Yue v. Reaction Labs, LLC, 2026 WL 157144 (W.D. Tex. 2026)

Case Highlights

• The Western District of Texas held that a first, non‑final USPTO reexamination office action rejecting all patent claims constituted a “changed circumstance” requiring reconsideration of an existing preliminary injunction.
• The initial office action created substantial questions of validity, leading the court to find that the patent owner could no longer demonstrate a likelihood of success on the merits.
• The decision reinforces that even early‑stage USPTO reexamination developments can meaningfully influence injunctive relief in federal patent litigation, elevating the strategic importance of parallel proceedings.
• Trending: Coincidentally, Director Squire’s recent order invites patent owners to present early arguments to oppose ex parte reexamination requests. The new process makes reply by the requestor less available and narrower when permitted. This contrasts with earlier practice which automatically enabled the requester to reply when the patent owner elected to enter an early response to an ex parte reexamination request. The new practice underscores USPTO’s attention to the renewed importance of ex parte reexamination within the current landscape. 

Ex parte reexamination is rising dramatically at the U.S. Patent and Trademark Office (USPTO).[1] And, the influence of reexamination proceedings, even at early litigation stages, continues to have a concrete impact on how Article III courts weigh whether a preliminary injunction remains warranted in patent infringement suits.

On Jan. 20, 2026, the Western District of Texas recognized a first (non-final) Office Action in ex parte reexamination created a ‘changed circumstance’ in federal patent litigation in Yue v. Reaction Labs, LLC a/k/a Lup. Judge Pitman deemed the non-final office action rejecting all 18 claims was sufficient to warrant the reconsideration of a previously granted preliminary injunction. 

Considering the USPTO’s initial rejection of all claims, the court concluded that the patent’s validity now appeared vulnerable. As a result, it reversed its earlier view of the patent owner’s likelihood of success on the merits in the infringement case. Because the patent owner failed to convince the court to maintain the preliminary injunction, the court vacated the injunction, citing the USPTO action as a persuasive, though not dispositive, factor in its decision.

The Road to Article III  

The case grew out of a dispute between two owners of magnetic data cable patents. Each party provided magnetic data cables through an online store. Lup successfully removed listings for Yue’s products (including its licensees’ products) through the online store’s patent evaluation program on grounds of alleged infringement of Lup’s patent. 

In response, Yue sued Lup for patent infringement in the Western District of Texas. Lup responded with its own counterclaims for patent infringement, and only Lup’s patent infringement counterclaim remains at issue. Lup moved for and obtained a preliminary injunction against Yue, with the court initially noting that “Lup was likely to succeed on the issue of validity and the merits of its [patent infringement] claim” against Yue. Yue appealed.

While Yue’s appeal of the preliminary injunction was pending, Yue filed a request for ex parte reexamination of Lup’s patent with the USPTO (Ex Parte Reexam no. 90/019597). After granting ex parte reexamination, the USPTO issued an initial, non-final office action rejecting all claims.[2]

Using that rejection, Yue filed a Motion to Vacate the Preliminary Injunction. The court granted the motion, placing substantial weight on the office action as a material change of Lup’s likelihood of success on the merits given the new questions about the patent’s validity.

USPTO Initial Office Action as Changed Circumstance Warranting Preliminary Injunction Reconsideration

A preliminary injunction does not remain in place unchanged until a court’s final adjudication. A party may ask a court to reconsider, and even change, an existing preliminary injunction if it can demonstrate that “the legal or factual circumstances justifying the injunction have changed,” and that those “changed circumstances warrant relief.” 

Here, the Western District of Texas agreed with Yue and court precedent that the initial office action is a “changed circumstance” sufficient to trigger reconsideration of the existing preliminary injunction. 

The “changed circumstance” of the initial office action is only a key to unlocking reconsideration of the preliminary injunction. Once reopened, the party requesting to maintain a preliminary injunction bears the burden of establishing, once again, that they still qualify for injunction given the changed circumstance. 

USPTO Initial Office Action as Evidence of Patent Vulnerability in Patent Litigation

Securing and maintaining a preliminary injunction in the Fifth Circuit is no small feat. A party seeking such injunction before litigation must demonstrate four factors: 

1. The requesting party will likely succeed on the merits;
2. There is a substantial threat of irreparable harm resulting in the injunction’s absence;
3. Such irreparable harm threatened by not granting the injunction outweighs any harm threatened on a defendant by preliminarily enjoining them; and
4. Granting the preliminary injunction will not dis-serve the public interest. 

Once an active preliminary injunction is placed under reconsideration by a changed circumstance, a requesting party must again demonstrate each of the four factors listed above. Failure to do so will lead to the preliminary injunction being vacated.

Here, the court’s analysis considered the USPTO examiner’s decision to grant reexamination. Although the mere grant of reexamination is not itself probative of patentability, it can indicate potential vulnerability when the examiner rejects claims after a preliminary injunction has been issued. Such rejections are not dispositive. Yet, the prior art raised a substantial question as to the Lup patent’s validity, which weighed against maintaining the injunction.      

The court found it needed only to reconsider the first factor: whether the requesting party will likely succeed on the merits to determine that Lup can no longer maintain a preliminary injunction following the ex parte reexamination office action. 

Under Federal Circuit law, “a patent holder [wishing to demonstrate a likelihood of success on the merits] must show that it will likely prove that the alleged infringer is infringing the asserted patent and that the patent holder will likely withstand ‘challenges to the validity and enforceability of’ the asserted patent.” 

Alleged infringers are not without recourse. An alleged infringer who “raises a substantial question concerning either infringement or validity, i.e., asserts an infringement or invalidity defense that the patentee cannot prove ‘lacks substantial merit,’” may block a preliminary injunction from either issuing or remaining in effect. For alleged infringers like Yue, raising a “substantial question concerning either infringement or validity” can be as simple as demonstrating that “the asserted patent is ‘vulnerable.’”

Here, the initial rejection of all of Lup’s patent claims was enough to show that Lup’s asserted patent is vulnerable. The court reasoned that a non-final office action rejecting all claims is a strong indicator of a future final Office Action that is likely to reject the same claims again. Given this initial rejection and the now‑reduced likelihood that Lup’s claims would survive the USPTO process intact, the court concluded that Lup could no longer show a substantial likelihood of success on the merits for its infringement claims.

The court vacated Lup’s preliminary injunction, a direct consequence of the “changed circumstance” (the USPTO preliminary office action) reversing the merits playing field for Lup and Yue.

Takeaway: What does Yue Mean for You?

A favorable initial office action is not an automatic basis for dissolving a preliminary injunction, as the court in Yue emphasized. The court retains discretion in how to treat such non‑final decisions. In Lup’s case, however, the preliminary rejection of all patent claims significantly undermined the support for the injunction. Subsequently, the court found Lup unable to demonstrate a substantial likelihood of success on the infringement merits.

This case highlights the growing influence of USPTO office actions, even initial ones, on the federal courts’ confidence in patent validity during early litigation. Because preliminary injunction outcomes can hinge on the USPTO’s parallel ex parte reexamination process, parties must strategically invest in both forums rather than relying on one alone. For patent owners, this means preparing for rapid rebuttal of examiner rejections, coordinating litigation arguments with reexamination responses, and ensuring that the record before the USPTO does not undermine positions taken in court. For accused infringers, promptly pursuing reexamination can be an effective tactic to question validity, strengthen arguments against injunctive relief, and potentially reshape the litigation’s trajectory at an early stage.