United States: There Is No Jurisdiction Over An Appeal From A Contempt Order Without Modification Or Continuation Of The Injunction

In Arlington Industries, Inc. v. Bridgeport Fittings, Inc., No. 13-1357 (Fed. Cir. July 17, 2014), the Federal Circuit held that it did not have jurisdiction to hear an appeal where the contempt order was not a final judgment or otherwise appealable.

Arlington Industries, Inc. ("Arlington") and Bridgeport Fittings, Inc. ("Bridgeport") compete in the electrical connectors market.  In March 2001, Arlington sued Bridgeport for infringement of two of its patents.  In January 2002, Arlington filed the action-at-issue on appeal, alleging infringement of a third patent, U.S. Patent No. 6,335,488 ("the '488 patent"), by certain Bridgeport connectors ("Old Connectors").  The parties settled in April 2004, with Bridgeport agreeing to be "permanently enjoined from directly or indirectly making, using, selling, offering for sale or importing . . . [the Old Connectors] or any colorable imitations of [the Old Connectors]" ("the 2004 Injunction").  Slip op. at 3 (citation omitted).

In 2005, Bridgeport began selling redesigned connectors ("New Connectors").  In 2012, Arlington filed a motion for contempt of the 2004 Injunction based on these sales.  The district court found that the New Connectors infringed the '488 patent, and issued a contempt order that expressly enjoined sale of the New Connectors for the life of that patent ("the 2013 Injunction"), but did not enter sanctions at that time.  Bridgeport appealed on multiple grounds.

"The focus of the clarification-or-modification analysis is whether there were changes to the original injunction that 'actually altered the legal relationship between the parties.'"  Slip op. at 7 (quoting Aevoe Corp. v. AE Tech Co., 727 F.3d 1375, 1382 (Fed. Cir. 2013)).

The Federal Circuit first agreed that it can have jurisdiction over interlocutory injunction orders of district courts under 28 U.S.C. § 1292(c)(1), but only if the injunction has been modified.  In order to determine if the Court has jurisdiction, it must "determine whether the [2013 Injunction] constitutes a modification, or is simply an interpretation or clarification."  Id. at 5-6.  The Court stated, "The focus of the clarification-or-modification analysis is whether there were changes to the original injunction that 'actually altered the legal relationship between the parties.'"  Id. at 7 (quoting Aevoe Corp. v. AE Tech Co., 727 F.3d 1375, 1382 (Fed. Cir. 2013)).

The Court held that the 2013 Injunction was a clarification, not a modification, of the 2004 Injunction.  The Court explained that both injunctions "are directed to the same parties, apply to the same activities, and are in force for the same time period."  Id. at 8.  The Court explained that even though the exact wording identifying the products is different in both injunctions, the injunctions also apply to the same products.  As the Court reasoned, the 2004 Injunction included any colorable imitations of the Old Connectors, and the district court explicitly found the New Connectors were indeed colorable imitations of the Old Connectors; thus, the identification of the new products in the 2013 Injunction was just a clarification of the existing protection of the 2004 Injunction.  As such, the Court stated that the legal relationship between the parties was not altered.

The Court rejected Bridgeport's argument that the 2013 Injunction modified the parties' relationship by broadening the scope of the 2004 Injunction.  Bridgeport argued that the 2013 Injunction enjoined it from selling the New Connectors for any use, not just uses infringing the claimed method.  The Court agreed, but pointed out that this was in fact within the scope of the original injunction.  The Court explained that the 2004 Injunction prevented the sale of specific products that infringe the method of claim 1 of the '488 patent, and was not restricted only to sales where the product was used in an infringing manner.  Thus, the Court concluded that the 2013 Injunction enjoined the same scope of behavior.

The Court noted that the construction of claim terms for purposes of the 2013 Injunction did not create a modification of the parties' relationship either.  The Court stated that, although the claim construction was necessary for the contempt order, the actual meaning of those claim terms did not change between the 2004 Injunction and the 2013 Injunction.  The Court explained that "[i]n expressly providing the claim constructions, the district court simply interpreted or clarified the meaning of those claim terms," regardless of whether the constructions were expressly provided in 2004.  Id. at 9.

The Court next declined to extend the exception to the final judgment rule, provided in 28 U.S.C. § 1292(c)(2), to contempt orders.  The Court acknowledged that § 1292(c)(2) allows for appeal of patent infringement actions that are "final except for an accounting" to the Federal Circuit, but noted that, "[a]s an exception to the final judgment rule, § 1292(c)(2) is to be interpreted narrowly."  Id. at 11.  Since "contempt proceedings and patent infringement cases are not co-extensive," the Court ruled that the exception could not apply.  Id. at 12.

Finally, the Court noted that a civil contempt order is not final and appealable until sanctions have been imposed.  The Court noted that "[h]ere, the district court has imposed sanctions, but only well after the record was fixed for appeal."  Id.  The Court explained it "normally cannot consider documents outside of the record on appeal," and that even if it could, Bridgeport's notices of appeal after the entry of sanctions also suggest the earlier appeal was premature.  Id. at 13. 

Accordingly, the Federal Circuit dismissed the appeal, finding that it did not have jurisdiction to hear an appeal of a contempt order where the contempt order constituted a clarification, and not a modification, of an earlier injunction, and where the contempt order was not a final judgment since sanctions had not yet been entered at the time of the appeal.

This article previously appeared in Last Month at the Federal Circuit, August, 2014.

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