1. Whether a patent infringement settlement agreement prohibiting a party from making or selling products within the scope of a "Defined Products" clause grants it permission to infringe the patent by manufacturing products outside of the scope of the clause.
2. Whether a consent judgement of patent validity may preclude a party from asserting invalidity in subsequent litigation involving new accused products.
1. No. The patent is still enforceable outside the scope of the "Defined Products" clause.
2. Yes. However any surrender of the right to challenge validity of a patent is construed narrowly. The law requires more than a declaration that the patents are valid and enforceable.
In 1991, Diversey brought a patent infringement suit against Ecolab alleging infringement of Diversey's U.S. Patent Nos. 5,009,801 ('801 patent) and 5,073,280 ('280 patent). Both patents are directed to methods of inhibiting stress cracking in the plastic bottles used by beverage bottlers through the use of particular chemical additives in conveyor lubricants. The parties signed a settlement agreement which states that both the '801 and '280 patents "are valid and enforceable", that Ecolab "will not directly or indirectly aid, assist or participate in any action contesting the validity" of either patent, and that Ecolab is prohibited from making or selling products within the scope of a Defined Products clause.
Ecolab developed two new lubricants that they admitted where outside the scope of the Defined Products clause, but infringed the '801 and '280 patents. Diversity brought this suit alleging these new lubricants infringed the patents. The United States District Court for the Eastern District of Michigan granted summary judgement that Ecolab infringed the '801 patent and the '280 patent.
The Federal Circuit affirmed this judgement, holding that Diversey can enforce the '801 and '280 patents against Ecolab products outside the scope of the Defined Products clause. The Defined Products clause does not grant Ecolab permission to infringe the '801 and '280 patents by manufacturing products outside of the scope of the clause. The Court also held that any surrender of the right to challenge validity of a patent is to be construed narrowly. Nonetheless, because of the explicit language in the settlement agreement, Ecolab surrendered its rights to challenge the validity of the patents in any context.
Prepared by the liibulletin-patent Editorial Board.