After PTO’s Cancellation Of Claim, No Legal Basis Remains To Enjoin Conduct Based On The Rights Previously Conferred By That Claim As Those Rights Cease To Exist

In ePlus, Inc. v. Lawson Software, Inc., Nos. 13-1506, -1587 (Fed. Cir. July 25, 2014), the Federal Circuit vacated an injunction and contempt order because both were based on a claim that had been cancelled by the PTO during reexamination.

ePlus, Inc. ("ePlus"), assignee of U.S. Patent Nos. 6,023,683 ("the '683 patent") and 6,505,172 pertaining to methods and systems for electronic sourcing, instituted an infringement action against Lawson Software, Inc. ("Lawson"). The district court found two asserted system claims and three asserted method claims were valid, and the jury determined that Lawson infringed the asserted claims. The district court entered a permanent injunction against Lawson in light of the jury's verdicts. On appeal, the Federal Circuit reversed-in-part—finding the system claims invalid and that two of the method claims were not infringed—affirmed only the infringement verdict as to method claim 26 of the '683 patent, and remanded so that the district court could modify the injunction.

On remand, the district court requested that the parties provide statements of position discussing the effect of the Federal Circuit's decision on the injunction. Particularly, Lawson challenged the bar against the sales of particular software products, which were originally supported by the jury's findings of infringement of the system claims, but those findings were later vacated by the Federal Circuit. Lawson argued that infringement of method claim 26 of the '683 patent did not support the district court's injunction against product sales and that, because the jury's findings had been narrowed, the software products subject to the injunction were capable of significant noninfringing uses. Lawson subsequently filed a Rule 60(b) motion seeking modification of the injunction. The district court disagreed with Lawson's arguments and modified the injunction in only one respect. The district court further found Lawson in civil contempt for violation of that same injunction because Lawson's redesigned products "were no more than colorably different and infringed," and required Lawson to pay a compensatory fine and coercive daily fines until it showed compliance with the injunction. Slip op. at 8. Lawson appealed the injunction and the contempt order, which was presently before the Court. While these appeals were pending, the PTO completed reexamination of the '683 patent and determined that claim 26 of the '683 patent was invalid, which the...