Lead Opinion
Appellants (collectively, “EchoStar”) appeal from the district court’s decision finding EchoStar in contempt of two separate provisions of the court’s permanent injunction order. See TiVo Inc. v. Dish Network Corp.,
As a result of our consideration of this case en banc, we hold that the two-step KSM analysis is unsound in contempt cases and we clarify the standards governing contempt proceedings in patent infringement cases. We therefore vacate the district court’s finding of contempt of the infringement provision of the permanent injunction, and remand to the district court to make a factual determination of colorable differences under the new standard we lay out here. We thus vacate in part the damages awarded to TiVo for EchoStar’s continued infringement. However, we once again affirm the district court’s finding of contempt of the disablement provision of the permanent injunction and its sanctions award in its entirety because we conclude that EchoStar waived arguments of overbreadth and vagueness with regard to that provision.
Background
TiVo Inc. (“TiVo”) owns U.S. Patent 6,233,389 (“the '389 patent” or “TiVo’s patent”), which is entitled “Multimedia Time Warping System.” The patented technology allows television users to simultaneously record and play (“time-shift”) television broadcasts using what is commonly known as a digital video recorder (“DVR”). A DVR allows users to fast-forward, rewind, pause, and replay a “live” television program while it is playing on the television set. TiVo’s patent covers various features essential to the working of a DVR.
In 2004, TiVo sued EchoStar in the United States District Court for the Eastern District of Texas, alleging that its receivers infringe “hardware” claims (claims 1 and 32) and “software” claims (claims 31 and 61) of the '389 patent. The hardware claims are not at issue in this appeal.
Claim 31 of the '389 patent is the first of the two software claims. It provides as follows:
A process for the simultaneous storage and play back of multimedia data, comprising the steps of:
[1] providing a physical data source, wherein said physical data source accepts broadcast data from an input device, parses video and audio data from said broadcast data, and temporarily stores said video and audio data;
[2] providing a source object, wherein said source object extracts video and audio data from said physical data source;
[3] providing a transform object, wherein said transform object stores and retrieves data streams onto a storage device;
[4] wherein said source object obtains a buffer from said transform object, said source object converts video data into data streams and fills said buffer with said streams;
[5] wherein said source object is automatically flow controlled by said transform object;
[6] providing a sink object, wherein said sink object obtains data stream buffers from said transform object and outputs said streams to a video and audio decoder;
[7] wherein said decoder converts said streams into display signals and sends said signals to a display;
[8] wherein said sink object is automatically flow controlled by said transform object;
[9] providing a control object, wherein said control object receives commands from a user, said commands control the flow of the broadcast data through the system; and
[10] wherein said control object sends flow command events to said source, transform, and sink objects.
'389 patent claim 31 (emphases added). Claim 61 is similar to claim 31, except that it recites an apparatus rather than a process. See id. claim 61.
The accused EchoStar satellite television receivers can be broadly classified into two categories based on the processing chip employed by the receiver: the “50X” series and the “Broadcom” series. The district court submitted questions of infringement and invalidity to the jury. TiVo, Inc. v. Dish Network Corp., No. 2:04-CV-00001, ECF No. 690 (E.D.Tex. Apr. 13, 2006) [hereinafter Verdict Form]. On infringement, the jury was asked whether eight different models of EchoStar receivers, three of the 50X series and five of the Broadcom series, literally infringed the hardware or software claims of TiVo’s patent. Id. at 2-3. The jury answered “yes” for each of the asserted claims, for each of the eight listed receivers. Id. It also found, by clear and convincing evidence, that EehoStar’s infringement was willful, id. at 4, and awarded TiVo approximately $74 million in lost profits and reasonable royalties, id. at 8. The district court entered judgment on the verdict and issued a permanent injunction against EchoStar. In its injunction, the district court ordered EchoStar: (1) to stop making, using, offering to sell, and selling the receivers that had been found infringing by the jury (the “infringement” provision) and (2) to disable the DVR functionality in existing receivers that had already been placed with EchoStar’s customers and in new placements that were yet to be placed with EchoStar’s customers (the “disablement” provision). The infringement provision reads:
Each Defendant, its officers, agents, servants, employees, and attorneys, and those persons in active concert of participation with them who receive actual notice hereof, are hereby restrained and enjoined, pursuant to 35 U.S.C. 283 and Fed.R.Civ.P. 65(d), from making, using, offering to sell, selling, or importing in the United States, the Infringing Products, either alone or in combination with any other product and all other products that are only colorably different therefrom in the context of the Infringed Claims, whether individually or in combination with other products or as a part of another product, and from otherwise infringing or inducing others to infringe the Infringed Claims of the '389 patent.
J.A.162. The disablement provision reads:
Defendants are hereby FURTHER ORDERED to, within thirty (30) days of the issuance of this order, disable the DVR functionality (i.e., disable all storage to and playback from a hard disk drive of television data) in all but 192,-708 units of the Infringing Products that have been placed with an end user or subscriber. The DVR functionality, i.e., disable all storage to and playback from hard disk drive of television data) [sic] shall not be enabled in any new placements of the Infringing Products.
