DC grant of Plasmacam’s motion to enforce its version of a settlement agreement reversed and remanded

Plasmacam, Inc. v. CNCelectronics, LLC et al.

Docket No. 2021-1689 (https://cafc.uscourts.gov/opinions-orders/21-1689.OPINION.2-3-2022_1902753.pdf)

NEWMAN, DYK, REYNA

February 3, 2021

Brief Summary:  DC grant of Plasmacam’s motion to enforce its version of a settlement agreement reversed and remanded.

Summary:  CNC appealed DC grant of Plasmacam’s motion to enforce its version of a settlement agreement relating to infringement of Plasmacam’s (as exclusive licensee) US 7,071,441 directed to a plasma cutting system.  During settlement negotiations, the parties traded emails in which Plasmacam’s counsel wrote that “[t]he parties will enter into mutual releases which will include releasing CNCElectronics’s downstream customers from liability for infringing the patent at issue” and CNC’s counsel agreed “[p]rovided that the release also covers future claims, then it looks like we have a settlement. I.e., the agreement includes a covenant not to sue (or license or similar) to cover Defendants and their downstream customers/users, from future infringement claims.”  After notifying the DC of their settlement, the parties continued discussions but disagreed as to which products were covered by the covenant not to sue (“Covered Products”) and the scope of release.  Plasmacam advocated for CNC to release it “from any causes of action that arose out of or related to the lawsuit, whereas Plasmacam would release CNC only for past and future claims for infringement of the ’441 patent arising from the Covered Products”, while “CNC proposed a broad release, applying equally to each party, which released all past claims of any nature and appeared to cover claims not related to the ’441 patent.”  The parties notified the DC of their disagreement and each briefed its position for the court, which then granted Plasmacam’s motion to enforce its version.  CNC requested reconsideration as “Plasmacam’s reply brief definition was not what the parties agreed to”, but the DC ordered “CNC to execute the settlement agreement and promissory note and pay any unpaid settlement funds.”  The FC panel determined it had jurisdiction because the DC’s “order effectually mandated specific performance in requiring CNC to execute the settlement agreement” (Section 1292(a)(1)) and, alternatively, “because it is a final judgment” (Firestone, US 1981).  The FC panel found that “the record…establishes that Plasmacam ultimately agreed to CNC’s proposed Covered Products definition” and that the DC’s “sole basis for disregarding this explicit agreement was that Plasmacam “gave’ [CNC] the Covered Products language in exchange for other proposed changes,” i.e., the Covered Products concession was contingent on CNC’s agreement to Plasmacam’s proposal” while “[t]here is no support in the record for any such qualification of the agreement.”  The FC panel therefore concluded the DC clearly erred and reversed and remanded the decision.  Judge Newman dissented, arguing that there never was “an enforceable binding settlement agreement” (e.g., the DC “found there was no meeting of the minds with respect to all the conditions of settlement, and the parties do not state otherwise”).