Eplus, Inc. v. Lawson Software, Inc.

United States Court of Appeals
for the Federal Circuit
______________________
EPLUS, INC.,
Plaintiff-Appellee,
v.
LAWSON SOFTWARE, INC.,
Defendant-Appellant.
______________________
2013-1506, -1587
______________________
Appeals from the United States District Court for the
Eastern District of Virginia in No. 09-CV-0620, Senior
Judge Robert E. Payne.
______________________
Decided: July 25, 2014
______________________
MICHAEL G. STRAPP, Goodwin Procter LLP, of Boston,
Massachusetts, argued for plaintiff-appellee. With him on
the brief were JENNIFER A. ALBERT and DAVID M. YOUNG,
of Washington, DC.
MARK A. PERRY, Gibson, Dunn & Crutcher, LLP, of
Washington, DC, argued for defendant-appellant. With
him on the brief were BLAINE H. EVANSON; and JOSH A.
KREVITT, DANIEL J. THOMASCH, RICHARD W. MARK, of New
York, New York. Of counsel on the brief were DONALD R.
DUNNER and ERIKA H. ARNER, Finnegan, Henderson,
Farabow, Garrett & Dunner LLP, of Washington, DC.
2 EPLUS, INC. v. LAWSON SOFTWARE, INC.
______________________
Before, PROST, Chief Judge, ∗ DYK and O’MALLEY, Circuit
Judges.
Opinion for the court filed by Circuit Judge DYK.
Dissenting opinion filed by Circuit Judge O’Malley.
DYK, Circuit Judge.
ePlus, Inc. (“ePlus”), the assignee of U.S. Patent Nos.
6,023,683 (the “’683 patent”) and 6,505,172 (the “’172
patent”), sued Lawson Software, Inc. (“Lawson”) for
infringement. The district court found two of the asserted
system claims and three of the asserted method claims
not invalid, and a jury found that Lawson infringed those
claims. In an earlier appeal, we reversed in part on the
ground that the system claims were invalid and that two
of the asserted method claims were not infringed. We
affirmed only the infringement verdict as to one method
claim—claim 26—of the ’683 patent. We remanded to the
district court to make necessary modifications to the
injunction.
On remand, the district court modified the injunction
in one respect and found Lawson in civil contempt for
violating the injunction. Lawson appealed both the in-
junction and contempt order. During the pendency of
Lawson’s appeals, the United States Patent and Trade-
mark Office (“PTO”) completed a reexamination of
the ’683 patent and determined that claim 26 was invalid.
In a separate appeal, we affirmed the PTO’s invalidity
determination, and the PTO cancelled claim 26. We now
vacate the injunction and contempt order because both
∗
Sharon Prost assumed the position of Chief Judge
on May 31, 2014.
EPLUS, INC. v. LAWSON SOFTWARE, INC. 3
were based on claim 26, which the PTO has now can-
celled.
BACKGROUND
This case raises two issues. The first is whether an in-
junction can continue after the PTO has cancelled the
only claim on which the injunction was based. The second
is whether civil contempt remedies based on the violation
of an injunction are appropriate when the injunction has
been overturned on direct appeal.
I
ePlus owns the ’172 patent and the ’683 patent, which
both relate to methods and systems for electronic sourc-
ing. See ePlus v. Lawson, 700 F.3d 509, 512 (Fed. Cir.
2012) (“ePlus I”). The claimed methods and systems are
directed to using electronic databases to search for prod-
uct information and ordering selected products from
third-party vendors. The only claim now at issue in this
appeal, claim 26 of the ’683 patent, recites a “method
comprising the steps of”: “maintaining at least two prod-
uct catalogs on a database,” “selecting product catalogs to
search,” “searching for matching items,” “building a
requisition,” “processing the requisition to generate one or
more purchase orders,” and “determining whether a
selected matching item is available in inventory.” ’683
patent col. 26 l. 61 to col. 27 l. 7.
In 2009, ePlus sued Lawson for infringement of
the ’683 patent and the ’172 patent in the Eastern District
of Virginia. 1 Lawson sells computer software to institu-
tional customers. Its products are modular—customers
1 ePlus also alleged infringement of certain claims
of U.S. Patent No. 6,055,516. The jury found none of those
claims infringed, and ePlus did not appeal that aspect of
the jury verdict.
4 EPLUS, INC. v. LAWSON SOFTWARE, INC.
decide which individual software components to purchase
based on their needs. As a result, different customers use
different combinations, or configurations, of software
modules. The different configurations generally let users
search for, select, and order products electronically, but
the nature and extent of those capabilities vary depending
on the particular modules a customer selects. When ePlus
sued Lawson, the basic software component (“Core Pro-
curement”) allowed users to load products into an internal
database (“Item Master”), search that database for prod-
ucts, create a requisition listing multiple selected prod-
ucts, and generate individual purchase orders to transmit
to vendors. Requisition Self-Service (“RSS”) was a module
that provided a user interface for the Core Procurement
unit. The Procurement Punchout module (“Punchout”) let
users search third-party vendors’ databases for products
and put those vendors’ products on requisitions along
with products stored in the internal Item Master data-
base.
Given the modular nature of Lawson’s products, ePlus
asserted different patent claims against five distinct
configurations of software modules (“Configurations 1–5”).
With respect to the asserted claims of the ’683 patent and
the ’172 patent, the jury found that three of the five
accused configurations infringed. Configurations 3 and 5
were found to infringe two system claims (claim 1 of
the ’172 patent and claim 3 of the ’683 patent) and three
method claims (claims 26, 28, and 29 of the ’683 patent).
Configuration 2 was found to infringe one system claim
(claim 1 of the ’172 patent). Configurations 1 and 4 were
found not to infringe any of the claims asserted against
them.
Pursuant to the jury verdicts, the district court per-
manently enjoined Lawson from
directly or indirectly making, using, offering to
sell, or selling within the United States or import-
EPLUS, INC. v. LAWSON SOFTWARE, INC. 5
ing into the United States any of the [adjudged in-
fringing] product configurations and/or installa-
tion, implementation, design, configuration,
consulting, upgrade, maintenance and support
and training and other related and associated ser-
vices and any colorable variations thereof (the “In-
fringing Products and Services”).
J.A. 4263. The court defined the “Infringing Products and
Services” to include the three software configurations
(Configurations 2, 3, and 5) adjudged infringing by the
jury. The court also enjoined Lawson from “[c]irculating,
publishing or disseminating within the United States any
literature or information that encourages the use, sale or
importation of any of the Infringing Products and Ser-
vices,” and from “[a]iding and abetting, actively inducing,
or in any way contributing to the making, use, sale or
importation of any of the Infringing Products and Ser-
vices.” J.A. 4264. Lawson appealed.
On this first appeal, we determined that the two
asserted system claims (claim 1 of the ’172 patent and
claim 3 of the ’683 patent) were invalid, and that two of
the three asserted method claims (claims 28 and 29 of
the ’683 patent) were not infringed. We affirmed only the
infringement finding as to method claim 26. Only Config-
urations 3 and 5 were found to infringe that claim. As a
result of our holding on appeal, Configuration 2 was no
longer infringing. We remanded “for the district court to
consider what changes are required to the terms of the
injunction, consistent with this opinion.” ePlus I, 700 F.3d
at 523.