Id. The injunction defines both the terms “Infringing Claims” and “Infringing Products”:
[T]he Court thereby enters judgment for Plaintiff against Defendants for willful infringement of U.S. Patent No. 6,233,389 (“'389 patent”), claims 1, 5, 21, 23, 32, 36, 52, 31 and 61 (“the Infringed Claims”) by Defendants’ following DVR receivers (collectively the “Infringing Products”): DP-501; DP-508; DP-510; DP-522; DP-625; DP-721; DP-921; and the DP-942.
Id. 161. The district court’s definition of the term “Infringing Products” listed the same model numbers that the jury in its verdict had found infringing.
Following the entry of final judgment by the district court, we affirmed in part, reversed in part, and remanded the district court’s decision. EchoStar had appealed issues of claim construction and infringement. We found that the district court had incorrectly construed at least one limitation of the hardware claims and reversed the portion of the judgment upholding the jury’s verdict that EchoStar’s DVRs literally infringed the hardware claims. TiVo, Inc. v. EchoStar Commc’ns Corp.,
At that time, EchoStar had not appealed the district court’s grant of a permanent injunction. In our opinion, we noted that the district court’s injunction, which had been stayed during the course of the appeal, would take effect following our decision. Id. at 1312. We remanded to the district court to make a determination as to any additional damages that TiVo may have sustained while the stay of the permanent injunction had been in effect. Id. Our mandate issued, and the injunction became effective, on April 18, 2008.
Following the decision on the appeal, TiVo moved the district court to find EchoStar in contempt of the court’s permanent injunction. After conducting a series of hearings on TiVo’s motion, the district court ruled that EchoStar was in contempt of both provisions of its permanent injunction. With regard to the infringement provision, the district court rejected EchoStar’s argument that it had redesigned its infringing receivers in a manner that rendered them more than colorably different from the adjudged infringing devices. EchoStar contended that it had redesigned the infringing software on both the 50X and the Broadcom receivers so that the “parsing” limitation of claims 31 and 61 was no longer satisfied. EchoStar argued that was because it had replaced the “start code detection” feature, which was originally alleged to meet the parsing limitation, with a “statistical estimation” feature. Video recordings in a DVR are comprised of sequential frames of audio and video data that are received as a data stream and stored to the hard drive of the DVR. The start code detection feature in the infringing receivers parsed for codes that designated the start of each video frame and indexed those codes so as to allow the system to precisely locate and access a required frame from the data stream whenever needed, such as during rewind and fast forward operations by the user. EchoStar contended that functionality was now accomplished by using a statistical estimation feature that relied on average frame rate statistics to estimate the location of a given video frame. EchoStar further argued that it had modified the infringing software on the Broadcom receivers so that the “automatically flow controlled” limitation of claims 31 and 61 was no longer satisfied. On that point, EchoS-tar’s contention was that it completely eliminated the “record buffer” that existed in its original software to provide flow control of data that was being transferred
The district court evaluated the two modifications and found by clear and convincing evidence that the modified DVR software was not more than colorably different from the infringing software, and did continue to infringe the software claims. On EchoStar’s contention that the “parsing” limitation was not met, the court held that the modified receivers, like the adjudicated ones, continued to utilize “PID filtering,” which EchoStar itself had recognized as “parsing,” and thus were not more than colorably different from the adjudicated receivers. TiVo,
Moreover, the district court held that even if EchoStar had achieved a noninfringing design-around, EchoStar would still be in contempt because it had failed to comply with the plain language of the disablement provision in the district court’s order requiring it to disable DVR functionality completely from the specifically named receiver models adjudged to be infringing at trial. EchoStar argued to the district court that because the disablement provision required it to disable “Infringing Products,” EchoStar was merely required to disable infringing DVR software, which did not exist once it had redesigned its receiver software. The district court rejected that argument, reasoning that if EchoStar believed that the infringing receivers in their entirety were not subject to the order or that the order improperly covered noninfringing practices, then EchoStar should have requested that the district court modify its order or should have challenged the scope of the injunction on appeal. Id. at 874. The district court concluded that having failed to do either at the time that the injunction issued, EchoS-tar had waived any argument that the injunction was overbroad. Id.
In view of EchoStar’s contempt of the court’s order, the district court imposed sanctions against EchoStar in the amount of nearly $90 million. TiVo Inc. v. Dish Network Corp.,
Discussion
A.
