Digest of EPlus, Inc. v. Lawson Software, Inc., No. 2013-1506, 2013-1587 (Fed. Cir. July 25, 2014) (precedential). On appeal from E.D. Va. Before Prost, Dyk, and O’Malley.
Procedural Posture: The district court found that five claims were valid, a jury found that all five claims were infringed, and the district court entered an injunction. In a first appeal, the CAFC held that only claim 26 was valid and infringed, and remanded for the district court to modify the injunction. On remand, the district court modified the injunction and found Lawson in civil contempt for violating the injunction. Lawson appealed both rulings. In another case, the CAFC upheld a ruling in a USPTO reexamination cancelling claim 26 as invalid. The CAFC vacated both the injunction and the contempt order.
- Injunction: An injunction must be reversed following a final judgment that the asserted patent is invalid. Because the PTO found claim 26 invalid and the CAFC affirmed that decision, claim 26 “no longer confers any rights that support an injunction against infringement.” The CAFC vacated the injunction.
- Damages: “[C]ompensatory civil contempt remedies must be set aside when the injunction on which they are based is set aside because the patent is  invalid.” If Lawson had been found guilty of criminal contempt, those penalties would not have been set aside, but the rule for civil contempt is that “the right to remedial relief falls with an injunction which events prove was erroneously issued.” Thus, the CAFC vacated the civil contempt sanctions. The CAFC also noted that they did not address whether civil contempt sanctions would survive if the district court’s injunction had been final when the civil contempt sanctions were imposed. The district court’s modified injunction was not final when the USPTO canceled claim 26, because the scope of relief had yet to be determined: the CAFC had earlier remanded the case to the district court to reconsider the injunction, and Lawson had appealed the modified injunction resulting from the remand.
- Damages: The injunction should have been considered final when it was first entered and Lawson failed to appeal the validity of claim 26. Furthermore, in the first appeal, the CAFC had only directed the district court to “consider” necessary changes to the injunction; the CAFC did not vacate the injunction or direct the district court to “revise or reconsider” the injunction. Thus, the civil contempt ruling for past violations of the injunction should stand because the injunction was final well before claim 26 was cancelled by the PTO.