Court Opinion

ID: 773109
Source: CourtListenerOpinion
Date Created: 2012-04-18 11:22:48+00
Date Added: 2024-06-11T17:56:09.082661
License: Public Domain

248 F.3d 1376 (Fed. Cir. 2001)
TEGAL CORPORATION, Plaintiff-Appellee,v.TOKYO ELECTRON COMPANY, LIMITED, Defendant,andTOKYO ELECTRON AMERICA, INC.,Non party-Appellant.
00-1239
United States Court of Appeals for the Federal  Circuit
DECIDED: May 14, 2001

Appealed from: United  States  District  Court  for  the  Easternamp; Valentine District of Virginia,  Judge James R. Spencer Jon B. Streeter, Keker & Van Nest, L.L.P., of San Francisco, California,  argued for plaintiff-appellee. With him on the brief was Steven A. Hirsch.  Of counsel on the brief were Warren E. Zirkle, of McLean, Virginia; and  Robert M. Tyler, McGuire, Woods, Battle & Boothe LLP, of Richmond,  Virginia.
Edgar H. Haug, Frommer Lawrence & Haug LLP, of New York, New York, argued  for Nonparty-Appellant. With him on the brief were Steven M. Amundson, and  Robert E. Colletti. Of counsel was Dabney J. Carr, IV, Mays & Valentine  L.L.P., of Richmond, Virginia.
Before LOURIE, BRYSON, and LINN, Circuit Judges.
BRYSON, Circuit Judge.

1
Tokyo Electron America, Inc., ("TEA") appeals from an order holding it in  contempt of court for violating an injunction entered by the United States  District Court for the Eastern District of Virginia. Because there is no  evidence that TEA violated the injunction, we reverse.

2
* The injunction at issue in this case was entered at the conclusion of a  patent infringement action brought by Tegal Corporation against TEA and  other defendants. Following a three-day bench trial, the court entered  judgment against TEA, holding that by selling the IEM model plasma etching  system in the United States, TEA had willfully infringed U.S. Patent No.  4,464,223 ("the '223 patent"), which relates to plasma etching equipment  that is used in fabricating semiconductor chips. In addition, the court  held that TEA had contributed to and induced the infringement of that  patent by TEA's customers.

3
As part of the relief granted to Tegal, the district court enjoined TEA  "from engaging in any further infringement or infringement by equivalents"  of two claims of the '223 patent until the expiration of the patent. The  court specifically barred TEA from "making, using, offering for sale,  selling or importing any of the IEM model etching systems found to  infringe" the two asserted claims of the '223 patent. The court then added  that the infringing activities that were enjoined "include acts that  constitute contributory infringement or inducement to infringement, such as  participating in, rendering assistance, or any way facilitating infringing  acts by related corporations or corporate affiliates or corporate parents,  or conducting field service, testing or spare parts replacement or  maintenance for customers that own infringing etching systems which were  sold after October 1997."

4
Shortly after entry of the injunction, Tegal filed a petition to require  TEA to show cause why it should not be held in contempt of court. In the  petition, Tegal charged that TEA and its parent corporation, Tokyo Electron  Company, Ltd., ("TEL") had violated the injunction entered in the  litigation against TEA. Tegal alleged that TEA and TEL had arranged to  transfer the function of servicing IEM model etching systems from TEA to  Tokyo Electron Massachusetts, Inc., ("TEM") which is wholly owned by Tokyo  Electron Yamanashita, Ltd., which in turn is owned by TEL. Based on its  view that "[o]ne of them, at least [TEL or TEA], is responsible for the  continued servicing of infringing etchers," Tegal asked the court to order  both to show cause why they should not be held in contempt.

5
Following proceedings on the show cause order, the district court found TEA and TEL in contempt of court for violating the injunction entered against  TEA. The court reviewed the evidence that, after the injunction against TEA  was entered, TEM serviced two IEM model etchers that TEA had sold after  October 1997. The district court found that "[s]ince TEM is essentially a  wholly owned subsidiary of TEL, TEL and TEA violated the terms of the  injunction by permitting TEM to service the infringing machines." Because  it found TEL's and TEA's contempt to be willful, the court directed TEL and  TEA to pay Tegal's reasonable attorney fees and costs incurred in  prosecuting the contempt petition.

