Yue v. Reaction Labs, LLC (2026)

Case details
Country
United States
Jurisdiction
Federal
Decided
2026
Disposition
Vacated
Majority
Order Robert Pitman (J.) (unanimous Court)
Yue v. Reaction Labs, LLC, --- F.Supp.3d ---- (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.12026 WL 157144Only the Westlaw citation is currently available.United States District Court, W.D. Texas, Austin Division.Wenyong YUE, et al., Plaintiffs/Counter-Defendants,v.REACTION LABS, LLC a/k/a Lup, Defendant/Counter-Plaintiff.1:24-CV-1125-RP|Signed January 20, 2026Editor's Note: This decision contains discussion of citationreferences that are incorrect or do not actually exist. Theseinvalid citations appeared in the original court opinion andhave been preserved as written since they are part of theofficial record. Any links to these invalid citations have beenremoved.Attorneys and Law FirmsJoseph J. Zito, Dnl Zito, Washington, DC, Lance Liu, Pro HacVice, Southbury, CT, Benjamin Charles Deming, Dnl Zito,Dallas, TX, Paul R. Juhasz, Pro Hac Vice, The Juhasz LawFirm, Houston, TX, Robert David Katz, Pro Hac Vice, LawOffices of Albert Wai-Kit Chan, Esq., Whitestone, NY, forPlaintiffs/Counter-Defendants.Daniel Scardino, Scardino LLP, Austin, TX, HenningSchmidt, Stradling Yocca Carlson & Rauth LLP, Austin, TX,for Defendant/Counter-Plaintiff.ORDERROBERT PITMAN, UNITED STATES DISTRICT JUDGE*1 Before the Court is Counter-Defendants Wenyong Yue(“Yue”), Huizhoushi Huifangyuan Nongye Keji YouxianGongsi a/k/a Botail (“Botail”), and yidiandian Shenzhenwenhuachuanmeiyouxiangongsi a/k/a Cool Essential's(“Cool Essential”) (collectively, “Counter-Defendants”)Opposed Motion to Vacate Preliminary Injunction. (Mot. toVacate PI, Dkt. 176). Counter-Plaintiff Reaction Labs LLC a/k/a Lup (“Lup”) filed a response in opposition, (Dkt. 177).Having considered the parties’ briefs, the record, and therelevant law, the Court issues the following order.I. BACKGROUNDThis case began as a dispute between owners of two differentpatents for magnetic data cables. Yue is the owner of the U.S.Patent No. 11,756,703 (“the ’703 Patent”), which discloseda magnetic data cable. (Am. Compl., Dkt. 96, 1; see alsoEx. A, Dkt. 96-1). Botail and Cool Essential are China-basedcompanies that operate Amazon stores to sell magnetic datacables to U.S. consumers under a license to the ’703 Patentfrom Yue. (Id. ¶¶ 2–3). Lup is a Texas-based company, ownedby John Nashed Hanna (“Hanna”), that operates an Amazonstore which also sells magnetic data cables. (Defs.’ Answer,Dkt. 55, ¶¶ 4–5). Lup is also the current owner and assigneeof U.S. Patent No. 11,972,881 (“the ’881 Patent”), which alsodisclosed a magnetized cable. (Id. ¶¶ 4–5, 58; see also Ex. B,Dkt. 96-2).In May 2024, Lup filed numerous complaints throughthe Amazon Patent Evaluation Express Program (“APEX”)against over eighty Amazon listings belonging to CoolEssential and Botail. (See Order, Dkt. 128, at 2). Amazon thenremoved the allegedly infringing listings. (Id.). In response,on June 15, 2024, Counter-Defendants initiated this litigationby filing suit against Lup and Hanna on multiple grounds,including infringement of the ’703 Patent. (Dkt. 1; see alsoAm. Compl., Dkt. 96).1 Lup and Hanna answered Counter-Defendants’ claims, and Lup, alone, counterclaimed forinfringement of the ’881 Patent. (Dkt. 55).Both parties filed a motion for a preliminary injunction (“PI”).(Dkts. 24-1, 57). On December 13, 2024, the Court issued anorder granting in part Hanna and Lup's motion for summaryjudgment, (Dkt. 88). (Order, Dkt. 122; see also Order, Dkt.141). The Court found that Hanna and Lup were entitledto summary judgment on most of Counter-Defendants’claims against them and dismissed all of Counter-Defendants’claims. The Court accordingly denied as moot Counter-Defendants’ motion for a PI. (Id.). The Court later dismissedHanna as a party to this case, as no claim by or against himremained. (Order Dismissing Hanna, Dkt. 162).As for Lup's remaining counterclaim, the Court held a hearingon its motion for a PI on December 5, 2024. (Min. Entry, Dkt.119). At the hearing, the Court considered arguments fromcounsel on the parties’ various filings related to Lup's motion.At the end of the hearing, the Court ordered Lup to file aproposed order granting the motion, which would include thespecific Amazon Standard Identification Numbers (“ASINs”)
