IP News

On May 14, 2010 the Federal Circuit granted Defendants-Appellants EchoStar Corporation, et al.'s petition for rehearing en banc, vacated its March 4, 2010 opinion affirming a district court's decision finding EchoStar in contempt of the court's permanent injunction order, 597 F.3d 1247 (Fed. Cir. 2010), and requested that the parties file new briefs addressing the following issues:

1. Following a finding of infringement by an accused device at trial, under what circumstances is it proper for a district court to determine infringement by a newly accused device through contempt proceedings rather than through new infringement proceedings? What burden of proof is required to establish that a contempt proceeding is proper?
2. How does “fair ground of doubt as to the wrongfulness of the defendant's conduct” compare with the “more than colorable differences” or “substantial open issues of infringement” tests in evaluating the newly accused devices against the adjudged infringing device?
3. Where a contempt proceeding is proper, (1) what burden of proof is on the patentee to show that the newly accused device infringes and (2) what weight should be given to the infringer's efforts to design around the patent and its reasonable and good faith belief of noninfringement by the new device, for a finding of contempt?
4. Is it proper for a district court to hold an enjoined party in contempt where there is a substantial question as to whether the injunction is ambiguous in scope?

The case originated in 2004 when Tivo sued EchoStar in the U.S. District Court for the Easter District of Texas, alleging that EchoStar's DVR receivers infringed U.S. Patent No. 6,233,389. Following a jury finding of infringement, the district court entered judgment on the verdict and issued a permanent injunction against EchoStar ordering it to: 1) stop making, using, offering to sell, and selling the receivers that had been found to infringe by the jury, and 2) disable the DVR functionality in existing receivers that had not already been placed with subscribers. On appeal, the Federal Circuit affirmed the liability findings with respect to some of the claims and noted that the permanent injunction would take effect following the court's decision. Tivo then moved the district court to find EchoStar in contempt of the court's permanent injunction based on its sale of redesigned DVR receivers. After a series of hearings, the district court held EchoStar in contempt and imposed sanctions of nearly $90 million, rejecting EchoStar's argument that the redesigned receivers were more than colorably different from the adjudged infringing devices.

The Federal Circuit panel affirmed the contempt judgment on appeal. The court held that the district court did not abuse its discretion in finding that the modified products raised no substantial open questions of infringement. Despite the fact that EchoStar undertook a significant redesign effort, the court reasoned that the redesign impacted only a single claim limitation and that there was another unmodified software feature that EchoStar had admitted at trial infringed that limitation. The court further rejected EchoStar's good faith argument ' that it had paid 15 engineers to spend 8,000 hours on the redesign ' reasoning that a lack of intent alone cannot save an infringer from a finding of contempt.