Chrimar Systems v. ALE U.S. is a nonprecedential case decided on September 19, 2019 on appeal from the Eastern District of Texas. After a jury trial returned a verdict against defendant ALE in a case involving four patents, the district court entered a judgment awarding plaintiff Chrimar damages and post-verdict ongoing royalties. On appeal in 2018, the Federal Circuit “affirmed on all issues presented [(including the damages award)] … except for the construction of a claim term in [one of the patents],” the ‘012 patent. The PTAB issued written final decisions deeming unpatentable all the claims at issue in the case. Chrimar moved to dismiss the count of its complaint based on the ‘012 patent, and provided ALE a covenant not to sue on the patent. ALE opposed the motion on the ground “that ALE had an unadjudicated, live counterclaim for noninfringement of the ‘012 patent.” The district court “dismissed Chrimar’s ‘012-infringement count.” The Federal Circuit affirmed the Board’s determination of unpatentability of the asserted claims. ALE moved “for a stay of the ongoing royalties, for a stay of the proceedings as a whole, and for relief from the judgment under FRCP 60(b)(5).” The district court did not stay the case or the ongoing royalties. ALE appealed.
The Federal Circuit vacated the final judgment, and remanded the case for dismissal.
The Federal Circuit’s “affirmance of the Board’s decisions of unpatentability of the patent claims at issue in the present case has an immediate issue-preclusive effect on any pending or copending actions involving the patents.” “It does not involve the special circumstance of a fully satisfied and unappealable final judgment.” A case is final, and not pending, when “the litigation is entirely concluded so that the cause of action against the infringer was merged into a final judgment,” “one that ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” “Such finality generally does not exist when a direct appeal is still pending.”
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The Federal Circuit held that this case is still pending. The district court had the authority to but denied ALE’s requests to modify the ongoing royalties and to stay the case. “ALE was reasonable in appealing the district court’s denial of relief. It had a substantial argument that the district court did not exercise available discretion because, in denying the requested stay, it did not recognize that it had discretion.” “In addition, ALE had a substantial argument to the district court that it still had a counterclaim for noninfringement of the ‘012 patent even if Chrimar’s affirmative count asserting infringement of that patent was to be dismissed.” Finally, ALE had a substantial argument that the Federal Circuit 2018 mandate affirming the damages award “did not foreclose the district court’s consideration of the arguments ALE made” based on the Board’s unpatentability decisions. “The Board’s unpatentability decisions had not existed at the time of the rulings that were challenged on appeal,” and the Federal Circuit was “not asked to rule on the effect of those intervening decisions.”
The Federal Circuit did “not decide whether ALE is correct on the merits of the just-discussed contentions.” The Court simply held “that this case remains pending and that its pending status is not the result of an abuse of the judicial process in the form of presentation of insubstantial arguments.” The Federal Circuit thus gave effect to the “now-affirmed unpatentability determinations by the Board as to all claims at issue,” vacating the final judgment and remanding the case to the district court for dismissal.