Note: This disposition is nonprecedential. 

United States Court of Appeals for the Federal Circuit 

2005-1587 

RFR INDUSTRIES, INC., 

 Plaintiff-Appellant, 

v. 

REX-HIDE INDUSTRIES, INC., 

Defendant/Third Party Plaintiff-Appellee, 

v. 

CENTURY STEPS, INC. 

 (doing business as Century Precast), 

 Third Party Defendant-Appellee. 

Robert G. Oake, Jr., Oake Law Office, of Allen, Texas, argued for plaintiffappellant. 

W. Todd Hoeffner, Hoeffner & Bilek, L.L.P., of Houston, Texas, argued for 

defendant/third party plaintiff-appellee. With him on the brief was Thomas E. Bilek. 

John R. Emerson, Haynes & Boone LLP, of Dallas, Texas, argued for third party 

defendant-appellee. With him on the brief was Benjamin L. Mesches. 

Appealed from: United States District Court for the Northern District of Texas 

Judge Ed Kinkeade 
NOTE: This disposition is nonprecedential. 

United States Court of Appeals for the Federal Circuit 

2005-1587 

RFR INDUSTRIES, INC., 

 Plaintiff-Appellant, 

v. 

REX-HIDE INDUSTRIES, INC., 

 Defendant/Third Party Plaintiff- 

 Appellee, 

v. 

CENTURY STEPS, INC. 

(doing business as Century Precast), 

 Third Party Defendant-Appellee. 

 __________________________ 

DECIDED: March 23, 2007 

 __________________________ 

Before MICHEL, Chief Judge, SCHALL and PROST, Circuit Judges. 

PROST, Circuit Judge. 

RFR Industries, Inc. (“RFR”) appeals from a final judgment of the United States 

District Court for the Northern District of Texas. RFR appeals the district court’s 

determination that RFR cannot recover damages for patent infringement from 

Defendant/Third Party Plaintiff Rex-Hide Industries, Inc. (“Rex-Hide”). RFR also 

appeals the district court’s grants of attorney fees to Rex-Hide and Third Party 

Defendant Century Steps, Inc. (“Century”). Finally, RFR appeals the district court’s 

entry of a permanent injunction prohibiting RFR from pursuing certain claims against 
Century in arbitration and ordering RFR to file all future related actions in the Northern 

District of Texas in Judge Kinkeade’s court. We affirm-in-part, reverse-in-part, vacatein-part, and remand for further proceedings consistent with this opinion. 

BACKGROUND 

RFR is the assignee of two patents relating to an embedded railway track 

system, U.S. Patent No. 5,577,662 (“’662 patent”) and U.S. Patent No. 5,535,947 (“’947 

patent”). The ’662 patent is directed to a railway system that utilizes a rubber product 

referred to by the parties as “flangeway filler,” and the ’947 patent is directed to a 

method of installing the flangeway filler. 

In 1998, RFR sued Century for patent infringement, alleging that Century’s sale 

of flangeway filler infringed the ’662 and ’947 patents. In 2000, RFR and Century 

entered into a written agreement to settle their dispute (“the 2000 settlement 

agreement”). The 2000 settlement agreement contained a number of provisions 

relevant to this appeal. First, Century agreed not to make, use, sell, offer to sell, or 

import flangeway filler that infringed the ’662 or ’947 patents, and Century consented to 

the entry of a permanent injunction prohibiting it from doing any of these activities. 

Second, Century agreed to pay a sum of money to RFR. Third, Century agreed to 

purchase a specified amount of flangeway filler from RFR, and the 2000 settlement 

agreement provided Century with an express license under the ’662 and ’947 patents to 

use, sell, and offer to sell any flangeway filler it had purchased from RFR. 

Fourth, the 2000 settlement agreement provided that RFR was releasing Century 

from RFR’s patent infringement claims in the underlying lawsuit. The agreement 

provided, however, that notwithstanding RFR’s release of Century, “nothing in this 

2005-1587 2
Agreement shall be construed as a release by RFR of Rex-Hide . . . or any other 

extruder that manufactured for Century [Flangeway] Filler (‘Century Extruders’) . . . .” 

RFR further agreed “to indemnify and hold harmless Century . . . from any claim made 

against Century . . . by any Century Extruder as a result of any RFR claim against any 

Century Extruder.” Finally, in a section of the 2000 settlement agreement entitled 

“FUTURE DISPUTE RESOLUTION,” RFR and Century agreed to submit to binding 

arbitration all claims arising out of the 2000 settlement agreement except for “motions 

for contempt for alleged violation of the permanent injunction or . . . complaints for 

patent infringement,” which were to be filed in federal district court. 