Contempt for Violation of the Infringement Provision
We begin by providing clarification of the standard to be used for determining
1. Good Faith as a Defense to Civil Contempt
We first consider EchoStar’s arguments that contempt is improper “where the defendant engaged in diligent, good faith efforts to comply with the injunction and had an objectively reasonable basis to believe that it was in compliance.” EchoStar argues that it employed 15 engineers for 8000 hours to complete the software redesign, which took a year. Similarly, it stresses the fact that it obtained an opinion of noninfringement from a respected patent law firm. It further contends that the redesign, by allowing for data loss, compromised performance in order to avoid infringement of TiVo’s patent, giving it a product inferior to what it previously had. In light of this evidence, EchoStar argues, the district court was incorrect in finding it in contempt.
We disagree and conclude that EchoStar misreads the law. We have made it clear that, under Supreme Court precedent, a lack of intent to violate an injunction alone cannot save an infringer from a finding of contempt. Additive Controls & Measurement Sys., Inc. v. Flowdata, Inc.,
2. The Propriety of a Contempt Proceeding on Infringement
In recent times, we have required district courts to make a two-part inquiry in finding a defendant in contempt of an injunction in patent infringement cases. KSM Fastening Sys., Inc. v. H.A. Jones Co.,
We conclude that KSM’s two-step inquiry has been unworkable and now overrule that holding of KSM. KSM crafted a special rule for patent infringement cases, in that it required a threshold inquiry on the propriety of initiating a contempt proceeding. We recognize now that inquiry confuses the merits of the contempt with the propriety of initiating contempt proceedings. Moreover, as a practical matter, district courts do not separately determine the propriety of a contempt proceeding before proceeding to the merits of the contempt itself. As a result, we will telescope the current two-fold KSM inquiry into one, eliminating the separate determination whether contempt proceedings were properly initiated. That question, we hold, is left to the broad discretion of the trial court to be answered based on the facts presented. Additive Controls,
Thus, we decline to address EchoS-tar’s argument that the district court, applying the old KSM standard, improperly held contempt proceedings in this case, although we note that there may be circumstances in which the initiation of contempt proceedings would constitute an abuse of discretion by the district court. Under our holding today, we find no abuse of discretion by the district court in proceeding to contempt. TiVo moved the district court to find EchoStar in contempt. Having reviewed the computer source code of the modifications to the infringing software, TiVo asserted to the district court that the modified EchoStar receiver software was not more than colorably different from the original one, and thus that EchoStar was in violation of the infringement provision of the permanent injunction. Given its familiarity with the parties, the patent at issue, and the infringing products, we do not find an abuse of discretion in the district court’s decision to hold contempt proceedings.
3. The “More than Colorable Differences” Test
(a) Discussion of the Law
The criteria for adjudicating a violation of a prohibition against continued infringement by a party whose products have already been adjudged to be infringing is a matter of Federal Circuit law. The Supreme Court has cautioned that contempt “is a severe remedy, and should
We have stated the test for colorable differences as one that requires determining whether “substantial open issues with respect to infringement to be tried” exist. KSM,
The primary question on contempt should be whether the newly accused product is so different from the product previously found to infringe that it raises “a fair ground of doubt as to the wrongfulness of the defendant’s conduct.” Cal. Artificial Stone Paving Co.,
The significance of the differences between the two products is much dependent on the nature of the products at issue. The court must also look to the relevant prior art, if any is available, to determine if the modification merely employs or combines elements already known in the prior art in a manner that would have been obvious to a person of ordinary skill in the art at the time the modification was made.
Conversely, when a court concludes that there are no more than color-able differences between the adjudged infringing product and modified product, a finding that the newly accused product continues to infringe the relevant claims is additionally essential for a violation of an injunction against infringement. KSM,
(b) Application of the “More Than Colorable Differences” Test to This Case
Applying the test in this case, one of the features of EchoStar’s original receivers that TiVo relied upon to prove infringement to the jury was the start code detection feature. TiVo argued, and the jury accepted, that feature satisfied the “parsing” limitation found in the software claims. It is undisputed that EchoStar replaced that feature with a statistical estimation feature. In finding contempt of the infringement provision of the injunction under our KSM standard, TiVo alleged, and the district court looked to, a different feature of EchoStar’s modified devices, viz., the PID filter, as meeting the parsing limitation of the software claims. Although the parties disputed their prior positions on whether the PID filter performs “parsing,” TiVo never unequivocally alleged prior to the contempt stage that the PID filter met that claim limitation. That was a new allegation. However, because the district court concluded that EchoStar had itself conceded that the PID filter performs a type of parsing, the court held that EchoStar’s modified devices continued to infringe the software claims, and that EchoStar was in contempt of the infringement provision.
We therefore vacate the district court’s finding of contempt for violation of the infringement provision and remand to the district court to make that factual determination under the guidance that we have provided today. If the district court determines that there are more than color-able differences between the two devices,
Consequently, we also vacate the district court’s order awarding TiVo “$1.25 per subscriber per month plus interest,” totaling approximately $110 million, for EchoS-tar’s continued infringement by EchoStar’s modified software during the stay of the injunction and the district court’s order requiring EchoStar to seek preclearance for any future attempts to design around the patent. On remand, the district court is required to separately calculate and award TiVo damages at the rate of “$1.25 per subscriber per month plus interest” for the use of the original infringing software during the stay of the injunction.
