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IP Litigation

Conduct not barred by consent order is not contemptuous

March 26, 2014

IP Litigation

Conduct not barred by consent order is not contemptuous

March 26, 2014

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Fed. Cir. reverses contempt finding for purported violation of 2001 consent decree, and vacates accompanying injunction.  The court had jurisdiction (28 USC 1292(c)(1) and 1292(a)(1)) because the district court modified its 2001 injunction by over-reading the consent decree.  On the merits, Hauge’s recent acquisition of a patent on, and introduction of a product for, reverse osmosis pressure exchangers did not violate his prior agreement to transfer all his 2001 IP in the area to his former employer ERI because his non-compete had expired, there was no assertion that his current actions violated any pre-2001 patents, and a state court jury had found that activity like his current activity did not misappropriate any trade secrets (he had recently hired some ERI employees to get his product made).

Energy Recovery, Inc. v. Hauge, ___ F.3d ____ (Fed. Cir. Mar. 20, 2014) (Rader, Reyna, WALLACH) (E.D. Va.: Jackson) (1 of 5 stars)

The district court’s main error was looking too generally at Hauge’s alleged use of the “same technology” as ERI, and violation of the agreements “purpose.”  But ERI had not identified particular IP rights that were violated, and according to the Supreme Court, consent decrees do not have purposes, but instead must be interpreted within their four corners.  There could also be no contempt or application of the Panduit “colorable differences” test for contempt, because the district court never enjoined Hauge from patent infringement, or otherwise identified a court command he had violated.  Slip. Op. at 8.  The injunction fell for those reasons, and was over-broad in any event.

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