Federal Circuit Summary

Before Dyk, Taranto, and Stoll. Appeal from U.S. District Court for the District of Delaware.

Summary: The Federal Circuit lacks jurisdiction to hear an appeal from a district court judgment that is non-final because it does not foreclose a litigant’s ability to establish an element of its claim.

Adobe, Inc. obtained a license from Princeton Digital for patented image encoding technology. The license agreement included a promise by Princeton Digital not to sue Adobe or its customers for infringement of the patented technology. When Princeton Digital brought lawsuits against Adobe’s customers, Adobe intervened and asserted a claim against Princeton Digital for breach of contract. Adobe sought damages consisting of (1) its attorneys’ fees expended in connection with defending its customers and responding to customers’ indemnity requests and (2) its fees expended in bringing the breach of contract claim itself. On summary judgment, the district court held that Adobe could only recover fees associated with defending its customers, as opposed to the affirmative claim for breach of contract.

The Court ordered Adobe to submit a supplemental report and a letter disclosing its defense fees. But the Court struck both the report and the letter because it ruled they did not properly separate defense fees from affirmative fees. Adobe then asked the court to enter judgment for Princeton Digital, on the grounds that it did not have evidence of damages to present at trial, which it contended was an element of its claim. The district court granted Adobe’s request, but specifically stated that there were defensive damages that could be proven on the existing record.

The Federal Circuit held that it lacked jurisdiction to hear the appeal, reasoning that the district court’s order was not a final judgment on the merits. The Federal Circuit reviewed the Supreme Court’s ruling in Microsoft v. Baker, 137 S. Ct. 1702 (2017), for the principle that “unless the district court has conclusively determined . . . that the plaintiff has failed to satisfy a required element of the cause of action, a voluntarily [sic] dismissal lacks finality.” Here, the district court had not determined that Adobe was unable to prove an element of its breach of contract claim. Thus, the judgment was non-final and the Federal Circuit lacked jurisdiction.

This case is: PRINCETON DIGITAL IMAGE CORP. V. OFFICE DEPOT INC. ET AL.

Editor: Paul Stewart

Written by: Jeremy Anapol & Eric R. Malmgren