Court denies cross-motions for summary judgment on claims for breach of settlement agreement
Sleet, C.J. Prior settlement agreement precludes invalidity argument for different product.
Plaintiff filed infringement action on ‘178 and ‘258 patents (involving voltage regulators) and for breach of a settlement agreement arising from a prior infringement action brought before the ITC regarding the same patents-in-suit. Subsequent to entering into the settlement agreement, defendant began marketing a voltage regulator controller product. Plaintiff contends that defendant’s product infringes the patents-in-suit and violates the terms of the settlement agreement. Plaintiff and defendant filed cross-motions for summary judgment on the claim for breach of the settlement agreement. Plaintiff contends that the agreement bars defendant from challenging validity and/or enforceability of the patents-in-suit in any action brought pursuant to the settlement agreement and from practicing any of the asserted claims of the patents-in-suit anywhere in the world. Defendant argues that nothing in the agreement prevents it from contesting validity and/or enforceability with respect to a product not encompassed by the agreement and that the prohibition on practice only applies to three categories of products which currently have the zx circuitry identified by plaintiff’s counsel during the ITC proceeding. Applying California law, the Court concludes that the terms are clear and unambiguous precluding consideration of parol evidence. The Court finds that the express words of the settlement agreement bar defendant from challenging the validity of the patents-in-suit but that the agreement is silent on the issue of enforceability. Thus, defendant may challenge the enforceability of the patents-in-suit. The Court also agrees with defendant that the express terms of prohibition against practice applies only to the defendant’s products containing zx circuitry and not to all products. The Court concludes that genuine issues of material fact remain regarding whether defendant’s product at issue contains the zx circuitry preventing summary judgment for either party on the breach of contract claim.
A full copy of the opinion is available here.
