Energy Recovery, Inc. v. Hauge
745 F.3d 1353
Fed. Cir.2014Background
- Hauge appeals a district court contempt ruling for allegedly violating the 2001 Order adopting ERI's March 16, 2001 Settlement Agreement on pressure exchanger IP
- The 2001 Order granted ERI ownership of specified patents and related IP predating the Order and included a two-year non-compete
- The Agreement states transfer of pre-Agreement IP but clarifies it does not extend to inventions made after the Agreement date
- Post-Order, Hauge pursued and obtained the ’437 patent (issued 2007) and later marketed XPR pressure exchangers through Isobarix
- ERI alleged Hauge used ERI’s proprietary technology in manufacturing Isobarix devices, prompting a Show Cause hearing and a Contempt Order in 2013
- On appeal, the Federal Circuit reverses the contempt finding and vacates the injunction, with discussion of consent-decree scope and remedies
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Hauge violate the 2001 Order? | Hauge violated IP transfer terms and used ERI tech | Hauge illicitly appropriated ERI’s pre-Order tech and manufacturing methods | No clear violation; contempt reversed |
| Does 'all other intellectual property predating this Order' extend to post-Agreement inventions? | Language broadly covers pre-Order IP only | Language could sweep broadly to pre-Order rights including related processes | Not violated; scope not violated by post-Order inventions |
| Was contempt proper given lack of unequivocal command in the underlying order? | Contempt valid if order was clear | No unequivocal command; broader consent-decree purpose governs | Abuse of discretion; contempt reversed |
Key Cases Cited
- United States v. Armour & Co., 402 U.S. 673 (1971) (consent decrees must be discerned within four corners)
- Firefighters Local Union No. 1784 v. Stotts, 467 U.S. 561 (1984) (consent decree scope and purposes)
- In re Wilson, 199 F.3d 1329 (4th Cir. 1999) (contempt standards generally; weighty remedy)
- Westberry v. Gislaved Gummi AB, 178 F.3d 257 (4th Cir. 1999) (abuse of discretion in contempt review)
- Ashcraft v. Conoco, Inc., 218 F.3d 288 (4th Cir. 2000) (elements of civil contempt; knowledge and violation)
- Brown v. Nucor Corp., 576 F.3d 149 (4th Cir. 2009) (abuse of discretion in contempt; erroneous legal principles)