## Facts

- Flowdata owned a patent covering positive displacement flowmeters and prevailed in a bench trial against Additive Controls & Measurement Systems, Inc. (Adcon) on infringement.
- In 1993, the district court entered a permanent injunction barring Adcon from making, using, or selling infringing flowmeters; Adcon’s appeal was dismissed.
- While the dispute was ongoing, Adcon’s president and controlling shareholder, Galen Cotton, designed a redesigned meter (the “TruGear” meter) and formed new companies (including Truflo Instrumentation, Inc.) to manufacture and market it.
- Cotton arranged for other entities to sell and service the redesigned meters and hired Jack Harshman to prepare drawings for the redesigned product.
- Flowdata asserted the new entities and individuals were used to continue infringing sales and to evade the 1993 injunction.
- In separate contempt proceedings enforcing the 1993 injunction, the district court found Cotton and Truflo functioned as a successor/continuation of Adcon and held Cotton, Truflo, and Harshman in contempt.
- The record showed Harshman completed certain drawing work before receiving actual notice of the injunction.

## Issues

1. Whether nonparties not named in an injunction may be held in contempt under Federal Rule of Civil Procedure 65(d) as persons in “active concert or participation” with an enjoined party.
2. Whether the evidence supported treating Truflo and Cotton as successors/continuations acting with Adcon to evade the injunction.
3. Whether contempt against Harshman was permissible given Rule 65(d)’s actual-notice requirement and the timing of his conduct.
4. Whether sales of the redesigned TruGear meters violated the injunction because the redesign was not more than colorably different and remained infringing.

## Decision

- The Federal Circuit affirmed the contempt findings against Cotton and Truflo.
- The court held that, for contempt purposes, an existing injunction may bind nonparties who, with actual notice, act in active concert with the enjoined party or operate as a successor/continuation to carry out prohibited conduct.
- The court limited or adjusted the contempt determination as to Harshman to ensure liability rested only on conduct occurring after he had actual notice of the injunction and sufficient participation in post-notice violations.
- The court accepted the district court’s determination that the redesigned meter fell within the injunction because it was not more than colorably different from the previously adjudicated infringing product and continued to infringe.

## Legal Principles

- Under Rule 65(d), an injunction binds parties and their officers, agents, employees, and others in active concert or participation who receive actual notice of the order.
- A court may enforce an existing injunction through contempt against nonparties who knowingly assist, collaborate with, or serve as a successor/alter ego to the enjoined party in violating the injunction.
- Actual notice is a prerequisite to contempt for a nonparty under Rule 65(d); pre-notice conduct cannot support contempt.
- In patent contempt, a redesigned product may be reached by an existing injunction where the redesign is not more than colorably different and continues to infringe.

## Conclusion

The Federal Circuit permitted contempt enforcement of a patent injunction against a controller and successor entity used to continue prohibited sales, while requiring strict compliance with Rule 65(d)’s actual-notice limit before imposing contempt on a nonparty participant.


Additive Controls & Measurement Systems, Inc. v. Flowdata, Inc., 154 F.3d 1345 (Fed. Cir. 1998)