After our ruling, the district court ordered the parties
to file statements of position on the effect of our decision
on the injunction. These were filed before Lawson’s Rule
60(b) motion discussed below. Most importantly, Lawson
challenged the very provisions of the injunction that led to
the contempt sanctions sought by ePlus—namely, the bar
6 EPLUS, INC. v. LAWSON SOFTWARE, INC.
against sales of particular software products. Originally,
these provisions concerning software sales were supported
by the jury’s findings of infringement of the system claims
(claim 1 of the ’172 patent and claim 3 of the ’683 pa-
tent). 2 After our decision vacated those findings, Lawson
argued that infringement of a single method claim (claim
26 of the ’683 patent) could not support the injunction
against product sales (and hence, contempt sanctions
based on such sales) and that our opinion distinguished
“sales” of software from “installation” and other services
provided to customers. 3 This court upheld the finding of
induced infringement of claim 26 not based on sales, but
based on Lawson’s providing customer services, including
software installation, demonstrations, and maintenance. 4
Lawson also urged that, in light of this court’s narrowing
2 In sustaining the jury verdict, the district court
relied on the determination that “Lawson actively induces
its customers’ direct infringement by selling and offering
to sell the infringing systems with the intent that its
customers use those systems in an infringing manner.”
ePlus, Inc. v. Lawson Software, Inc., No. 3:09-cv-620, 2011
WL 3584313, at *4 (E.D.V.A., Aug. 12, 2011). We did not
sustain the finding of infringement of the system claims
or the findings of direct and induced infringement based
on the sales of the systems.
3 We recognized that “[i]n addition to selling pro-
curement software, Lawson provides services to custom-
ers who purchase its products. These services may include
installation and maintenance of the products.” ePlus I,
700 F.3d at 514.
4 We relied on “evidence that Lawson installed,
maintained, demonstrated and managed the infringing
systems for its customers” to conclude that a reasonable
jury could “infer that Lawson performed the steps of claim
26” and “induced its customers to infringe claim 26.” Id.
at 521.
EPLUS, INC. v. LAWSON SOFTWARE, INC. 7
of the jury’s infringement findings, the enjoined software
products were capable of significant non-infringing uses
and sales of such software should not be enjoined. Addi-
tionally, Lawson argued that under eBay Inc. v. Mer-
cExchange, L.L.C., 547 U.S. 388 (2006), the balancing of
equities no longer supported any injunction. ePlus argued
that the only modification required was the removal of
Configuration 2 from the list of enjoined products. Lawson
thereafter filed a Rule 60(b) motion to modify the injunc-
tion.
The district court agreed with ePlus’s position and or-
dered that the injunction be “modified by deleting from its
scope the product . . . colloquially known as ‘Configuration
2,’” and “remain in effect in all other respects.” J.A. 1.
On remand, in addition to reconsidering the injunc-
tion, the district court also instituted contempt proceed-
ings. Following the jury verdicts, Lawson had
decommissioned and stopped selling products with RSS,
the user interface module for Core Procurement, the basic
building block of Lawson’s system. Lawson had also
redesigned its software in two pertinent respects. First, it
redesigned Configurations 3, and 5 by developing a new
module, Requisition Center (“RQC”) to replace the RSS
user interface module. As redesigned, RQC prevented a
user from simultaneously putting items from both the
internal Item Master database and a third-party vendor’s
database (accessible via Punchout) on the same requisi-
tion. Second, Lawson redesigned Configurations 3 and 5
by developing downloadable software (“Patch 1”) that
limited the functionality of Punchout in Configurations 3
and 5. As modified by Patch 1, those configurations no
longer allowed users to put items from multiple third-
party vendors on the same requisition when using Pun-
chout. As a result, users could only build requisitions with
products from the internal Item Master database or from
a single third-party database.
8 EPLUS, INC. v. LAWSON SOFTWARE, INC.
ePlus alleged that Lawson was in contempt for violat-
ing the injunction with respect to the redesigned software,
arguing that the changes did not make the software more
than colorably different from Configurations 3 and 5, and
that the redesigned software infringed claim 26. Lawson
argued that it was not violating the injunction because
the redesigned software was more than colorably different
from the originally accused software and that ePlus could
not show that the redesigned software continued to in-
fringe claim 26. The court held Lawson in contempt for
violating the injunction, finding that the redesigned
products were no more than colorably different and in-
fringed. The court ordered Lawson to pay a compensatory
fine of $18,167,950 and coercive daily fines of $62,362
until it could show compliance with the injunction. It
declined to award enhanced damages or attorneys’ fees.
Lawson appealed the district court’s modified injunction
and contempt order. We stayed the accumulation of fines
during the pendency of the appeals.
While Lawson’s appeals were pending, in another
case, we affirmed the PTO’s reexamination decision
invalidating claim 26 of the ’683 patent. In re ePlus, Inc.,
540 Fed App’x 998 (Fed. Cir. 2013) (per curiam). Our
mandate issued, and the PTO cancelled claim 26 in April
2014.
We have jurisdiction over the appeal of the injunc-
tion pursuant to 28 U.S.C. § 1292(a)(1) & (c)(1) and over
the appeal of the contempt order pursuant to 28 U.S.C
§ 1291. We review a grant, denial, or modification of an
injunction in a patent case for abuse of discretion. Int’l
Rectifier Corp. v. Samsung Elecs. Co., 361 F.3d 1355, 1359
(Fed. Cir. 2004) (citing Carborundum Co. v. Molten Metal
Equip. Innovations, Inc., 72 F.3d 872, 881 (Fed. Cir.
1995)). We review a contempt order based on an injunc-
tion against infringement for abuse of discretion. Merial
Ltd. v. Cipla Ltd., 681 F.3d 1283, 1292 (Fed. Cir. 2012)
EPLUS, INC. v. LAWSON SOFTWARE, INC. 9
(citing Fujifilm Corp. v. Benun, 605 F.3d 1366, 1370 (Fed.
Cir. 2010)).
DISCUSSION
I. Injunction
The first question is whether the district court’s modi-
fied injunction against Lawson must be set aside now that
the PTO has cancelled the patent claim on which it is
based. It is well established that an injunction must be
set aside when the legal basis for it has ceased to exist. In
Pennsylvania v. Wheeling & Belmont Bridge Co., 54 U.S.
(13 How.) 518, 577–79 (1851), the Supreme Court ap-
proved an injunction sought by the state of Pennsylvania,
ordering the removal of a bridge across the Ohio River
because it illegally obstructed navigation. Congress
subsequently enacted a law authorizing the bridge. Penn-
sylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18
How.) 421, 422 (1855) (“Wheeling Bridge”). Pennsylvania
requested that the Court execute its decree ordering the
abatement of the bridge and punish the defendants for
contempt for violating the Court’s order by failing to
remove the bridge. Id. at 427. The Court denied the
motions and instead dissolved the injunction because
“there [wa]s no longer any interference with the enjoy-
ment of the public right inconsistent with law.” Id. at 432.
The Court held that an injunction “is executory, a contin-
uing decree . . . . If, in the mean[]time, since the decree,
this right has been modified by the competent authori-
ty . . . it is quite plain the decree of the court cannot be
enforced.” Id. at 431–32. Because the bridge was no longer
unlawful, the Court had to set aside the previous order
rather than enforce it.
“The principles of the Wheeling Bridge case have re-
peatedly been followed” by the Supreme Court as well as
“by lower federal and state courts.” Sys. Fed’n No. 91, Ry.
Emps’ Dep’t., AFL-CIO v. Wright, 364 U.S. 642, 650–52
(1961) (holding that it is an abuse of discretion not to
10 EPLUS, INC. v. LAWSON SOFTWARE, INC.
modify an injunction when, because of a change in the
law, “[t]he parties have no power to require of the court
continuing enforcement of rights the statute no longer
gives”); see also, e.g., Cobell v. Norton, 392 F.3d 461, 467
(D.C. Cir. 2004) (vacating injunction where subsequently
enacted legislation relieved executive department of
duties required by injunction because “an injunction may
be a final judgment for purposes of appeal, [but] it is not
the last word of the judicial department because any
provision of prospective relief is subject to the continuing
supervisory jurisdiction of the court, and therefore may be
altered according to subsequent changes in the law”
(quoting Nat’l Coal. to Save Our Mall v. Norton, 269 F.3d
1092, 1096–97 (D.C. Cir. 2001) (internal quotation marks
omitted in original) (quoting Miller v. French, 530 U.S.
