Introduction

Attorneys unfamiliar with the unique aspects of patent litigation may be surprised to learn that a judgment disposing of all liability issues in a patent infringement case is not always appealable to the Court of Appeals for the Federal Circuit. The Federal Circuit has jurisdiction over appeals from interlocutory judgments in patent infringement actions that are "final except for an liability issues are decided. Often, however, patent infringement accounting." 28 U.S.C. § 1292(c)(2). Of course, a judgment cannot be final unless all outstanding actions also involve the issue of whether injunctive relief should be granted. Few published authorities have considered whether a judgment is "final except for an accounting" where all liability issues have been decided but injunctive relief has not been decided. Similarly, few authorities have addressed whether a judgment is appealable where the issues of liability and injunctive relief have been decided but the judgment specifically directs that an accounting of the amount of damages be completed.

As it turns out, a judgment is not final and appealable to the Federal Circuit if a claim for injunctive relief has not been decided by the trial court. Nor can a judgment be appealed if it directs a further calculation of the amount of damages. Such a judgment is not "final except for an accounting of damages" under 28 U.S.C. § 1292(c)(2).

Discussion

The Federal Circuit has jurisdiction over a "final decision of a district court" in a patent case pursuant to 28 U.S.C. § 1295(a)(1). Briefly, a "final decision" is a judgment that disposes of all the claims of all the parties, leaving nothing for the court to do except execute the judgment,1 or a judgment certified by the district court as "final" pursuant to Federal Rule Of Civil Procedure 54(b).2 Anything else is an "interlocutory decision," which is appealable only as permitted under 28 U.S.C. § 1292. A judgment which disposes of all of the liability issues but not issues of injunctive relief falls into this "interlocutory" category and is governed by § 1292(c)(2), which provides:

The United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction - * * * (2) of an appeal from a judgment in a civil action for patent infringement which would otherwise be appealable to the United States Court of Appeals for the Federal Circuit and is final except for an accounting.

Thus, an interlocutory judgment must be "final except for an accounting" to be appealable to the Federal Circuit. Determining whether a judgment is "final except for an accounting" can be complicated, however.

It is clear that a judgment cannot be final unless all liability issues have been adjudicated.3 But there are very few authorities that address whether a judgment is appealable when liability has been decided but injunctive relief has not been decided, or when both liability and injunctive relief have been decided but the judgment specifically directs an accounting of the amount of damages. The few published authorities are in agreement that if there are outstanding issues to be decided after a court finds that a patent is valid and has ordered an accounting, including the issue of whether to grant a permanent injunction, then the court's decision is not "final except for an accounting" for purposes of section 1292(c)(2), and thus is not appealable.

The Wright, Miller & Cooper treatise notes that "[a] straightforward reading of the statute would suggest that appeal can be taken only after resolution of all issues of liability and also any remedy issues apart from an accounting."4 Applying this reading, the treatise goes on to suggest that a judgment reflecting final decisions on patent validity and infringement would not be appealable "if issues of license or release remain to be decided", or if "the district court had ordered an accounting and withheld determination whether to issue a permanent injunction."

Moore's Federal Practice is to the same effect, stating that "[i]f liability has been decided but some other relief, such as a pending motion for an injunction, remains to be decided, the judgment is not final for purposes of being appealed under § 1292(c)(2)."5

The principal authority relied upon by both commentators is a 1970 decision of the Fifth Circuit in Stamicarbon, N.V. v. Escambia Chemical Corp. In that case, appellate jurisdiction was challenged on the ground that the district court had not ruled on a request for injunctive relief and the judgment therefore was not "final except for an accounting." The Fifth Circuit held that the district court had, indeed, ruled on the request for injunctive relief sub silentio by determining that there was no continuing infringement to enjoin. The clear implication of the court's analysis, however, was that if the district court had not ruled on the request for injunctive relief, the judgment would not have been appealable under 28 U.S.C. § 1292(a)(4) (1966) (the predecessor of present § 1292(c)(2)). The court stated:

In the absence of a finding of continuing infringement, we therefore assume that the district court had nothing on which to base the grant of an injunction and, sub silentio, denied it. With this assumption, the only issue not disposed of by the district court would be the issue of an accounting. The district court's order is therefore appealable.7

The Federal Circuit has not addressed this issue in a precedential opinion. However, several recent nonprecedential Federal Circuit decisions are consistent with the views expressed by the commentators and the Fifth Circuit in Stamicarbon.8 For example, in Magnesystems Inc. v. Nikken, Inc.,9 the court addressed the issue of whether an appeal is "final except for an accounting" when liability has been decided but injunctive relief has not been decided.10 The court cited Stamicarbon with approval, stating "[i]mplicit in the Court's decision is a holding that the pending request for injunctive relief would have rendered the liability finding nonappealable."11

