Opinion ID: 215085
Heading Depth: 2
Heading Rank: 1

Heading: .Contempt for Violation of the Disablement Provision

Text: We consider next EchoStar's arguments that the injunction is unenforceable either because it is overly broad or it is too vague to provide fair notice of what it actually prohibits. We find both arguments unpersuasive.
EchoStar argues that the only natural reading of the phrase disable the DVR functionality ... in ... the Infringing Products is that EchoStar was required to disable only products that maintained the infringing functions, and not products that did not continue to infringe. Presuming that its redesigned software was noninfringing, EchoStar argues that it had no obligation to disable the DVR component of the new software. In light of the district court's later reading of the provision as barring all DVR functionality in all of the enumerated receiver models regardless of later modifications to the software, EchoStar argues that the express language failed to provide EchoStar with even the slightest hint that the district court was thinking about non-infringing functionality that had yet to be invented. In the absence of fair notice of the district court's interpretation of the provision, EchoStar, citing the Supreme Court's decision in Granny Goose Foods, Inc. v. Teamsters , argues that it cannot be held in contempt of an order that was not sufficiently specific and definite. 415 U.S. 423, 445, 94 S.Ct. 1113, 39 L.Ed.2d 435 (1974). We reject EchoStar's argument that vagueness can operate as a defense to the district court's holding of contempt here. Under the Federal Rules of Civil Procedure, [e]very order granting an injunction... shall be specific in terms [and] shall describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained. Fed.R.Civ.P. 65(d). Rule 65(d) was designed to prevent uncertainty and confusion on the part of those faced with injunctive orders, and to avoid the possible founding of a contempt citation on a decree too vague to be understood. Schmidt v. Lessard, 414 U.S. 473, 476, 94 S.Ct. 713, 38 L.Ed.2d 661 (1974). Thus, the judicial contempt power is a potent weapon that cannot be founded upon a decree too vague to be understood. Int'l Longshoremen's Ass'n v. Phila. Marine Trade Ass'n, 389 U.S. 64, 76, 88 S.Ct. 201, 19 L.Ed.2d 236 (1967). On the other hand, where a party faced with an injunction perceives an ambiguity in the injunction, it cannot unilaterally decide to proceed in the face of the injunction and make an after-the-fact contention that it is unduly vague. McComb, 336 U.S. at 192, 69 S.Ct. 497. EchoStar's vagueness defense rests on its argument that the term Infringing Products in the district court's injunction is ambiguous, thereby rendering the injunction vague and unenforceable. The disablement provision deals separately with the receivers already placed in EchoStar's customers' homes and new placements that are yet to reach the customer. EchoStar notes that while the first directive of the disablement provision calls for EchoStar to disable the DVR functionality of the Infringing Products that have been placed with an end user or subscriber, the sentence following it requires that [t]he DVR functionality, storage to and playback from a hard disk drive shall not be enabled in any new placements of the Infringing Products. EchoStar argues that this second sentence, because it references new placements, requires that the term Infringing Products be read as referring only to infringing functionality. After all, EchoStar continues, one does not disable a function that has yet to be devised or installed. As for the court's definition of the term DVR functionality, EchoStar argues that the definition all storage to and playback from refers merely to the entire infringing function. Moreover, EchoStar argues that a provision that requires such detailed sentence diagramming to arrive at the district court's reading of the order cannot be sufficiently specific and definite to satisfy the contempt standard. If the district court wanted to prevent EchoStar from deploying modified DVR functionality on its receivers, EchoStar suggests, it should have specifically done so. We do not agree with EchoStar that the stretched reading of the disablement provision that it proposes allows it to collaterally attack the district court's injunction at this stage of the proceedings. We