327, 347 (2000)))); Biodiversity Assocs. v. Cables, 357 F.3d
1152, 1169–70 (10th Cir. 2004) (injunction arising from
settlement agreement “must give way” because it was
inconsistent with new legislation); Imprisoned Citizens
Union v. Ridge, 169 F.3d 178, 184 (3rd Cir. 1999) (“Wheel-
ing Bridge therefore stands for the proposition that when
Congress changes the law underlying a judgment award-
ing prospective injunctive relief, the judgment becomes
void to the extent that it is inconsistent with the amended
law.”).
Those principles reflect the fact that “[a] continuing
decree of injunction directed to events to come is subject
always to adaptation as events may shape the
need. . . . [A] court does not abdicate its power to revoke or
modify its mandate, if satisfied that what it has been
doing has been turned through changing circumstances
into an instrument of wrong.” United States v. Swift &
Co., 286 U.S. 106, 114–15 (1932); see also Salazar v.
Buono, 559 U.S. 700, 718 (2010) (“Where legislative action
has undermined the basis upon which relief has previous-
ly been granted, a court must consider whether the origi-
nal finding of wrongdoing continues to justify the court's
EPLUS, INC. v. LAWSON SOFTWARE, INC. 11
intervention.” (citing Wright, 364 U.S. at 648–49 and
Wheeling Bridge, 59 U.S. at 430–32)).
Our court has applied these principles to an injunc-
tion barring infringement of patents later found to be
invalid. Mendenhall v. Barber-Greene Co., 26 F.3d 1573,
1584 (Fed. Cir. 1994). In Mendenhall, we reviewed injunc-
tions based on findings of patent infringement. Id. at
1576. While those injunctions were pending on appeal, the
same patents were held invalid in another case in our
court. Id. at 1576–77. We held that the injunctions had to
be reversed following the final judgment of patent invalid-
ity. Id. at 1584. We recognized that upholding injunctions
would be “anomalous in the extreme in connection with
patents this court has just held invalid.” Id. at 1578.
Under these authorities, there is no longer any legal
basis to enjoin Lawson’s conduct based on rights that
claim 26 of the ’683 patent previously conferred as those
rights have ceased to exist. The PTO found claim 26
invalid, we affirmed that decision, our mandate issued,
and the PTO cancelled the claim. Claim 26 no longer
confers any rights that support an injunction against
infringement. During oral argument, ePlus even admitted
that there could be no injunction moving forward. The
PTO’s cancellation of claim 26 requires that we now
vacate the injunction.
II. Civil Contempt Remedies
The second question is whether the civil contempt
sanctions should be set aside. It is well established that
“[v]iolations of an order are punishable as crimi-
nal contempt even though the order is set aside on ap-
peal . . . or though the basic action has become
moot.” United States v. United Mine Workers of Am., 330
U.S. 258, 294 & n.60 (1947) (citing Worden v. Searls, 121
U.S. 14 (1887); Gompers v. Buck’s Stove & Range Co., 221
U.S. 418 (1911)); see also Walker v. Birmingham, 388 U.S.
307, 319 (1967) (upholding criminal contempt sentences
12 EPLUS, INC. v. LAWSON SOFTWARE, INC.
for violation of injunction regardless of the validity of the
injunction); Howat v. State of Kansas, 258 U.S. 181, 189–
90 (1922) (criminal contempt sentences do not depend on
constitutionality of law on which injunction is based). If
Lawson had been found guilty of criminal contempt, that
order and any resulting penalties would not be set aside
simply because claim 26 had been cancelled.
However, the district court found Lawson in civil, not
criminal, contempt. It awarded “compensation” to ePlus
for economic injury during the period that the injunction
was in effect, based on the Supreme Court decision in
Leman v. Krentler-Arnold Hinge Last Co., 284 U.S. 448
(1932). In Leman, the Court upheld an award of the
infringer’s profits “not by way of punishment but to insure
full compensation.” Id. at 456. 5 The rule for civil contempt
is that “[t]he right to remedial relief falls with an injunc-
tion which events prove was erroneously issued.” United
Mine Workers, 330 U.S. at 295 (citing Worden, 121 U.S. at
25, 26; Salvage Process, 86 F.2d at 727; S. Anargyros v.
Anargyros & Co., 191 F. 208 (C.C.D. Cal. 1911)). The
Supreme Court distinguished civil from criminal con-
tempt, explaining that:
It does not follow, of course, that simply because a
defendant may be punished for crimi-
nal contempt for disobedience of an order later set
aside on appeal, that the plaintiff in the action
may profit by way of a fine imposed in a simulta-
neous proceeding for civil contempt based upon a
violation of the same order.
5 The district court also ordered coercive sanctions.
We stayed these sanctions pending the resolution of this
appeal. There is no question that ePlus is not entitled to
seek coercive sanctions now that the injunction has been
vacated.
EPLUS, INC. v. LAWSON SOFTWARE, INC. 13
Id. at 294–95. The Court explained that if the injunction
had been overturned, “the conviction for civil contempt
would be reversed in its entirety.” Id. at 295. “[A party’s]
right, as a civil litigant, to the [civil] compensatory fine is
dependent upon the outcome of the basic controversy.” Id.
at 304. Civil contempt sanctions must be set aside when
the resolution of the case requires overturning the injunc-
tion on which those sanctions are based.
The Supreme Court has specifically applied this rule
to set aside civil contempt sanctions imposed for violating
an injunction based on patents subsequently found to be
invalid. Worden, 121 U.S at 26. 6 In Worden, the district
court had declared the patent not invalid, found the
defendants liable for infringement, and ordered a perma-
nent injunction. Id. at 19. The court also found the de-
fendants in contempt of its preliminary injunction and
ordered them to pay fines for civil contempt. Id. at 20. The
defendants appealed the court’s rulings on infringement
and validity, as well as the contempt order and resulting
fines. Id. at 20, 24. On appeal, the Supreme Court found
the patent invalid and, on that basis, vacated the injunc-
tion. Id. at 25. Because the Court found the patent inva-
lid, id. at 24, and reversed the injunction on appeal, id. at
6 Curiously, the dissent now finds Worden inappli-
cable to this situation, Diss. Op. at 11 n.4, after previously
urging in Fresenius that Worden required the reversal of
contempt sanctions in such situations. Judge O’Malley, in
dissenting from the denial of en banc rehearing in Frese-
nius, stated: “[Worden] merely stands for the proposition
that the right to fines for violation of a preliminary in-
junction is founded on that injunction which in turn is
predicated on the validity of the patent.” Fresenius USA,
Inc. v. Baxter Int’l, Inc., 733 F.3d 1369, 1376 n.5 (Fed. Cir.
2013) (dissenting from the denial of the petition for re-
hearing en banc) (citing Worden, 121 U.S. at 25).
14 EPLUS, INC. v. LAWSON SOFTWARE, INC.
26, it set aside the civil contempt order and resulting
fines, declaring that the sanctions “cannot be upheld.” Id.
The Court explained that the civil sanctions were “inci-
dents of [the patentee’s] claims in the suit. His right to
them was, if it existed at all, founded on his right to the
injunction, and that was founded on the validity of his
patent.” Id. at 25. Under Worden, compensatory civil
contempt remedies must be set aside when the injunction
on which they are based is set aside because the patent is
determined to be invalid. 7 Other circuits have similarly
held that civil contempt sanctions must be set aside if the
underlying injunction is reversed on appeal. 8
7 ePlus claims that some cases it cites have reached
contrary results, but those cases involve situations where
the basis for the injunction was eliminated prospectively
only, see, e.g., Klett v. Pim, 965 F.2d 587, 590 (8th Cir.
