Virginia IP Law > Troutman Sanders LLP

Judge Jackson Rebuffs Verizon’s Motion to Stay Payment of Sunset Royalties to ActiveVideo

As we posted here, Judge Jackson granted Verizon a temporary stay of the permanent injunction he entered in favor of ActiveVideo in return for Verizon’s payment of royalties for a six-month “sunset” period. Verizon then moved for an automatic stay of the payment of “sunset” royalties under Fed. R. Civ. P. 62(d) upon its posting of a supersedeas bond. On December 12, Judge Jackson denied Verizon’s motion for a stay.  ActiveVideo Networks, Inc. v. Verizon Comm’s., Inc., et al., Case No. 2:10CV248 (Dec. 12, 2011) (Jackson, J.).  Judge Jackson’s opinion can be found here.

While Rule 62(d) entitles a party to a stay of a money judgment as a matter of right upon posting a supersedeas bond, Judge Jackson ruled that Rule 62(d) did not apply where the Court had not issued a money judgment. By pointing to decisions which involved a monetary award coupled with some nonmonetary relief, the judge stated, “Verizon is attempting to separate the royalty payments from the permanent injunction as if the royalty payments were not one with the grant of a permanent injunction.”

As Judge Jackson pointed out, the Court conditioned the stay of the permanent injunction on payment of the sunset royalties. Staying the royalties “would merely provide Verizon the freedom to continue to infringe without any recourse” to ActiveVideo. Moreover, if courts were required to stay sunset royalties upon payment of a bond, the judge noted, “it is likely that no court would ever grant sunset royalties.”

Judge Jackson’s logic is compelling, but there is little authority on the issue, and the Federal Circuit may see it differently and hold that the language of Rule 62(d) requires a stay once a supersedeas bond is posted. Indeed, Verizon filed an emergency motion to stay the payment of sunset royalties in the Federal Circuit the day of Judge Jackson’s ruling. In the meantime, Verizon’s first sunset royalty payment is due December 16, and Judge Jackson refused Verizon’s request to extend the time for that payment.

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