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Federal Circuit Vacates District Court’s Judgment Of Patent Infringement Following Affirmance Of Invalidity At The PTAB
05/14/2024On May 2, 2024, the United States Court of Appeals for the Federal Circuit (“CAFC”) vacated an amended final judgment of patent infringement entered by the U.S. District Court for the Eastern District of Texas against NetScout Systems, Inc. Packet Intelligence LLC v. NetScout Systems, Inc., No. 2022-2064. The CAFC’s decision was based on its affirmance of parallel Patent Trial and Appeal Board (“PTAB”) decisions finding the asserted patent claims unpatentable as obvious.
This case was previously before the CAFC in 2020, where it had affirmed the district court’s judgment of willful infringement but reversed the award of pre-suit damages and vacated any enhancement thereof. On remand, the district court entered an amended judgment eliminating pre-suit damages, reducing the enhanced damages from $2.8 million to $1.1 million, and resetting the ongoing royalty rate to 1.355%.
In the interim, third parties had requested inter partes review (“IPR”) of the asserted patent claims before the PTAB. The PTAB found all of the asserted claims unpatentable as obvious, and Packet Intelligence appealed those decisions to the CAFC in parallel with NetScout’s appeal of the amended judgment.
The CAFC panel (Judges Lourie, Hughes, and Stark) applied the precedential decision from Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330 (Fed. Cir. 2013), in which the court held that a judgment of patent infringement is not sufficiently final to prevent the application of an intervening determination of invalidity, unless the judgment “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Here, the CAFC found that its prior mandate in 2020 had remanded to the district court for substantive modifications to the judgment, including adjustments to damages calculations. Thus, the district court judgment was not final and remained vulnerable to subsequent unpatentability rulings, even though the CAFC had previously affirmed the finding of infringement.
Quoting from Fresenius, the CAFC reiterated that, “even though there had been an appellate decision entirely resolving the patent infringement claims, because there had not yet been a final judgment on the [remaining issues], the … intervening decision [on patentability] was binding as to the infringement claims.”
Accordingly, the CAFC vacated the amended judgment and remanded with instructions to dismiss the case following the CAFC’s same-day affirmance of the PTAB’s unpatentability findings. The decision serves as another reminder that pending district court cases can be impacted by intervening unpatentability determinations, even after a judgment of infringement has been initially affirmed on appeal.