On March 29, 2004, RFR filed this action against Rex-Hide, a custom rubber 

extruder who had been Century’s main supplier of the allegedly infringing flangeway 

filler. The complaint alleged that Rex-Hide’s manufacture and sale of flangeway filler to 

Century constituted induced and contributory infringement of the ’662 and ’947 patents. 

Rex-Hide then filed a third-party complaint against Century, alleging that Century was 

required to indemnify it against RFR’s infringement claims. Century, in turn, filed a 

cross-claim against RFR, alleging that the 2000 settlement agreement required RFR to 

indemnify it. Finally, RFR filed a counterclaim against Century, seeking a declaration 

that the 2000 settlement agreement did not require RFR to indemnify Century against 

Rex-Hide’s claim. 

On January 13, 2005, the district court granted partial summary judgment to 

Century, holding that the 2000 settlement agreement required RFR to indemnify 

Century against Rex-Hide’s claim. RFR Indus., Inc. v. Rex-Hide Indus., Inc., No. 3:02-

CV-1444-K, slip op. at 3-4 (N.D. Tex. Jan. 13, 2005) (“Summary Judgment Order”). On 

2005-1587 3
August 11, 2005, after a bench trial, the court determined that Century was required to 

indemnify Rex-Hide against RFR’s claims pursuant to (1) the flangeway filler sales 

contract between Rex-Hide and Century and (2) the Texas Business & Commerce 

Code. RFR Indus., Inc. v. Rex-Hide Indus., Inc., No. 3:02-CV-1444-K, 2005 WL 

2036393, at *2 (N.D. Tex. Aug. 11, 2005) (“Circular Indemnity Order”). The court also 

held that RFR’s duty to indemnify Century and Century’s duty to indemnify Rex-Hide 

“creates a circular indemnity that extinguishes RFR’s patent-infringement claims against 

Rex-Hide.” Id. 

In addition, the district court considered Century’s and Rex-Hide’s applications for 

attorney fees and expenses. In its Summary Judgment Order, the court held that RFR’s 

duty to indemnify Century included paying any attorney fees and expenses incurred by 

Century while defending against Rex-Hide’s claim. Slip op. at 4. In its Circular 

Indemnity Order, the court held that Century’s duty to indemnify Rex-Hide included 

paying any attorney fees and expenses incurred by Rex-Hide while defending against 

RFR’s claims. 2005 WL 2036393, at *2. In addition, the court held that RFR’s duty to 

indemnify Century required RFR to pay Century for Rex-Hide’s recovery from Century 

of Rex-Hide’s attorney fees and expenses. Id. Finally, in yet another order, the court 

determined that Rex-Hide was entitled to $222,860.21 in attorney fees and expenses 

and Century was entitled to $79,679.24 in attorney fees and expenses. RFR Indus., 

Inc. v. Rex-Hide Indus., Inc., No. 3:02-CV-1444-K, slip op. at 5-6 (N.D. Tex. Aug. 11, 

2005) (“Attorney Fees Order”). 

While all of this was going on in the district court, the parties were involved in a 

number of collateral disputes. When RFR first refused to indemnify Century in this 

2005-1587 4
action, Century withheld the remaining payments it owed RFR under the 2000 

settlement agreement. Century also refused to pay RFR for some flangeway filler it had 

ordered from RFR pursuant to the 2000 settlement agreement. RFR responded to 

Century’s nonpayment in three ways. First, RFR filed an arbitration demand seeking 

both payment of the owed settlement amounts and payment for the flangeway filler 

Century had ordered from RFR. Second, in October 2004 RFR filed a new patent 

infringement suit against Century, alleging that Century’s nonpayment for and 

subsequent resale of the flangeway filler constituted infringement of the ’662 and ’947 

patents.1

 Third, RFR filed a petition to show cause in the 1998 lawsuit, alleging that 

Century’s nonpayment for and subsequent resale of the flangeway filler it had ordered 

from RFR violated the permanent injunction entered in that case. 

