Eplus Inc. v. Lawson Software, Inc.

946 F.Supp.2d 503

EPLUS INC., Plaintiff,

v.LAWSON SOFTWARE, INC., Defendant.

Civil Action No. 3:09cv620.

United States District Court,

E.D. Virginia,

Richmond Division.

Sept. 10, 2013.

Craig Thomas Merritt, Belinda Duke Jones, Henry Irving Willett, III, Paul Wilbur Jacobs, II, Rowland Braxton Hill, IV, Samuel Perry Coburn, Christian & Barton LLP, Richmond, VA, David Michael Young, Jennifer Ann Albert, Scott Lynn Robertson, April Elise Weisbruch, Eleanor Martha Hynes, Goodwin Procter LLP, Washington, DC, Lana Svetlana Shiferman, Srikanth Kadumpalli Reddy, Daniel Mark Forman, Michael Gavin Strapp, Goodwin Procter LLP, Boston, MA, for Plaintiff.

Bradford Anthony Cangro, Robert William Busby, Jr., Morgan Lewis LLP, Donald Robert Dunner, Finnegan Henderson Farabow Garrett & Dunner LLP, Washington, DC, Daniel Johnson, Jr, Morgan, Lewis & Bockius LLP, Palo Alto, CA, Daniel William McDonald, Eric Ronald Chad, Merchant & Gould PC, Minneapolis, MN, Rita Emily Tautkus, Morgan Lewis & Bockius LLP, San Francisco, CA, Azar Mouzari, Christopher Dean Dusseault, Jason Charn–Jieh Lo, Timothy Patrick Best, Gibson Dunn & Crutcher LLP, Los Angeles, CA, Dabney Jefferson Carr, IV, Megan Conway Rahman, Robert Armistead Angle, Timothy James St. George, Troutman Sanders LLP, Stephen Dennis Otero, Capital One Services LLC, Richmond, VA, Daniel James Thomasch, Josh Krevitt, Richard William Mark, Gibson Dunn & Crutcher LLP, New York, NY, Erika Harmon Arner, Finnegan Henderson Farabow Garrett & Dunner LLP, Reston, VA, Sarah Elizabeth Simmons, Gibson Dunn & Crutcher, Dallas, TX, for Defendants.

MEMORANDUM OPINION

ROBERT E. PAYNE, Senior District Judge.

This matter is before the Court on DEFENDANT LAWSON SOFTWARE, INC.'S MOTION FOR A STAY PENDING APPEAL (Docket No. 1090). For the reasons set forth below, the motion will be denied.

BACKGROUND

ePlus Inc. (“ePlus”) filed this action against Lawson Software, Inc. (“Lawson”) for infringement of three patents: U.S. Patent Nos. 6,023,683 (the “'683 Patent”), 6,055,516 (the “'516 Patent”) and 6,585,173 (the “'173 Patent”). Following a three week trial, a jury determined that the ' 683 Patent and '172 Patent were infringed and that the '152 Patent was not. The jury found that all asserted claims of the patents-in-suit were valid. On May 23, 2011, the Court entered a permanent injunction enjoining Lawson, its officers, agents and employees and “any person in active, concert or participation with them” “from directly or indirectly making, using, offering to sell, or selling within the United States or importing into the United States” certain product configurations (so-called configurations 2, 3 and 5) and services (Docket No. 729).

On appeal, the United States Court of Appeals for the Federal Circuit affirmed the finding of infringement as to Claim 26 of the '683 Patent and affirmed the breath of the injunction. ePlus Inc. v. Lawson Software, Inc., 700 F.3d 509, 520, 522 (Fed.Cir.2012).¹ However, the Federal Circuit also remanded the action for this Court “to consider what changes are required to the terms of the injunction, consistent with this opinion.” Id. at 523. Thereafter, and following an opportunity for briefing and hearing, the Court, to assure consistency with the Federal Circuit's opinion, entered an Order dated June 11, 2013 (Docket No. 1083) modifying the original injunction by eliminating from its scope the product configuration known as Configuration 2. The injunction was left in effect in all other respects.²

While the appeals were pending before the Federal Circuit, ePlus filed, on September 9, 2011 (approximately three months after the issuance of the injunction on May 23, 2011), its motion for an order to show cause, alleging that Lawson was in contempt of the injunction. The contempt motion concerned a module of the adjudged infringing system configurations called Requisition Self–Service (“RSS”). After the trial in 2011, Lawson redesigned RSS and created Requisition Center (“RQC”) for use in its stead. ePlus alleged that the new RQC product was not more than colorably different from RSS and that it too infringed Claim 26 of the '683 Patent.

