TEGAL v. TOKYO ELECTRON

Decision Date14 May 2001
Parties(Fed. Cir. 2001) TEGAL CORPORATION, Plaintiff-Appellee, v. TOKYO ELECTRON COMPANY, LIMITED, Defendant, and TOKYO ELECTRON AMERICA, INC.,Non party-Appellant. 00-1239 DECIDED:
CourtU.S. Court of Appeals — Federal Circuit

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.

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.

I

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.

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."

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.

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

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.

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.

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."

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).

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.

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:

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,...

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