Yue v. Reaction Labs, LLC, --- F.Supp.3d ---- (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.2that Lup wished to be enjoined. (Id.). The day after thehearing, Lup filed a proposed order that contained the ASINsfor the accused listings. (Dkt. 120). Counter-Defendants didnot respond to Lup's proposed order.*2 On December 17, 2024, the Court entered an ordergranting Lup's motion and issued a PI against Counter-Defendants. (Order, Dkt. 128; see also Am. Order, Dkt. 130).The Court found that Lup had shown that it was likely tosucceed on its claim that Counter-Defendants were infringingthe ’881 Patent. (Id. at 6–7). The Court also found thatCounter-Defendants had failed to present any persuasiveevidence that the ’881 Patent is invalid due to inequitableconduct, the priority of the ’703 Patent, or other prior art. (Id.at 7–12). As such, the Court found that Lup was likely tosucceed on the issue of validity and the merits of its claim.(Id. at 12). After finding that the other preliminary injunctionfactors favored Lup, the Court issued an injunction barringCounter-Defendants from making, importing, or selling theaccused products—specifically those sold through the ASINsidentified by Lup in its proposed order. (Id. at 19). In issuingits injunction, the Court required Lup to post a bond in theamount of $25,000. (Id. at 20). Lup complied by depositing$25,000 with the Clerk of the Court. (Dkts. 131, 132).On December 22, 2024, Counter-Defendants filed a Noticeof Appeal challenging both the dismissal of their claims andthe Court's order granting Lup's motion for a preliminaryinjunction. (Dkt. 133). On January 10, 2025, their appealwas formally docketed at the Federal Circuit. Yue v. Hanna,25-1356 (Fed. Cir. 2025).On April 11, 2025, Counter-Defendants filed a Petition forReexamination of the ’881 Patent before the United StatesPatent and Trademark Office (“USPTO”). (Dkt. 159-5). Thepetition asserted that reexamination was warranted basedon nine substantial new questions of patentability. (Id.). OnMay 1, 2025, the USPTO instituted reexamination of thefive independent claims of the ’881 Patent on five of thenine grounds asserted in Counter-Defendants’ petition. (Dkt.159-2, at 8–16). The USPTO did not grant the reexaminationrequest for the dependent claims and did not grant the requestfor the independent claims based on substantial new questionsof patentability 1, 2, 3, and 9.2 (Id.).Counter-Defendants subsequently filed two motions for relieffrom the Court's preliminary injunction. In their Motion forWrongful Injunction Damages, Counter-Defendants arguedthat four ASINs were improperly enjoined as part of theCourt's injunction, and accordingly they request damages forlost sales. (Dkt. 153). Counter-Defendants also filed a Motionto Vacate the Preliminary Injunction based on the USPTO'sdecision to institute a reexamination proceeding against the’881 Patent. (Dkt. 159). The Court denied both of thesemotions.3Counter-Defendants now inform the Court that the USPTOhas issued a preliminary Office Action rejecting all 18 claimsof the ’881 Patent, despite only instituting reexamination oncertain claims. (Mot. to Vacate PI, Dkt. 176, at 6–7; USPTONon-Final Office Action, Dkt. 176-1, at 3). Based on this non-final rejection, Counter-Defendants renewed their motion tovacate the PI and filed a motion to withdraw the pendingappeal of the Court's PI with the Federal Circuit. In response,Lup filed a motion for sanctions against Counter-Defendants.The Federal Circuit's Order granting Counter-Defendants’voluntary motion to dismiss the appeal (with costs to Lup) anddenying Lup's motion for sanctions was docketed with thisCourt on December 30, 2025.4 (Fed. Cir. Order, Dkt. 178).II. LEGAL STANDARD*3 District courts may appropriately modify an injunction“when the legal or factual circumstances justifying theinjunction have changed.” Bear Ranch, L.L.C. v. HeartbrandBeef, Inc., 885 F.3d 794, 803 (5th Cir. 2018). Such a decisionis reviewed for abuse of discretion. Id. “The party seeking tomodify the injunction has the burden to show ‘that changedcircumstances warrant relief.’ ” Id. (quoting Horne v. Flores,557 U.S. 433, 447, 129 S.Ct. 2579, 174 L.Ed.2d 406 (2009)).If such a showing is made, district courts in the Fifth Circuitthen “apply the same standards in reviewing a preliminaryinjunction under a motion to dissolve as they do in decidingwhether to grant one in the first instance.” Chamber of Com.of United States v. Consumer Fin. Prot. Bureau, 767 F. Supp.3d 357, 362 (N.D. Tex. 2024) (citing Texas v. United States,No. 7:15-CV-00056-O, 2015 WL 13424776, at *1 (N.D. Tex.June 26, 2015)). Federal Rule of Civil Procedure 65(a)(1)provides that the Court “may issue a preliminary injunctiononly on notice to the adverse party.” The party movingfor the preliminary injunction must establish the following:“(1) there is a substantial likelihood that the movant willprevail on the merits; (2) there is a substantial threat thatirreparable harm will result if the injunction is not granted;(3) the threatened injury outweighs the threatened harm to thedefendant; and (4) the granting of the preliminary injunction
