Following an order granting a permanent injunction, an infringer may still be held in contempt of that order despite good faith efforts to achieve a non-infringing design-around; and even if the infringer achieves a non-infringing design-around, it may still be held in contempt for failure to comply with the clear terms of the order.

Tivo, Inc. v. Echostar Corporation, et. al, 2009-1374 (Fed. Cir. March 4, 2010)

The infringer of a patent covering various features essential to the working of a digital video recorder (“DVR”) appealed from a district court order finding it in contempt of a permanent injunction. The district court rejected the infringer’s argument that it had achieved a non-infringing design-around, and further found that even if the infringer had achieved such a design-around, it would still be in contempt because it had failed to comply with the terms of the injunction requiring it to disable DVR technology completely from the receivers adjudged to be infringing at trial.

The Federal Circuit affirmed. Rejecting the infringer’s claim that the patentee had to prove by clear and convincing evidence that a contempt proceeding was more appropriate than a new trial, the majority agreed that the question is left to the discretion of the trial court. Specifically, where a district court finds that there is “more than a colorable difference” between the original infringing product and the redesigned product such that “substantial open issues with respect to infringement” exist, a new trial is necessary to determine further infringement and a court may not proceed with a contempt finding.

Here, however, the majority agreed that no substantial open questions of infringement remained even though the infringer made some changes to its products. Finding no reason to limit contempt hearings to situations in which the redesigned products are alleged to infringe in the exact same manner previously found to infringe, the majority explained that the district court did not err when it looked to other components that the infringer had itself previously conceded met the limitations now at issue and which the infringer did not modify.

Last, the majority rejected the infringer’s argument that evidence of its good faith suffices to protect it from any finding of contempt, despite a year-long redesign effort and an opinion of noninfringement from a respected patent law firm. A district court can give appropriate weight to good faith arguments, but there is no requirement that it accept them and the lack of intent alone cannot save an infringer from a finding of contempt.

The majority also reviewed and endorsed the district court’s interpretation of the terms of the injunction requiring the infringer to disable DVR technology completely from the infringing receivers even if that technology did not necessarily infringe. Here, the district court made clear its intent in barring certain conduct, and the infringer was not free to ignore the court’s order.

In dissent, Judge Rader faulted the majority for punishing “a good faith design-around effort” and for allowing the injunction to apply to “any DVR functionality regardless of infringement.” He concluded that the majority’s decision “discourages good faith efforts to design around an infringement verdict.”

A copy of the opinion can be found here.