ePlus: Injunctions, Contempt, Law of the Case, and the Final Judgment Rule

An important role of our court system it to provide a final judgment that settles a dispute between parties.  The final judgment rule is strong and – in most cases – bars any re-judgment even when post-judgment events & revelations would impact the outcome.   For patent cases, one area of distinction is that of ongoing relief – such a ‘permanent’ injunction or ongoing royalties.

In ePlus v. Lawson Software, the patentee (ePlus) won its infringement case and the court ordered a permanent injunction against the adjudged infringer. Despite the court order, Lawson continued to violate the injunction and was socked with an $18 million contempt sanction.  However, prior to the appeal of that sanction-order being completed the USPTO cancelled the infringed claims (reexamination finding affirmed on appeal).  With that result in hand, the court here vacates the injunction and the contempt order – finding that the cancelled patent leaves them with no further legal basis.

It is well established that an injunction must be set aside when the legal basis for it has ceased to exist. . . . [U]pholding injunctions would be anomalous in the extreme in connection with patents this court has just held invalid. (citing Mendenhall v. Barber-Greene Co., 26 F.3d 1573 (Fed. Cir. 1994)).

Regarding the contempt holding, the court found it important that the district court’s holding was one of civil rather than criminal contempt.  In dissent, Judge O’Malley argued that the contempt holding should have remained in place.

The court also released a denial of an en banc rehearing request in the same case – with a 5 to 5 vote. [LINK]


2 thoughts on “ePlus: Injunctions, Contempt, Law of the Case, and the Final Judgment Rule

  1. 2

    As noted by the dissenting judges, under controlling law and every other circuit the judgment here was final.

    But the big issue here is not the question about the finality of judgments about abuse of the system. There was a real debate here between the two sides of the court about whether a collateral attack on a judgment was or was not an abuse of the system. As the dissenters noted, Congress intended reexaminations to be a low-cost alternative to litigation, or a benefit to patent owners who could not use the reissue process to voluntarily re-examine patents because they could not allege a mistake. Congress did not intend parallel litigation in the patent office and in courts. This cannot result in cost reductions to anybody unless the litigation is set aside while the proceedings in the patent office take years and years to complete. But that in itself is a reason to think that the use of the patent office for delay purposes in court is itself an abuse.

    There is a growing realization in the Federal Circuit that reexaminations and IPRs and the like are out of control. The people who sell us as Kool-Aid are very smooth. They are very soft and their words. But the whole point is to have as many collateral attacks on a patent as possible, to the delay in court if possible, and to now vacate contempt orders, long after a case is over and final if they can eventually prevailed in the patent office.

    This is wrong.

  2. 1

    eBay gets extended…even if they can get an injunction, just ignore it and roll the dice at the PTO. Wow. The Google parade marches on. It’s a Google world after all.

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