Yue v. Reaction Labs, LLC, --- F.Supp.3d ---- (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.3will not disserve the public interest.” Clark v. Prichard, 812F.2d 991, 993 (5th Cir. 1987).When reviewing a district court's decision to grant or denya preliminary injunction, the Federal Circuit applies the lawof the regional circuit when reviewing and interpreting suchdecisions. Aevoe Corp. v. AE Tech. Co., 727 F.3d 1375,1381 (Fed. Cir. 2013). However, “[s]ubstantive matters ofpatent infringement are unique to patent law, and thus theestimated likelihood of success in establishing infringementis governed by Federal Circuit law.” Revision Military, Inc.v. Balboa Mfg. Co., 700 F.3d 524, 526 (Fed. Cir. 2012). Todemonstrate a likelihood of success on the merits, a patentholder must show that it will likely prove that the allegedinfringer is infringing the asserted patent and that the patentholder will likely withstand “challenges to the validity andenforceability of” the asserted patent. Amazon.com, Inc. v.Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir.2001) (citing Genentech, Inc. v. Novo Nordisk, A/S, 108F.3d 1361, 1364 (Fed. Cir. 1997)). If the alleged infringer“raises a substantial question concerning either infringementor validity, i.e., asserts an infringement or invalidity defensethat the patentee cannot prove ‘lacks substantial merit,’ thepreliminary injunction should not issue.”5 Id. at 1350–51.III. DISCUSSIONThe Court first addresses whether Counter-Defendants, asthe “party seeking to modify the injunction,” have met their“burden to show ‘that changed circumstances warrant relief.’” Bear Ranch, L.L.C., 885 F.3d at 803 (quoting Horne, 557U.S. at 447, 129 S.Ct. 2579). The Court agrees with thereasoning in DUSA Pharmaceuticals, Inc. v. River's EdgePharmaceuticals, LLC, which similarly involved a motion todissolve a PI after the USPTO issued a non-final rejectionof all claims of the asserted patent. DUSA Pharms., Inc.v. River's Edge Pharms., LLC, No. 06-1843SRC, 2007 WL748448, at *2–3 (D.N.J. Mar. 7, 2007). In DUSA, the courtfound that “the USPTO's decision to reexamine the [assertedpatent] and its accompanying initial Office Action ... rejectingall 16 of the claims in the [asserted patent]” was a “changedcircumstance that justif[ied] the dissolution of the preliminaryinjunction.”6 Id. Here, too, the Court finds that the USPTO'spreliminary Office Action rejecting all eighteen of the ’881Patent’s claims qualifies as a changed circumstance thatwarrants the Court's reconsideration of its PI.*4 Accordingly, the Court will address whether Lup, asthe party seeking to maintain the PI, is continuing to meetthe requirements for injunctive relief. First, Lup must showa likelihood of success on the merits. As stated in SectionII, supra, Lup therefore must show that it will likely provethat Counter-Defendants are infringing the ’881 Patent andthat Lup will likely withstand challenges to the validity andenforceability of the ’881 Patent. See Amazon.com, Inc., 239F.3d at 1350. The Court will dissolve the PI if Counter-Defendants “raise[ ] a substantial question concerning eitherinfringement or validity.” See id. at 1350–51. At the PI stage,alleged infringers such as Counter-Defendants need onlyshow that the asserted patent is “vulnerable.” See id. at 1359.The Federal Circuit has instructed district courts to “considerthe current posture of the inter partes reexaminationproceedings at the PTO when evaluating [the patent holder's]likelihood of success on the merits.”7 Procter & GambleCo. v. Kraft Foods Global, Inc., 549 F.3d 842, 847 (Fed.Cir. 2008). It specifically noted that a USPTO examiner'sdetermination in a reexamination proceeding “may berelevant to [the patent holder's] likelihood of success,” thougha mere grant of reexamination is not probative of patentability.Id. at 847–48; see also Hoechst Celanese Corp. v. BPChemicals Ltd., 78 F.3d 1575, 1584 (Fed. Cir. 1996) (“Wetake notice that the grant by the examiner of a request forreexamination is not probative of unpatentability.”). Notably,vulnerability may be shown by an examiner's rejection ofclaims issued after a PI, though such a rejection by the USPTOis not dispositive. See Kimberly-Clark Worldwide, Inc. v.First Quality Baby Prods., LLC, 431 F. App'x 884, 889 n.3(Fed. Cir. 2011) (citing Procter & Gamble Co., 549 F.3dat 847) (“[T]he examiner's decision regarding patentabilitycan be considered when discerning the likelihood of success.Although the rejection issued after the district court'spreliminary injunction ruling, we note that the rejectionprovides further support for [the alleged infringer's] positionthat the [the asserted patent] claims are ‘vulnerable.’ ”).Here, the USPTO examiner rejected all eighteen claimsin the ’881 Patent under 35 U.S.C. § 102(a)(1) as beinganticipated by Chinese Patent Document CN113674921 A(“CN ’921”) or as obvious over CN ’921 in view of CN’921 in combination with two new pieces of prior art, the“Dlugas”8 and “Aase”9 references. (Office Action, Dkt.176-1, at 6, 15). CN ’921 was also the main reference citedwhen the USPTO invalidated the ’703 Patent, and the sameUSPTO examiner was assigned to the reexamination of the’703 Patent as to the ongoing reexamination of the ’881