All of the collateral disputes led the district court to take action in this case. On 

August 11, 2005, the district court entered a preliminary injunction prohibiting RFR from 

pursuing its arbitration claims and ordering RFR “to file any and all future actions 

relating to the RFR patents, or the RFR-Century Settlement Agreement in the Northern 

District of Texas in Judge Kinkeade’s Court.”2

 RFR Indus., Inc. v. Rex-Hide Indus., Inc., 

No. 3:02-CV-1444-K, slip op. at 5 (N.D. Tex. Aug. 11, 2005) (“Preliminary Injunction 

Order”). The court later made the injunction permanent. RFR Indus., Inc. v. Rex-Hide 

 1

 RFR later attempted to dismiss this suit under Fed. R. Civ. P. 41, 

however, the district court granted judgment on the pleadings to Century. See RFR 

Indus., Inc. v. Century Steps, Inc., Nos. 2005-1610, 2006-1285, 2007 WL 489485, at *2 

(Fed. Cir. Feb. 16, 2007). On appeal, this court held that RFR dismissed its suit 

pursuant to Fed. R. Civ. P. 41(a)(1)(i) when RFR filed a notice of dismissal before 

Century served its answer on RFR. Id. at *4. 

2

 Judge Kinkeade presided over this case in the district court. 

2005-1587 5
Indus., Inc., No. 3:02-CV-1444-K, slip op. at 2 (N.D. Tex. Jan. 28, 2006) (“Amended 

Judgment”). Finally, on June 27, 2006, while RFR’s appeal to this court was pending, 

the district court on its own initiative issued a memorandum opinion clarifying the scope 

of the permanent injunction and requesting leave of this court to make the clarification. 

RFR Indus., Inc. v. Rex-Hide Indus., Inc., No. 3:02-CV-1444-K (N.D. Tex. June 27, 

2006) (“Clarification Opinion”). 

DISCUSSION 

 RFR makes, essentially, four arguments on appeal. First, RFR argues that the 

district court’s determination that RFR could not recover patent infringement damages 

from Rex-Hide was erroneous because Century was not required to indemnify Rex-Hide 

against RFR’s infringement claims. Second, RFR argues that the district court’s 

determination that RFR could not recover damages from Rex-Hide was erroneous 

because RFR was not required to indemnify Century against Rex-Hide’s claim. Third, 

RFR argues that the district court erred by awarding attorney fees and expenses to 

Century and Rex-Hide. Finally, RFR argues that the district court improperly entered a 

permanent injunction prohibiting RFR from pursuing its arbitration claims and ordering 

RFR to file any future related claims in the Northern District of Texas in Judge 

Kinkeade’s court. 

A 

RFR first takes issue with the district court’s determination that Century was 

required to indemnify Rex-Hide. On August 11, 2005, after a bench trial, the court 

determined that Century was required to indemnify Rex-Hide against RFR’s 

infringement claims under both (1) the Rex-Hide/Century flangeway filler sales contract 

2005-1587 6
and (2) the Texas Business & Commerce Code. Circular Indemnity Order, 2005 WL 

2036393, at *2. 

Specifically, the district court found that Century provided Rex-Hide with 

specifications for the flangeway filler. Rex-Hide, in turn, gave Century a price quotation 

form, which stated the terms under which Rex-Hide would manufacture the flangeway 

filler for Century. This form contained the following indemnification provision: 

In the event any of the parts produced under this contract infringe or are 

claimed to infringe any patent, copyright, or trademark, you agree to 

indemnify and save us harmless from any and all damages, losses or 

expenses, direct or indirect, to which we may be subjected on that account 

including but not limited to losses resulting from judgments, attorneys’ fees 

or settlements with or without your consent. 

Id. at *1. After receiving Rex-Hide’s quotation form, Century sent Rex-Hide a purchase 

order for the flangeway filler, which was accepted by Rex-Hide. The district court found 

that Century’s purchase order did not contradict the terms of Rex-Hide’s quotation form 

and that the indemnification provision on Rex-Hide’s quotation form became part of the 

contract between Rex-Hide and Century. Id. at *2. The court also determined that the 

indemnification provision required Century to indemnify Rex-Hide against RFR’s patent 

infringement claims. Id.

 RFR argues that the district court erred in two respects. First, RFR argues that 

the indemnification provision was not part of the contract between Rex-Hide and 

Century. Specifically, RFR contends that the quotation form was not an offer that could 

be accepted by Century because the quotation form reserved the final right of 

acceptance to Rex-Hide. But even if the quotation form was not an offer, RFR has not 

provided this court with any basis to assign error to the district court’s determination that 

2005-1587 7
the terms on the quotation form became part of the contract. Accordingly, we reject 

RFR’s first argument. 

Second, RFR argues that even if the indemnification provision became part of 

the contract, Rex-Hide is only entitled to indemnification if the parts Rex-Hide produced 

directly infringed the patents, but not if Rex-Hide is found to be liable for contributory or 

induced infringement. RFR points out that the indemnification provision only requires 

Century to indemnify Rex-Hide “[i]n the event any of the parts produced under th[e] 

contract infringe or are claimed to infringe any patent.” Id. at *1. RFR argues that RexHide is not entitled to indemnification under this provision because RFR does not claim 

that the parts Rex-Hide produced directly infringed RFR’s patents. 