II

6
TEA appeals from the contempt citation. It argues that the district court  abused its discretion in entering the contempt citation because there is no  evidence to support the finding that TEA violated the injunction.

7
Tegal concedes that there is no evidence that TEA sold or serviced any  infringing etcher after the injunction was entered. Instead, Tegal premises  its argument that TEA violated the injunction on the contention that TEA  had an affirmative obligation to stop any of its corporate affiliates from  selling or servicing infringing etchers, regardless of whether TEA had any  control over that affiliate.

8
Tegal's theory is that by taking no action to prevent it, TEA was guilty of  "facilitating" infringement by its corporate affiliates. That also appears  to be the basis on which the court found TEA to be in contempt.  Facilitation, however, entails some affirmative act; it is not enough to  show that TEA failed to take steps to prevent its corporate affiliates from  servicing the IEM etchers. In the absence of a showing of control over  another party, merely permitting that party to commit infringing acts does  not constitute infringement, and it likewise cannot constitute  "facilitating infringing acts."

9
The distinction between facilitation and permission is highlighted by the  very cases relied on by Tegal. Those cases make clear that the term  "facilitate," as used in the criminal context, requires some affirmative  action such as using a telephone to "facilitate" a narcotics sale, see  United States v. Mertilus, 111 F.3d 870, 872 (11th Cir. 1997); United  States v. Aquilla, 976 F.2d 1044, 1049 (7th Cir. 1992) (telephone  facilitation of a narcotics offense occurs when the telephone call makes  the sale easier or less difficult or assists or abets the sale), or using  property to "facilitate" a money laundering scheme, see United States v.  Hawkey, 148 F.3d 920, 928 (8th Cir. 1998) (property is "involved in" or  facilitates a money laundering offense when use of the property makes the  prohibited conduct less difficult or more or less free from obstruction or  hindrance).

10
Tegal's assertion that inaction can constitute "facilitation" has no basis  in any legal principle to which Tegal has directed us. Accordingly, in  order to be held in contempt of court TEA must have taken some affirmative  action to "facilitate" TEM's servicing of the infringing machines; it is  not enough that TEA did not resist TEM's actions or successfully prevent  them.

11
That conclusion is consistent with the statutory provision barring active  inducement of infringement. See 35 U.S.C. § 271(b) ("Whoever actively  induces infringement of a patent shall be liable as an infringer.").  "Actively inducing," like "facilitating," requires an affirmative act of  some kind:

12
Of course inducement has connotations of active steps knowingly  taken-knowingly at least in the sense of purposeful, intentional as  distinguished from accidental or inadvertent. But with that qualifying  approach, the term is as broad as the range of actions by which one in  fact causes, or urges, or encourages, or aids another to infringe a  patent.

13
Fromberg, Inc. v. Thornhill, 315 F.2d 407, 411, 137 USPQ 84, 87 (5th Cir.  1963) (emphasis added); see also National Presto Indus., Inc. v. West Bend  Co., 76 F.3d 1185, 1196, 37 USPQ2d 1685, 1693 (Fed. Cir. 1996) (analogizing  active inducement to aiding and abetting violations of criminal laws);  Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1569, 30  USPQ2d 1001, 1010 (Fed. Cir. 1994) (noting that jurisdiction for a claim of  inducement cannot be premised on an omission because "active inducement of  infringement requires the commission of an affirmative act"). In A. Stucki  Co. v. Worthington Industries, Inc., 849 F.2d 593, 7 USPQ2d 1066 (Fed. Cir.  1988), we considered whether evidence of mere inaction by a parent company  in the face of infringement by a subsidiary-i.e., a failure to stop  infringement-could constitute either direct infringement or active  inducement. In the absence of evidence showing that the parent company  either was an alter ego of the subsidiary or controlled the conduct of the  subsidiary, we refused to find direct infringement. A. Stucki, 849 F.2d at  596-97, 7 USPQ2d at 1068-69. We also concluded that evidence of mere  inaction did not constitute inducement, and we therefore affirmed the  directed verdict in favor of the defendant. A. Stucki, 849 F.2d at 597, 7  USPQ2d at 1069. Thus, Tegal's proposed construction of the term  "facilitating" would encompass conduct not contemplated by the inducement  statute.

