In this case, the district court originally found two of the asserted system claims and three of the asserted method claims not invalid, and a jury found that Lawson infringed those claims. In an earlier appeal, the Federal Circuit reversed in part on the ground that the system claims were invalid and that two of the asserted method claims were not infringed. The court affirmed only the infringement verdict as to one method claim (claim 26). The Federal Circuit remanded to the district court to make necessary modifications to the injunction.  On remand, the district court modified the injunction in one respect and found the infringer Lawson in civil contempt for violating the injunction, awarding over $18 million as a compensatory fine together with a daily coercive fine of over $62,000 per day.  Lawson appealed both the injunction and contempt order. During the pendency of Lawson’s appeals, the PTO completed a reexamination of the patent-in-suit and determined that claim 26 was invalid. In a separate appeal, we affirmed the PTO’s invalidity determination, and the PTO cancelled claim 26.

This case presented two issues – (1) whether the whether an injunction can continue after the PTO has cancelled the only claim on which the injunction was based; and (2) whether civil contempt  remedies based on the violation of an injunction are appropriate when the injunction has been overturned on direct appeal.  On the first issue, the court held that the injunction cannot continue after the PTO cancelled claim 26.

On the second issue, the court held that the contempt finding, which was a civil contempt based on a non-final injunction, should be vacated.  The court reasoned that the injunction on claim 26 was merely a non-final injunction (one that it is still subject to litigation over its issuance), because Lawson had challenged the injunction on remand (after the Federal Circuit had instructed the district court to make the necessary modifications to the injunction following its decision to affirm infringement of claim 26) and there were open issues as to whether the injunction could cover sales (in addition to making), because claim 26 was a method claim for which sales could only be infringing acts if Lawson was an indirect infringer.

The majority’s decision drew a sharp (and lengthy) dissent from Judge O’Malley, who argued that the contempt finding should not have been vacated, because the injunction was final.  To the extent that the court is bound by Fresenius USA, Inc. v. Baxter International, Inc., 721 F.3d 1330 (Fed. Cir. 2013), Judge O’Malley argues that the court should reconsider that case. 

Simultaneous with the issuance of this opinion, the court issued an order denying Lawson’s petition for rehearing en banc.  The decision drew three dissenting opinions, one by Judge Newman, which was joined by Judges O’Malley and Wallach; one by Judge Moore, joined by Judges O’Malley, Reyna, and Wallach; and one by Judge O’Malley, joined by Judge Wallach.  Among other issues, these dissents believe that the injunction pertaining to claim 26 was final and therefore the contempt finding should not have been vacated.  

ePlus, Inc. v. Lawson Software, Inc., Case Nos. 2013-1506, -1587 (June 12, 2015); Opinion by: Dyk, joined by Prost, dissenting opinion by O’Malley; Appealed From: District Court for the Eastern District of Virginia, Payne, J.  Read the revised majority opinion here.  Read the petition for rehearing en banc here

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