B.
Contempt for Violation of the Disablement Provision
We consider next EchoStar’s arguments that the injunction is unenforceable either because it is overly broad or it is too vague to provide fair notice of what it actually prohibits. We find both arguments unpersuasive.
1. Vagueness
EchoStar argues that the only natural reading of the phrase “disable the DVR functionality ... in ... the Infringing Products” is that EchoStar was re-
We reject EchoStar’s argument that vagueness can operate as a defense to the district court’s holding of contempt here. Under the Federal Rules of Civil Procedure, “[e]very order granting an injunction ... shall be specific in terms [and] shall describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained.” Fed.R.Civ.P. 65(d). Rule 65(d) “was designed to prevent uncertainty and confusion on the part of those faced with injunctive orders, and to avoid the possible founding of a contempt citation on a decree too vague to be understood.” Schmidt v. Lessard,
EchoStar’s vagueness defense rests on its argument that the term “Infringing Products” in the district court’s injunction is ambiguous, thereby rendering the injunction vague and unenforceable. The disablement provision deals separately with the receivers already placed in EchoStar’s customers’ homes and new placements that are yet to reach the customer. EchoStar notes that while the first directive of the disablement provision calls for EchoStar to “disable the DVR functionality of the Infringing Products that have been placed with an end user or subscriber,” the sentence following it requires that “[t]he DVR functionality, storage to and playback from a hard disk drive shall not be enabled in any new placements of the Infringing Products.” EchoStar argues that this second sentence, because it references new placements, requires that the term “Infringing Products” be read as referring only to infringing functionality. After all, EchoStar continues, one does not disable a function that has yet to be devised or installed. As for the court’s definition of the term “DVR functionality,” EchoStar argues that the definition “all storage to and playback from” refers merely to the entire infringing function. Moreover, EchoStar argues that a provision that requires such detailed “sentence diagramming” to arrive at the district court’s reading of the order cannot be sufficiently “specific and definite” to satisfy the contempt standard. If the district court wanted to prevent EchoStar from deploying modified DVR functionality
We do not agree with EchoS-tar that the stretched reading of the disablement provision that it proposes allows it to collaterally attack the district court’s injunction at this stage of the proceedings. We agree that in certain circumstances vagueness can operate as a defense to contempt. Granny Goose,
EchoStar’s reading of the disablement provision is contrary to the most natural reading of the provision, as it would necessarily render the injunction vague on its face. The injunction clearly defines the term “Infringing Products” in terms of eight actual receiver models, specifically listing each model number.
In McComb, employers faced with an order barring them from violating any provision of the Fair Labor Standards Act relating to minimum wage, overtime, or record keeping argued that, because they had changed their methods of computing hours worked, and because the modified practices were “not specifically enjoined,” they were immune from contempt pro
The cases cited by EchoStar in its argument that it is entitled to raise the vagueness defense at this time are inapposite. The Supreme Court’s decision in Granny Goose involved an ex parte temporary restraining order, such that, unlike EchoS-tar, the defendants were not involved in the proceedings leading to the issuance of the order. Moreover, the Supreme Court considered only the duration of the order, not whether any terms in the order were so vague as to make it unenforceable. Granny Goose,
In International Longshoremen, the record of the lower court proceedings made it abundantly clear that the alleged contemnor did not understand the terms of the order, repeatedly telling the district court, “I don’t know what this order means,” but receiving no clarification.
The dissent cites our precedent and several cases from our sister circuits to argue
Moreover, most of the cases cited deal with situations very different from the one presented here and address specific circumstances where it may be proper to allow vagueness as a defense to contempt, such as with ex parte orders being enforced against non-parties to the order, see, e.g., U.S. v. Saccoccia,
2. Overbreadth
EchoStar argues that even if the district court’s reading of the disablement provision is the proper one, the order would still be unenforceable because the prohibition of noninfringing activity is unlawful. EchoStar contends that it simply downloaded noninfringing software to the
EchoStar’s primary business is satellite television transmission, and the products that were found by the jury to infringe TiVo’s patent are satellite receivers that receive and display broadcasts to users. The DVR functionality that allows users to record and play back such broadcasts is merely one of the software components of the receivers. The disablement provision of the injunction required disablement only of that DVR software component in eight specific models of receivers that had been found infringing by the jury. J.A. 162. The district court further defined “DVR functionality” as “all storage to and playback of ... television data.” Id. Plainly, the word “all” refers to all DVR functionality, infringing or not, and that is not an unnatural reading of the disablement provision. The second directive of the disablement provision, requiring EchoStar not to enable DVR functionality in any new placements of the receivers, ie., DVR functionality that could potentially be non-infringing, supports a plain reading of the word “all.” It was therefore not “unnatural” to read the court’s order as a prohibition on employing any type of DVR software, infringing or not, on those listed receiver models.
