Monday, April 03, 2017

CAFC discusses injunctions in Asetek v. CMI

The basic issue in the case:

Asetek’s claims of infringement
by CMI USA (hereafter “CMI”), and CMI’s invalidity
counterclaims, were tried partly to a jury and partly to
the court. Asetek prevailed and received a judgment of
infringement, and of no invalidity, plus a damages award
against CMI of $404,941, based on a 14.5% royalty rate.
The district court also entered an injunction covering the
specific “Cooler Master” products found to infringe. The
injunction runs not only against CMI but also against
Cooler Master—which was not then a party (though it
later intervened and became one) and which was not
adjudicated liable for infringement.
We affirm the district court’s rulings on infringement,
invalidity, and damages. We remand as to part of the
injunction, i.e., insofar as the injunction reaches conduct
by Cooler Master (regarding the covered products) that
goes beyond abetting a new violation by CMI. The governing
standards for reaching such conduct by persons
not adjudicated liable for the underlying wrong, reflected
in Federal Rule of Civil Procedure 65(d)
, are highly fact specific.
In this case, a determination of the propriety of
the injunction’s reach would benefit from further findings
and, if sought and needed, further record development.

The Graco case is mentioned:

Dorel Juvenile Group, Inc. v. Graco Children’s Products,
Inc., 429 F.3d 1043 (Fed. Cir. 2005), which interpreted
superficially similar claim terms, does not establish
non-infringement here. In Dorel, which involved a patent
on a child’s car seat, the asserted claims recited a “base,”
which was “removably attached” and “removably secured”
to a “seat.” Id. at 1044–45. We upheld a claim construction,
relying on the specification for context, that “removably
attached” in that case implied that the “seat” and
“base” were “affixed together in a manner that contemplates
that the seat may be removed from the base such
that the seat remains functional.” Id. at 1045. The
present case involves no claim construction, but instead
claim application, and the context is quite different, e.g.,
there is no requirement here that each component was
meant to function separately (unlike the seat in Dorel).

Verdegaal came up:

Those precedents
all involve situations where a reference or device
does come within a claim term. See Abbott Labs. v.
Sandoz, Inc., 566 F.3d 1282, 1299 (Fed. Cir. 2009) (where
a claim term covers an accused product or process, there
is infringement even if de minimis); Embrex, Inc. v. Service
Eng’g Corp., 216 F.3d 1343, 1349 (Fed. Cir. 2000)
(same); Verdegaal Bros., Inc. v. Union Oil Co. of Cal., 814
F.2d 628, 630, 632 (Fed. Cir. 1987) (claim element of
“making a concentrated liquid fertilizer by reacting sulfuric
acid and urea” taught by reference requiring the
sulfuric acid to be “added slowly”). That is enough to
distinguish those precedents from this case.

Damages comes up:

35 U.S.C. § 284 guarantees to a patent holder damages
“adequate to compensate for the infringement, but in no
event less than a reasonable royalty.” A patent owner,
having prevailed on liability, may receive a reasonable
royalty or lost profits, but not both for the same infringing
units. See SmithKline Diagnostics, Inc. v. Helena Labs.
Corp., 926 F.2d 1161, 1164 (Fed. Cir. 1991). There is no
dispute here about the propriety of using the common
hypothetical-negotiation approach to calculating a reasonable
royalty, under which the finder of fact “attempts
to ascertain the royalty upon which the parties would
have agreed had they successfully negotiated an agreement
just before infringement began.” Lucent Techs., Inc.
v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009).
The amount of damages presents a fact question, reviewed
for substantial evidence in a jury-tried case, and
the underlying methodology is reviewed for an abuse of
discretion, including consistency with governing legal

Of claim preclusion:

