En banc CAFC tosses two-step KSM analysis in Tivo v. Echostar

The outcome of the case:

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 deter-
mination 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 perma-
nent injunction and its sanctions award in its entirety
because we conclude that EchoStar waived arguments of
overbreadth and vagueness with regard to that provision.

Of the new approach:

Instead of
focusing solely on infringement, the contempt analysis
must focus initially on the differences between the fea-
tures relied upon to establish infringement and the modi-
fied 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 re-
moved, 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 inap-
propriate. 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.”).

In dissent, Judge Dyk wrote:

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 injunc-
tion cannot be the basis for contempt. The majority’s
holding that lack of clarity provides no defense is incon-
sistent with established law reflected in numerous deci-
sions of the Supreme Court, our own court, and our sister
circuits.

(...)
In the context of statutory construction, identical lan-
guage is assumed to have the same meaning. See, e.g.,
Clark v. Martinez, 543 U.S. 371, 378 (2005); Dept. of
Revenue of Or. v. ACF Indus., Inc., 510 U.S. 332, 341–42
(1994). In Clark, the Supreme Court held that identical
language in two separate provisions of a statute must be
interpreted in the same manner even though the two
provisions had different purposes. 543 U.S. at 378–380.

(...)
An
accused party cannot be held in contempt for violating an
injunction which does not clearly reach the accused con-
duct. This is so because contempt is improper where
there is “a fair ground of doubt” as to whether the defen-
dant’s conduct is barred by the injunction. Cal. Artificial
Stone Paving Co. v. Molitor, 113 U.S. 609, 618 (1885);
MAC Corp. of Am. v. Williams Patent Crusher & Pulver-
izer Co., 767 F.2d 882, 885 (Fed. Cir. 1985) (citing Cal.
Artificial Stone Paving Co., 113 U.S. at 618). The fair
ground of doubt principle is itself reflected in Rule 65(d) of
the Federal Rules of Civil Procedure, which the Supreme
Court has interpreted to require that an injunction con-
tain a clear and unambiguous statement of “what the
court intends to require and what it meant to forbid.”
Int’l Longshoremen’s Ass’n v. Phila. Marine Trade Ass’n,
389 U.S. 64, 76 (1967); see also Square Liner 360, Inc. v.
Chisum, 691 F.2d 362, 378 (8th Cir. 1982) (“An enjoined
party ought not to be compelled to risk a contempt cita-
tion unless the proscription is clear.”).