Show Cause or Show Time: Contempt Standard for Patent Infringement Relaxed

July 11, 2012, 3:10 PM

In the face of an award of an injunction, those accused of infringing a patent often redesign their product to avoid infringement. How much change is enough and how much change will land you in hot water with the Court? Traditionally, the Court looked at the changed product to ascertain if it was colorably different than the product found to infringe the patent. If the issue raised a substantial question, the patent holder had to institute a whole new lawsuit; if the change was insubstantial, the Court could summarily hold the adjudged infringer in contempt. The rigid standard required the moving party to prove that the difference was insubstantial and presented a difficult hurdle to overcome when enforcing a patent even after winning an expensive lawsuit. Recently, that has all changed.

In Tivo v. Echostar, 646 F.3d 869 (Fed. Cir. 2011) (en banc), the Federal Circuit outlined the legal standard governing contempt proceedings when an adjudicated infringer claims that it has redesigned an infringing product. The Federal Circuit collapsed the traditional two-part inquiry, eliminating the separate determination whether contempt proceedings were properly initiated. Id. at 881. That question, the Federal Circuit held, is left to the broad discretion of the trial court to be answered based on the facts presented. Id. The Federal Circuit explained that a district court may hold contempt proceedings upon receipt of a detailed accusation from the injured party setting forth the alleged facts constituting the contempt. Id.

In Tivo, the Federal Circuit rejected the infringers argument that contempt is improper where the defendant engaged in diligent, good faith efforts to comply with the injunction and had an objectively reasonable basis to believe that it was in compliance. Id. at 880 (internal quotations omitted). The Court explained, [w]e have made it clear that, under Supreme Court precedent, a lack of intent to violate an injunction alone cannot save an infringer from a finding of contempt Id. The Federal Circuit further explained that once contempt proceedings are initiated, the party seeking to enforce the injunction must prove both that the newly accused product is not more than colorably different from the product found to infringe and that the newly accused product actually infringes. Id. at 882. In conducting this analysis, the Federal Circuit instructed courts to focus initially on the differences between the features relied upon to establish infringement and the modified features of the newly accused products, or put differently, those elements of the adjudged infringing products that the patentee previously contended, and proved, satisfy specific limitations of the asserted claims. Id.

To determine whether a relevant feature in a redesigned product is more than colorably different from a corresponding feature in the infringing product, courts should first determine whether the feature has been modified, or removed. Id. If the feature was modified, the court must then make an inquiry into whether that modification is significant. Id. Only if the district court concludes that differences between the old and new elements are significant can the newly accused product be deemed more than colorably different from the adjudged infringing one. Id. Thus, 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 defendants conduct. Id. (quoting Cal. Artificial Stone Paving Co. v. Molitor, 113 U.S. 609, 618 (1885)). If there are no colorable differences, the district court must next determine whether the redesigned product infringes the relevant claims. Id. at 883. The Tivo standard allows parties to initiate contempt proceedings with more ease while, at its core, maintaining the high standard of proof requisite with a contempt proceeding.

Stephen E. Noona is the head of Kaufman & Canoles Trial Section and Co-chair of its Intellectual Property Law and Franchising Practice Group. He has been counsel in over ninety (90) patent cases in the Eastern District, is Fellow in the American College of Trial Lawyers and has appeared before the judges in all four Divisions of the Eastern District on patent and intellectual property matters.Stephen E. Noona