Ordered To Agree: Binding Settlement Agreement Provision Found Despite Absence of Singular, Executed Agreement
In Plasmacam, Inc. v. Cncelectronics, LLC Appeal No. 21-1689, the Federal Circuit held that an agreement on the meaning of a term in settlement negotiations may create a binding, enforceable agreement as to that term, despite the absence of a finalized settlement agreement as to all terms.
PlasmaCam sued CNCElectronics, LLC (“CNC”) for patent infringement. On December 20, 2019, the parties exchanged a series of emails before eventually agreeing to settle the case. The parties then exchanged specific drafts of the settlement agreement, primarily disputing the products to be covered by a covenant not to sue and the terms of the mutual release. The parties eventually agreed to CNC’s definition of the covered products but could not agree on the terms of the mutual release. PlasmaCam then moved to enforce the settlement agreement as outlined in the parties’ December 20, 2019 email exchange. In its reply brief, PlasmaCam informed the court that the parties had reached agreement on the scope of the mutual release. However, PlasmaCam’s reply brief also included PlasmaCam’s definition of covered products, and not CNC’s definition that the parties had previously agreed on. The court ultimately enforced PlasmaCam’s definition of the covered products. CNC appealed.
On appeal, the Federal Circuit noted that the term to which the parties assented is a factual question reviewed for clear error. The Federal Circuit then found clear error existed because there was mutual agreement on the definition of the covered products, even though there was no agreement on the mutual release term at that time. The Federal Circuit reversed and remanded to the district court to enter an order using CNC’s definition of the covered products.
Judge Newman dissented, arguing that there could not be a piecemeal “agreement” to one provision in a settlement agreement, since this would run afoul of the settled contract principle of mutual assent.
Conclusory Statements About Prior Art Combinations Not Enough to Defeat Preliminary Injunction
In BLEPHEX, LLC v. MYCO INDUSTRIES, Inc. Appeal No. 21-1149, the Federal Circuit held that conclusory statements about how a skilled artisan would combine embodiments in a prior art reference are insufficient to defeat a preliminary injunction motion.
BlephEx filed suit against Myco for infringement of one claim of its patent related to treating blepharitis. The district court entered a preliminary injunction enjoining Myco from all domestic sales of its accused product. Myco appealed to the Federal Circuit, challenging the district court’s conclusion that Myco had failed to show a substantial question of validity and arguing that the preliminary injunction failed to preserve the status quo between the parties.
The Federal Circuit found no clear error in the district court’s determinations regarding anticipation and obviousness. Myco argued that a reference that disclosed the claim limitations in two separate embodiments may anticipate even if it lacks discussion of the actual combination so long as one skilled in the art would be able to implement the combination. The Federal Circuit rejected this argument, explaining that Myco agreed that the ordinary level of skill in the art was extremely high (a doctorate and several years of experience treating blepharitis), but that Myco only provided supposition about what a skilled artisan would do. The Federal Circuit determined that this was insufficient evidence to show that a skilled artisan would have combined the two embodiments. Similarly, the Federal Circuit rejected Myco’s single-sentence obviousness argument—which the Federal Circuit noted was so sparse that Myco may have forfeited the argument—as Myco failed to present evidence showing what a skilled artisan would have been motivated to do.
As to Myco’s argument that the district court’s injunction failed to preserve the status quo, the Federal Circuit found that Myco was wrong in asserting that the status quo should be considered as a time before BlephEx’s patent was issued. Instead, the proper time period for evaluating the status quo was when BlephEx’s patent was granted and could be enforced.