Supreme Court precedent is clear on the issue. The time to appeal the scope of an injunction is when it is handed down, not when a party is later found to be in contempt. Maggio v. Zeitz,
As a result, we affirm the district court’s finding of contempt and the $1.00 per subscriber per month, totaling approximately $90 million, awarded by the district court as a sanction against EchoStar. The district court expressly stated that this award was made on alternative grounds, ie., for violation of either of the two separate provisions of the injunction, that dealing with disablement and the other dealing with infringement.
Conclusion
In sum, we vacate the court’s holding of contempt of the infringement provision and remand for the court to make a finding concerning any colorable difference between the previously adjudicated infringing devices and the newly accused devices. We vacate in part the damages awarded for continued infringement. We affirm the district court’s finding of contempt of the disablement provision of the court’s injunction and the sanctions imposed by the district court.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED
Notes
. We do not suggest that the law on obviousness is binding in contempt proceedings, where, in most cases, a single limitation that has been modified by an infringer is at issue.
. See, e.g., KSM,
. EchoStar asserts that its statistical estimation methodology is the subject of a U.S. patent. That fact alone, EchoStar suggests, serves as prima facie evidence of colorable differences. We disagree. The colorable differences analysis should be based on the court’s independent evaluation of specific differences between the original and the modified products. Here, the court must compare the newly developed statistical estimation feature with the original start code detection feature to determine if the difference between the two is significant.
. We make no holding as to how a district court should proceed in a new infringement proceeding. As we have stated before, the district court is able to utilize principles of claim and issue preclusion (res judicata) to determine what issues were settled by the original suit and what issues would have to be tried. KSM,
. It is notable that the district court’s definition of "Infringing Products” is consistent with the products found by the jury in the earlier infringement proceeding to infringe TiVo’s patent. See Verdict Form at 2-3.
. The dissent argues that the district court read the term "Infringing Products” in the two provisions of the disablement provision inconsistently in order to find EchoStar in contempt. We need not reach that issue because there is a clear definition of that term at the beginning of the order that contradicts EchoStar's proposed reading of the term.
. TiVo's Proposed Permanent Injunction was submitted on May 26, 2006. JA 7820-24. Both the merits and the wording of the injunction were fully briefed and were the subject of a hearing held on June 28, 2006. Thereafter, the district court issued a thorough order addressing the eBay factors and the parties’ arguments related thereto. TiVo Inc. v. EchoStar Commc'ns Corp.,
. With consent decrees, it is generally the case that a district court summarily approves the agreement that the parties reach. Where disputes later arise in such cases, the court is required, for the first time, to interpret the letter of the contract and determine the intent of the parties. Thus, in such cases, contempt can be disfavored where the party had no notice that the decree barred the alleged conduct. In determining notice to the alleged contemnor, courts are limited to the four corners of the decree. United States v. Armour & Co.,
. We note, however, that, although we have strongly discouraged judicial restraint of non-infringing activities, Johns Hopkins Univ. v. CellPro, Inc.,
. We do not agree with the dissent's suggestion that the "disablement provision” is limited only to products that had been placed with end users. Dissent at 892-93. On the contrary, the district court and the parties have thus far referred to both directives of that provision, i.e., that relating to units placed with end users as well as that on new placements, together as the "disablement provision,” and the district court imposed sanctions for the violation of the entire "disablement provision.”
Dissenting Opinion
with whom
While I join Parts A(l)-(3)(a) of the majority decision, I dissent from parts A(3)(b) and B. In particular, I dissent from the majority’s decision to uphold the finding of contempt of the disablement provision. In my view, the disablement provision does not bar the installation of modified software that renders the devices non-infringing, and, even if the provision were unclear, an unclear injunction cannot be the basis for contempt. The majority’s holding that lack of clarity provides no defense is inconsistent with established law reflected in numerous decisions of the Su
I also dissent from the majority’s decision to remand to the district court to determine whether EchoStar violated the infringement provision. In my view, that provision plainly was not violated. Finally, I dissent from the majority’s affirmance of the $90 million sanctions award, which was based in part on the finding of contempt of the infringement provision. If the contempt finding is set aside with respect to the infringement provision, the sanctions award must also be set aside.
I
Before today’s majority decision — upholding contempt of the disablement provision based on an apparently successful design-around — two principles seemed well established. The first of these was that accused infringers were encouraged to design around patent claims to achieve non-infringing products and methods. As this court has recognized, “designing new and possibly better or cheaper functional equivalents [of a competitor’s product] is the stuff of which competition is made.” State Indus. Inc. v. A.O. Smith Corp.,
A
A crucial question in any contempt proceeding is whether the injunction bars the accused conduct. The “interpretation of the terms of an injunction is a question of law we review de novo.” Abbott Labs. v. TorPharm, Inc.,
Defendants are hereby FURTHER ORDERED to, within thirty (30) days of the issuance of this order, disable the DVR functionality (i.e., disable all storage to and playback from a hard disk drive of television data) ... of the Infringing Products that have been placed with the end user or subscriber.