14
Where courts have held enjoined parties in contempt for failing to prevent  particular conduct, the finding of contempt ordinarily has been based on an  affirmative obligation set forth in the underlying injunction. In  Consolidation Coal Co. v. United Mineworkers, 683 F.2d 827 (4th Cir. 1982),  for example, the court found a local union and its officials in contempt of  court for failing to take reasonable efforts to persuade miners to return  to work, including failing to threaten or take disciplinary action against  union members. The basis for that ruling, however, was that the temporary  restraining order at issue specifically enjoined the union and its  officials from "[e]ngaging in or continuing to engage in, supporting or  encouraging, reinstituting, by failing to take reasonable steps to end, or  otherwise, the current strike or work stoppage . . . ." Id. at 828  (emphasis added); see also In re Dolcin Corp., 247 F.2d 524, 534 (D.C. Cir.  1957) (treasurer and secretary of corporation held in contempt of court for  inaction because court imposed "an affirmative obligation on them,  individually and as officers of Dolcin, to take all reasonable steps to  effect compliance with this court's order"). The injunction at issue in  this case does not impose any such affirmative obligation on TEA.

15
In the absence of express obligations to prevent particular conduct by  others, courts have held parties in contempt based on the conduct of  others, but in that circumstance they have required proof that the party  subject to contempt sanctions had control over those who engaged in the  conduct proscribed by the injunction. In United States v. Johnson, 541 F.2d  710 (5th Cir. 1976), for example, the court held Johnson, the chief  executive officer of a corporation, in contempt of court for permitting  corporate salesmen to repeatedly violate an injunction prohibiting Johnson  and the corporation from engaging in certain unfair trade practices. But  the court there held that Johnson "formulated, directed and controlled"  company operations and that the salesmen were acting as agents for Johnson.  Id. at 712-13; see also In re Dolcin, 247 F.2d at 533 (officers "in control  of the management, policies, and operation" of corporation held in contempt  of court for inaction). Like the union and union officials in Consolidation  Coal, Johnson exercised a high degree of control over the actual  wrongdoers, thus justifying holding him in contempt. There is no similar  showing that TEA exercised a high degree of control-or any control at  all-over TEM.

16
TEA is affiliated with TEM. But Tegal introduced no evidence that TEA  formulates, directs, or controls TEM's operations or that it is in control  of the management, policies, and operation of TEM. Tegal suggests that TEA  could have sued TEL on a contract theory for breaching its right to service  IEM etchers in the United States, or that it could have sued TEM on a tort  theory such as interfering with the exclusive representation contract  between TEL and TEA, and that TEA's failure to bring such an action  constituted "facilitation" of infringement. We disagree. First, it is  unclear that there has been any breach of the contract at issue. Although  the contract between TEL and TEA provides that TEA is TEL's "exclusive"  representative in the United States, TEL retains certain servicing rights  under the contract: "TEL shall be responsible for the warranty service of  the [infringing etchers and] . . . for the upgrade, modification and  replacement of key components of the [infringing etchers] which may affect  system performance and safety specification of the Products." In its  interrogatory response in the litigation between TEL and Tegal, TEL  described TEM's servicing activity as including "replacement of consumable  parts." Second, Tegal offers no support for the proposition that a party  violates an injunction against "facilitation" of unlawful conduct by others  merely by failing to take legal steps to prevent or terminate that unlawful  conduct. Again, the failure to take legal steps that could conceivably  prevent particular conduct may "permit" the conduct to take place, but it  does not constitute "facilitation."

17
Tegal makes the alternative argument that TEA must have colluded with TEM  or TEL by transferring its service personnel and resources to TEM in an  effort to circumvent the injunction. However, Tegal presented no evidence  to support that theory-it offers only the fact that prior to entry of the  injunction in August 2000 TEA provided around-the-clock service to its  customers while TEM did not (at least as of June 1998), and that subsequent  to entry of the injunction TEM provided around-the-clock service while TEA  did not.

18
The district court did not adopt that theory in support of its decision,  and we therefore decline to uphold the contempt sanction on that ground.  Moreover, there is no evidence that TEA personnel are now employed by TEM  or that TEA transferred any customer files, manuals, or other support  materials to TEM to assist TEM in servicing the infringing etchers, either  before or after the issuance of the injunction. Because there is no  evidence supporting the contempt citation, the order finding TEA in  contempt and imposing sanctions on TEA must be reversed.

19
REVERSED.