1992) (passage of Agricultural Credit Act made injunction
moot, not baseless), Coleman v. Espy, 986 F.2d 1184, 1190
(8th Cir. 1993) (citing Klett, 965 F.2d at 590) (same), or
penalties that were not determined to be civil. See, e.g.,
Cassidy v. Puett Elec. Starting Gate Corp., 182 F.2d 604,
608 (4th Cir. 1950) (district court ordered penalties “to
punish those who have deliberately and without any
reasonable excuse disobeyed [its] orders” (internal quota-
tion marks omitted)).
8 “The general rule is that whether a contempt
judgment survives the avoidance of an underlying order
depends on the nature of the contempt decree. If the
contempt is criminal it stands; if it is civil it falls.”
LaTrobe Steel Co. v. United Steelworkers of Am., AFL-
CIO, 545 F.2d 1336, 1342, 1347–48 (3rd Cir. 1976) (Vacat-
ing coercive civil contempt order because “reversal of the
underlying injunction indicates that the complainant
never had a valid right which was enforceable against the
defendant.”); see also e.g., McLean v. Cent. States, S. & S.
EPLUS, INC. v. LAWSON SOFTWARE, INC. 15
This case is not distinguishable on the ground that
the injunction has been set aside as the result of the PTO
proceeding rather than a court judgment. In Fresenius
USA, Inc. v. Baxter International, Inc., we held that a
non-final money judgment of damages for infringement
must be set aside where the judgment rested on a patent
claim that the PTO later cancelled. 721 F.3d 1330, 1344,
1347 (Fed. Cir. 2013). 9 We held that the cancellation of a
patent requires that non-final judgments be set aside
because the “cancelled claims [a]re void ab initio,” id. at
1346, relying on Moffit v. Garr, 66 U.S. 273, 283 (1861),
where the Supreme Court held that “unless [the patent]
exists, and is in force at the time of trial and judgment,
the suits fail.” Id. at 1345 (quoting Moffit, 66 U.S. at 283).
Thus, the cancellation of the patent precluded the patent-
ee from recovering damages in Fresenius. Similarly, here
the civil contempt sanctions must be set aside.
This case does not require us to decide whether civil
contempt sanctions would survive if the injunction had
Areas Pen. Fund, 762 F.2d 1204, 1210 (4th Cir. 1985)
(Ordering “reversal of the contempt order because [the
appellant] has prevailed in overturning the [underlying]
order on appeal.”); Scott and Fetzer Co. v. Dile, 643 F.2d
670, 675 (9th Cir. 1981) (Remedial civil contempt judg-
ment “must fall as a result of our decision invalidating the
underlying injunction.”); ITT Comm. Dev. Corp. v. Barton,
569 F.2d 1351, 1361 (5th Cir. 1978) (Vacating contempt
orders because the underlying turn-over order “was
invalid ab initio.”); Blaylock v. Cheker Oil Co., 547 F.2d
962, 966 (6th Cir. 1976) (Concluding that “the remedial
contempt order . . . falls with [the relevant provision] of
the injunction.”).
9 The Supreme Court denied the petition for certio-
rari on May 19, 2014. Baxter, Int’l., Inc. v. Fresenius USA,
Inc., 134 S. Ct. 2295 (2014).
16 EPLUS, INC. v. LAWSON SOFTWARE, INC.
been final at the time the district court imposed civil
contempt sanctions. 10 The injunction here was not final
even though claim 26 had been held infringed. We held in
Fresenius that even if this court has rejected an invalidity
defense to infringement, an “intervening decision invali-
dating the patents unquestionably applies” as long as “the
judgment in [the present] litigation is not final.” Id. at
1344; see also Moffit, 66 U.S. at 283 (“[P]ending suits fall
with the surrender” of a patent “which, in judgment of
law, extinguishes the patent.”); Mendenhall, 26 F.3d at
1584 (“Because the Mendenhall patents are invalid, the
plaintiffs cannot now enjoin or recover damages from
these defendants.”). In Fresenius, we had previously
reviewed the district court’s rulings on infringement and
invalidity and remanded the case to the district court to
determine the scope of damages and injunctive relief. 721
F.3d at 1333. When reviewing the judgment reached by
the district court on remand, we held that the original
district court judgment, while “final for purposes of ap-
peal . . . was not sufficiently final to preclude application
of the intervening judgment” that led to the cancellation
of the patent. Id. at 1340. With respect to the determina-
tion of finality, we explained that “where the scope of
relief remains to be determined, there is no final judg-
ment binding the parties (or the court).” Id. at 1341. This
rule follows from the Supreme Court’s holding that “a
10 See, e.g., Maggio v. Zeitz, 333 U.S. 56, 68 (1948)
(reviewing contempt order, but not underlying order
requiring turnover of property because “the turnover
proceeding is a separate one, and when completed and
terminated in a final order, it becomes res judicata and
not subject to collateral attack in the contempt proceed-
ings”); Proveris Scientific Corp. v. Innovasystems, Inc., 739
F.3d 1367, 1370, 1374 (Fed. Cir. 2014) (holding defendant
cannot raise invalidity as a defense to contempt when the
underlying injunction is final and not on appeal).
EPLUS, INC. v. LAWSON SOFTWARE, INC. 17
final decree [is] one that finally adjudicates upon the
entire merits, leaving nothing further to be done except
the execution of it.’” John Simmons Co. v. Grier Bros. Co.,
258 U.S. 82, 88 (1922).
There is no question here that the district court’s
modified injunction was not final when the PTO cancelled
claim 26. Our previous appeal did not affirm the injunc-
tion, rather it remanded the case to the district court,
requiring it “to consider what changes are required to the
terms of the injunction, consistent with this opinion.”
ePlus I, 700 F.3d at 512. Our decision necessitated chang-
es to the injunction because of our reversal of the in-
fringement findings under claims 28 and 29, and our
conclusion that Configuration 2 was not infringing. On
remand, the district court had to consider the scope of
relief to which ePlus was entitled, which necessarily
impacted what activities Lawson could undertake. The
district court ordered the parties to file statements of
position “respecting the effect, if any, of the decision of the
Court of Appeals on the scope of the injunction previously
entered.” ePlus, Inc. v. Lawson Software, Inc., No. 3:09-cv-
620, Order, (E.D.Va. Nov. 28, 2012), ECF No. 981. In light
of those submissions, the court recognized that “it is
appropriate to reassess the propriety and scope of an
injunction, as directed by the United States Court of
Appeals for the Federal Circuit.” ePlus, Inc. v. Lawson
Software, Inc., No. 3:09-cv-620, Order 2, (E.D.Va. Mar. 12,
2013), ECF No. 1019.
On the remand (as on appeal), Lawson argued that
our ruling required more than eliminating the reference
to Configuration 2. Specifically, Lawson contended that it
was necessary to alter the injunction as to sales of prod-
ucts. Lawson also asserted that the requisite eBay analy-
sis for the injunction changed because Configurations 3
and 5 were used by a substantially smaller portion of its
customer base than Configuration 2. The district court
rejected Lawson’s arguments and found that the only
18 EPLUS, INC. v. LAWSON SOFTWARE, INC.
change our mandate required was removing the provision
of the injunction that referenced Configuration 2. Conse-
quently, it issued an order modifying the injunction in
this one respect. The court ordered that “[p]ursuant to the
mandate of the United States Court of Appeals for the
Federal Circuit . . . it is hereby ORDERED that the in-
junction . . . is modified by deleting from its scope the
product . . . colloquially known as ‘Configuration 2[.]” J.A.
1. Lawson appealed the modification on the ground that it
was not sufficient or consistent with our mandate and did
not make the required changes. Under these circumstanc-
es, as in Fresenius, the district court’s order was not final.