Yue v. Reaction Labs, LLC, --- F.Supp.3d ---- (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.4Patent. (Mot. to Vacate, Dkt. 176, at 13). Counter-Defendantspoint out that the ’881 Patent’s claims being “rejected basedon the same art is not surprising, given the similarity ofthe claims in the now-invalidated ’703 Patent and the ’881Patent.” (Id. at 13). They explain that the ’703 and ’881Patents each recite a magnetic cable in which the data cablecore is wrapped by one or more layers of magnetic materialsand outer protective layers and argue that “the citation of theCN ’921 Patent against both patents shows that there is asubstantial question of validity regarding the ’881 Patent thatweighs against maintaining the preliminary injunction.” (Id.at 14). Counter-Defendants emphasize that the Office Actionis “persuasive evidence that a preliminary injunction is notwarranted.” (Id. at 9).*5 Lup responds in opposition: (1) though an office actionin a reexamination is a factor that may be considered, itis not dispositive;10 (2) Counter-Defendants’ motion doesnot rely upon newly discovered prior art, so that is not a“changed circumstance”; (3) a final rejection of all claimsin the reexamination is unlikely; and (4) CN ’921 doesnot disclose or suggest the ’881 Patent’s claims. First, theCourt agrees that it need not necessarily dissolve the PI asa result of the USPTO's non-final Office Action but findsthat it may do so. The Federal Circuit has instructed districtcourts to “consider the current posture” of reexaminationproceedings when evaluating a patent holder's likelihood ofsuccess on the merits. Procter & Gamble Co., 549 F.3d at 847.The current posture—that all eighteen claims of the patenthave been preliminarily rejected—tilts strongly in favor ofthe ’881 Patent being “vulnerable.” See Amazon.com, Inc.,239 F.3d at 1350–51, 1359 (noting that at the PI stage,a PI should not be issued if the alleged infringer showsthat the asserted patent is “vulnerable”); Kimberly-ClarkWorldwide, Inc., 431 F. App'x at 889 n.3 (citing Procter &Gamble Co., 549 F.3d at 847) (“[T]he examiner's decisionregarding patentability can be considered when discerning thelikelihood of success. Although the rejection issued after thedistrict court's preliminary injunction ruling, we note that therejection provides further support for [the alleged infringer's]position that the [the asserted patent] claims are ‘vulnerable.’”).It is true that, in some contexts, the Federal Circuit andother courts have found a preliminary office action inreexamination proceedings to not be probative of invalidity.For example, in Acoustical Design, Inc. v. Control ElectronicsCo., the Federal Circuit noted that an alleged infringer couldnot have a good-faith belief that a patent was invalid afteran initial rejection by the USPTO. 932 F.2d 939, 942 (Fed.Cir. 1991).11 This holding, however, was in the context ofpost-trial motions after a jury found the alleged infringershad willfully infringed upon the patent. In Tesco Corp. v.Weatherford International, Inc., a court in this Circuit heldthat an examiner's rejection of claims in a reexaminationproceeding was inadmissible evidence for the purpose ofproving invalidity of the patents at the summary judgmentstage. 750 F. Supp. 2d 780, 793–94 (S.D. Tex Sept. 27,2010). See also DataQuill Ltd. v. High Tech Computer Corp.,887 F. Supp. 2d 999, 1018 (S.D. Cal. 2011) (rejecting adefendant's argument at the summary judgment stage thatit did not act recklessly because all claims of the assertedpatent had been rejected in a non-final office action). Thougha non-final rejection of all of a patent's claims may not behighly probative at trial or at the summary judgment stage—where the standard is “clear and convincing evidence”—thestandard is this stage is merely whether Counter-Defendantshave raised “substantial questions of invalidity,” even if that“evidence ... would not suffice to support a judgment ofinvalidity at trial.” Amazon.com, Inc., 239 F.3d at 1358–59.The Court therefore does not consider itself bound to thereasoning in those cases.*6 Second, Lup attempts to show that the validity questionraised by the Office Action lacks substantial merit. Lup arguesthat Counter-Defendants already knew about CN ’921 priorto completing its PI briefing but failed to adequately developan argument as to how CN ’921 anticipates the ’881 Patent.(Lup Resp., Dkt. 177, at 18–19). Counter-Defendants alsoraised CN ’921 in their first motion to vacate the PI in thiscase. As a result, Lup contends, “The Court should not allow[Counter-Defendants] to make these arguments now—over ayear after the initial PI briefing—when [Counter-Defendants]had everything needed to make its arguments available to[them] from the very start. That is the very antithesis ofthe ‘changed circumstances’ requirement imposed by theSupreme Court.” (Lup Resp., Dkt. 177, at 19). Relatedly, Lupalso cites as support M-I LLC v. Fpusa, LLC, in which anothercourt in this District purportedly “noted the importance of thefact that the prior art in the reexam was newly discovered andnot known to the Defendant during the original preliminaryinjunction briefing.” (Lup Resp., Dkt. 177, at 17). See M-I LLC v. Fpusa, LLC, No. SA:15-CV-406-DAE, 2016 WL6088344, at *2–3 (W.D. Tex. Oct. 17, 2016). Lup assertsthat, because Counter-Defendants do not rely upon newlydiscovered prior art in their motion, there is no such new artto give rise to a changed circumstance.
