United States District Court, E.D. Texas, Marshall Division
MEMORANDUM OPINION AND ORDER
PAYNE, UNITED STATES MAGISTRATE JUDGE
parties in this patent infringement action appeared to have
settled their dispute, but the final settlement agreement
fell through when Defendants learned that the Patent Trial
and Appeal Board (PTAB) instituted inter partes review (IPR)
of one of the asserted patents. Neurovision Medical Products,
Inc. (“Neurovision”) now seeks emergency relief
to enforce the parties' settlement agreement. ECF No.
102. For the following reasons, Neurovision's emergency
motion is GRANTED-IN-PART-the Court finds that at least
Neurovision and Medtronic entered into an enforceable
settlement agreement by email on February 17, 2017.
Complaint alleges that Defendants Medtronic Public Limited
Company, Medtronic, Inc., Medtronic Xomed, Inc.
(collectively, “Medtronic”), HCA Holdings, Inc.
(“HCA”), and HealthTrust Purchasing Group, L.P.
(“HPG”) infringe U.S. Patent No. 8, 467, 844 and
8, 634, 894. ECF No. 1 at 1. The allegations concerning HCA
and HPC are based on devices made and sold by Medtronic, and
Medtronic is indemnifying HCA and HPC. See ECF No.
107 at 1 n.2.
the Complaint was filed, Medtronic Xomed, Inc. petitioned for
IPR of all asserted claims of the '894 and '844
patents-two petitions were filed on July 11, 2016 and one on
December 9, 2016 challenging the '894 patent, and one
petition was filed on September 19, 2016 challenging the
'844 patent. See ECF No. 99 at 1. On December
29, 2016, the PTAB instituted IPR of all asserted claims of
the '894 patent. Id. The parties thereafter
filed a joint motion to stay the action, id., and
the Court granted the motion, ECF No. 100.
December 2016 the parties had attended a mediation session
but had not reached a settlement. See ECF No. 95.
Settlement discussions continued, and in February 2017, a
Medtronic director and Neurovision's owner began
exchanging offers and counteroffers by email. See
ECF No. 102-7. Medtronic's director ultimately emailed an
offer that included Medtronic's upfront and subsequent
payment obligation to Neurovision in addition to
Medtronic's agreement to withdraw the four IPR petitions,
in exchange for a license to the patents and
Neurovision's release from the district court action.
See Id. On February 17, 2017, Neurovision's
owner responded to Medtronic's email, indicating that he
had “briefed the shareholders and [that] we accept your
offer.” Id. at 6-7. This response email
summarized various terms, including payment, the patent
license, and Medtronic's agreement to withdraw the four
IPRs. Id. at 7. Neurovision's owner concluded,
“Advise us as to how you wish to proceed to create the
for the parties began exchanging drafts of a settlement
agreement, and on March 23, 2017, Medtronic's counsel
emailed Neurovision's counsel a finished agreement with
only “a final clarifying edit.” See ECF
No. 102 at 5. Drafts of the agreement and the March 23
agreement all included clauses indicating that the agreement
was effective upon signing and “WITNESS HEREOF”
clauses, in addition to empty signature blocks. See
ECF No. 106 at 1-2. Edits to the settlement agreement appear
to have been complete by the morning of March 23 when
Neurovision's counsel sent Medtronic's counsel a
signed copy of the agreement. See ECF No. 102 at
changed later that afternoon when the PTAB released its
decision instituting IPR of the '844 patent. See
ECF No. 104. The timing of the PTAB's decision, however,
was not unexpected. The parties expected the PTAB's
decision on the '844 patent no later than March 30, 2017.
See ECF No. 99 at 1. By statute, the PTAB must
decide whether to institute IPR within three months after the
patent owner's preliminary response, or if no response is
filed, within three months after the date any preliminary
response is due. 35 U.S.C. § 314(b). Neurovision filed a
preliminary response on December 30, 2016, and thus the
PTAB's institution decision was due no later than March
PTAB's decision on the '844 patent nevertheless
prompted Medtronic to inform Neurovision on March 27, 2017
that Medtronic “does not intend to execute the
[settlement agreement] in its current form” because
“circumstances changed materially last week when the
PTAB instituted inter partes review of the '844
patent.” See ECF No. 102 at 6. Neurovision
filed its emergency motion to enforce the settlement
agreement on March 28, 2017. ECF No. 102. Specifically,
Neurovision asks the Court to force Medtronic to sign the
March 23 agreement, which, according to Neurovision, is the
final written agreement. See id.
district court in the Fifth Circuit has inherent power to
enforce a settlement agreement in a case pending before it.
Mid-S. Towing Co. v. Har-Win, Inc., 733 F.2d 386,
390 (5th Cir. 1984). The court has the ability to summarily
enforce a settlement “if no material facts are in
dispute, ” but “when opposition to enforcement of
the settlement is based not on the merits of the claim but on
a challenge to the validity of the agreement itself, the
parties must be allowed evidentiary hearing on disputed
issues of the validity and scope of the agreement.”
In re Deepwater Horizon, 786 F.3d 344, 354 (5th Cir.
2015) (internal quotations and citations omitted).
regarding the enforceability or validity of such agreements
are determined by federal law-at least where the substantive
rights and liabilities of the parties derive from federal
law.” Mid-S. Towing, 733 F.2d at 389. To the
extent state law applies, the parties have not identified a
conflict of law that would affect the outcome of the dispute.
Moreover, federal contract law is often indistinguishable
from general state contract law, and where federal law is
undeveloped, courts rely on treatises and general state law
principles to fill gaps in federal law. In re Deepwater
Horizon, 786 F.3d at 354-55.
parties' dispute raises two questions-first, whether the
email exchange culminating on February 17, 2017 qualifies as
a valid settlement agreement, and second, whether the
subsequent and more complete March 23, 2017 agreement is
enforceable, even though Defendants had not signed it. Much
of the parties' briefing is devoted the second question,
but the first question is relatively easy to answer. Because
the Court believes resolution of the first question will
allow the parties to complete their settlement, the Court
does not address the second question.
is no dispute that Medtronic's director and
Neurovision's owner exchanged a number of offers and
counteroffers between February 13 and February 17, 2017.
See ECF No. 102-7. Most important, Defendants do not
contend that the email from Medtronic's director on
February 17, 2017 was not a valid offer under
applicable contract law. See Id. at 7. Indeed,
Neurovision's owner responded to the email by saying
“we accept your offer, ” in addition to
summarizing material terms of the agreement. See Id.
at 6-7. In response to Neurovision's purported
acceptance, Medtronic's director wrote, among other
things, “This is excellent news. Thanks for working
through.” Id. at 6. The Medtronic director did
not dispute any ...