Hybir, Inc. appealed a final judgment from the United States District Court for the District of Massachusetts, which had held that Hybir's asserted patent claims were ineligible under 35 U.S.C. § 101. The defendant, Veeam Software Corp., declined to file a brief defending the judgment or participate in oral argument. This non-participation was based on a Settlement and Limited Patent License Agreement between the parties. Under this agreement, Hybir had already licensed several patents to Veeam, but reserved the right to appeal the judgment regarding the specific '043 patent. The agreement provided that if Hybir succeeded on appeal, Veeam would have the option to add the '043 patent to its existing license for a mere $100. Veeam was not required to exercise this option, and the agreement explicitly stated that Veeam would not participate in the appeal proceedings.
The court determined that the appeal was moot because the parties had placed a 'side bet' on the outcome of the appeal rather than maintaining a live legal controversy. Relying on the precedent set in Allflex USA, Inc. v. Avid Identification Systems, the court explained that where an appellant identifies no relationship between the valuation placed on the appeal and the issues being challenged, the arrangement is insufficient to avoid a ruling of mootness. The court noted that the $100 option to add the patent to the license was 'completely untethered to the value of any of the issues on appeal.' The court reasoned that if a $50,000 reduction in a settlement payment was considered a 'token or arbitrary sum' in Allflex, the $100 amount here was an even smaller token that could not create a live case or controversy. Hybir argued that the limited nature of the license might motivate Veeam to attempt invalidating the patent again if the appeal succeeded, but the court rejected this as unsubstantiated speculation that did not demonstrate a real and imminent injury.
The district court's judgment declaring the patent claims ineligible under 35 U.S.C. § 101 remains in effect without further appellate review. The decision reinforces the strict application of the mootness doctrine in patent settlements where the financial stakes of the appeal are arbitrary or 'untethered' from the actual value of the legal issues. It serves as a warning that parties cannot manufacture a case or controversy through nominal settlement terms designed solely to preserve an appeal.
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