Yue v. Reaction Labs, LLC, --- F.Supp.3d ---- (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.5In M-I LLC, however, the USPTO had merely institutedreview of the asserted patent—it had not, as in theinstant case, issued an initial office action within thatreexamination proceeding. See id. at *2. That opinion istherefore not persuasive in this context, where the USPTOhas preliminarily rejected the ’881 Patent’s claims. Counter-Defendants do not need to show the Court newly discoveredprior art to give rise to a changed circumstance, as there isa different changed circumstance—the USPTO's preliminaryrejection of all 18 of the ’881 Patent’s claims.Third, Lup contends that the reexamination process isunlikely to result in the rejection of all of the ’881 Patent’sclaims. (Lup Resp., Dkt. 177, at 20). It cites as support genericstatistics from the USPTO:The reexam process is inherently unlikely to be successful.The federal circuit explicitly noted that “[t]he AnnualReport of the Patent and Trademark Office for 1994states that 89% of the reexamination requests were grantedthat year, but only 5.6% of the reexamined patentswere completely rejected with no claims remaining afterreexamination.” Hoechst Celanese Corp. v. BP Chems.Ltd., 78 F.3d 1575, 1584 (Fed. Cir. 1996), fn. 2. Thecited statistics have since become even more extreme.The most recent ex parte reexamination filing data,published September 30, 2024, shows that 92.6% of thereexamination requests were granted, but only 14.1% ofthe reexamined patents were completely rejected with noclaims remaining after reexamination.(Lup. Resp., Dkt. 177, at 20). Lup's citations to the USPTOstatistics are problematic for multiple reasons. First, thestatistics cited regarding the percentage of reexamined patentsthat were completely rejected are based on the number ofpatents for which reexamination was instituted—not based onthe number of patents for which reexamination was institutedand then were initially fully rejected. For example, in 1994,89% of reexamination requests were granted but only 5.6%of those reexamined patents were completely rejected. (Id.).Though that 5.6% number may have been persuasive whenex parte reexamination was first granted by the USPTO, the’881 Patent’s claims have now been preliminarily rejected intheir entirety. It therefore is now much more likely that theUSPTO will issue a final office action rejecting all claims thanit was at the outset of reexamination. Second, regarding Lup'sclaim that the “cited statistics have since become even moreextreme,” (id.), the statistics in fact show the exact opposite.They state that in 1994, only 5.6% of reexamined patentshad all of their claims rejected, and in 2024, that percentageincreased up to 14.1%—making it in fact more likely that allof the ’881 Patent’s claims will be rejected, not less likely.*7 Finally, Lup argues that CN ’921 does not disclose orsuggest all of the ’881 Patent’s claims. As to Claim 1 ofthe ’881 Patent, which requires that the “magnetic cablehas a substantially rectangular cross section defining a pairof substantially planar and parallel major surfaces,” Lupcontends that CN ’921 does not disclose a rectangular crosssection and instead discloses a circular cross section. (LupResp., Dkt. 177, at 22). It points to an image included inthe CN ’921 Patent as depicting a cable with a circular crosssection:(Id.; CN ’921 Patent, Dkt. 177-1, at 37). According toLup, the translation of CN ’921 provided to the USPTO byCounter-Defendants for the reexamination was a “machinetranslation,” and a human translation of the patent has slightdifferences. The machine translation states: “A method ofpreparing a data line according to claim 1, where [ ] that thesection shape of the data line is one of the circular, flat, ovalregular shape, or any irregular shape.” (Machine Translation,Dkt. 176-3, at 3). This machine translation was relied uponby the USPTO examiner for his initial rejection of Claim 1of the ’881 Patent. (USPTO Non-Final Office Action, Dkt.176-1, at 7 (“CN ’921, Claim 5, ‘the [cross-]section shape ofthe data line is one of the circular, flat, oval regular shape,or any irregular shape,’ where at least a ‘flat’ and/or ‘ovalregular shape’ is a ‘substantially rectangular’ shape.”)). Thehuman translation of the shape disclosed by the CN ’921Patent states: “a cross-sectional shape of the data cable isone of regular shapes of circular, flat and elliptical, or is anyirregular shape.” (Human Translation, Dkt. 177-1, at 18–19).Lup contends that, based on the figure above and the humantranslation, the CN ’921 Patent does not disclose a rectangularcross-section. (Lup Resp., Dkt. 177, at 22).Though Lup's argument is well-taken, the Court finds thatit is not enough to show that the “substantial question”
