Federal Circuit: no jurisdiction over contempt appeal, but dissolution of injunction affirmedJune 14, 2007

In a decision Wednesday, the Federal Circuit dismissed an appeal of a contempt order for lack of jurisdiction and ruled that the district court did not abuse its discretion in dissolving a preliminary injunction.

The defendant was found in contempt of a preliminary injunction, but also found two new pieces of prior art that made out an invalidity case having substantial merit. The plaintiff failed to prove otherwise, so the district court dissolved the preliminary injunction. The Federal Circuit found no abuse of discretion, which put the defendant in an interesting position, having been found in contempt of a preliminary injunction that it subsequently convinced the district court to lift.

Interestingly, while the district court's determination that the defendant's invalidity case had substantial merit was based on obviousness, there was no mention of KSR in the opinion.

More details of Entegris, Inc. v. Pall Corp. after the jump.

The plaintiff, Mykrolis (now known as Entegris) competes with the defendant, Pall, in filtration systems for semiconductor manufacturing. In 2003, Mykrolis sued Pall for infringement of two patents, asserting that Pall's PhotoKleen™ EZD-2 filter assembly product infringed these patents. Mykrolis also moved for a preliminary injunction.

After an evidentiary and claim construction hearing, the district court issued a preliminary injunction enjoining Pall from selling its EZD-2 filter or any colorable imitation thereof. In response, Pall began selling a modified assembly, the EZD-3. Mykrolis asked that Pall be held in contempt for violating the preliminary injunction because of its sales of the EZD-3 assembly and requested damages. Before the court could issue a ruling on the contempt motion, Pall once again modified its accused products and created the "slotless" EZD-3 assembly, and ceased distributing the original slotted EZD-3 assembly. Pall also moved to dissolve the preliminary injunction due to two newly-discovered prior art references, arguing that a substantial question regarding the validity of the asserted patent claims was raised.

The district court found Pall in contempt of the preliminary injunction for the sales of the slotted EZD-3 assembly and assessed a $210,000 fine against Pall for Mykrolis' attorneys' fees and costs in connection with the contempt motion, but also granted Pall's motion to dissolve the preliminary injunction in light of the new prior art references, stating that Pall's invalidity defenses no longer lacked substantial merit. Both parties appealed, Pall appealing the finding of contempt, and Mykrolis the dissolution of the preliminary injunction.

The Federal Circuit spent the bulk of the decision addressing whether it had subject matter jurisdiction over Pall's appeal of the contempt order, ultimately concluding that it did not. First, the court held the appeal was not a proper interlocutory appeal under 28 U.S.C. § 1292 because the contempt order did not fall into any of the enumerated categories in § 1292(a) governing interlocutory appeals of injunction rulings. The order did not, either on its face or effectively, modify or continue an injunction. The district court clearly stated that it was interpreting, not modifying, the original preliminary injunction when it found Pall in contempt. Additionally, because there was no change in the injunction's duration, the Federal Circuit found the injunction was not "continued," adopting the reasoning of the First and Ninth Circuits on the issue.

The court also rejected Pall's arguments that the order was a final judgment because of the imposition of the fine, and that there was pendent or ancillary jurisdiction to hear the appeal. As a result, Pall's portion of the appeal was dismissed for lack of jurisdiction.

Turning to the merits of Mykrolis' appeal, the Federal Circuit held Mykrolis had not shown the district court abused its discretion in dissolving the preliminary injunction. Specifically, the court found the district court's preliminary factual finding regarding the content of the new prior art references as applied to elements of the asserted claims and the district court's determination that the new references were analogous prior art were not clearly erroneous. Thus, the court concluded that Mykrolis had not shown that Pall's invalidity defenses lacked substantial merit, and the district court did not abuse its discretion in dissolving the preliminary injunction.

To read the full decision in Entegris, Inc. v. Pall Corp., click here.

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