ACCUSCAN, INC. v. XEROX CORPORATION, (S.D.N.Y. 2003)

HAROLD BAER, United States District Judge

Plaintiff Accuscan, Inc. ("Accuscan") moves to re-impose on defendant Xerox Corporation ("Xerox") a supersedeas bond in the amount of at least $10,785,180.00. For the following reasons, plaintiff's motion is DENIED.

This lawsuit is a patent infringement case. I assume familiarity with the background facts, as set forth in Accuscan, Inc v. Xerox Corp., 1998 WL 603217 (S.D.N.Y. Sept. 11, 1998) and 2001 WL 599700 (Fed. Cir. May 31, 2001), and review here only facts pertinent to decide Accuscan's motion.

On tile basis of prosecution history estoppel arising from arguments made by the patentee, the Federal Circuit reversed this Court's denial of Xerox's motion for JMOL of non-infringement after a jury trial. Accuscan, 2001 WL 599700, at *6. Following the reversal, this Court ordered the dissolution of a previous order requiring Xerox to maintain a supersedeas bond. Subsequently, the Supreme Court granted Accuscan's petition for a writ of certiorari, vacated the Federal Circuit's decision, and remanded the case for further consideration in view of Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 122 S.Ct. 1831 (2002). See Accuscan, Inc. v. Xerox Corp., 2002 WL 1159469 (U.S. Jun. 3, 2002). Accuscan argues that re-entry of an order requiring Xerox to post a bond is appropriate in light of the Supreme Court's decision to vacate and Xerox's publicized financial difficulties. See, e.g. Investors Punish Xerox After Credit Ratings Is Cut, N.Y. Times, May 3, 2002, at C4.

While the Supreme Court in Festo rejected the view that a claim amendment serves as a "complete bar" to any equivalents to the amended claim limitation, 122 S.Ct. at 1840. the Fesbo Court reaffirmed the well-established rule that a patentee may not recapture the subject matter of a patent that was expressly disclaimed. relinquished, or surrendered through arguments made before the Patent Office. See id. at 1838-39. In light of the arguments made by the patentee of Accuscan's patent during its prosecution, which limited the scope of the allegedly infringed claims, the Federal Circuit held that none of Xerox's accused products infringed either literally or under the doctrine of equivalents the asserted claims. Accuscan, 2001 WL 599700, at *5. Nothing in the Supreme Court's Festo decision changes the law on the estoppel effect arguments on the scope of the claims. Arguments disclaiming or otherwise distinguishing features in the prior art from the claimed invention preclude the patentee from later asserting infringement based on the disclaimed or distinguished features. See e.g., Eagle Comtronics, Inc. v. Arrow Communication, 305 F.3d 1303, 1315 (Fed. Cir. 2002); cert. denied, 2003 WL 167691 (U.S. Jan 27. 2003). Accordingly, I find it unlikely that the Supreme Court's Festo decision will change the Federal Circuit's earlier decision on non-infringement. Furthermore, despite the May report last year of Xerox's financial difficulties, Xerox managed to turn a profit in 2002. Xerox returns to the black after tough times, Financial Times, (Jan. 28, 2003), at http://www.ft.com. Thus, re-imposing a supersedeas bond on Xerox seems unnecessary and, in any event, not appropriate here.

I should add that while the Supreme Court vacated the Federal Circuits Accuscan decision and remanded the case back to the Federal Circuit, it did not address the merits of the case. Generally, such a "summary reconsideration" order merely indicates that the Justices find the intervening precedent "sufficiently analogous and perhaps decisive to compel reexamination of the case." Robert L. Stern et al., Supreme Court Practice 249-250 (7th ed. 1993) Historically, notwithstanding the intervening precedent that lead to the summary reconsideration order, "in a substantial number of the remanded cases the courts of appeals adhered to the original ruling, and that very few of these judgments were reversed by the Supreme Court." Id. at 250 n. 77. Having reexamined the Federal Circuit's decision in light of the Supreme Court's Festo decision, I find it unlikely that the Federal Circuit will reverse itself, and thus plaintiffs motion to re-impose a bond on defendant is denied.