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Judge Carter Rules “Customers” Don’t Fit Within the “Customer Exception”

RegenLab USA LLC (“RegenLab”) is the exclusive licensee of U.S. Patent 8,529,957 (“the ’957 patent”) entitled “Cell Preparations for Extemporaneous Use, Useful for Healing and Rejuvenation In Vivo.” RegenLab , who markets and distributes products based on the ’957 patent, accused Estar Technologies Ltd. (“Estar”), a manufacturer of an allegedly infringing product, and Eclipse Aesthetics LLC (“Eclipse”) and Healeon Medical Inc. (“Healeon”) (collectively, “Movants”), who distribute the accused product, of direct and indirect infringement of the ’957 patent.  In a separate and later filed lawsuit, RegenLab also accused Movant’s customers of infringement.  Additionally, RegenLab sent various “improper” communications to Movant’s non-party customers.

Movants moved to sever and stay the case against them in favor of proceeding only against Estar and to enjoin RegenLab from:

• continuing a separate lawsuit against their customers and the filing of additional   customer lawsuits; and

• having communications with movants’ other customers.

The Court, in large part, denied the motion.  In doing so, the Court stated that, “while styled as a motion for preliminary injunction,” the motion to enjoin prosecution of the separate customer suit and filings of future customer suits was “in reality” a motion to stay.  RegenLab USA LLC v. Estar Techs. Ltd., No. 16-cv-08771, at 5 (S.D.N.Y. Aug. 17, 2017).  As such, according to the court, the issue was one of “efficiency.” Id.  The court denied the motion, finding it was most efficient to proceed as one case because the customers did not agree to be bound by the validity finding in the case against the Movants and because the customers’ actions were intertwined with the allegations of inducement by the Movants.

With regard to its denial of an injunction against communications with non-party customers, in denying the motion the court applied “the ordinary preliminary injunction standard” and found that the Movants have not shown irreparable harm on the record before it. Id. at 7-8.  However, Judge Carter was concerned that a contemplated press release could be “easily misconstrued by those without significant patent law expertise” and authorized a meet and confer to determine “how RegenLab can more clearly and accurately articulate the contours of its claims to the public.”           

With regard to severing the suit against the Movants and having RegenLab proceed against Estar first, the Court found the “customer suit exception” inapplicable because “each of the parties could be found liable for different reasons, and Estar’s liability does not necessarily dictate that either Eclipse or Healeon will be found liable.”  Thus, because Estar, Healeon, and Eclipse could each individually infringe method claim 20 of the ’957 patent, the customer suit exception is inapplicable.  The Court noted that the “customer suit exception” is more difficult to utilize when a method claim is at issue.

Case: RegenLab USA LLC v. Estar Techs. Ltd., 16-cv-08771 (ALC)