The Federal Circuit recently affirmed a district court ruling setting aside a final judgment of patent infringement, including a
(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:
. . .
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party; . . . .1
A motion under Rule 60(b)(3) "must be made within a reasonable time," "no more than a year after the entry of judgment."2
Cap later discovered Lawrie's testimony that he was unaware of any prior art was false.8 A lawsuit by
The court found that Rule 60(b)(3) applied. During Lawrie's
The issue before the Federal Circuit was whether Lawrie's misrepresentations about his knowledge supported relief under Rule 60(b)(3).16 Relief under this rule is a procedural issue on which the court applies regional circuit law.17 Here, Ninth Circuit law applied, under which "the moving party must prove by clear and convincing evidence that the verdict was obtained through fraud, misrepresentation, or other misconduct," "the conduct complained of prevented the losing party from fully and fairly presenting the defense," and the fraud must not have been "discoverable by due diligence."18
On appeal,
The Federal Circuit noted that the Ninth Circuit's due diligence requirement is not in the text of Rule 60(b)(3) and "seems questionable," yet followed it.21 The Federal Circuit found that "[i]n other contexts, due diligence in discovering fraud does not require investigation unless there is reason to suspect fraud."22 Thus, the question was whether a reasonable company in Cap's position "should have had reason to suspect the fraud."23
The Federal Circuit found "no . . . reason to suspect that Lawrie's statements were fraudulent."24 Lawrie repeatedly misrepresented his knowledge; Cap undertook numerous prior art searches that failed to reveal evidence of the invoiced beds; and the material evidence concealed was not widely available, a matter of public record, or already in Cap's possession.25 The other two prongs of the Rule 60(b)(3) test were also satisfied: Lawrie's answers constituted affirmative misrepresentations, and evidence of the invoiced beds would have been material to invalidity, preventing Cap from fully and fairly presenting its defense.26 "Showing the material's likely worth as trial evidence or by elucidating its value as a tool for obtaining meaningful discovery" is enough to establish that withheld material "deprived the movant of a full and fair opportunity to present its case."27 The Federal Circuit therefore affirmed the district court in vacating the judgment.28
Here, ironically,
Footnotes
1FED.
2FED.
3Cap Exp., LLC v.
4Id. at *2.
5Id.
6Id. at *3.
7Id. at *3-4.
8Id. at *4.
9Id. at *4-5.
10Id. at *6.
11Id.
12Id. at *5.
13Id. at *7 (emphasis in original).
14Id. at *8-9.
15Id. at *9.
16Id. at *10.
17Id. at *11.
18Id.
19Id. at *12.
20Id.
21Id. at *11-13.
22Id. at *13.
23Id. at *14.
24Id. at *15.
25Id.
26Id. at *16-17.
27Id. at *17.
28Id. at *19.
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Mr
NY 10151
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