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CAFC Orders Settlement Agreement Enforced, Tosses Summary Judgment of Non-Infringement

Even though a settlement agreement may call for future performance, it generally renders the underlying action moot. The Federal Circuit may enforce a settlement agreement that resolves patent infringement claims as long as the proceedings are still ongoing.

Settlement Agreement Check Word 3d IllustrationThe Federal Circuit recently issued an opinion vacating the district court’s grant of summary judgment motions of non-infringement and remanding with instructions to enforce a settlement agreement between Serta Simmons Bedding, LLC and Dreamwell, Ltd. (collectively, “Serta Simmons”) and Casper Sleep Inc. (“Casper”). See Serta Simmons Bedding, LLC v. Casper Sleep Inc., No. 19-1098, 2020 U.S. App. LEXIS 4467 (Fed Cir. Feb. 13, 2020) (Before Dyk, Plager, and Stoll, Circuit Judges) (Opinion for the Court, Dyk, Circuit Judge).

Serta Simmons sued Casper for infringement of U.S. Patent Nos. 7,036,173, 7,424,763, and 8,918,935, each directed to mattresses that include a channel and methods for forming same. While Casper’s motions for summary judgment on the issue of non-infringement were pending, the parties executed a Settlement Agreement, requiring Casper to pay $300,000 to Serta Simmons and cease the allegedly infringing activities, including manufacturing, selling, and marketing the accused products by set dates. The Settlement Agreement included language obligating the parties to release each other from all liabilities and to dismiss all claims and counterclaims upon Casper’s payment of the stipulated fee. As further mandated by the Agreement, the parties filed a Joint Notice of Settlement and Motion to Stay informing the district court of the Settlement Agreement and requesting stay until the dismissal papers had been filed.

Without mentioning the Settlement Agreement, the district court granted Casper’s motions of non-infringement against Serta Simmons. In light of this, Casper refused to make the payments required by the Agreement. Serta Simmons, in turn, filed motions to enforce the Agreement and vacate the non-infringement orders, which the district court denied. Serta Simmons appealed. The Federal Circuit agreed with Serta Simmons, vacated the district court’s orders, and instructed the district court to enforce the Settlement Agreement.

Relying on precedent, the Federal Circuit first held that a binding settlement agreement generally moots an action even if it requires future performance. Here, Casper admitted that the Agreement was binding, the Agreement was neither unlawful nor contrary to public policy, and it was undisputed that the Settlement Agreement was executed prior to the court’s issuing of the summary judgment order. Thus, the Settlement Agreement rendered the infringement case moot. As a result, the Court vacated the summary judgment orders.

Second, applying Federal Circuit law, the Court held that the district court did have jurisdiction to enforce the Settlement Agreement. Because the Court vacated the district court’s summary judgment orders, there will be no final judgment in the case until the remand proceedings are concluded. Because the motion to enforce the Agreement was filed before the case is dismissed, the district court has jurisdiction to enforce it.

Image Courtesy of Deposit Photos
Image ID: 136182058
Copyright: iqoncept

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