Recent nonprecedential Federal Circuit opinions and orders have also provided guidance as to how the court will likely proceed if a trial court's judgment directs that an accounting of the amount of damages be completed. The purpose of § 1292(c)(2) is to permit district courts to stay and possibly avoid a burdensome determination of damages.12 The key distinction appears to be whether damages have been separated pursuant to Federal Rule Of Civil Procedure 42(b). If so, the underlying liability issues may be appealable under § 1292(c)(2). However, where damages have been tried and the trial court's judgment directs that an accounting of the amount of damages be completed, apparently that judgment is not "final except for an accounting" within the meaning of that statute.

For example, in Schneider (Europe) AG v. Scimed Life Systems, Inc.,13 the Federal Circuit dismissed an appeal for lack of jurisdiction based on a "'judgment' (1) finding that SciMed infringed the claims of Schneider's patents, (2) assessing damages in the amount of $45 million against SciMed for the period through June 1993, (3) directing further calculation of damages from June 1993 to March 4, 1994, and (4) issuing a permanent injunction."14 Apparently, the court decided that, where a judgment directs a further calculation of damages, it is not "final except for an accounting" within the meaning of 28 U.S.C. § 1292(c)(2). In fact, the court specifically noted that "[n]either party is focusing on the crucial fact that part of the damages have been calculated, but not all."15

Similarly, in Procter & Gamble Co. v. Paragon Trade Brands, Inc.,16 the Federal Circuit dismissed an appeal by Paragon as premature because "[n]o final judgment has yet issued." The Federal Circuit found that the "district court did not bifurcate the proceedings into entitlement and damages. Instead, entitlement and most of the damages issues have been decided. A final issue concerning damages remains and, apparently, Procter & Gamble's request for an injunction has not been decided."17

Conclusion

A "judgment" adjudicating all of the liability issues in a patent infringement action is not necessarily final and appealable to the Federal Circuit. If a claim for injunctive relief has not been decided by the trial court or if, after a trial on the damages issues, the trial court specifically directs in its judgment that an accounting of the amount of damages be completed then the judgment is not final for purposes of appeal until such issues have been disposed of by order of the court.

ENDNOTES:

1 See, e.g., View Eng'g, Inc. v. Robotic Vision Sys., 115 F.3d 962, 963 (Fed. Cir. 1997) (The Supreme Court has stated that a final decision "generally is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment."), quoting, Catlin v. United States, 324 U.S. 229, 233 (1945).

2 Rule 54(b), Fed. R. Civ. P., provides: "When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment."

3 See, e.g., Spraytex, Inc. v. DJS&T, 96 F.3d 1377, 1379 (Fed. Cir. 1996) ("In a case involving more than one claim, there is no final decision until a judgment is entered adjudicating all of the claims.")

4 16 Wright, Miller & Cooper, Federal Practice And Procedure: Jurisdiction And Related Matters § 3928 at 351-352 (2d ed. 1996).

5 19 Moore's Federal Practice § 203.14[2]b] at 203-73 (3d ed. 1997).

6 430 F.2d 920 (5th Cir. 1970).

7 Id. at 931.

8 An unpublished Federal Circuit opinion or order is not citable as precedent under Rule 47.6(b), Federal Rules Of Appellate Procedure. Such an opinion or order is unanimously determined by the Federal Circuit panel at the time of its issuance as not adding significantly to the body of law. Rule 47.6(b) does not preclude assertion of issues of claim preclusion, issue preclusion, judicial estoppel, law of the case or the like based on a decision of the Federal Circuit rendered in a nonprecedential opinion or order.

9 1994 U.S. App. LEXIS 24363 (Fed. Cir. 1994) (nonprecedential).

10 Id. at *4.

11 Id. *4-*5.

12 Mendenhall v. Barber-Greene Co., 26 F.3d 1573, 1581 (Fed. Cir. 1994).

13 1994 U.S. App. LEXIS 11290 (Fed. Cir. 1994) (nonprecedential).

14 Id. at *1-*2.

15 Id. at *2.

16 Order No. 98-1222 (Fed. Cir. March 30, 1998) (nonprecedential).

17 The remaining damages issue is set forth in paragraph 4 of the "Judgment" appealed from. Paragraph 4 provides that "P&G shall submit an accounting of the amount of damages to which it is entitled in accordance with the Court's Opinion of this date." The Procter & Gamble Co. v. Paragon Trade Brands, Inc., Civil Action No. 94-16 LON (D. Del. December 30, 1997).

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.