We agree with the district court, however, and reject RFR’s second argument. 

Parts don’t infringe a patent by themselves; it is Rex-Hide’s making and selling the parts 

that can give rise to a claim of infringement. Accordingly, the provision is best read to 

protect Rex-Hide from a claim of infringement arising from its making and selling the 

flangeway filler. RFR has not provided us with a persuasive basis to reverse the district 

court’s determination that the provision encompasses claims of indirect infringement. 

Therefore, we affirm the district court’s determination that Century was required to 

indemnify Rex-Hide under the terms of the flangeway filler sales contract.3

 

 3

 The district court also held that Century was required to indemnify RexHide under Texas Business & Commerce Code § 2.312(c), which states that “a buyer 

who furnishes specifications to the seller must hold the seller harmless against any 

[claim of infringement or the like] that arises out of compliance with the specifications.” 

Id. at *2. Because we affirm the district court’s determination that Century was required 

to indemnify Rex-Hide under the terms of the flangeway filler sales contract, we need 

not decide whether indemnification was also required under the Texas Business & 

Commerce Code. 

2005-1587 8
B 

RFR next takes issue with the district court’s determination that the 2000 

settlement agreement required RFR to indemnify Century. The 2000 settlement 

agreement provided that RFR would “indemnify and hold harmless Century . . . from 

any claim made against Century . . . by any Century Extruder as a result of any RFR 

claim against any Century Extruder.” The agreement specifically identified Rex-Hide as 

a “Century Extruder.” The district court held that the 2000 settlement agreement was 

unambiguous and that it required RFR to indemnify Century against Rex-Hide’s claim. 

Summary Judgment Order, slip op. at 3-4. 

On appeal, RFR argues that this provision should not be given effect because it 

conflicts with another provision of the 2000 settlement agreement, which states that 

“nothing in this Agreement shall be construed as a release by RFR of Rex-Hide . . . .” 

We agree with the district court, however, and reject RFR’s argument. It is apparent 

from the 2000 settlement agreement that the parties anticipated that RFR might sue 

Rex-Hide, who might, in turn, sue Century. And the agreement explicitly protects 

Century in such a situation. It is only in combination with Century’s duty to indemnify 

Rex-Hide that RFR is precluded from recovering damages from Rex-Hide. This is not a 

“release” of Rex-Hide; for instance, had RFR chosen to do so, RFR could have pursued 

injunctive relief against Rex-Hide. 

C 

Next, RFR assigns error to the district court’s grants of attorney fees and 

expenses to Century and Rex-Hide. RFR first argues that neither Century nor Rex-Hide 

is entitled to any attorney fees and expenses. We reject RFR’s argument because RFR 

2005-1587 9
has not provided this court with a persuasive basis to reverse the district court’s 

determination that, under Texas law, the indemnity provision in the 2000 settlement 

agreement entitled Century to recover attorney fees and expenses for defending against 

Rex-Hide’s claim. Nor has RFR provided this court with a persuasive basis to reverse 

the district court’s determination that the indemnity provision in the Rex-Hide/Century 

sales contract entitled Rex-Hide to recover attorney fees or expenses for defending 

against RFR’s claims. 

In the alternative, RFR argues that under Texas law Rex-Hide and Century may 

not recover fees and expenses incurred in the process of establishing their respective 

rights to indemnification. Accordingly, RFR argues that the district court improperly 

allowed Rex-Hide and Century to recover attorney fees and expenses insofar as those 

fees and expenses were incurred while establishing their rights to indemnification. On 

appeal, Rex-Hide and Century do not take issue with RFR’s interpretation of the law. 

Nevertheless, Rex-Hide and Century assert two bases for affirming the district court’s 

grants of attorney fees and expenses. 

First, Rex-Hide and Century argue that they should be able to recover attorney 

fees and expenses for establishing their rights to indemnification because establishing 

their rights to indemnification essentially eliminated their liabilities as effectively as if 

Rex-Hide had obtained a judgment of non-infringement or invalidity. Were we to accept 

this argument, however, it would mean that a party could always recover attorney fees 

and expenses for establishing its right to indemnification. And Rex-Hide and Century do 

not dispute RFR’s assertion that a party may not recover fees and expenses for 

establishing the party’s right to indemnification. We therefore reject this argument. 