Yue v. Reaction Labs, LLC, --- F.Supp.3d ---- (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.6raised by the non-final rejection “lacks substantial merit.”See Amazon.com, Inc., 239 F.3d at 1350–51 (“If the [allegedinfringer] raises a substantial question concerning eitherinfringement or validity, i.e., asserts an infringement orinvalidity defense that the patentee cannot prove ‘lackssubstantial merit,’ the preliminary injunction should notissue.”). For one, though the figure shown above depicts acircular cross-section, Federal Circuit precedent is clear that“drawings are not meant to ... limit the scope of coveragedefined by the words used in the claims themselves.” Gartv. Logitech, Inc., 254 F.3d 1334, 1342 (Fed. Cir. 2001); seealso TI Grp. Auto. Sys. (N. Am.), Inc. v. VDO N. Am., L.L.C.,375 F.3d 1126, 1138 (Fed. Cir. 2004) (“[T]he fact that thedrawings are limited to a particular embodiment does notsimilarly limit the scope of the claims.”). The Court thereforemust look at the “full breadth of claim scope supported bythe words of the claims.” TI Grp., 375 F.3d at 1138. Evenusing the human translation provided by Lup—“a cross-sectional shape of the data cable is one of regular shapesof circular, flat and elliptical, or is any irregular shape”—there is a valid argument that the “full breadth of [the] claimscope” does include a rectangular cross-section. It explicitlyteaches that the cable may be circular “or ... any irregularshape.” (Human Translation, Dkt. 177-1, at 18–19) (emphasisadded). A rectangle is an irregular shape, as its sides are notequal lengths. Thus, there remains “substantial merit” to thequestion of whether the CN ’921 Patent does in fact includea cable with a rectangular cross-section.12*8 Finally, as to Claims 8, 12, 14, and 15, Lup arguesthat Counter-Defendants’ motion provides no analysis forthe motivation to combine CN ’921 with the Dlugas andAase references.13 The Court disagrees. Counter-Defendantssubmitted to the Court a claim chart, (Dkt. 176-2), givinga “point-by-point analysis demonstrating the grounds forinvalidity.” (Mot. to Vacate, Dkt. 176, at 11). The claim chartincludes an explanation for why it would be obvious to askilled artisan to make the asserted combinations:• Claim 8: “It would have been obvious to one of ordinaryskill in the art before the effective filing date of theclaimed invention to use insulation, such as one with‘a low dielectric constant’ in Dlugas, around the wiresof CN ’921, which is of ‘great importance’ in datatransmission lines, in particular those in high frequency/speed data transmission lines, in particular those in highfrequency/speed data transmissions.” (Claim Chart, Dkt.176-2, at 23).• Claim 12: “It would have been obvious to one of ordinaryskill in the art before the effective filing date of theclaimed invention to have the outer sheath of the cablein CN ’921 be made of silicon-rubber, as in Dlugas, toensure ‘data transmission at high data rates ... withoutinterference.’ ” (Id. at 24).• Claim 14: “It would have been obvious to one of ordinaryskill in the art before the effective filing date of theclaimed invention to use a compression molding process,as in Aase, to form the data cable of CN ’921 suchthat a ‘single-segment unibody cable’ may be formed,which reduces the need for additional processing of othersegments.” (Id. at 25).• Claim 15: It would have been obvious to one of ordinaryskill in the art before the effective filing date of theclaimed invention to use an injection molding process,as in Aase, to form the data cable of CN ’921 suchthat a ‘single-segment unibody cable’ may be formed,which reduces the need for additional processing of othersegments.” (Id. at 25–26).Though the above motivations for combination are merelycopied from the USPTO Office Action, (Dkt. 176-1), theCourt nonetheless finds the explanations to be sufficient,as they describe why a skilled artisan would have beenmotivated to make the combinations of prior art to arrive at the’881 Patent and go beyond merely alleging that the individualelements of the claimed inventions were each known inthe prior art. See Belden Inc. v. Berk-Tek LLC, 805 F.3d1064, 1073 (Fed. Cir. 2015) (explaining that “obviousnessconcerns whether a skilled artisan not only could have madebut would have been motivated to make the combinations ormodifications of prior art to arrive at the claimed invention”)(emphasis in original); Natera, Inc., 106 F.4th at 1377 (citingKSR Int'l Co. v. Teleflex, Inc., 550 U.S. 398, 418–19, 127 S.Ct.1727, 167 L.Ed.2d 705 (2007)) (“It is not sufficient to merelyallege that the individual elements of the claimed inventionwere each known in the prior art.”).*9 In conclusion, though the USPTO's preliminary OfficeAction may not be “clear and convincing evidence,” the Courtfinds that the examiner's detailed explanation for why CN’921 (including in combination with the Dlugas and Aasereferences) anticipates or makes obvious each of the ’881Patent’s claims at the very least raises a “substantial question”as to the validity of the ’881 Patent. (USPTO Non-FinalOffice Action, Dkt. 176-1, at 4–14). See Amazon.com, Inc.,
