Wednesday, April 20, 2011

En Banc Federal Circuit Clarifies Law of Contempt

Today the Federal Circuit released an en banc opinion in Tivo v. Echostar.  This case deals with the standards for contempt proceedings after trial and entry of a permanent injunction.  As such, the issue doesn't come up very often, but the Federal Circuit took the case en banc to clarify -- and overrule -- some of its earlier precedent.  Rejecting the application of the previous "colorably different" test, the court held:
Thus, the party seeking to enforce the injunction must prove both that the newly accused product is not more than colorably different from the product found to infringe and that the newly accused product actually infringes.
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, 776 F.2d at 1532. In some cases, that has misled district courts to focus solely on infringement by the newly accused devices in deciding contempt. That is the case here. Today, we reject that infringement-based understanding of the colorably different test. Instead of focusing solely on infringement, the contempt analysis must focus initially on the differences between the features relied upon to establish infringement and the modified features of the newly accused products.
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., 113 U.S. at 618. The analysis must focus not on differences between randomly chosen features of the product found to infringe in the earlier infringement trial and the newly accused product, Additive Controls, 154 F.3d at 1350, but on those aspects of the accused product that were previously alleged to be, and were a basis for, the prior finding of infringement, and the modified features of the newly accused product. Specifically, one should focus on those elements of the adjudged infringing products that the patentee previously contended, and proved, satisfy specific limitations of the asserted claims. Where one or more of those elements previously found to infringe has been modified, or removed, the court must make an inquiry into whether that modification is significant. If those differences between the old and new elements are significant, the newly accused product as a whole shall be deemed more than colorably different from the adjudged infringing one, and the inquiry into whether the newly accused product actually infringes is irrelevant. Contempt is then inappropriate. Arbek Mfg., Inc. v. Moazzam, 55 F.3d 1567, 1570 (Fed. Cir. 1995) (“[T]he modifying party generally deserves the opportunity to litigate the infringement questions at a new trial.”).
There is more going on in this opinion, including a separate section on a provision requiring Echostar to disable certain products already sold, but the above holding is of greatest interest.

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