Appellants contend that, even if an injunction against
Cooler Master would be proper had no claim ever been
filed against it in this case, it cannot be enjoined because
it was initially a defendant and the claims against it were
dismissed with prejudice. Appellants rest that contention
on the premise that dismissal is an adjudication that has
claim-preclusive effect. But, while the premise is correct,
the inference appellants urge—that claim preclusion bars
relief as to future conduct—is not.
Appellants’ argument assumes that the “claim” covered
by the dismissal, which concerned Cooler Master’s
pre-dismissal conduct, is the same as a “claim” covering
conduct subject to the injunction, which is Cooler Master’s
future conduct—not just post-dismissal, but post-trial and
post-injunction-issuance. It is well established, however,
that the difference in timing means that the two situations
do not involve the same “claim” for claim-preclusion
purposes, even if all the conduct is alleged to be unlawful
for the same reason. See Dow Chems. Corp. v. NOVA
Chems. Corp. (Can.), 803 F.3d 620, 626–27 (Fed. Cir.
2015); Aspex Eyewear, Inc. v. Marchon Eyewear, Inc., 672
F.3d 1335, 1343 (Fed. Cir. 2012); 18 Charles Alan Wright,
Arthur R. Miller & Edward H. Cooper, Federal Practice
and Procedure § 4409 (2d ed. 2002). As we have ex-
plained, “a party who sues a tortfeasor is ordinarily not
barred by a prior judgment from seeking relief for discrete
tortious action by the same tortfeasor that occurs subsequent
to the original action.” Aspex Eyewear, 672 F.3d at
1342. The rationale is simple: claim preclusion “requires
a party to assert all claims that the party could have
asserted in the earlier lawsuit”; and a party cannot assert
claims based on “tortious conduct” that “had not occurred
at that time—those claims could not have been asserted
and therefore are not barred.” Id.

As to FRCP 65(d):

The fundamental principle relevant to appellants’
narrower, scope objection to the injunction here is that an
injunction may not “make punishable the conduct of
persons who act independently and whose rights have not
been adjudged according to law.” Regal Knitwear Co. v.
NLRB, 324 U.S. 9, 13 (1945) (citing Chase Nat’l Bank v.
City of Norwalk, 291 U.S. 431, 436–37 (1934), and other
decisions). But as that formulation suggests, an injunction
may reach certain conduct by persons not held liable
for the underlying wrong where the conduct is not undertaken
“independently” of the persons who have been held
liable. Federal Rule of Civil Procedure 65(d) reflects the
standards when it declares that an injunction “binds only”
“the parties,” “the parties’ officers, agents, servants,
employees, and attorneys,” and “other persons who are in
active concert or participation” with them “who receive
actual notice of [the injunction] by personal service or

In this case, the injunction imposes two sorts of obligations
on Cooler Master—it restricts conduct by Cooler
Master that abets a new violation by CMI; and it also
restricts conduct by Cooler Master that does not abet a
new violation by CMI.

Learned Hand is mentioned:

Different terminology has been used for the two categories
of enjoinable conduct by persons not held liable.
Judge Learned Hand wrote, for the Second Circuit, that
the non-liable party “must either abet the [liable party],
or must be legally identified with him.” Alemite Mfg.
Corp. v. Staff, 42 F.2d 832, 833 (2d Cir. 1930), quoted in
Additive Controls & Measurement Sys., Inc. v. Flowdata,
Inc., 96 F.3d 1390, 1395 (Fed. Cir. 1996) (Additive Controls
I). Sometimes “privity” is used for the “legally
identified” category, which covers a number of bases for
binding a non-liable person to obligations imposed on a
liable person; but whatever the labels, both categories are
well established in the law and recognized as within the
“active concert or participation” standard of Rule 65(d).
See Golden State Bottling Co. v. NLRB, 414 U.S. 168,
179–80 (1973); Regal Knitwear, 324 U.S. at 13–14; Merial
Ltd. v. Cipla Ltd., 681 F.3d 1283, 1304–05 (Fed. Cir.
2012); Aevoe, 727 F.3d at 1384 (“‘Active concert or participation’
has been interpreted to include both aiders and
abettors of, and privies of, an enjoined party.”); Additive
Controls I, 96 F.3d at 1394–95, 1397; Rockwell Graphic
Sys., Inc. v. DEV Indus., Inc., 91 F.3d 914, 919–20 (7th
Cir. 1996); G. & C. Merriam Co. v. Webster Dictionary Co.,
639 F.2d 29, 35 (1st Cir. 1980).

Here, the CAFC noted:

We do not think it advisable to resolve the issue of the
proper scope of the injunction here without a fuller picture
of the facts described by the district court. Rather,
we think, further proceedings are warranted before a final
conclusion is drawn about the injunction in this case.
Both the delicacy of the injunctive authority at issue and
the tradition of narrow fact-dependent determinations
whether to invoke it argue for deferring conclusions until
the facts about the relationship of Cooler Master and
CMI, both in their businesses and in this litigation, are
more fully developed and their legal significance more
fully explored. See Parker v. Ryan, 960 F.2d 543, 546 (5th
Cir. 1992) (identifying need for further inquiry and remanding);
cf. United States v. Int’l Bhd. of Teamsters,
Chauffeurs, Warehousemen & Helpers, 964 F.2d 180, 184
(2d Cir. 1992) (“Whether any person is bound by a judgment
always depends on the precise relationship of that
person to the underlying litigation . . . .”).


Post a Comment

<< Home