J.A. 162 (emphasis added). Because other provisions are also pertinent, the entire injunction is included as an Appendix to this opinion.
TiVo and the district court essentially interpret this provision as barring designarounds (i.e., the substitution of non-infringing software for software found to infringe in the devices installed in customers’ homes). In its briefing to the panel, TiVo characterized the injunction as prohibiting the “continued provision of DVR functions through the exact units previously found to infringe — whether or not they have purportedly been modified by the downloading of new software.” Br. of Pl.Appellee TiVo, Inc. at 21, TiVo, Inc. v.
First, contrary to TiVo’s argument, the definition of the term “Infringing Products” on its face does not simply refer to devices with particular model numbers; it requires that those products be “Infringing.” The term “Infringing Products” appears in the introductory paragraph of the injunction, which enters judgment “against Defendants for willful infringement ... by Defendants’ following DVR receivers (collectively the ‘Infringing Products’): DP-501; DP-508; DP-510; DP-522; DP-625; DP-721; DP-921; and the DP-942.” J.A. 161. The injunction was thus written to address devices with particular model numbers that had been found by the jury to be infringing. The verdict form itself is framed in terms of whether particular model numbers infringed. See Verdict Form at 2-3, TiVo, Inc. v. EchoStar Corp., No. 2:04-CV01 (E.D.Tex. Apr. 13, 2006), ECF No. 690. Thus it is not surprising that the injunction also made reference to those particular model numbers that were found to infringe. The evident purpose of the injunction was to award relief concerning the specific products found to infringe.
Second, interpreting the term “Infringing Products” as extending to non-infringing products is contradicted by the usage of the same term elsewhere in the injunction. In addition to the disablement provision, the term “Infringing Products” is also used in the infringement provision— barring continued infringement by the “Infringing Products ... and [those] products that are only colorably different” — and in the enablement provision — barring the enablement of “DVR functionality ... in any new placements of the Infringing Products.”
Disablement Provision
Enablement Provision
“Defendants are hereby FURTHER ORDERED to, within thirty (30) days of the issuance of this order, disable the DVR functionality (i.e., disable all storage to and playback from a hard disk drive of television data) ... of the Infringing Products that have been placed with an end user or subscriber.” J.A. 162 (emphases
’’The DVR functionality (i.e., disable all storage to and playback from a hard disk drive of television data) shall not be enabled in any new placements of the Infringing Products.” J.A. 162 (emphases added).
By using the same terminology in both the disablement and enablement provisions, it is clear that the injunction extends only to infringing software. It would be contrary to established principles of construction to give identical language a different meaning in one provision than the other. Nor can the use of the term “DVR functionality,” with the notation “disable all storage to and playback from a hard disk drive of television data,” distinguish the disablement provision from other provisions in which the term “Infringing Products” is used. The enablement provision also uses the term “DVR functionality” and describes it in the same manner as the disablement provision (“i.e., disable all storage to and playback from a hard disk drive of television data”). J.A. 162.
In the context of statutory construction, identical language is assumed to have the same meaning. See, e.g., Clark v. Martinez,
Third, the injunction does not explicitly address the issue of design-arounds, and TiVo’s proposed interpretation is clearly contrary to the established policy in favor of design-arounds discussed above. There is indeed a serious question as to whether, in light of this strong policy, the district court would even have the authority to issue an injunction barring design-arounds. This court has repeatedly instructed that injunctions in the patent context must be limited to restraints designed to prevent further infringement. See Riles v. Shell Exploration and Prod. Co.,
B
Unlike the district court, the majority does not hold that the injunction clearly prohibits the accused conduct. Rather, the majority concludes that even if the injunction is unclear, the district court’s reading is “the most natural” and lack of clarity is not a defense in contempt proceedings.
The majority relies primarily on McComb v. Jacksonville Paper Co.,
In order to understand the Supreme Court’s holding in McComb, it is essential to understand the facts of the case. The original decree enjoined violations of the Fair Labor Standards Act. Id. at 189,
Indeed, after McComb, the Supreme Court twice affirmed the principle that an accused party cannot be held in contempt for violating an injunction which does not clearly reach the accused conduct. See Granny Goose,
In Granny Goose, the district court issued a temporary restraining order without specifying an expiration date.