agree that in certain circumstances vagueness can operate as a defense to contempt. Granny Goose, 415 U.S. at 445, 94 S.Ct. 1113. In a case such as this, however, where a party has bypassed opportunities to present its asserted vagueness claim on appeal or through a motion to clarify or modify the injunction, the party cannot disregard the injunction and then object to being held in contempt when the courts conclude that the injunction covered the party's conduct. McComb, 336 U.S. at 192, 69 S.Ct. 497 (Respondents could have petitioned the District Court for a modification, clarification or construction of the order.... They undertook to make their own determination of what the decree meant. They knew they acted at their peril.); see also Chaganti & Assocs., P.C. v. Nowotny, 470 F.3d 1215, 1224 n. 2 (8th Cir.2006); Szabo v. U.S. Marine Corp., 819 F.2d 714, 718 (7th Cir.1987) (Not having appealed from the grant of the injunction, U.S. Marine cannot argue that it is too vague to be enforced....); Polo Fashions, Inc. v. Stock Buyers Int'l, Inc., 760 F.2d 698, 700 (6th Cir.1985) (The defendants acted at their own risk by failing to seek the court's interpretation of the injunction if they had any good faith doubt as to its meaning or by failing to have it set aside or amended if they thought it was defective.); Perfect Fit Indus., Inc. v. Acme Quilting Co., Inc., 646 F.2d 800, 808 (2d Cir.1981) ([A] party to an action is not permitted to maintain a studied ignorance of the terms of a decree in order to postpone compliance and preclude a finding of contempt. The party and his counsel have a duty to ... ascertain the terms of any order entered against the party). EchoStar's reading of the disablement provision is contrary to the most natural reading of the provision, as it would necessarily render the injunction vague on its face. The injunction clearly defines the term Infringing Products in terms of eight actual receiver models, specifically listing each model number. [5] If the term Infringing Products in the disablement provision were to refer merely to products containing infringing functionality, the court's definition of the term, immediately preceding the disablement provision, as a list of eight receiver models would directly contradict EchoStar's understanding of the term. If that were the case and the injunction were in fact facially vague and susceptible of two alternative readings, the burden was clearly on EchoStar to seek clarification or modification from the district court. McComb, 336 U.S. at 192, 69 S.Ct. 497. EchoStar did neither. Nor did it ever disable any DVR functionality in even a single receiver that had been found infringing by the jury. It unilaterally decided that downloading modified software to its infringing receivers was sufficient to comply with the district court's injunction. In McComb, employers faced with an order barring them from violating any provision of the Fair Labor Standards Act relating to minimum wage, overtime, or record keeping argued that, because they had changed their methods of computing hours worked, and because the modified practices were not specifically enjoined, they were immune from contempt proceedings. The Court disagreed, roundly condemning a rule that would give tremendous impetus to the program of experimentation with disobedience of the law. Id. The Court stated that a rule requiring the conduct at issue in contempt to have been specifically enjoined would prevent accountability for persistent contumacy. Id. EchoStar's position here, in essence, arguing that it was not specifically enjoined from downloading modified DVR software in place of the infringing software, is not very different, and we find the Supreme Court's decision in McComb binding. See also Walker v. Birmingham, 388 U.S. 307, 316-17, 320, 87 S.Ct. 1824, 18 L.Ed.2d 1210 (1967) (refusing to permit a collateral challenge to the validity of an injunction despite the fact that the breadth and vagueness of the injunction itself would ... unquestionably be subject to substantial constitutional question,  and emphasizing that the way to raise that question was to apply to the ... courts to have the injunction modified or dissolved.) (emphasis added). Fifth Circuit law, applicable here, similarly places the burden on the party faced with the injunction. Gulf King Shrimp Co. v. Wirtz, 407 F.2d 508, 517 (5th Cir.1969) (If for some reason Gulf King had doubts about the meaning of any part of the injunction, it could have sought district court clarification.). The cases cited by EchoStar in its argument that it is entitled to raise the vagueness defense at this time are inapposite. The Supreme Court's decision in Granny Goose involved an ex parte temporary restraining order, such that, unlike EchoStar, the defendants were not involved in the proceedings leading to the issuance of the order. Moreover, the Supreme Court considered only the duration of the order, not whether any terms in the order were so vague as to make it unenforceable. Granny Goose, 415 U.S. at 445, 94 S.Ct. 1113 (There being no order to violate, the District Court erred in holding the Union in contempt.). Thus, we find Granny Goose inapplicable to the factual circumstances presented here. In International Longshoremen, the record of the lower court proceedings made it abundantly clear that the alleged contemnor did not understand the terms of the order, repeatedly telling the district court, I don't know what this order means, but receiving no clarification. 389 U.S. at 70-71, 88 S.Ct. 201. Indeed, the order there was simply a blanket statement requiring the union to to comply with and to abide by the said [arbitrator's] Award, but the award contained only an abstract conclusion of law, not an operative command capable of `enforcement.' Id. at 74, 88 S.Ct. 201 (holding that the order at issue could only be described as unintelligible). The Supreme Court expressly explained that [w]e do not deal here with a violation of a court order by one who fully understands its meaning but chooses to ignore its mandate. Id. at 76, 88 S.Ct. 201. The injunction here is not unintelligible. Moreover, from the time that the injunction issued to the time that the district court found it in contempt, EchoStar never once raised the facial ambiguity that it now finds in the injunction. It cannot now spring its ambiguity defense to avoid contempt on the basis of its self-serving interpretation of the court's injunction. To hold otherwise would indeed impose an unnecessarily heavy burden on district courts to draft immaculate ordersa burden that neither the federal rules nor the Supreme Court mandateand would radically constrict district courts' inherent power to enforce their orders. We decline to do so and conclude that EchoStar has waived its vagueness arguments. The dissent cites our precedent and several cases from our sister circuits to argue that contempt is improper, even in the absence of a direct appeal, if the contemnor can later propose an interpretation of the injunction that allows the conduct on which the contempt allegation is based. Given the strained nature of EchoStar's proposed reading of the disablement provision [6] and the fact that it had ample notice of the proposed terms of the injunction as well as a full and fair opportunity to litigate the issue, [7] we do not find the law cited by the dissent persuasive on the facts before us. Some of the cited cases address conduct that simply could not have violated the order at issue, thus finding no application to this case. See, e.g., Abbott Labs., 503 F.3d at 1383 Others cover orders that were truly inadequate to meet the mandate of Rule 65, similar to the one in International Longshoremen. See, e.g., Common Cause v. Nuclear Regulatory Comm'n, 674 F.2d 921, 926-27 (D.C.Cir. 1982); H.K. Porter Co., Inc. v. Nat'l Friction Prods. Corp., 568 F.2d 24, 27 (7th Cir.1977). Moreover, most of the cases cited deal with situations very different from the one presented here and address specific circumstances where it may be proper to allow vagueness as a defense to contempt, such as with ex parte orders being enforced against non-parties to the order, see, e.g., U.S. v. Saccoccia, 433 F.3d 19, 21-22 (1st Cir.2005); N.Y. Telephone Co. v. Commc'ns Workers of Am., 445 F.2d 39, 42 (2d Cir.1971); or consent decrees that did not provide adequate notice to the enjoined party, [8] see, e.g., Perez v. Danbury Hosp., 347 F.3d 419, 422 (2d Cir.2003); Gates v. Shinn, 98 F.3d 463, 464 (9th Cir.1996); Harris v. City of Phila., 47 F.3d 1342, 1344 (3d Cir.1995). More importantly, we decide that the facts presented here fall squarely within the holding of McComb, and we are not persuaded that we are inconsistent with Supreme Court precedent.
