USPTO's Cancellation of Infringed Patent Claim Voids Injunction and Civil Contempt Sanctions: Federal Circuit | Practical Law

USPTO's Cancellation of Infringed Patent Claim Voids Injunction and Civil Contempt Sanctions: Federal Circuit | Practical Law

In ePlus, Inc. v. Lawson Software, Inc., the US Court of Appeals for the Federal Circuit vacated an injunction and contempt order because the US Patent and Trademark Office (USPTO) cancelled the infringed patent claim before the judgment became final.

USPTO's Cancellation of Infringed Patent Claim Voids Injunction and Civil Contempt Sanctions: Federal Circuit

by Practical Law Intellectual Property & Technology
Published on 19 Jun 2015 • USA (National/Federal)
In ePlus, Inc. v. Lawson Software, Inc., the US Court of Appeals for the Federal Circuit vacated an injunction and contempt order because the US Patent and Trademark Office (USPTO) cancelled the infringed patent claim before the judgment became final.
On June 18, 2015, the US Court of Appeals for the Federal Circuit issued ePlus, Inc. v. Lawson Software, Inc., vacating the US District Court for the Eastern District of Virginia's injunction and civil sanction order against the accused infringer, Lawson Software, Inc. (Nos. 2013-1506, 2013-1587, (June 18, 2015)). The Federal Circuit held that the USPTO's cancellation of the sole infringed claim during a reexamination voided the earlier injunction and civil contempt order.
ePlus, Inc. owns U.S. Patent Nos. 6,023,683 ('683 patent) and 6,505,172 ('172 patent), which describe the use of electronic databases to search for product information and order selected products from third-party vendors. In 2009, ePlus sued Lawson for infringement of these patents. After a jury found infringement of both patents, the district court entered a permanent injunction against Lawson. On appeal, the Federal Circuit affirmed the infringement finding on claim 26 of the '683 patent, and found the remaining asserted claims either invalid or not infringed. The Federal Circuit remanded the case to the district court to consider what changes are necessary to the injunction in light of its decision.
On remand, the district court modified the injunction by removing one of the accused configurations and left the other aspects of the injunction intact. The district court also instituted contempt proceedings against Lawson. After finding that Lawson's redesigned product configurations infringed asserted claim 26, the court fined Lawson for civil contempt. Lawson appealed the district court's modified injunction and contempt order. While this appeal was pending, the Federal Circuit affirmed the USPTO's reexamination decision invalidating claim 26 of the '683 patent, the sole patent claim supporting the district court's modified injunction and contempt order.
On appeal, the Federal Circuit first held that the district court's modified injunction must be set aside because the USPTO cancelled the patent claim on which it is based, explaining that it is well established that an injunction must be set aside when the legal basis for it has ceased to exist.
The Federal Circuit then considered whether the contempt order should be set aside based on the USPTO's cancellation of claim 26. The court held that civil contempt sanctions must be set aside if they are based on the violation of a non-final injunction and the relevant patent claims are later found to be invalid, explaining that:
  • The US Supreme Court set aside civil contempt sanctions imposed for violating an injunction based on patents found to be invalid on appeal of the non-final injunction (Worden v. Searls, 121 U.S. 14, 26 (1887)).
  • The Federal Circuit recently set aside a non-final money judgment for infringement damages after the USPTO cancelled the underlying patent claim (Fresenius USA, Inc. v. Baxter Int'l, Inc., 721 F.3d 1330, 1344 (Fed. Cir. 2013)).
  • The district court's modified injunction order on remand was not a final judgment because Lawson's appeal of that order raised significant questions concerning the scope and propriety of the injunction, which the Federal Circuit's decision did not resolve in the original appeal.
Circuit Judge O'Malley dissented from the majority's decision to set aside the contempt sanctions, explaining that:
  • The propriety of the injunction was not an issue after the decision in the original appeal and the injunction remained in effect following the Federal Circuit's decision.
  • Lawson never appealed the validity of claim 26 of the '683 patent. Accordingly, the validity of that claim as between ePlus and Lawson was final well before the USPTO's cancellation of the claim.