Despite the majority’s assertion that, under McComb, “[t]he burden was clearly on EchoStar to seek clarification or modification from the district court,” Maj. Op. at 886, no other court has read McComb in this way. In cases which are quite similar to the present case, courts of appeals, including ours, have consistently held that contempt is inappropriate where the injunction does not clearly prohibit the accused conduct. For example, in Abbott, an injunction barred Apotex from “commercially manufacturing, using, selling, offering to sell, or importing into the United States generic divalproex sodium which the Court has found to be infringing.... ”
In New York Telephone Co. v. Communications Workers of America,
In Common Cause v. Nuclear Regulatory Commission,
In NBA Properties, Inc. v. Gold,
In Perez v. Danbury Hospital,
In Imageware, Inc. v. U.S. West Communications,
In each one of these cases, the language of the injunction could be read to cover the accused conduct, but the court of appeals held that the accused infringer could reasonably interpret it as not covering the accused conduct. These cases establish that contempt cannot be based on an order susceptible to two reasonable readings, one of which does not cover the accused conduct. There are numerous additional circuit cases in which courts have reversed a contempt finding because the injunction or decree does not clearly prohibit the accused conduct.
With respect, these numerous Supreme Court and Court of Appeals cases directly refute the majority’s manifestly incorrect statement that “the burden was clearly on EchoStar to seek clarification or modification from the district court.” Maj. Op. at 886. In many of the cases discussed above no such challenge was even attempted before the contempt proceeding.
Apart from its reliance on McComb, the majority attempts to deal with this established authority in part by discussing cases dealing with the validity of an overly broad injunction, which are distinct from cases involving the requirement that the injunction clearly prohibit the accused conduct. For example, in Walker v. Birmingham,
Similarly, the court in Chaganti & Assocs., P.C. v. Nowotny,
We also find that the injunction conformed to the requirements of F.R.Civ.P. 65(d). Rule 65(d) requires that an injunction have specificity so that those constrained to follow it will not want for guidance. The injunction in question is not lacking in clarity. Its interdiction of oppressive child labor is not vague, and its command that Gulf King keep and preserve records is clearly understandable.
Id. at 517 (internal citations omitted). It was only after finding the injunction sufficiently clear that the court noted the possibility of an appeal of the injunction. Id.
Finally, the majority urges that permitting clarity to be addressed in contempt proceedings “would indeed impose an unnecessarily heavy burden on district courts to draft immaculate orders.” Maj. Op. at 887. I do not suggest that the district court must draft perfect orders, but that it be required to draft orders that are sufficiently clear to provide notice of “what the court intends to require and what it meant to forbid.” Int’l Longshoremen’s,
In sum, TiVo was obligated to show that the injunction clearly prohibited the substitution of new noninfringing software. It did not remotely satisfy this burden. Under such circumstances, contempt is improper because there is at least a fair ground of doubt as to the wrongfulness of EchoStar’s conduct.
II
The majority vacates the district court’s finding of contempt for violation of the infringement provision and remands to the district court to determine colorable differences and infringement. In my view, remand is wholly unnecessary because it is clear that there are colorable differences between the features relied upon to establish infringement and the modified features of the newly accused products.
The majority correctly describes the colorable differences requirement as involving a comparison between the specific features relied upon to establish infringement and the modified features of the newly accused product on a limitation-by-limitation basis. The party seeking to enforce the injunction bears the burden of demonstrating what products and features of those products were found to infringe. Here, it is undisputed that the feature found to satisfy the “parsing” limitation— the start-code-detection feature — was removed from EehoStar’s modified products. Further, TiVo does not argue that the start-code detection feature was merely replaced with a solution that was known in prior art. The statistical-estimation feature, which replaced the start-code-detection feature, was not present in original software and was not earlier viewed by TiVo as being capable of performing the required function. In fact, TiVo had earlier characterized the start-code detection feature, which was removed, as “required for a viable DVR.” J.A. 1556. Therefore, it is clear that the statistical-estimation feature is more than substantially different from the start-code-detection feature.
Because the sole feature accused of satisfying the parsing limitation was removed from the modified product and replaced with a feature that is both substantially different and a solution not known in the prior art, the two products are necessarily
Ill
My final disagreement with the majority lies in the affirmance of the $90 million sanctions award despite the fact that the award is based on a finding of contempt that the majority reverses. The majority nonetheless affirms the district court’s sanctions award in its entirety because it concludes that the “award was made on alternative grounds, i.e., for violation of either of the two separate provisions of the injunction.” Maj. Op. at 890. The contempt judgment and the sanctions imposed by the district court, however, rest on two separate and distinct findings of contempt, neither of which standing alone is sufficient to sustain the sanctions award.
In its motion for sanctions, TiVo calculated damages based on both the models listed in the injunction and EchoStar’s “VIP models” (a group of products that were not adjudged to infringe nor listed in the permanent injunction). See Decl. of Keith R. Ugone, Ph.D. In Support of TiVo’s Motion for Sanctions for Contempt at 3-5 and Ex. 4, TiVo, Inc. v. Dish Network Corp.,
Additionally, the disablement provision applied only to those products “that [had] been placed with the end user or subscriber” at the time the injunction issued. J.A. 162. But the sanctions award was based in part on DVR subscribers acquired after the date the injunction became effective. See TiVo,
Because it is clear that the sanctions award was based in large part on EchoS-tar’s alleged violation of the infringement
APPENDIX
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION TIVO INC., Plaintiff, v. ECHOSTAR COMMUNICATIONS CORP., et. al., Defendants.