Yue v. Reaction Labs, LLC, --- F.Supp.3d ---- (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.7239 F.3d at 1358–59 (“The showing of a substantial questionas to invalidity ... requires less proof than the clear andconvincing showing necessary to establish invalidity itself.”).The Court acknowledges that the Office Action is not final,that Lup is challenging service of the ex parte reexamination,and that Lup still has the ability to make claim amendmentsor file new claims.14 But, based on the evidence currentlybefore the Court, and considering a preliminary injunction ina patent case is “extraordinary relief,” see id. at 1359, theCourt finds that Counter-Defendants have met their burden ofdemonstrating a changed circumstance and that Lup has notmet its burden of continuing to show a reasonable likelihoodof success on the merits. See DUSA Pharms., 2007 WL748448, at *3 (“The Court recognizes that ... the PTO'sfinal word on the ’468 Patent's validity has not yet issued.[The patent holder], however, has not shown that the validityquestion raised by the reexamination order and the OfficeAction lacks substantial merit.”). Because Lup has not metits burden on this first element of the preliminary injunctionanalysis, the Court will not reach the remaining three factors.IV. CONCLUSIONAccordingly, IT IS ORDERED that Counter-Defendants’Opposed Motion to Vacate Preliminary Injunction, (Dkt.176), is GRANTED.IT IS FURTHER ORDERED that the Court's PI, (Dkt. 128),and Amended PI, (Dkt. 130), are VACATED.All Citations--- F.Supp.3d ----, 2026 WL 157144Footnotes1Since the initiation of this litigation, all claims of the ’703 Patent have been found to be invalid after a thirdparty requested, and the United States Patent and Trademark Office initiated, a reexamination of the ’703Patent. (See May 20, 2025 Final Office Action, Dkt. 160-1).2As stated below, the USPTO subsequently issued a non-final rejection of all eighteen claims, despite onlyinitially instituting reexamination as to claims one and nine. (USPTO Non-Final Office Action, Dkt. 176-1, at 3).3As to the motion for wrongful injunction damages, the Court found that the motion was premature, as Counter-Defendants had not moved for the Court to amend its preliminary injunction order to remove the four ASINsat issue and had not carried their burden in showing they were entitled to wrongful injunction damages.(Order, Dkt. 163, at 9–10). As to the motion to vacate the preliminary injunction, the Court found that it lackedjurisdiction to dissolve its preliminary injunction while Counter-Defendants’ appeal of the injunction remainedpending before the Federal Circuit. (Id. at 13). And, even if the Court did consider the merits of the motion,the Court found that the USPTO's decision to institute a reexamination of the ’881 Patent was not probativeevidence of the patent's invalidity. (Id. at 13–14).4Lup's Response to the instant motion, which contends that the Court continues to lack jurisdiction over theinstant motion due to the appeal with the Federal Circuit remaining pending, (Dkt. 177, at 13–14), was filedprior to the Federal Circuit's Order being docketed with this Court.5At trial, the “test for invalidity ... is by evidence that is clear and convincing.” Amazon.com, Inc., 239 F.3d at1358 (citing WMS Gaming, Inc. v. Int'l Game Tech., 184 F.3d 1339, 1355 (Fed. Cir. 1999)). At the PI stage,however, “one need not make out a case of actual invalidity. Vulnerability is the issue at the preliminaryinjunction stage, while validity is the issue at trial.” Id. at 1359.6The Court notes that Lup, in its response to Counter-Defendants’ motion to vacate the PI, blatantlymisrepresented the court's reasoning in DUSA. (Lup Resp., Dkt. 177, at 16). Lup claims that the changedcircumstance in DUSA was not the initial office action rejecting the patent's claims and that “[i]nstead, the