EchoStar argues that even if the district court's reading of the disablement provision is the proper one, the order would still be unenforceable because the prohibition of noninfringing activity is unlawful. EchoStar contends that it simply downloaded noninfringing software to the receivers that it had placed with consumers. EchoStar argues that the district court's injunction cannot prohibit such noninfringing design-arounds. Because such an injunction would be unlawfully overbroad, EchoStar contends that it should not be expected to appeal an unnatural reading of an injunction at the time that the injunction issued. We disagree and conclude that a broad reading of the disablement provision to include all DVR functionality is not unnatural and that having failed to raise the issue on direct appeal, EchoStar is now barred from using it as a defense to the district court's finding of contempt. EchoStar's primary business is satellite television transmission, and the products that were found by the jury to infringe TiVo's patent are satellite receivers that receive and display broadcasts to users. The DVR functionality that allows users to record and play back such broadcasts is merely one of the software components of the receivers. The disablement provision of the injunction required disablement only of that DVR software component in eight specific models of receivers that had been found infringing by the jury. J.A. 162. The district court further defined DVR functionality as all storage to and playback of ... television data. Id. Plainly, the word all refers to all DVR functionality, infringing or not, and that is not an unnatural reading of the disablement provision. The second directive of the disablement provision, requiring EchoStar not to enable DVR functionality in any new placements of the receivers, i.e., DVR functionality that could potentially be noninfringing, supports a plain reading of the word all. It was therefore not unnatural to read the court's order as a prohibition on employing any type of DVR software, infringing or not, on those listed receiver models. Supreme Court precedent is clear on the issue. The time to appeal the scope of an injunction is when it is handed down, not when a party is later found to be in contempt. Maggio v. Zeitz, 333 U.S. 56, 69, 68 S.Ct. 401, 92 L.Ed. 476 (1948). In Maggio, affirming an appeals court's conclusion that a bankruptcy order is subject only to direct attack, and that its alleged infirmities cannot be relitigated or corrected in a subsequent contempt proceeding, the Supreme Court stated that [i]t would be a disservice to the law if we were to depart from the long-standing rule that a contempt proceeding does not open to reconsideration the legal or factual basis of the order alleged to have been disobeyed and thus become a retrial of the original controversy. 333 U.S. at 69, 68 S.Ct. 401. Sixty years later, that law remains unchanged. Travelers Indemnity Co. v. Bailey, ___ U.S. ___, 129 S.Ct. 2195, 2203, 174 L.Ed.2d 99 (2009). In Travelers, claimants sought to overturn a bankruptcy court order interpreting an injunction previously issued by that court, barring any future claims against insurer defendants. The Second Circuit agreed with the claimants that the previously issued order could not be enforced according to its terms because the bankruptcy court had exceeded its jurisdiction when it issued those orders in the first place. Rejecting the Second Circuit's willingness to entertain this collateral attack, the Supreme Court held the challenge foreclosedeven though it concerned the bankruptcy court's subject matter jurisdiction and statutory authority to issue such an orderbecause it could have been raised on direct appeal. Id. at 2205-06. Fifth Circuit law, applicable here, is also in accord on the issue. See W. Water Mgmt., Inc. v. Brown, 40 F.3d 105, 108 (5th Cir.1994) (holding that the scope of an injunction may be challenged only on direct appeal). We therefore conclude that EchoStar's arguments on overbreadth of the district court's injunction have been waived by its failure to raise them earlier. Had EchoStar brought an appeal on the injunction at the time that it issued, arguing that the injunction was overbroad, we could have addressed its legitimacy. [9] The time to do so has long passed. It is just as important that there should be a place to end as that there should be a place to begin litigation. Travelers, 129 S.Ct. at 2206 (citations omitted). As a result, we affirm the district court's finding of contempt and the $1.00 per subscriber per month, totaling approximately $90 million, awarded by the district court as a sanction against EchoStar. The district court expressly stated that this award was made on alternative grounds, i.e., for violation of either of the two separate provisions of the injunction, that dealing with disablement and the other dealing with infringement. [10] See TiVo, 655 F.Supp.2d at 663, 666 (stating that [i]n the alternative, the Court found that EchoStar had failed to comply with the plain directives of [its] order, and awarding the additional $1.00 sanction to promote EchoStar's compliance with [its] orders.). Although we vacate the finding of contempt of the infringement provision, the finding of contempt of the disablement provision has been affirmed. We therefore have no basis for modifying the amount of the sanction.