721 F.3d at 1342–43. After the district court modified the
injunction, Lawson appealed the modification under 28
U.S.C. § 1291(a)(1). That appeal was pending when the
PTO cancelled the only claim at issue in the litigation.
ePlus asserts that Lawson viewed the injunction as
final because it filed a Rule 60(b) motion asking the
district court to modify or dissolve the modified injunc-
tion. The filing of a Rule 60(b) motion under such circum-
stances is not unusual. Filing a Rule 60(b) motion did not
prevent Lawson from appealing the modified injunction in
addition to appealing the denial of the Rule 60(b) motion.
See Stone v. I.N.S., 514 U.S. 386, 401 (1995) (“Either
before or after filing his appeal, the litigant may also file a
Rule 60(b) motion for relief with the district court. The
denial of the [Rule 60(b)] motion is appealable as a sepa-
rate final order, and if the original appeal is still pend-
ing . . . the court of appeals can consolidate the
proceedings.”).
We conclude that the compensatory award for the vio-
lation of the injunction must be set aside in light of the
cancellation of claim 26. Given our disposition, we need
not reach the question of whether Lawson’s redesigned
products are more than colorably different from the
original accused products and whether the redesigned
products infringe.
EPLUS, INC. v. LAWSON SOFTWARE, INC. 19
CONCLUSION
For the foregoing reasons, the district court’s injunc-
tion and contempt orders are vacated. The case is re-
manded with instructions to dismiss.
VACATED AND REMANDED
United States Court of Appeals
for the Federal Circuit
______________________
EPLUS, INC.,
Plaintiff-Appellee,
v.
LAWSON SOFTWARE, INC.,
Defendant-Appellant.
______________________
2013-1506, -1587
______________________
Appeals from the United States District Court for the
Eastern District of Virginia in No. 09-CV-0620, Senior
Judge Robert E. Payne.
______________________
O’MALLEY, Circuit Judge, dissenting.
I agree that, once this Court affirmed the PTO’s can-
cellation of claim 26 of the ’683 patent, an ongoing injunc-
tion barring infringement of that patent could no longer
stand and must be vacated prospectively. That conclusion
comes easily; as the majority notes, even Appellant’s
counsel conceded the point during oral argument. Maj.
Op. at 11. The more difficult question is whether Appel-
lees are relieved of all penalties for having violated the
2 EPLUS, INC. v. LAWSON SOFTWARE, INC.
injunction during the four years it was in place before the
PTO’s cancellation was affirmed. 1
On this second question, the majority concludes that
“[t]his case does not require us to decide whether civil
contempt sanctions would survive if the injunction had
been final at the time the district court imposed civil
contempt sanctions,” Maj. Op. at 15-16, because, under
Fresenius USA, Inc. v. Baxter International, Inc., 721 F.3d
1330 (Fed. Cir. 2013) (“Fresenius II”), cancellation of
claims by the Patent and Trademark Office (“PTO”)
“requires that non-final judgments be set aside.” Maj. Op.
at 15. Because it finds the judgment in this case non-
final, the majority—on the strength of Fresenius II—
renders all aspects of the earlier judgment against Law-
son, including the injunction premised thereon, a nullity.
I respectfully dissent from that aspect of the majority’s
opinion because Fresenius II is distinguishable from, and
I do not believe governs, the present appeal. I write
separately, moreover, to note that, if we are bound by
Fresenius II on these facts, I find Fresenius II even more
troubling than I initially believed. Fresenius USA, Inc. v.
Baxter Int’l, Inc., 733 F.3d 1369, 1373-81 (Fed. Cir. 2013)
(O’Malley, J., dissenting from denial of petition for rehear-
ing en banc).
I
In Fresenius II, a panel of this court held that “cancel-
lation of claims during reexamination would be binding in
concurrent litigation,” and, while “cancellation of a pa-
1 While Lawson contends it did not violate the dis-
trict court’s injunction, because the majority does not
reach that question, neither do I. The current record
contains a district court finding that Lawson did violate
the injunction. The question I debate with the majority is
whether we can reach the merits of that finding.
EPLUS, INC. v. LAWSON SOFTWARE, INC. 3
tent’s claims cannot be used to reopen a final damages
judgment ending a suit based on those claims,” there can
be “no final judgment binding the parties” “where the
scope of relief remains to be determined.” 721 F.3d at
1339, 1341 (emphasis added). The facts here are different
than those before us in Fresenius II.
In the initial district court litigation between Frese-
nius and Baxter, Fresenius brought suit seeking a declar-
atory judgment that the claims of three patents were
“invalid and not infringed by Fresenius’s hemodialysis
machines.” Fresenius USA, Inc. v. Baxter Int’l., Inc., 582
F.3d 1288, 1293 (Fed. Cir. 2009) (“Fresenius I”). The
district court granted Baxter judgment as a matter of law,
finding that the jury’s obviousness verdict was not sup-
ported by substantial evidence. Id. After a separate jury
trial on damages, the jury awarded Baxter over $14
million in pre-verdict damages. Id. at 1294. The district
court issued a permanent injunction against Fresenius,
but delayed implementation of the injunction to allow
Fresenius time to develop a non-infringing machine. Id.
In lieu of the immediate injunction, the district court
ordered Fresenius to pay an on-going royalty for any
infringing machines sold prior to the injunction taking
effect. Id. Fresenius appealed the district court’s grant of
judgment as a matter of law regarding validity, the per-
manent injunction, the ongoing royalty award, and claim
construction. Id. Fresenius, however, did not appeal the
pre-verdict damages award, only the prospective royalties
and injunction.
In Fresenius I, we reversed the district court’s grant of
judgment as a matter of law for all but six claims of one of
Baxter’s patents. Id. at 1304. For those six claims, we
held that Fresenius failed to prove invalidity. Id. We
remanded to the district court with the following instruc-
tion: “[W]e vacate the injunction and remand so that the
court may revise or reconsider the injunction in light of
the fact that only claims 26-31 of the ’434 patent remain
4 EPLUS, INC. v. LAWSON SOFTWARE, INC.
valid and infringed. Finally, we vacate the royalty award
entered by the district court and remand for further
proceedings consistent with this opinion.” Id.
On remand, Fresenius argued that no injunction
should issue, the post-verdict ongoing royalty amount was
unreasonable, and it should receive a “new trial for pre-
verdict damages for infringement of the ’434 patent.”
Fresenius II, 721 F.3d at 1333. The district court declined
to enter an injunction as the relevant patent had expired,
awarded Baxter new post-verdict damages at a reduced
royalty, and denied Fresenius’s motion for a new pre-
verdict damages trial. Id. While Fresenius’s second
appeal was pending, we affirmed a decision of the PTO
cancelling the remaining claims of the ’434 patent in an
ex parte reexamination proceeding. In re Baxter Int’l,
Inc., 678 F.3d 1357, 1366 (Fed. Cir. 2012). The Fresenius
II panel concluded that, because we vacated the injunc-
tion and the royalty award, and remanded for “further
proceedings consistent with this opinion” in Fresenius I,
582 F.3d at 1304, the litigation was not final as we left
the district court with more to do than simply “execute
the judgment.” Fresenius II, 721 F.3d at 1341. Because
the “scope of relief remain[ed] to be determined,” there
was “no final judgment binding the parties,” the reexami-
nation “extinguishe[d] the underlying basis for suits
based on the patent,” and we vacated the pre-verdict
damages award. Id. at 1341, 1344.
The facts of the present appeal differ markedly from
those presented in Fresenius II. At trial in this case, the
jury found that Configurations 1 and 4 were not infring-
ing; Configurations 2, 3, and 5 infringed system claim 1 of
the ’172 patent; Configurations 3 and 5 infringed system
claim 3 of the ’683 patent and method claims 26, 28, and
29 of the ’683 patent; and Lawson did not infringe the ’516
patent. ePlus, Inc. v. Lawson Software, Inc., No. 3:09-cv-
620, 2011 WL 2119410, at *4 (E.D. Va. May 23, 2011).
