Like any gambling, betting on an appeal can be risky.
Allflex USA v. Avid Identification is an appeal from an declaratory-judgment action for unenforceability and non-infringement for six different patents related to RFID tags for pets. The district court made three rulings that Avid appealed: (1) that Avid “should be sanctioned” for not disclosing pending reexamination proceedings; (2) granting summary judgment of non-infringement, and (3) granting partial summary judgment after concluding that Avid’s failure to fully disclose prior public use and offers to sell one of its products was material to the inequitable conduct.
Then the parties settled—sort of. The Federal Circuit explains:
By its terms, the agreement resolved all claims and issues between the parties other than those raised in this appeal. As part of the settlement agreement, Avid agreed to pay $6.55 million to Allflex. The parties further agreed that Avid would be free to appeal the three issues referred to above—[non-infringement, materiality of prior public use and offers, and the “should be sanctioned” ruling.] Avid also reserved the right to appeal the district court’s claim constructions and any other “underlying orders, objections, opinions, and rulings.” For its part, Allflex retained the right to contest any appeal on the merits, but the settlement explicitly barred Allflex from disputing the existence of a live case or controversy. The agreement further provided that, “[i]n the event AVID is successful in overturning any of such findings,” Allflex would pay Avid $50,000, i.e., the settlement amount to be paid to Avid would be reduced from $6.55 million to $6.5 million.
After the settlement, the district court entered a stipulated order, which dismissed the action with prejudice “with the exception of the following findings, which are final and ripe for appellate review.” The district court listed non-infringement, materiality, and sanctions as the issues ready for review.
Avid appealed and filed its opening brief. Allflex did not file a brief. Read the rest of this entry
Sometimes a party who is sued will voluntarily cease its objectionable conduct to end the lawsuit. That cessation, however, does not automatically moot the other party’s claim. City of Mesquite v. Aladdin’s Castle, Inc., 455 U.S. 283 (1982). The “voluntary cessation doctrine” is, effectively, a presumption against mootness in these cases. The doctrine holds that the case is not moot unless the wrongful conduct “could not reasonably be expected to recur.” Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167 (2000).
The Supreme Court held that Nike met its burden to show that its objectionable conduct (i.e. enforcing an allegedly invalid trademark) would not recur by issuing a broad covenant not to sue. Nike’s covenant is now a Court-approved model for future defendants:
[Nike] unconditionally and irrevocably covenants to refrain from making any claim(s) or demand(s) . . . against Already or any of its . . . related business entities . . . [including] distributors . . . and employees of such entities and all customers . . . on account of any possible cause of action based on or involving trademark infringement, unfair competition, or dilution, under state or federal law . . . relating to the NIKE Mark based on the appearance of any of Already’s current and/or previous footwear product designs, and any colorable imitations thereof, regardless of whether that footwear is produced . . . or otherwise used in commerce before or after the Effective Date of this Covenant.
Already, LLC v. Nike Inc., 586 U.S. __, No. 11-982, 2013 WL 85300, *6.
IntellectualIP previously wrote about the cert grant.