Intellectual Property > IP Newsflash > Injunction Remanded Against Dismissed Party for Further Fact-Finding
15 Dec '16

On December 6, 2016, the Federal Circuit remanded, in part, a district court’s grant of a permanent injunction in order to develop additional facts relating to the appropriate reach and scope of the injunction. Asetek Danmark A/S v. CMI USA Inc. (16-1026).

In 2013, Asetek sued Cooler Master USA, Inc. (CMI) and Cooler Master Co., Inc. (“Cooler Master”), alleging that three products infringed two of Asetek’s patents. Asetek’s patents claimed systems and methods for cooling computers. Prior to trial, Cooler Master was dismissed from the case by stipulation, with prejudice. Asetek, however, prevailed in its infringement suit against CMI, the exclusive U.S. distributor for Cooler Master, a Taiwanese supplier of computer components. Despite Cooler Master’s dismissal from the case with prejudice, Asetek obtained an injunction against both CMI and Cooler Master. Cooler Master intervened and argued that the injunction was overbroad by reaching conduct beyond that which “abets a new violation by CMI, the only party adjudicated liable for infringement.” Asetek Danmark, 16-1026, Opinion at 18 (Fed. Cir. Dec. 6, 2016).

On appeal, CMI and Cooler Master challenged the injunction on two grounds. First, they argued that the district court was precluded from subjecting Cooler Master to the injunction, since it had been dismissed with prejudice from the case, and, therefore, it was not found liable for infringement. The Federal Circuit rejected this argument, holding that there was no claim preclusion and that Cooler Master could be enjoined because the claim covered by the dismissal (Cooler Master’s predismissal conduct) was not the same as the claim covered by the injunction (Cooler Master’s postdismissal conduct).

Second, CMI and Cooler Master argued that the injunction was too broad because it reached Cooler Master’s independent conduct after it had left the case. There are, however, two instances in which an injunction can reach the conduct of a party not adjudicated to be liable in the underlying case: when the nonliable party aids the liable party in committing the infringement and when the nonliable party is legally identified with the liable party. The latter, which was the issue in the present case, may include circumstances in which the non-liable party is in privity with the liable party, the nonliable party is the successor of the liable party or the liable party’s litigation of the case is sufficiently controlled by the non-liable party.

In remanding the case to the district court, the Federal Circuit reasoned that, under Federal Civil Procedure Rule 65(d), the standards for reaching conduct that was not found to be liable for the underlying infringement are highly fact-specific. The Federal Circuit instructed the district court to consider the injunction against Cooler Master to the extent that “the injunction reaches conduct by Cooler Master that goes beyond abetting a new violation by CMI.” Asetek Danmark, 16-1026, Opinion at 2 (Fed. Cir. Dec. 6, 2016)

Chief Judge Prost, dissenting, argued that the injunction should have been vacated insofar as it improperly reaches Cooler Master, which was not found to infringe Asetek’s patents.

Asetek Danmark A/S v. CMI USA Inc., 16-1026 (Fed. Cir. Dec. 6, 2016)