The jury also concluded that none of the asserted claims
EPLUS, INC. v. LAWSON SOFTWARE, INC. 5
were invalid. Id. The district court entered a permanent
injunction against Lawson, preventing Lawson from
making, using, selling, or offering to sell, Configurations
2, 3, or 5. Id. at *19. 2 ePlus then initiated contempt
proceedings against Lawson, arguing that the design-
around RQC module was not more than colorably differ-
ent from the infringing RSS module. ePlus, Inc. v. Law-
son Software, Inc., 946 F. Supp. 2d. 472, 475-76 (E.D. Va.
2013).
Lawson appealed the validity of the two system
claims, the jury’s infringement findings as to all claims,
and the district court’s entry of an injunction. ePlus I, 700
F.3d at 516-17. Importantly, Lawson did not appeal the
validity determinations regarding claims 26, 28, and 29 of
the ’683 patent. We concluded that the system claims
were invalid as indefinite, and reversed the district
court’s denial of judgment as a matter of law for nonin-
fringement of claims 28 and 29 of the ’683 patent. Id. at
523. We affirmed, however, the jury’s finding of in-
fringement of claim 26 of the ’683 patent. 3 We returned
2 Prior to entering the injunction, the district court
excluded ePlus’s expert report regarding damages, and
did not permit ePlus to present evidence of damages due
to prior discovery sanctions. ePlus, Inc. v. Lawson Soft-
ware, Inc., 700 F.3d 509, 515 (Fed. Cir. 2012) (“ePlus I”).
Thus, ePlus’s only available remedy was an injunction.
3 The majority claims that, in ePlus I, we upheld
the finding of induced infringement of claim 26 based
solely on “Lawson providing customer services,” and not
due to sales. Maj. Op. at 6. That is not accurate, as the
language the majority omits from the same paragraph of
ePlus I proves. Maj. Op. at 6 n.4. In ePlus I, we held that
“there remains no serious dispute that Lawson’s custom-
ers infringe claim 26.” 700 F.3d at 520. After finding that
Lawson directly infringed through its customer services,
6 EPLUS, INC. v. LAWSON SOFTWARE, INC.
the case to the district court with a very limited remand
instruction: “We remand to the district court to consider
what changes are required to the terms of the injunction,
consistent with this opinion. In all other respects, we
affirm.” Id. Our remand instruction merely recognized
the district court’s inherent continuing equitable powers
over the scope of its injunction. Importantly, neither our
opinion nor our remand instruction vacated the injunc-
tion. The judgment that claim 26 was valid and in-
fringed—one of the judgments upon which the injunction
was predicated—remained intact, as did the injunction.
On remand, Lawson moved to modify or vacate the
injunction under Federal Rule of Civil Procedure 60(b).
The district court concluded that “the injunction must be
modified so as to no longer apply to Configuration No. 2.
The injunction shall remain in effect in all other respects.”
ePlus, Inc. v. Lawson Software, Inc., 946 F. Supp. 2d 459,
471 (E.D. Va. 2013) (also holding that aspects of the
injunction related to Configuration Nos. 2 and 5 “remain
undisturbed by the Federal Circuit decision”). Thus, the
only modification necessary under our remand instruction
“consistent with [our] opinion” was that Configuration 2
had to be removed from the scope of the injunction as
claim 1 of the ’172 patent, the sole basis for infringement
we held that “[f]inally, we have reviewed the record and
are satisfied that it contains sufficient evidence of Law-
son’s intent and knowledge to allow a reasonable jury to
conclude that Lawson induced its customers to infringe
claim 26.” Id. at 521. We also affirmed the district
court’s finding that there was sufficient evidence that
Lawson was a contributory infringer. Id. at 523 n.2. We
thus affirmed that Lawson induced infringement, in part,
through “selling and offering to sell the infringing sys-
tems,” without limiting our analysis to just the system
claims. See ePlus, 2011 WL 3584313, at *4.
EPLUS, INC. v. LAWSON SOFTWARE, INC. 7
by Configuration 2, was held invalid. Id. Lawson never
contended that the number of claims of the ’683 patent
that were infringed would or should impact the scope of
the products enjoined, or even that the number of patents
infringed by the same products was material to the na-
ture of the injunctive relief. Id. at 466-70 (noting that
Lawson sought to alter the scope of the injunction only on
the basis that just method claims remained infringed
after ePlus I, and “only 150 Lawson customers would be
affected by the injunction”). Thus, while reference to
Configuration 2 was removed from the injunction, the
activities enjoined did not change. Id. at 471. Separately,
the district court concluded that Lawson had been in
contempt of the injunction since soon after it was entered,
and awarded ePlus disgorgement of Lawson’s profits.
ePlus, Inc. v. Lawson Software, Inc., 946 F. Supp. 2d 472,
489-93 (E.D. Va. 2013). Lawson appealed the district
court’s contempt order and ruling on the Rule 60(b) mo-
tion.
There are crucial differences between these facts and
the facts in Fresenius II. First, Fresenius failed to appeal
the pre-verdict damages judgment from the district court,
but did appeal the validity of all relevant claims-at-issue.
As the PTO’s reexamination determination involved the
validity of some of the claims-at-issue, Fresenius at least
continued to press the validity of the patents in its first
appeal. Further, while Fresenius did not directly appeal
the pre-verdict damages award in Fresenius I, it did move
for a new trial on damages on remand premised on the
“further proceedings” language in our remand instruction,
which it then appealed in Fresenius II. In the present
appeal, Lawson never appealed the validity of claim 26 of
the ’683 patent and never sought to press the issue again,
either before the trial court or this one. The judgment
that claim 26 of the ’683 patent was valid became final
when the district court entered final judgment and Law-
son chose not to appeal that judgment to this court.
8 EPLUS, INC. v. LAWSON SOFTWARE, INC.
While the PTO did find claim 26 of the ’683 patent to be
invalid through ex parte reexamination proceedings, and
we affirmed that decision in In re ePlus, Inc., 540 F. App’x
998 (Fed. Cir. 2013), the validity of claim 26 of the ’683
patent as between ePlus and Lawson with regards to the
continuing injunction (at least until the decision in In re
ePlus mandated) was final well before that point in time.
See Function Media, L.L.C. v. Kappos, 508 F. App’x 953,
956 (Fed. Cir. 2013) (holding that a party’s failure to
appeal from a district court’s judgment of no invalidity
barred that party from seeking reexamination of those
claims); Odectics, Inc. v. Storage Tech. Corp., 185 F.3d
1259, 1275 (Fed. Cir. 1999) (holding that failure of a party
to cross-appeal the issue of validity “preclud[ed] further
consideration of the issue”); cf. Volvo Trademark Holding
Aktiebolaget v. Clark Mach. Co., 510 F.3d 474, 481 (4th
Cir. 2007) (the mandate rule “forecloses litigation of
issues decided by the district court but foregone on ap-
peal”); Bullen v. De Bretteville, 239 F.3d 824, 829 (9th Cir.
1956), overruled on other grounds, Lacey v. Maricopa
Cnty., 693 F.3d 896 (9th Cir. 2012) (“A case remanded for
further hearing or over which jurisdiction is retained for
some purposes may nonetheless be final as to other issues
determined.”).
Second, the remand instructions in ePlus I and Frese-
nius I were different in important, material respects. In
Fresenius I, we vacated the injunction and the post-
verdict royalty awards, instructed the district court to
“revise or reconsider” the injunction, and remanded “for
further proceedings consistent with this opinion.” Frese-
nius I, 582 F.3d at 1304. By vacating the injunction, we
required the district court to analyze the injunction anew.
