Contempt Proceedings or New Infringement Trial?

You’ve just been through a multi-year patent infringement lawsuit that cost you several million dollars in attorneys’ and experts’ fees, you’ve defended your patent on appeal to the Federal Circuit, and now you’ve finally won an injunction to keep your competitor from infringing the patent again.  Several months after the conclusion of the case, you notice that your competitor now has a different product that you believe also infringes your patent.  What do you do?  Do you have the time, money, and most of all energy to go through enforcement proceedings again?

If a party violates a court order, such as a permanent injunction, that party may be guilty of contempt of court.  The court usually conducts contempt proceedings where it determines whether in fact its order has been violated and to give the party a chance to respond.  If found guilty of contempt, the party usually faces sanctions and more onerous burdens in the future.

An example of such a proceeding took place in Tivo, Inc. v. EchoStar Corp.  A jury found EchoStar guilty of infringing Tivo’s patent and awarded Tivo $74 million in damages.  The court also issued a permanent injunction against EchoStar.  Tivo then filed a motion that EchoStar was in contempt of the court’s injunction order in that its redesigned products still infringed its patent.  The district court agreed, awarding Tivo $90 million in sanctions against EchoStar and ordering that it must seek the court’s approval before marketing other redesigned products.  The Federal Circuit affirmed this order on appeal.

The question that arises in these situations is:  when are contempt proceedings appropriate and when does the newly alleged infringement require a whole new infringement trial?  The Federal Circuit granted EchoStar’s petition for rehearing en banc to clarify this issue of the law.  Specifically, the court will address the following questions:

a) Following a finding of infringement by an accused device at trial, under what circumstances is it proper for a district court to determine infringement by a newly accused device through contempt proceedings rather than through new infringement proceedings? What burden of proof is required to establish that a contempt proceeding is proper?

b) How does “fair ground of doubt as to the wrongfulness of the defendant’s conduct” compare with the “more than colorable differences” or “substantial open issues of infringement” tests in evaluating the newly accused device against the adjudged infringing device? See Cal. Artificial Stone Paving Co. v. Molitor, 113 U.S. 609, 618 (1885); KSM Fastening Sys., Inc. v. H.A. Jones Co., 776 F.2d 1522, 1532 (Fed. Cir. 1985).

c) Where a contempt proceeding is proper, (1) what burden of proof is on the patentee to show that the newly accused device infringes (see KSM, 776 F.2d at 1524) and (2) what weight should be given to the infringer’s efforts to design around the patent and its reasonable and good faith belief of noninfringement by the new device, for a finding of contempt?

d) Is it proper for a district court to hold an enjoined party in contempt where there is a substantial question as to whether the injunction is ambiguous in scope?

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2 Responses to “Contempt Proceedings or New Infringement Trial?”

  1. Royce Galdo Says:

    Incredibly insightful, and enlightening. I never generally make commentary, as I’m kind of an blog lurker, but I thought it deserved a word or two. With thanks for sharing.

  2. Two En Banc Arguments at Federal Circuit this Week « INVENTIVE STEP Says:

    […] The court posed a number of questions that it will seek to answer in this case to determine which proceeding is appropriate in various circumstances. […]

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