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M&R MARKING SYS. v. TOP STAMP

May 10, 1996

M&R MARKING SYSTEMS, INC., Plaintiff,
v.
TOP STAMP, INC., STEVE HEWITT, and EDISON TSE, Defendants.



The opinion of the court was delivered by: BASSLER

 BASSLER, DISTRICT JUDGE:

 This case concerns alleged infringement of two patents, a design patent for a handle top for a hand stamp and a mechanical patent for a hand stamp itself. Plaintiff M&R Marking Systems, Inc. ("M&R") alleges that defendants, Top Stamp, Inc. and two of its officers, Edison Tse, President, and Steve Hewitt, Marketing Director are willfully infringing both patents.

 M&R seeks a preliminary injunction enjoining defendants from importing, making, using, offering to sell, or selling products which infringe the two patents. This court's jurisdiction is pursuant to 28 U.S.C. § 1331 and § 1338(a). For the following reasons, plaintiff's application for a preliminary injunction is GRANTED with respect to the mechanical patent and DENIED with respect to the design patent.

 I. BACKGROUND

 M&R is a corporation engaged in the sale of stamping equipment. M&R alleges that the defendants have infringed two of M&R's United States patents.

 The two allegedly infringed patents are patent # 5,377,599 for an adjustable mount device for a pre-inked hand stamp ("'599 patent" or "mechanical patent") issued on January 3, 1995 and patent DES.346,396 for a handle top design for a hand stamp issued on April 24, 1994 ("'396 patent" or "design patent"). The mechanical patent is for a "hand stamp having an adjustment mechanism for adjusting the stroke of the hand stamp so that a lighter or darker imprint can be obtained." Complaint P11. The design patent covers the ornamental appearance of the top of a handle for a hand stamp. Complaint P13.

 Defendant Edison Tse and his brother Wilson Tse are owners of one of the largest pre-inked stamp mount companies in the world, Claimchop Company Limited ("Claimchop") of Hong Kong. The Tse brothers also own Fen Hin Chon Enterprises Limited ("FHC"), a Hong Kong Company that designs the products manufactured and sold by Claimchop. The Tse brothers are also majority owners in defendant Top Stamp, a United States wholesaler. M&R was the exclusive United States distributor of Claimchop's stamp mount products *fn1" from 1990-1992. M&R terminated its relationship with defendants in 1992.

 One of Claimchop's stamp handles distributed by M&R contained a convex lens set within a circular recess. M&R also asked Claimchop to manufacture stamp handles containing a "watch crystal" design which incorporated a raised flat lens within the recess. Steven Sculler, the Vice-President of Marketing at M&R, subsequently obtained a patent on the design in April, 1994.

 Plaintiff contends that the defendants have engaged in a pattern of infringement of both patents. Steven Sculler allegedly became aware that the defendants intended to infringe the design patent in the Spring of 1994. Steven Sculler Aff. P6-7. Steven Sculler notified M&R's intellectual property counsel who sent a cease and desist letter to Top Stamp & Steve Hewitt on May 4, 1994. Compl. Exh. B. On May 31, 1994, Top Stamp's counsel sent a letter to M&R's counsel indicating that Top Stamp voluntarily agreed to cease using the flat lens. Compl. Exh. E.

 Both M&R and Top Stamp had booths at a marking industry trade show in September, 1995. Steven Sculler Aff. P8. Steven Sculler saw stamps at Top Stamp's booth that appeared to infringe the mechanical patent. He obtained one of the samples and forwarded it to M&R's counsel to review. Steven Sculler contacted Steve Hewitt on September 19, 1995 regarding the potential infringement of the mechanical patent. In that conversation, Hewitt allegedly indicated that Top Stamp also intended to market items that Steven Sculler believed would infringe the design patent Id. P9. M&R's counsel subsequently sent out a second charge of infringement letter to Hewitt and Edison Tse. Compl. Exh. F.

 On October 6, 1995, Hewitt responded in a letter indicating that Top Stamp had not sold any of the allegedly infringing products in the United States. He also indicated that Top Stamp would not use the design patent's specific "raised flat plate." Compl. Exh. H.

 Marc B. Sculler, Vice President of Finance at M&R, allegedly discovered the present alleged infringement while visiting one of M&R's customers, Texas Marking Products. Top Stamp had sent Texas Marking Products a promotional package including stamp samples that infringe both the mechanical and the design patent. Marc Sculler Aff. P10.

 Plaintiff now moves for a preliminary injunction enjoining defendants from importing, making, using, offering to sell, or selling products which infringe the two patents.

 II. DISCUSSION

 A. Patent Preliminary Injunction Standards

 35 U.S.C. § 282 provides that courts "may grant injunctions in accordance with the principles of equity to prevent a violation of any right secured by patent, on such terms as the court deems reasonable." The decisions of the federal circuit are controlling precedent in determining whether the court will issue a preliminary injunction in patent cases. Hybritech, Inc. v. Abbott, 849 F.2d 1446, 1451 n.2 (Fed. Cir. 1988) The standards for preliminary injunctions in patent cases, however, are no more or less stringent than the standards in other types of cases. H.H. Robertson Company v. United Steel Deck, Inc., 820 F.2d 384, 387 (Fed Cir. 1987) abrogated on other grounds Markham v. Westview Inst. Inc., 52 F.3d 967 (Fed. Cir. 1995).

 In order to issue a preliminary injunction, the court must be satisfied of four things:

 
1) that the moving party is likely to succeed on the merits;
 
2) that the moving party will suffer irreparable harm without injunctive relief;
 
4) that, if relevant, the public interest will be served by the injunction.

 See Id.

 B. Likelihood of Success on the Merits

 The first factor that the court must consider is the plaintiff's likelihood of success on the merits. In order to prevail on the merits, the plaintiff must prove that the patents are valid ...


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