Further, in Fresenius II we found that, by remanding “for
further proceedings consistent with this opinion,” the
district court was free to consider other aspects of the
case, including Fresenius’s motion for a new trial regard-
ing pre-verdict damages. Here, we did not vacate the
EPLUS, INC. v. LAWSON SOFTWARE, INC. 9
injunction, which was the only form of remedy available
to ePlus. By not vacating the injunction, the injunction
remained in force and any on-going infringing activity by
Lawson would be potential contemptible conduct. We did
no more than suggest that the district court “consider”
any necessary changes to the injunction, consistent with
the district court’s equitable powers; we did not direct the
district court to “revise or reconsider” the injunction.
Finally, we conspicuously did not remand for “any further
proceedings consistent with this opinion.” As the majority
in Fresenius II recognized in distinguishing Qualcomm,
Inc. v. FCC, 181 F.3d 1370, 1380 (D.C. Cir. 1999), the
scope of the appellate remand instruction is crucial to the
preclusive effect of an intervening PTO reexamination
determination. Fresenius II, 721 F.3d at 1346 n.12.
The Fresenius II majority concluded that the remand
instruction in Qualcomm was for “specific, immediate
relief for a party,” while it found the remand instruction
in Fresenius I more open-ended—“for further proceed-
ings.” Id. The remand instruction in ePlus I, like that in
Qualcomm, did contemplate “specific, immediate relief for
a party”—Configuration 2 should be removed from the
scope of the injunction, but the injunction remains in force
subject only to the district court’s continuing equitable
power over it. And, the remand instruction in ePlus I
noticeably does not include an order for the district court
to undertake “further proceedings.” Fresenius I, 582 F.3d
at 1304. Thus, as the Fresenius II majority contemplated
when attempting to distinguish the United States Court
of Appeals for the District of Columbia’s (“D.C. Circuit”)
apparently contrary ruling in Qualcomm, the more lim-
ited scope of the remand order from ePlus I differentiates
the present appeal from that in Fresenius II.
Finally, the nature of the remedies at issue on appeal
distinguishes the two cases. In Fresenius II, the majority
determined that both pre-verdict and post-verdict damag-
es would be vacated in light of the PTO reexamination
10 EPLUS, INC. v. LAWSON SOFTWARE, INC.
results because the scope of monetary remedies was not
yet final. That is not the case here. As noted, I agree
with the majority that the injunction should be vacated
prospectively from the date when In re ePlus mandated,
and that any coercive civil remedies should be vacated
since it would be inappropriate to force Lawson to comply
with an injunction that is no longer enforceable. As the
majority correctly states, an injunction is a “continuing
decree” that must not be enforced prospectively if the
right underlying the decree is abrogated. Maj. Op. at 9-11
(quoting Pennsylvania. v. Wheeling & Belmont Bridge Co.,
59 U.S. (18 How.) 421, 422 (1855)). I disagree, however,
that the results of In re ePlus require that we vacate the
compensatory civil contempt order.
Lawson’s conduct giving rise to the contempt order oc-
curred while the injunction, with regards to Configura-
tions 3 and 5, was valid under ePlus I. While we
remanded to allow the district court to use its inherent
equitable powers to remove Configuration 2 from the
scope of the injunction, we retained the jury’s infringe-
ment finding with regards to claim 26 of the ’683 patent,
Lawson did not appeal the validity of claim 26, and we did
not vacate the injunction. In a contempt proceeding, the
putative contemnor may not challenge the correctness of
the underlying order or attack the validity of the underly-
ing basis for an injunction unless the court issuing the
injunction had no jurisdiction to do so. 4 Maggio v. Zeitz,
4 The cases the majority relied upon, such as
McLean v. Central States, S. & S. Areas Pension Fund,
762 F.2d 1204 (4th Cir. 1985); Scott & Fetzer Co. v. Dile,
643 F.2d 670 (9th Cir. 1981); ITT Committee Development
Corp. v. Barton, 569 F.2d 1351 (5th Cir. 1978); Blaylock v.
Cheker Oil Co., 547 F.2d 962 (6th Cir. 1976); LaTrobe
Steel Co. v. United Steelworkers of America, AFL-CIO, 545
F.2d 1336 (3d Cir. 1976); all involved both the underlying
EPLUS, INC. v. LAWSON SOFTWARE, INC. 11
333 U.S. 56, 68-69 (1948); Proveris Scientific Corp. v.
Innovasystems, Inc., 739 F.3d 1367, 1370 (Fed. Cir. 2014)
(“‘In a contempt proceeding to enforce [an] injunction . . .,
the only available defense for anyone bound by the injunc-
tion was that the [newly accused product] did not infringe.
. . . Validity and infringement by the original device were
not open to challenge.’” (quoting Additive Controls &
injunction and the contempt order simultaneously on
direct appeal. Here, Lawson failed to appeal the validity
of claim 26 of the ’683 patent, we affirmed the jury’s
finding of infringement on that patent, and we did not
vacate the injunction. While a district court retains the
equitable power to revise an injunction prospectively, we
did not vacate the injunction, and the injunction was final
at the time of the allegedly contemptible conduct.
The majority further relies on Worden v. Searls, 121
U.S. 14 (1887). Like the cases noted above, Worden
involved an injunction and contempt order which were
simultaneously on direct appeal. Worden stands for “the
proposition that the right to fines for violation of a prelim-
inary injunction is founded on that injunction which in
turn is predicated on the validity of the patent.” Frese-
nius II, 733 F.3d at 1376 n.5 (O’Malley, J., dissenting
from denial of petition for rehearing en banc). Worden
thus permits prospective challenges to an injunction and
prevents a contempt finding predicated upon an injunc-
tion after the predicate for it no longer exits. Id. (“Thus,
while the PTO’s cancellation of the patent renders it
prospectively invalid, the cancellation cannot render a
prior judgment for damages invalid.”). We affirmed the
underlying injunction in ePlus I, rendering the injunction
retrospectively final. Thus, because the contemptible
conduct occurred before the PTO invalidated the patent
upon which the retrospectively final injunction was predi-
cated, it is not “curious” that Worden does not apply to
these facts.
12 EPLUS, INC. v. LAWSON SOFTWARE, INC.
Measurement Sys., Inc. v. Flowdata, Inc., 154 F.3d 1345,
1350 (Fed. Cir. 1998)). All that remained available for
review in the current appeal was the prospective validity
of the injunction and the propriety of findings made
during the contempt proceeding, not the underlying basis
for the injunction at issue in the contempt proceeding.
Thus, the underlying basis of the contempt award, which
is the only aspect of the contempt proceeding that could
be influenced by the results of In re ePlus, was not at
issue during the district court contempt proceedings, and
is not at issue in this appeal.
For these reasons, I believe that the majority incor-
rectly holds that Fresenius II requires that we to vacate
the compensatory contempt award in light of In re ePlus. 5
II
If the majority is correct that Fresenius II requires us
to vacate the compensatory contempt award, even though
Lawson failed to appeal the judgment finding claim 26 of
the ’683 patent valid and even though we did not vacate
the injunction or remand for open-ended proceedings,
then Fresenius II is even more concerning than I first
believed. I continue to believe that we wrongly decided
Fresenius II. As detailed in my dissent to the denial of
the petition for rehearing en banc, Fresenius II, 733 F.3d
at 1373-81 (O’Malley, J., dissenting from denial of petition
for rehearing en banc), the majority in Fresenius II erro-
neously analyzed both the finality of the issues on appeal
and the scope of our appellate remand instruction in
Fresenius I. These arguments apply with even greater
force and urgency here.
5 As noted, given the grounds for our decision here,
I express no opinion on the merits of Lawson’s objections
to the contempt findings.