2005-1587 10
During oral argument, Rex-Hide suggested a second basis for affirming the 

district court’s grants of attorney fees and expenses. Specifically, Rex-Hide contended 

that the district court reduced Rex-Hide’s and Century’s awards to take into account the 

fees and expenses Rex-Hide and Century incurred while establishing their rights to 

indemnification. We cannot affirm the awards on this basis. It is true that the district 

court made a downward adjustment of 30% of Rex-Hide’s and Century’s requested 

amounts; however, the district court did not state that it was reducing Rex-Hide’s or 

Century’s award because some of the fees were incurred while establishing the right to 

indemnification. Instead, the district court cited “the time and amount involved, the 

nature of the case, fee awards in similar cases and that the case only required a one 

day bench trial.” Attorney Fees Order, slip op. at 3-4. Thus, it appears that the district 

court improperly allowed Rex-Hide and Century to recover fees for establishing their 

respective rights to indemnification.4 Consequently, we vacate the district court’s 

Attorney Fees Order and remand to the district court. 

On remand, the district court should determine the portion of Rex-Hide’s 

requested fees and expenses incurred while establishing Rex-Hide’s right to 

indemnification from Century and adjust Rex-Hide’s award accordingly. Similarly, the 

district court should determine the portion of Century’s requested fees and expenses 

 4

 Indeed, that the Attorney Fees Order mentioned that the bench trial only 

lasted one day suggests that the district court improperly included time spent 

establishing the right of indemnification since the bench trial only involved the issue of 

indemnification. 

2005-1587 11
incurred while establishing Century’s right to indemnification under the 2000 settlement 

agreement and adjust Century’s award accordingly.5

D 

Next, RFR appeals the district court’s entry of a permanent injunction. The 

permanent injunction, as elucidated by the district court in its Clarification Opinion, 

prohibits RFR from pursuing its arbitration claims and directs RFR to bring all future 

actions against Century or Rex-Hide related to the ’662 and ’947 patents in the Northern 

District of Texas in Judge Kinkeade’s court. Slip op. at 4. We reverse the permanent 

injunction in its entirety. 

We deal first with the portion of the injunction prohibiting RFR from pursuing its 

arbitration claims. The district court held that RFR had substantially invoked the judicial 

machinery, and thus had waived arbitration for its claim for payment of the settlement 

amounts owed by Century and its claim for payment for the flangeway filler Century had 

ordered from RFR. RFR argues that it should be allowed to submit those claims to 

arbitration because it has not invoked the judicial machinery with respect to those 

claims. In response, Century argues that RFR waived its right to arbitration because 

some of the issues raised by RFR’s claims overlap with some of the issues resolved by 

the district court, for example, whether RFR had a duty under the 2000 settlement 

agreement to indemnify Century. 

 5

 RFR asserts that the district court abused its discretion by awarding fees 

and expenses because Rex-Hide and Century submitted inadequate records. In light of 

our remand, we need not address this argument, and we anticipate that any issues 

regarding deficiencies in Rex-Hide’s and Century’s records, if there are any, will be 

resolved by the district court in the process of recalculating the awards. 

2005-1587 12
We do not conclude that RFR’s actions in this case constituted a waiver of 

arbitration with respect to its two claims arising under the 2000 settlement agreement: 

its claim for payment of the settlement amounts owed by Century, and its claim for 

payment for the flangeway filler Century had ordered from RFR. RFR has not 

attempted to litigate these specific claims that it now seeks to arbitrate and, therefore, 

arbitration may be available for these claims.6

Because RFR may seek arbitration on its claims arising under the 2000 

settlement agreement, we also reverse the portion of district court’s injunction directing 

RFR to file all future related actions in the Northern District of Texas in Judge 

Kinkeade’s court. While this court understands and appreciates the district court’s 

desire to prevent duplicative litigation, we anticipate that any court or arbitrator 

confronted with these parties and issues in the future will enter such orders as 

necessary to prevent unnecessary costs, delays, and inconsistent judgments. 

CONCLUSION 

We affirm the district court’s determination that RFR cannot recover damages for 

patent infringement from Rex-Hide. We vacate the grants of attorney fees and remand 

for the district court to recalculate the amounts of the awards. We reverse the 

permanent injunction.7

 6

 Of course, RFR cannot revisit issues in arbitration that have been 

conclusively decided in this appeal. For instance, RFR may not reopen the issue of 

whether the 2000 settlement agreement required RFR to indemnify Century. 

7

 RFR’s motion to remand this case to a different district court judge is 

denied. 

2005-1587 13