On July 25, the Federal Circuit vacated an injunction and $18 million civil contempt fine in a patent infringement case after a subsequent reexamination invalidated the claims at issue. In the district court, a jury found that the defendant had infringed a number of claims of plaintiffs’ electronic sourcing patents. The court issued an injunction, but did not award damages, because the plaintiffs’ damages expert was excluded.
In defendant’s initial appeal, the Federal Circuit determined that only one of the claims was valid and infringed, and remanded the case to have the injunction modified. During remand, the court modified the injunction, but also ordered the defendant to pay a $18 million civil contempt fine for violating the injunction. During this appeal, the USPTO cancelled the sole claim at issue after finding it invalid, and that ruling was affirmed by the Federal Circuit. The defendant appealed both the injunction and contempt rulings, arguing that they could not be upheld as a result of the reexamination.
The Federal Circuit vacated both the injunction and the contempt fine. The court noted that “[i]t is well established that an injunction must be set aside when the legal basis for it has ceased to exist.” With respect to the contempt ruling, the court distinguished between criminal and civil contempt, noting that criminal contempt orders are a form of punishment, whereas civil contempt proceedings are to ensure full compensation. With civil contempt fines, the plaintiff’s right to the compensatory fine “is dependent upon the outcome of the basic controversy.” Because the PTO had invalidated the sole claim at issue, the court vacated the contempt fine.
ePlus Inc. v. Lawson Software Inc., Nos. 2013-1506, 2013-1587 (Fed. Cir., July 25, 2014).