Yue v. Reaction Labs, LLC, --- F.Supp.3d ---- (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.8‘changed circumstances’ that warranted revisiting the preliminary injunction was the patent holder's expertdeclaration arguing for a narrowed claim construction.’ ” (Id.). To the contrary, the DUSA court explicitlyfound two changed circumstances: “This Court finds that [the defendant] has demonstrated two changedcircumstances that justify the dissolution of the preliminary injunction: (1) the PTO's decision to reexaminethe [asserted patent] and its accompanying initial Office Action of November 22, 2006 rejecting all16 of the claims in the [asserted patent] and (2) DUSA's definition of the term ‘substantial release form’through the Williams Declaration.” DUSA Pharms., 2007 WL 748448, at *2 (emphasis added). Moreover,Lup represents that the court in DUSA “specifically noted that ‘the reexamination order is not dispositive onthe issue of validity.’ ” (Id.). Though this phrase does appear in DUSA, Lup has taken it out of context. Thefull sentence is: “While the reexamination order is not dispositive on the issue of validity, the Court doesfind that ‘it is probative to the issue of whether [DUSA has] raised a substantial question of validity.’ ” Id.at *3. That court then proceeded to dissolve the PI, reasoning that the changed circumstance of the non-final Office Action “raises a substantial question of validity with regard to the [asserted patent]” and“justif[ies] dissolution of the preliminary injunction.” Id. The Court warns Lup to more carefully presentcase law in the future.7Though the instant case involves ex parte reexamination rather than inter partes review, and though Lupattempts to distinguish the instant case from those involving inter partes review reexamination, (see LupResp., Dkt. 177, at 16), it provides no argument or rationale for why cases involving inter partes review shouldnot be persuasive to the Court in this context. In the absence of any argument to the contrary, the Court findsthat cases involving a PI followed by the rejection of claims through inter partes review are just as instructiveas cases involving a PI followed by the rejection of claims through ex parte reexamination.8U.S. Patent Application Publication No. 2009/0056972, to Dlugas et al.9U.S. Patent Application Publication No. 2011/0170733, to Aase et al.10Strangely, two of the citations given by Lup in support of this assertion are incorrect. Lup cites to Cummins-Allison Corp. v. SBM Co., No. 9:07-cv-196, 2009 WL 763926, at *10 (E.D. Tex. March 19, 2009). (LupResp., Dkt. 177, at 15). Though this order exists, it only eight pages long, making Lup's citation to page *10impossible. Similarly, Lup cites Fiber Sys. Int'l v. Applied Optical Sys., 2009 WL 8590962, at *8-9 (E.D. Tex.March 12, 2009), an order that is only six pages long and was published on June 24, 2009, not in March2009. The Court cautions Lup's counsel to cite-check his filings in the future, as such mistakes may suggestreliance upon artificial intelligence without independently validating the accuracy of generated citations.11This case was later cited by the Federal Circuit in support of its reasoning that “[t]he grant of a requestfor reexamination, although surely evidence that the criterion for reexamination has been met (i.e., that a‘substantial new question of patentability’ has been raised, 35 U.S.C. § 303), does not establish a likelihoodof patent invalidity.” Hoechst Celanese Corp., 78 F.3d at 1584 (citing Acoustical Design, 932 F.2d at 942).12Lup also argues that, regarding the ’881 Patent’s requirement that the cable have a “pair of major surfaces[that] lie within a first and second polarity region of the persistent magnetic field,” the CN ’921 Patent cannotteach a “pair of major surfaces [that] lie within a first and second polarity region of the persistent magnetic fieldbecause the cable described in CN ’921 has no major surfaces because it is circular or at most a ‘flattenedcircle.’ ” (Lup Resp., Dkt. 177, at 25). Because the Court has found that it is possible the CN ’921 Patentteaches a rectangular cross-section and is not necessarily circular (or elliptical), the Court finds that thisargument also does not prove that the challenge to the ’881 Patent’s validity lacks substantial merit.13“In determining whether there would have been a motivation to combine prior art references to arrive at theclaimed invention, a challenger must show a reason why a skilled artisan would have made the combination.Whether a skilled artisan would have been motivated to combine references is a question of fact.” Natera,
Yue v. Reaction Labs, LLC, --- F.Supp.3d ---- (2026) © 2026 Thomson Reuters. No claim to original U.S. Government Works.9Inc. v. NeoGenomics Lab'ys, Inc., 106 F.4th 1369, 1376 (Fed. Cir. 2024) (citing Apple Inc. v. Samsung Elecs.Co., 839 F.3d 1034, 1051 (Fed. Cir. 2016) (en banc)).14This Order does not prevent Lup from filing a new motion for injunctive relief should new circumstanceswarrant it (e.g., if the USPTO ultimately confirms claims of the ’881 Patent).End of Document© 2026 Thomson Reuters. No claim to original U.S. Government Works.
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