EPLUS, INC. v. LAWSON SOFTWARE, INC. 13
The majority’s approach to finality will further dis-
place the critical role of district courts in patent infringe-
ment suits. According to the majority, a decision of the
PTO, an administrative agency under a coordinate branch
of government, can displace a judgment of an Article III
court. Validity of claim 26 became final when Lawson
failed to appeal the issue in ePlus I and our disposition
did not reopen the judgment for any further proceedings
regarding the validity of any of the claims-at-issue, nor
did it leave the remedy open in the sense Fresenius II said
Fresenius I did. By extending Fresenius II to these mate-
rially different circumstances, the majority assumes that
any determination made during an infringement case,
even if that specific issue is never appealed, can be nulli-
fied by the action of an administrative agency as long as
anything—even a fully discretionary “consideration” of an
intact remedy—remains available. The majority’s ap-
proach essentially allows an executive agency action to
render both the panel opinion in ePlus I and the district
court’s judgment regarding validity advisory opinions.
That result ignores the role of Article III courts in our
constitutional structure. See Hayburn’s Case, 2 U.S. (2
Dall.) 409, 411 (1792) (Chief Justice Jay and Justice
Cushing writing, in an opinion for the Circuit Court for
the District of New York, that the executive branch may
not “sit as a court of errors on the judicial acts or opin-
ions” of the federal courts); Qualcomm, 181 F.3d at 1379-
80 (discussing Plaut v. Spendthrift Farm, Inc., 514 U.S.
211, 240 (1995), and the protection granted to final judg-
ments of Article III courts from invalidation by coordinate
branch activity under the separation of powers doctrine).
The majority’s approach is contrary to the well-
established law of finality when the merits of an issue are
conclusively decided. Fresenius II, 733 F.3d at 1375-77
(O’Malley, J., dissenting from denial of petition for rehear-
ing en banc). And, that decision further deepens the
circuit split between our court’s approach to finality and
14 EPLUS, INC. v. LAWSON SOFTWARE, INC.
that of our sister circuits, as identified by Judge Newman
in her dissent in Fresenius II. 721 F.3d at 1355-59 (New-
man, J., dissenting). While it is true that a district court,
in its equitable powers, retains the ability to alter the
scope of an injunction prospectively, the district court
here lacked the power to vacate the merits underlying our
finding of infringement once the Supreme Court denied
certiorari after ePlus I. Even further, we lacked the
power in ePlus I to alter the jury’s finding regarding the
validity of claim 26 of the ’683 patent because Lawson did
not appeal that issue. The majority, nevertheless, breaks
away from well-established notions of finality to hold that
the jury’s final determination that claim 26 was not
invalid—a judgment justifying the injunction that led to
the compensatory civil contempt order—must be vacated
in light of a later determination by an executive agency.
The majority opinion also creates uncertainty for any
future compensatory contempt awards due to the unique
nature of injunctions, a point not contemplated in Frese-
nius II. District courts always retain the equitable power
to revise injunctions prospectively in light of changed
circumstance. Does this mean that, where an injunction
is entered, the “scope of relief remains to be determined”
in perpetuity? Maj. Op. at 16. Even if we had affirmed
all grounds in ePlus I and did not remand, Lawson could
still have filed a Rule 60(b) motion and argued that, as
long as the contempt proceedings were on appeal the
“scope of relief remains to be determined” under the
district court’s continuing power over the injunction.
Would we have to vacate every civil contempt award
where a later PTO decision invalidates the patent at issue
in those contempt proceedings? 6
6 Indeed, parties have begun reading Fresenius II
broadly, arguing that the policies and rationales underly-
ing that decision justify reopening even admittedly final
EPLUS, INC. v. LAWSON SOFTWARE, INC. 15
The majority decision today exacerbates the circuit
split between the Federal Circuit and the D.C. Circuit. As
noted, the Fresenius II majority distinguished Qualcomm
by arguing that the D.C. Circuit ordered “specific” relief
on remand, while our order for remand in Fresenius I was
not sufficiently specific. Fresenius II, 721 F.3d at 1346
n.12. Here, our remand order was significantly more
specific than in Fresenius II—only allowing the district
court to alter the scope of the injunction within its inher-
ent equitable powers, but not permitting the district court
to upset the final determinations on the merits or allow-
ing the district court to undertake further proceedings.
The majority here argues, however, that Fresenius II
applies, despite our more specific remand instruction in
ePlus I. It appears that no remand instruction would ever
be specific enough to protect the integrity of an Article III
court’s judgment as long as any “remand” occurs. That
view strains concepts of finality beyond all recognition.
Finally, as I noted in my dissent from denial of re-
hearing en banc in Fresenius II, 733 F.3d at 1380-81
(O’Malley, J., dissenting from denial of petition for rehear-
ing en banc), the view of finality we espouse in these two
cases is a view of finality which is wildly divergent from
that employed by this very court in other contexts. In
Robert Bosch, LLC v. Plyon Manufacturing Corp., 719
F.3d 1305 (Fed. Cir. 2013) (en banc), this court held, en
judgments to give effect to later PTO decisions. See, e.g.,
Versata Software, Inc. v. SAP Am., Inc., No. 2:07-cv-153-
RSP, 2014 WL 1600327, at *2 (E.D. Tex. Apr. 21, 2014)
(dismissing infringer’s argument that its Rule 60(b)(6)
motion to reopen a final judgment of validity should be
granted in light of a later Board determination of invalidi-
ty), aff’d sub nom. Versata Computer Indus. Solution v.
SAP Am., Inc., No. 14-1430, 2014 WL 2765230 (Fed. Cir.
June 18, 2014) (per curiam).
16 EPLUS, INC. v. LAWSON SOFTWARE, INC.
banc, that liability determinations in patent cases are
final for purposes of immediate appeal under 28 U.S.C. §
1292(c), even when a jury trial on damages and willful-
ness remains. See id. at 1316, 1319-20. There, we con-
cluded that damages and willfulness determinations are
sufficiently “ministerial” to constitute no more than an
“accounting” within the meaning of § 1292(c), thus render-
ing the liability determination a “final” judgment for
purposes of appeal.
Despite the very liberal view of finality we employed
in that context, we continue to declare that we must
employ the stingiest view of that concept when deciding at
what point parties may rely on litigated determinations of
their rights. This chasm between the sweeping rule laid
down both in Fresenius II and here and the one the court
established in Bosch is confusing. Notably, finality often
may be applied less strictly for preclusion purposes than
for purposes of appeal, not more so. See Miller Brewing
Co. v. Joseph Schlitz Brewing Co., 605 F.2d 990, 996 (7th
Cir. 1979) ( “To be ‘final’ for purposes of collateral estoppel
the decision need only be immune, as a practical matter,
to reversal or amendment. ‘Finality’ in the sense of 28
U.S.C. § 1291 is not required.”); see also Syverson v. Int’l
Bus. Mach. Corp., 472 F.3d 1072, 1079 (9th Cir. 2007);
Henglein v. Colt Indus. Operating Corp., 260 F.3d 201,
209–10 (3d Cir. 2001) (“[W]e commented that finality for
purposes of issue preclusion is a more ‘pliant’ concept
than it would be in other contexts.”); Swentek v. USAIR,
Inc., 830 F.2d 552, 561 (4th Cir. 1987), abrogated on other
grounds, Mikels v. City of Durham, N.C., 183 F.3d 323
(4th Cir. 1999) (“Finality for purposes of collateral estop-
pel is a flexible concept. . . . ”); Pye v. Dep’t of Transp. of
Georgia, 513 F.2d 290, 292 (5th Cir. 1975) (“To be final a
judgment does not have to dispose of all matters involved
in a proceeding.”); Zdanok v. Glidden Co., 327 F.2d 944,
955 (2d Cir. 1964). Thus, it would seem that our juris-
prudence should be the reverse of what it has become.
EPLUS, INC. v. LAWSON SOFTWARE, INC. 17
I see no way to reconcile the liberal view of finality for
appeal purposes we adopted in Bosch with today’s view
that finality almost never exists for preclusion purposes.
I dissent from the majority’s decision. I would proceed to
consider the merits of Lawson’s appeal from the trial
court’s civil contempt findings.