The US Court of Appeals for the Federal Circuit dismissed an appeal brought by an adjudged infringer because the district court had not determined or specified the means for determining the amount of pre-judgment interest. Halo Electronics, Inc. v. Pulse Electronics, Inc., Case No. 16-2006 (Fed. Cir., May 26, 2017) (Lourie, J). Because the Federal Circuit lacked jurisdiction, the appeal was dismissed in order for the district court to resolve the specifics of the pre-judgment interest award in the first instance.
This dispute has been ongoing for 10 years. The lawsuit began in 2007, with Halo accusing Pulse of infringing three patents. Following a jury trial, the district court entered judgment in favor of Halo on findings of direct infringement, induced infringement and $1.5 million in reasonable royalty damages. While both sides initially appealed, Pulse’s appeal of the district court’s decision to set aside the jury’s finding of willful infringement eventually found its way to the Supreme Court of the United States after the Federal Circuit affirmed the no willfulness finding (IP Update, Vol. 19, No. 6). While the Supreme Court decision was pending, the district court awarded Halo pre-judgment interest and ordered the parties to either file a stipulation on the amount of that award or file briefs explaining their position on how much pre-judgment interest should be awarded.
The parties could not agree on an amount of pre-judgment interest and disputed the period during which the interest accrued. Halo contended that the amount should be calculated from the day the complaint was served. Pulse disagreed and contended that the calculation of pre-judgment interest should account for the fact that Pulse’s infringing activities were found to occur throughout the damages period and Halo had not suffered the full amount of damages at the time the complaint was served. Shortly after the briefing addressing the pre-judgment interest dispute was submitted to the district court, Pulse filed notice of appeal. That appeal arose from the district court’s decision to award Halo any pre-judgment interest at all. The appeal proceeded, with Pulse indicating that the district court could wait to rule on the particulars of the disputed pre-judgment interest issues until after the Federal Circuit addressed the propriety of the decision to award any pre-judgment interest to Halo.
On appeal, the Federal Circuit declined to address the substantive issues raised because there was no “final decision” pursuant to 28 USC § 1295(a)(1) (final judgment rule). The Federal Circuit explained that it has jurisdiction over the “final decision” of a district court—i.e., a decision that “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” There is a narrow exception to the final judgment rule pursuant to § 1292(c)(2), which gives the Federal Circuit jurisdiction over an appeal from a judgment in a patent infringement action when the case is final except for an accounting. However, here the Court explained that it lacked jurisdiction over the appeal under both the final judgment rule and the § 1292(c)(2) exception.
The Federal Circuit looked to the appealed-from decision dated April 6, 2016, and noted that the Order required the parties to either stipulate to the amount of pre-judgment interest or submit briefing addressing disputed items. The district court never resolved the parties’ dispute regarding the date from which to begin calculating pre-judgment interest or set the amount of pre-judgment interest to be awarded. The presence of these outstanding disputes was dispositive. The Federal Circuit determined that there was no final decision that would confer jurisdiction on appeal. Similarly, the exception to the final judgment rule was not applicable because the order was not final. Regardless of whether pre-judgment interest is part of an accounting, § 1292(c)(2) has been interpreted to preclude consideration of a non-final order that is related to the accounting. Thus, because the order appealed from was not final under § 1295(a)(1), the Federal Circuit lacked jurisdiction under § 1295(c)(2). The appeal was dismissed for lack of jurisdiction, but the Federal Circuit clarified that Pulse preserved its rights to later file a proper appeal of a final award of pre-judgment interest.