United States: After PTO’s Cancellation Of Claim, No Legal Basis Remains To Enjoin Conduct Based On The Rights Previously Conferred By That Claim As Those Rights Cease To Exist

In ePlus, Inc. v. Lawson Software, Inc., Nos. 13-1506, -1587 (Fed. Cir. July 25, 2014), the Federal Circuit vacated an injunction and contempt order because both were based on a claim that had been cancelled by the PTO during reexamination. 

ePlus, Inc. ("ePlus"), assignee of U.S. Patent Nos. 6,023,683 ("the '683 patent") and 6,505,172 pertaining to methods and systems for electronic sourcing, instituted an infringement action against Lawson Software, Inc. ("Lawson").  The district court found two asserted system claims and three asserted method claims were valid, and the jury determined that Lawson infringed the asserted claims.  The district court entered a permanent injunction against Lawson in light of the jury's verdicts.  On appeal, the Federal Circuit reversed-in-part—finding the system claims invalid and that two of the method claims were not infringed—affirmed only the infringement verdict as to method claim 26 of the '683 patent, and remanded so that the district court could modify the injunction. 

On remand, the district court requested that the parties provide statements of position discussing the effect of the Federal Circuit's decision on the injunction.  Particularly, Lawson challenged the bar against the sales of particular software products, which were originally supported by the jury's findings of infringement of the system claims, but those findings were later vacated by the Federal Circuit.  Lawson argued that infringement of method claim 26 of the '683 patent did not support the district court's injunction against product sales and that, because the jury's findings had been narrowed, the software products subject to the injunction were capable of significant noninfringing uses.  Lawson subsequently filed a Rule 60(b) motion seeking modification of the injunction.  The district court disagreed with Lawson's arguments and modified the injunction in only one respect.  The district court further found Lawson in civil contempt for violation of that same injunction because Lawson's redesigned products "were no more than colorably different and infringed," and required Lawson to pay a compensatory fine and coercive daily fines until it showed compliance with the injunction.  Slip op. at 8.  Lawson appealed the injunction and the contempt order, which was presently before the Court.  While these appeals were pending, the PTO completed reexamination of the '683 patent and determined that claim 26 of the '683 patent was invalid, which the Federal Circuit affirmed in a separate appeal.

"Under these authorities, there is no longer any legal basis to enjoin Lawson's conduct based on rights that claim 26 of the '683 patent previously conferred as those rights have ceased to exist.  The PTO found claim 26 invalid, we affirmed that decision, our mandate issued, and the PTO cancelled the claim.  Claim 26 no longer confers any rights that support an injunction against infringement."  Slip op. at 11.

On appeal, first addressing whether an injunction can continue after the PTO has cancelled the only claim upon which the injunction was based, the Federal Circuit found that the injunction was no longer supported.  Relying on long-standing precedent, the Federal Circuit explained that—once the PTO invalidated claim 26, the Federal Circuit affirmed that decision, the mandate issued, and the PTO cancelled the claim—"there is no longer any legal basis to enjoin Lawson's conduct based on rights that claim 26 of the '683 patent previously conferred as those rights have ceased to exist."  Id. at 11.  Indeed, the Court noted that ePlus admitted as much during oral argument.  Thus, the Federal Circuit found that the injunction should be vacated.

The Federal Circuit then turned to the second issue on appeal:  whether civil contempt remedies based on the violation of an injunction should be set aside when the injunction has been overturned on direct appeal.  Distinguishing between criminal and civil contempt, the Federal Circuit explained that "[c]ivil contempt sanctions must be set aside when the resolution of the case requires overturning the injunction on which those sanctions are based."  Id. at 13.  The Court further explained that the present case was not distinguishable based on the injunction being set aside due to a PTO proceeding rather than a court judgment.  The Court found this case analogous to Fresenius USA, Inc. v. Baxter International, Inc., 721 F.3d 1330 (Fed. Cir. 2013) ("Fresenius II"), where the Court previously held that "a non-final money judgment of damages for infringement must be set aside where the judgment rested on a patent claim that the PTO later cancelled."  Slip op. at 15 (citing 721 F.3d at 1344, 1347). 

The Court further noted that the present appeal did not require it to decide whether civil sanctions would survive if the injunction had been final at the time civil contempt sanctions had been imposed by the district court.  To be sure, the Court indicated, "[t]here is no question here that the district court's modified injunction was not final when the PTO cancelled claim 26."  Id. at 17.  Addressing ePlus's argument that Lawson viewed the injunction as final because it filed a Rule 60(b) motion to modify or dissolve the modified injunction, the Court found the filing of the motion under those circumstances not to be unusual.  Thus, the Court concluded that the compensatory damages award had to be set aside due to the cancellation of claim 26 of the '683 patent.

Accordingly, the Court vacated both the district court's injunction and contempt orders, and remanded the case with instructions to dismiss.

While Judge O'Malley agreed that, upon affirming the PTO's cancellation of claim 26 of the '683 patent, the injunction could no longer stand, she dissented to address the "more difficult question" as to whether Lawson should be relieved of all penalties for violation of the injunction for the four years that it was in place prior to the Court's affirmance of the PTO's cancellation of claim 26.  O'Malley Dissent at 1-2.  Judge O'Malley dissented from the portion of the Court's opinion where it stated that it did not need to decide whether civil contempt sanctions would survive if the injunction had been final at the time the district court imposed civil contempt sanctions.  She was of the opinion that Fresenius II was distinguishable from the present appeal and also wrote separately "to note that, if we are bound by Fresenius II on these facts, I find Fresenius II even more troubling than I initially believed."  Id. at 2.  First, Judge O'Malley found "crucial differences between these facts and the facts in Fresenius II."  Id. at 7.  Second, she reiterated the concerns from her dissent in Fresenius II that "the majority in Fresenius II erroneously analyzed both the finality of the issues on appeal and the scope of our appellate remand instruction in [Fresenius USA, Inc. v. Baxter International, Inc., 582 F.3d 1288, 1293 (Fed. Cir. 2009)].  These arguments apply with even greater force and urgency here."  O'Malley Dissent at 12.  Accordingly, Judge O'Malley would consider the merits of Lawson's appeal from the trial court's civil contempt findings.

Judges: Prost, Dyk (author), O'Malley (dissenting)

[Appealed from E.D. Va., Senior Judge Payne]

This article previously appeared in Last Month at the Federal Circuit, August, 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
16 Jan 2019, Conference, Washington, DC, United States

Finnegan partner Lionel Lavenue will present “The Technology Accelerates: IP Issues at the Cutting Edge” during the Embry-Riddle Aeronautical University Aviation Law & Insurance Symposium.

17 Jan 2019, Webinar, Washington, DC, United States

As a part of Strafford Publications’ webinar series, Finnegan partners Erika Arner and Michael Flibbert

will discuss best practices for preparing a PTAB case for appeal to the Federal Circuit.

22 Jan 2019, Webinar, Washington, DC, United States

As part of Strafford Publications’ webinar series, Finnegan partners Shana Cyr and Mark Feldstein will provide essential updates on FDA practice and patent law relating to biologics and biosimilars.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions