Eplus, Inc. v. Lawson Software, Inc.
789 F.3d 1349
| Fed. Cir. | 2015Background
- ePlus sued Lawson for infringement of two patents ('683 and '172) covering electronic sourcing methods and systems; a jury found multiple claims infringed and the district court enjoined Lawson's infringing product configurations and related services.
- On first appeal (ePlus I), the Federal Circuit invalidated the asserted system claims and found two method claims noninfringed but affirmed infringement of method claim 26 of the '683 patent; the court remanded for modification of the injunction.
- On remand the district court modified the injunction (removing Configuration 2) but otherwise left it in force, and later found Lawson in civil contempt for violating the injunction with redesigned software; substantial compensatory and coercive fines were imposed (stayed pending appeal).
- While Lawson’s appeals of the injunction and contempt orders were pending, the PTO completed reexamination and cancelled claim 26; the Federal Circuit affirmed that PTO cancellation in a separate appeal.
- The Federal Circuit held that because claim 26 — the sole patent claim supporting the injunction and civil-contempt award — was cancelled, the injunction and civil-contempt remedies must be vacated and the case remanded with instructions to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May an injunction remain enforceable after the PTO cancels the patent claim that was the sole basis for it? | ePlus: injunction should remain until the court modifies it; PTO action does not automatically erase injunction. | Lawson: cancellation of the only supporting claim destroys the legal basis for the injunction. | Held: Vacate injunction — when the underlying patent right is cancelled the injunction no longer has a legal basis (Wheeling Bridge line of authority). |
| Should civil contempt (compensatory) sanctions based on violation of a non-final injunction survive when the injunction’s predicate claim is later invalidated/cancelled? | ePlus: sanctions stand because conduct violated an order in effect at the time. | Lawson: compensatory civil sanctions are remedial and dependent on the injunction’s validity, so must be set aside if injunction is undone. | Held: Vacate compensatory civil contempt award — remedial contempt relief falls with a non-final injunction that is later reversed or its basis cancelled (Worden/United Mine Workers). |
| Does the fact that the PTO (not a court) cancelled the claim change the result? | ePlus: PTO cancellation is different and may not nullify court remedies. | Lawson: PTO cancellation of claim eliminates the legal basis regardless of source. | Held: Cancellation by the PTO has the same effect for non-final injunctive and remedial relief; case follows Fresenius and related authority. |
| Was the injunction “final” such that civil contempt could survive? | ePlus: remand and district-court proceedings show injunction was final enough; contempt remedies should be evaluated on merits. | Lawson: injunction was non-final as this court remanded for modifications; therefore civil remedial sanctions dependent on that injunction cannot survive intervening cancellation. | Held: Injunction was not final for purposes of preserving the remedial civil fines after claim cancellation; vacated. |
Key Cases Cited
- Pennsylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.) 421 (1855) (injunction must be dissolved where subsequent law removes the legal wrong underlying decree)
- United States v. United Mine Workers of Am., 330 U.S. 258 (1947) (remedial relief tied to a non-final injunction falls when the injunction is overturned)
- Worden v. Searls, 121 U.S. 14 (1887) (civil contempt fines founded on a preliminary injunction must be set aside when injunction reversed for invalid patent)
- Mendenhall v. Barber-Greene Co., 26 F.3d 1573 (Fed. Cir. 1994) (injunctions based on patents held invalid must be reversed)
- Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330 (Fed. Cir. 2013) (PTO cancellation of patent claims requires setting aside non-final monetary or injunctive relief tied to those claims)
- eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) (equitable balancing required for permanent injunctions)
- Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) (inducement requires affirmative intent to encourage infringement)