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Patentee Has Burden to Show Infringement on Defendant’s SJ Motion

March 22, 2006

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Last Month at the Federal Circuit - April 2006

Judges: Gajarsa, Dyk (author), Prost

In Exigent Technology, Inc. v. Atrana Solutions, Inc., No. 05-1338 (Fed. Cir. Mar. 22, 2006), the Federal Circuit affirmed the district court’s grant of SJ of noninfringement, holding that Atrana Solutions, Inc. (“Atrana”) need not produce evidence of noninfringement to support its SJ motion. In addition, the Federal Circuit reversed the district court’s order denying as moot Exigent Technology, Inc.’s (“Exigent”) motion to vacate the SJ grant and enforce the settlement agreement, vacated the district court’s award of attorney fees and costs to Atrana, and remanded the case for further proceedings.

Exigent brought suit against Atrana, alleging infringement of U.S. Patent No. 6,651,885 (“the ’885 patent”). After the scheduled close of fact discovery, Atrana filed an SJ motion on the issues of infringement, invalidity, and unenforceability. In that motion, Atrana stated that Exigent would not be able to establish infringement and explained that Atrana’s systems did not contain certain claim limitations. The district court granted Exigent two extensions of time to respond to the SJ motion. Exigent then retained new counsel and filed a motion under Fed. R. Civ. P. 56(f) seeking another extension of time to complete fact and expert discovery before responding to the SJ motion. The district court denied Exigent’s Rule 56(f) motion.

Exigent then reached an agreement in principle with Atrana to dismiss the case under terms to be agreed and to license the patented system to Atrana in exchange for royalty payments. The parties would negotiate and sign a formal agreement within five business days. On the same day, however, the district court granted Atrana’s SJ motion with respect to noninfringement and declined to reach the issues of invalidity and unenforceability. In doing so, the court construed several of the claim terms.

Thereafter, the parties failed to execute a final settlement agreement. Exigent filed a motion requesting the district court vacate its decision granting SJ and enforce the settlement agreement. The district court denied the motion as moot and subsequently entered a final order of dismissal and awarded fees and costs to Atrana.

On appeal, the Federal Circuit affirmed the district court’s grant of SJ for noninfringement. First, the Court found no reversible error in the district court’s construction of the claim term “payment authority” because Exigent did not make the argument below that it asserted on appeal. In fact, the Court noted that the district court’s construction was not at odds with what Exigent proposed below. Second, the Court found that Atrana did not have to support its motion with evidence of noninfringement, applying the Supreme Court’s decision in Celotex Corp. v. Catrett, 477 U.S. 317 (1986).

The Supreme Court in Celotex held that on issues in which the nonmovant bears theburden of proof, the movant need not produce evidence showing the absence of a genuine issue of material fact in order to properly support its SJ motion. Instead, the moving party’s burden may be discharged by showing that there is an absence of evidence to support the nonmoving party’s case. In light of Celotex, the Federal Circuit concluded that “nothing more is required than the filing of a summary judgment motion stating that the patentee had no evidence of infringement and pointing to the specific ways in which accused systems did not meet the claim limitations.” Slip op. at 11. The Federal Circuit therefore agreed with the district court that Atrana discharged its burden as the SJ movant. The Court specifically pointed to Exigent’s failure to present any argument or evidence of infringement in response to Atrana’s motion and Exigent’s admission that no evidence of the accused device was ever submitted as part of the SJ record.

The Federal Circuit also found that the district court did not abuse its discretion in denying Exigent’s Rule 56(f) motion on the ground that Exigent had not been diligent. The Court noted that the district court granted Exigent two extensions of time to respond to the SJ motion after fact discovery was already closed. According to the Court, if Exigent believed that Atrana was not responding promptly to its discovery requests, it could have promptly sought the district court’s assistance. In addition, the Court concluded that the district court has discretion regarding whether to receive expert testimony on claim construction, and thus rejected Exigent’s argument that it should have been given time to complete expert discovery. Moreover, Exigent made an insufficient showing of the need for expert discovery on infringement.

Regarding the other issues on appeal, the Federal Circuit reversed and remanded the district court’s order denying as moot Exigent’s motion to vacate the SJ grant and enforce the settlement agreement. In particular, the Court found that Exigent’s motion was not moot because the district court retained jurisdiction despite the SJ decision since no final judgment had been entered. And if the agreement was enforceable, it rendered moot the entry of final judgment. The Court thus remanded for further proceedings to determine whether the settlement agreement was enforceable. Additionally, the Court vacated the district court’s award of fees and costs to Atrana, so that the district court could reconsider its award after it determines the enforceability of the settlement agreement.