Show Me the Money!

Show Me The MoneyActiveVideo Networks, Inc. v. Verizon Communications, Inc., Nos. 2011-1538, -1567, 2012-1129, -1201 (Fed. Cir. Apr. 2, 2012) (Judges Bryson, Mayer, and Linn) (per curiam) (nonprecedential order)

If you’re a Verizon FiOS® customer, pay attention. You might have heard about Verizon’s huge patent lawsuit with ActiveVideo, which resulted in Verizon having to pay $115 million in damages after a jury decided Verizon infringed ActiveVideo’s patents. But ActiveVideo wanted more—it asked the court to bar Verizon from making, selling, or using the infringing system. The court gave Verizon 6 months to figure out a new system that didn’t infringe. During that 6-month period (which started in December), Verizon has to pay ActiveVideo a royalty of $2.74 per subscriber, which adds up to about $11 million per month.

This appeal involves Verizon’s request for a lower royalty rate. The district court rejected Verizon’s request. Verizon then asked the district court to stay (i.e., suspend) the royalty payments until the appeal was over if Verizon posted a bond.  The district court said no. Verizon appealed this denial.

The question addressed in this Federal Circuit order is whether the royalty payments involve money. This seems obvious, since an $11 million monthly payment requirement certainly looks, sounds, and smells like money. Ordinarily, under Federal Rule 62(d), a party has a right to hold off on paying money damages if it pays a “supersedeas bond.” But the tricky part is that here, the royalty payments were tied to the injunction. Money damages and injunctions are two different forms of relief—money damages require a payment, and injunctions require a party to do something (or, in patent cases, stop doing something). According to the district court, the royalty payments weren’t actually money damages, so Verizon wasn’t entitled to stay payments by posting a bond.

The Federal Circuit disagreed. The court said that money is money, whether it’s part of the damages award or tied to the injunction. The purpose of a bond is to ensure that the party who won at the trial court will get paid if the appealing party loses its appeal. That result doesn’t change even though the royalty payments are technically a condition of the injunction.

I won’t go into the history of “law” versus “equity” here, but this is an interesting order to consider in light of the changing standards for injunctive relief for patent holders after the Supreme Court’s decision in eBay. The Federal Circuit’s Bosch case recently clarified that there’s no presumption of irreparable harm to the patent holder (a major factor in the injunction inquiry) once a patent is found infringed. This order might be part of the shift away from automatic and immediate injunctive relief for patent holders.

Regardless, Verizon FiOS customers will be glad to know that their video-on-demand services will continue uninterrupted at least until May 23, when the 6-month hiatus is up.

You Can’t Always Get What You Want (Once You’ve Gotten What You Need)

Allergan, Inc. v. Sandoz Inc., Nos. 2011-1619, -1620, -1635, 1639 (Fed. Cir. Apr. 4, 2012) (Judges Bryson, Mayer, and Linn) (nonprecedential order)

This appeal comes from a Hatch-Waxman case involving a generic version of Allergan’s Combigan® drug, which is used treat glaucoma. Allergan claimed that Sandoz’s generic drug would infringe 4 claims of Allergan’s patents. The district court said that Sandoz’s product didn’t infringe claims 1-3. But the district court also said that Sandoz’s product infringed claim 4 and that claim wasn’t invalid, so it barred Sandoz from marketing its generic version of Combigan®. Sandoz appealed that ruling.

Even though Allergan got the result it wanted, it filed a cross-appeal arguing that the district court should have addressed whether claims 1-3 (the claims that weren’t infringed) were valid. The Federal Circuit said Allergan’s cross-appeal wasn’t allowed. A party may only file a cross-appeal when it “seeks to enlarge its own rights under the judgment or to lessen the rights of its adversary under the judgment.” Allergan had already gotten an injunction, which is the best result it could get. So, the court said, there’s nothing else Allergan could get from the cross-appeal. Under these circumstances, the Federal Circuit concluded that a cross-appeal would be improper.

That’s Not Our Department

Select Export Corp. v. Jack Richeson & Co., No. 2012-1122 (Fed. Cir. Apr. 2, 2012) (Judges Bryson, Mayer, and Linn) (nonprecedential order)

This order is a great example of how confusing the Federal Circuit’s jurisdiction can be for parties that don’t practice there frequently. Select Export appealed a summary judgment order (and a number of other orders) concerning their federal and state claims for trademark infringement and dilution to the Federal Circuit. Jack Richeson asked the Federal Circuit to dismiss the appeal because, it argued, Select Export gave up its right to appeal by agreeing to settle the case. Select Export responded that it didn’t actually agree to settle. Select Export also asked the court to transfer the appeal to the 11th Circuit.

The Federal Circuit transferred the appeal because it didn’t have jurisdiction over the case. Generally speaking, the Federal Circuit doesn’t have jurisdiction over trademark infringement claims. The court only has jurisdiction over trademark cases that involve questions of whether a mark can get a federal registration. Since this case doesn’t involve trademark registrability issues, the Federal Circuit couldn’t hear it.

It’s interesting to note that Jack Richeson didn’t ask to dismiss or transfer the appeal based on jurisdiction—Select Export, who brought the case to the Federal Circuit in the first place, brought up the jurisdiction issue. But even if neither party mentioned the jurisdiction issue, the Federal Circuit still wouldn’t have the authority to hear the case. Even if you’re pretty sure Federal Circuit can hear your appeal, it’s a good idea to double check before you file your appeal.

Photo credit: epSos.de

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