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Despite More than $1 Billion at Stake, Fears and Speculation Are Insufficient to Warrant Injunctive Relief

by | Insights

Money isn’t everything, even when it’s a lot of money.  In the recent case The Research Foundation for the State University of New York, v. Inpria Corporation & JSR Corporation, 2024 WL 1345511 (N.D.N.Y. Mar. 29, 2024), despite hundreds of millions of dollars being at stake, the United States District Court for the Northern District of New York has confirmed once again that without a showing of irreparable harm, it will not issue a preliminary injunction or a temporary restraining order.  In confirming the well-settled precept that “a showing of irreparable harm is the single most important prerequisite for the issuance of a preliminary injunction,” the Northern District also affirmed the two factors that primarily defeat such applications, to wit, (1) irreparable injury may not be remote nor speculative, but actual and imminent; and (2) any injury that can be remedied by an award of monetary damages is not irreparable.

In Inpria, the plaintiff SUNY RF is a private non-profit education corporation associated with State University of New York, specializing in research and discovery by administering sponsored projects.  One of those projects involved nanotechnology, semiconductors and the use of “extreme ultra violet” (“EUV”) light in the construction of circuit board patterns on microchips.  In turn, defendant Inpria is an American corporation also engaged in research, design, manufacturing and sales related to EUV light and semiconductors.  Finally, defendant JSR is a Japanese corporation that sells materials for, inter alia, semiconductors, and, subsequent to the parties’ forming the relationships at bar, acquired Inpria as a subsidiary.

In what no doubt seemed a match made in heaven, these parties entered into a Research Agreement to pool their resources.  To extend the metaphor however, the Research Agreement contained clauses akin to a prenuptial agreement.  To wit, all inventions and intellectual property (“IP”) generated using only SUNY RF resources and personnel would belong to SUNY RF, all inventions and IP generated using only Inpria resources and personnel would belong to Inpria, and mutually created inventions and IP would be owned mutually.  While Inpria did bargain for an option to license SUNY RF’s IP, it was never exercised.

The Inpria Court does not specify how many years ago the disputes between the parties began, but matters clearly came to a head during June 2023 when a company overseen by the Japanese Ministry of Economy, Trade, and Industry announced it would be acquiring JSR for $6.4 billion dollars because, following the expiration of a tolling agreement, SUNY RF filed suit alleging over 300 claims arising from defendants’ alleged use of SUNY RF’s IP and defendants’ alleged attempts to box SUNY RF and its personnel out of their own inventions.

Less than a week after filing the suit, SUNY RF also filed a motion for a temporary restraining order and preliminary injunction intended to: (1) freeze any of defendants’ patent applications or licensing or transferring of patents involving the contested IP; (2) to enjoin defendants from using any of SUNY RF’s IP; and (3) to affirmatively deposit between hundreds of millions to over a billion dollars into an escrow account.  It is clear from this requested relief that SUNY RF believes that defendants, under the direction of the Japanese government, will funnel the IP out of the country and beyond the reach of a United States judgment.

As set forth in Inpria, in Federal Court a party seeking a preliminary injunction (with or without a temporary restraining order, as the standards are the same) must demonstrate: (1) a likelihood of irreparable harm in the absence of an injunction; (2) a likelihood of success on the merits or sufficiently serious questions going to the merits to make them fair ground for litigation; (3) that the balance of hardships tips in the movant’s favor or, if relying on the presence of sufficiently serious questions, that the balance of hardships tips decidedly in the plaintiff’s favor; and (4) that the public interest would not be disserved by the issuance of an injunction.

Unfortunately for SUNY RF, the Inpria Court began and ended its analysis and decision on SUNY RF’s failure to demonstrate irreparable harm.  The Court noted that in each and every case granting such relief found that the movants had set forward actual evidence of secreting assets, off-shore transfers and other acts that affirmatively showed that the defendants intended to frustrate any eventual judgment.

SUNY RF’s clearly threadbare evidence (which included defendants’ refusal to affirmatively stipulate to waivers of jurisdictional and sovereign immunity defenses, along with a promise to comply with any future court-ordered deposits) did not show any actual bad acts.  Instead, it seems that SUNY RF’s claims are based on anticipation of bad acts or speculation as to Japan’s intentions concerning the acquisition.  However, without more, anxieties, worries, conspiracy theories, and speculation does not demonstrate irreparable harm — even if such theories eventually do come to pass.

Further, the Inpria Court noted that JSR had value independent of Inpria, such that it is far from clear that the acquisition centered around SUNY RF’s IP.  Even more, the Court noted that there was significant evidence that Japan was looking to expand its influence in the international semiconductor market, which cuts against any plan to avoid United States jurisdiction.  Indeed, savvy practitioners should note Defendants’ strategy of not merely pushing back against SUNY RF on the law that mere speculation is insufficient, but also providing a robust factual response to demonstrate that absconding with the SUNY RF’s IP is against Japan’s larger interests.

Following this analysis, the Inpria Court made short work of SUNY RP’s remaining points.  To wit, the Court found that SUNY RP could be made whole by money damages.  Indeed the licensing agreement confirms that the IP rights were for sale.  Conversely, because SUNY RP had never commercialize its IP outside of the option given to defendants, there could be no harm to SUNY RP’s business reputation or goodwill.  Finally, the Court found no expediency since SUNY RP knew of the breaches but did not act until the June 2023 acquisition.

In conclusion, while the presence of international players, including foreign governments, may be cause for anxiety for SUNY RP, the Northern District’s decision is a good reminder that Courts evaluate facts, not fears, in granting preliminary relief.  Therefore, when counseling clients on the factors Courts will review favorably to foster provisional relief, a responsible practitioner must always keep the discussion focused on the facts as to what has actually occurred, not what merely may happen.





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