2:04-CV-l-DF
FINAL JUDGEMENT AND PERMANENT INJUNCTION
Pursuant to Rule 58 of the Federal Rules of Civil Procedure and in accordance with the jury verdict delivered on April 13, 2006 and with the Court’s contemporaneously filed orders, the Court thereby enters judgment for Plaintiff against Defendants for infringement of U.S. Patent No. 6,233,389 (“'389 patent”), claims 1, 5, 21, 23, 32, 36, 52, 31 and 61 (“the Infringed Claims”) by Defendants’ following DVR receivers (collectively “the Infringing Products”): DP-501; DP-508; DP-510; DP-522; DP-625; DP-721; DP-921; and the DP-942.
IT IS THEREFORE ORDERED THAT Plaintiff shall have and recover from Defendants, jointly severally, the total sum of $73,991,964.00, together with prejudgment interest at the rate of prime, said prejudgment interest in the total sum of $5,367,544.00
IT IS FURTHER ORDERED THAT
Each Defendant, its officers, agents, servants, employees and attorneys, and those persons in active concert or participation with them who receive actual notice hereof, are hereby restrained and enjoined, pursuant to 35 U.S.C. § 283 and Fed. R.CivJP. 65(d), from making, using, offering to sell or selling in the United States, the Infringing Products, either alone or in combination with any other product and all other products that are only colorably different therefrom in the context of the Infringed Claims, whether individually or in combination with other products or as a part of another product, and from otherwise infringing or inducing others to infringe the Infringed Claims of the '389 patent.
Defendants are hereby FURTHER ORDERED to, within thirty(30) days of the issuance of this order, disable the DVR functionality (i.e., disable all storage to and playback from a hard disk drive of television data) in all but 192,708 units of the Infringing Products that have been placed with an end user or subscriber. The DVR functionality, i.e., disable all storage to and playback from a hard disk drive of television data) shall not be enabled in any new placements of the Infringing Products.
This injunction shall run until the expiration of the '389 patent.
This Court retains jurisdictions over Defendants to enforce any and all aspects of this Judgment and Permanent Injunction.
The Court further retains jurisdiction to award Plaintiff amounts for supplemental damages, interest, costs, attorneys fees and such other or further relief as may be just and proper.
All relief not specifically granted herein in denied. All pending motions not previously ruled on are denied. This is a Final Judgment and is appealable.
SIGNED this 17th day of August, 2006.
/s/ David Folsom
DAVID FOLSOM
UNITED STATES DISTRICT JUDGE
. See also State Indus.,
. The majority’s treatment of the latter provision is confusing. The majority treats the enablement provision as though it is part of the disablement provision, although it clearly was not the basis for a contempt finding. "By not disabling DVR functionality in adjudged receivers that had been placed with end-users, EchoStar failed to comply with the plain language of this Court’s order.” Contempt Opinion,
. The majority suggests that EchoStar's reading of the disablement provision is “contrary to the most natural reading of the provision” because “it would necessarily render the injunction vague on its face.” Maj. Op. at 886. The exact same point, however, could be made with respect to the reading of the disablement provision advanced by TiVo and the district court.
. See, e.g., United States v. Saccoccia,
. See Granny Goose,
. See Int’l Longshoremen’s,
. See also Latino Officers Ass’n City of N.Y., Inc. v. N.Y.C.,
. See also, Szabo v. U.S. Marine Corp.,
. The majority attempts to distinguish both Saccoccia and New York Telephone on the ground that they involved "ex parte orders being enforced against nonparties to the order.” Maj. Op. at 888. This is simply not true. In Saccoccia, the injunction was specifically directed at the defendants "and their agents and attorneys.”
. The language relied upon by the majority appears in a confusing footnote, in which the court erroneously cites Perfect Fit for the proposition that the alleged contemnor "had an obligation to seek clarification of the court’s order.” Id. at 1224 n. 2. This footnote is inconsistent with both the text of the opinion and Perfect Fit, both of which explicitly recognize that contempt is improper where the order does not clearly reach the accused conduct.
. The majority confusingly suggests that the district court imposed sanctions for violation of the portion of the injunction prohibiting the enablement of DVR functionality in any new placements of the Infringing Products. Maj. Op. at 890 n. 10. Nowhere does the district court, however, suggest that EchoStar violated the injunction by improperly enabling the DVR functionality in new placements of the Infringing Products. See generally Contempt Opinion,
. The prejudgment interest and supplemental damages award herein do not cover the time period from August 1, 2006 to the date of entry of this Order. Consistent with the contemporaneously filed order addressing prejudgment interest and supplemental damages, the Court will award additional prejudgment interest and supplemental damages after receipt of additional information from Plaintiffs damages expert.