Hybir, Inc. v. Veeam Software Corporation (Fed. Cir. 2501367; D. Mass 20-cv-10329).

Hybir accused Veeam of infringing patents relating to on-line backup systems that minimize duplication of the backed-up data at the source of the data. Judge Talwani found the asserted claims invalid under 35 U.S.C. § 101 as directed to ineligible subject matter. Hybir appealed and filed its appeal brief, but Veeam declined to file its own brief, informing the Federal Circuit that it had reached an agreement with Hybir to resolve the dispute following conclusion of the appeal. Veeam licensed a number of other patents from Hybir, and the license included an option to add the patent-in-suit for an additional $100, should the Federal Circuit reverse the ineligibility finding.

The Federal Circuit determined that this agreement rendered the appeal moot. Earlier precedent found that, when an appellant had reached an agreement under which it would appeal and have its payment reduced by $50,000 should it succeed on any of the issues under appeal, the “token or arbitrary sum” had been introduced to “manufacture a controversy” and did not present a live case or controversy because the amount was untethered to the value of any of the issues on appeal.

I would note that here, of course, the fact that Veeam would almost certainly exercise the $100 option and license the patent should a reversal occur does render the dispute between the parties moot, this decision leaves Hybir with an invalidated patent and no option to have that determination reviewed by the appellate court – in other words, Hybir’s concerns are certainly not moot. This decision would seem to deter settlements that occur when an appeal is pending, which runs counter to the traditional encouragement of settlements by the court system.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.