Following a hearing on the issue of contempt and full briefing, the Court issued a Memorandum Opinion, 946 F.Supp.2d 472, 2013 WL 4430912 (E.D.Va.2013) and Order (Docket Nos. 1087 and 1088) (the “Contempt Opinion” and “Contempt Order,” respectively) finding, by clear and convincing evidence, that Lawson was in contempt of the injunction against Configurations 3 and 5 which had been in place since May 23, 2011. The basis of that finding was that Configurations 3 and 5 with RQC were not more than colorably different than the adjudged Infringing Configurations using RSS and that Lawson and its customers were using the RQC configurations in a manner that infringed Claim 26 of the '683 Patent. Also, the Court determined that Lawson was in contempt of the injunction for “instructing (and permitting) its employees and agents to continue to service the infringing configuration and by deliberately instructing its customers on how to continue to use RSS, even after the RQC product had been released,” without providing any method for Lawson's customers to disable the infringing RSS. (Contempt Opinion (Docket No. 1087), 946 F.Supp.2d at 492).

Lawson filed timely Notices of Appeal of the order (Docket No. 1083) modifying the injunction (Docket No. 729) in response to the remand issued by the Federal Circuit. Lawson also has appealed the finding of contempt and the Order assessing damages therefor and imposing a coercive fine (Docket No. 1088). Lawson has tendered a proposed supersedeas bond (Docket No. 1098–1, Ex. A) to secure the payment of the money judgment entered in favor of ePlus and against Lawson. The Court has approved the form of that bond and directed that the enforcement of that aspect of the contempt judgment be stayed pending appeal as soon as the supersedeas bond actually is posted. Order entered September 9, 2013 (Docket No. 1102).

The motion presently before the Court is somewhat confusing as to its intended reach. In the motion, Lawson “moves for a stay of this Court's order of injunction and imposing coercive fines (D.I. 1088) extending the deadline for Lawson to be ‘in compliance with the injunction’ and the corresponding start date of any coercive fine until 30 days after the Federal Circuit issues is [sic] decision on appeal of the order.” (DEFENDANT LAWSON SOFTWARE, INC.'S MOTION FOR A STAY PENDING APPEAL, Docket No. 1090). The supporting memorandum (Docket No. 1091) (“Lawson's Opening Br., p. ––––”), in the section entitled “CONCLUSION” repeats the same language. However, in its reply brief (Docket No. 1101), Lawson takes a somewhat different tack, stating that:

Lawson seeks to stay two aspects of the Court's August 16, 2013 Order:

First, Lawson seeks to stay enforcement of the monetary judgment by ePlus, and has proposed a supersedeas bond in the amount of $18,217,950 to secure the full amount of that judgment, plus interest that will accrue during the appeal.

* * *

Second, Lawson seeks to stay only the portion of the Court's August 16, 2013 Order that requires it to come into (and demonstrate) compliance with the Injunction by September 20, 2013 in regard to the sale, maintenance, support and service of the redesigned Configurations 3 and 5 containing RQC ... To be clear, Lawson does not seek or need to stay that portion of the Court's order requiring demonstration of compliance by September 20, 2013 with regard to its complete cessation of enjoined activities regarding RSS. Lawson does not require or request such a stay because it has long since ended sales, maintenance, service and support for RSS, and it has gone well beyond the policies disclosed at the contempt hearing to ensure compliance. Lawson fully intends to demonstrate its compliance with the Injunction with respect to the RSS-containing configurations before the September 20, 2013 deadline.

(DEFENDANT LAWSON SOFTWARE, INC.'S CONSOLIDATED REPLY IN SUPPORT OF MOTION FOR A STAYPENDING APPEAL AND MOTION TO APPROVE LAWSON'S SUPERSEDEAS BOND AND STAY THE ENFORCEMENT OF THE COURT'S ORDER ENTERING

JUDGMENT FOR DAMAGES PENDING APPEAL AND TO STAY EXECUTION, p. 1) (“Lawson's Reply Br., p. ––––.”).

It thus appears at first glance, that Lawson does not seek a stay of the injunction that was modified upon remand (Docket No. 1083). At the same time, Lawson's papers make it clear that, if a stay is granted, it does not intend to demonstrate compliance with the injunction, as modified (Docket No. 1083) as to RQC by September 20, 2013.

Lawson contends that it needs this stay “so that it may seek appellate relief without suffering harm to its customer relationships that could result from complying with the Injunction that may, on appeal, be vacated, or ruled not to apply to RQC. In the absence of a stay, Lawson will have to choose between the certain harm that will flow to it from its customer disruption or the abandonment of a substantial appeal ....” (Docket No. 1101, p. 5). Taken together, Lawson's papers seek a stay of the injunction as modified on June 13, 2013 (Docket No. 1083) and the coercive provisions of the Contempt Order issued on August 16, 2013 (Docket No. 1088).

DISCUSSION

Lawson apparently considers that its motion is governed by Fed.R.Civ.P. 62(b) and 62(c) because it mentions both rules in the argument section of its opening brief. Rule 62(b) pertains to stays pending the disposition of motions under Rule 50, Rule 52(b), Rule 59 or Rule 60. None of those circumstances obtain here.

Rule 62(c) provides that a court “may suspend, modify, restore or grant an injunction on terms for bond or other terms that secure the opposing party's rights.” That provision applies only if there is an appeal pending from a judgment that “grants, dissolves, or denies an injunction.” Because, the Court construes Lawson's briefs to be seeking a stay of the injunction (Docket ...