection of an “unexpected voltage” and the “accused systems are incapable of determining if an electric field is created by an unexpected voltage or an expected voltage.” Defendants argue that its “accused systems detect electric fields but the systems are adjusted so that they detect electric fields that are stronger than the ‘background’ electric fields, i.e., they only detect electric fields above a certain threshold.” In essence, Defendants' system measures...