Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in PlasmaCAM, Inc. v. CNCElectronics, LLC, No. 2021-1689 (Feb. 3, 2022), reversing and remanding a district court’s judgment involving a dispute over settlement terms.
PlasmaCAM sued CNCElectronics for patent infringement. The parties eventually agreed to settle the case and notified the district court that a settlement had been reached. However, when the district court asked the parties to submit their final settlement documents, the parties could not agree on the scope of the mutual release or the identification of products that would be covered by the covenant not to sue (“Covered Products”). After a series of emails, CNCElectronics proposed that “Covered Products” be defined as “all components manufactured, sold or offered for sale by CNC which incorporate digital torch height control.” PlasmaCAM responded that it agreed to this definition of Covered Products. Because the parties continued to dispute the scope of the release, the district court authorized each side to submit briefing on its proposed interpretation of the agreement. During the briefing, the parties resolved their dispute concerning the release. PlasmaCAM’s reply brief, however, proposed a definition of Covered Products different than the one to which it had previously agreed. The district court granted PlasmaCAM’s motion to enforce the settlement agreement, adopting PlasmaCAM’s unilateral definition of Covered Products, and denied CNCElectronics’s motion for reconsideration. CNCElectronics appealed.
The Federal Circuit reversed. The Court first noted that it had jurisdiction under 28 U.S.C. § 1292(a)(1) because the district court’s order effectively mandated specific performance, and, alternatively, because the order was a final judgment. On the merits of the appeal, the Court held that the district court committed clear error by disregarding the parties’ explicit agreement as to the definition of Covered Products. The Court explained that the record demonstrated the parties’ agreement to the definition proposed by CNCElectronics. The Court rejected PlasmaCAM’s argument that its agreement to CNCElectronics’s definition of Covered Products was contingent on adopting PlasmaCAM’s version of the mutual release, finding no support for such an argument in the record. The Court remanded for entry of an appropriate order implementing the parties’ agreed definition of Covered Products.
Judge Newman dissented, explaining that “nowhere in the record is there even a remote suggestion of agreement by PlasmaCAM” regarding all terms of settlement.