Opinion ID: 766560
Heading Depth: 3
Heading Rank: 1

Heading: The Settlement Agreement Release

Text: 10 This is a case of first impression for this court in interpreting the language of the Settlement Agreement reached between the two parties. We must determine whether the language as drafted by Augustine and Progressive functions as a bar to any future claims of Augustine for patent infringement occurring after the Settlement Agreement, related to those goods that were included in the Settlement Agreement. 11 Augustine would have us construe the language of the Settlement Agreement, namely: 12 AMI does hereby . . . release and forever discharge PDI from any and all manner of action or actions . . . that AMI and/or its owners . . . have, have had, or may have against PDI upon or by reason of or relating to any acts, omissions or statements made by PDI on or before the date of this Settlement Agreement, 13 as limiting the release to claims based on PDI's pre-settlement actions and does not refer to future claims. Progressive urges us to affirm the district court's holding, adopting the position that the language may have was prospective in nature, and therefore the release barred future claims that would arise after the date of the Settlement Agreement, as long as the claims were related to acts that were taken on or before the date of the Settlement Agreement. For the following reasons, we find that the terms of the Settlement Agreement clearly reach the present dispute between the parties, and therefore find Progressive's interpretation of the settlement provisions to be correct. 14 The phrase may have is necessarily future-oriented. In the context of the Settlement Agreement, it implies a future possibility of Augustine having a claim. Augustine argues that the phrase have, have had, or may have is restricted by the phrase which appears later in the same paragraph, on or before the date of this Settlement Agreement, and argues that a claim could not have existed on or before the date of the Settlement Agreement because the post-settlement patent infringement had not yet occurred. We find this interpretation to be contrary to the clear language of the agreement by unduly emphasizing the role of the settlement date clause. 15 Specifically, Augustine fails to consider the intervening words between the two phrases they cite. In releas[ing] . . . PDI from any and all . . . actions . . . that AMI . . . may have against PDI . . . relating to any acts, omissions or statements made by PDI on or before the date of th[e] Settlement Agreement, Augustine has discharged its ability to sue Progressive not for claims that existed on or before the date of the Settlement Agreement, but for claims related to any actions taken by Progressive on or before the date of the Settlement Agreement. Prior to and on the date of the Settlement Agreement, as well as after the date of the Settlement Agreement, Progressive was producing and marketing the convective warming blankets at issue. Augustine's claims for patent infringement then are undeniably related to Progressive's production and marketing of the goods at issue on or before the date of the Settlement Agreement. While Augustine's claims for patent infringement in the present litigation are not directly based on Progressive's actions prior to the date of the Settlement Agreement, they are sufficiently related to those pre-settlement actions so as to fall within the clear meaning of the language of the agreement. 16 Augustine contends that because we have held patent infringement to be a continuing tort, see Pall Corp. v. Micron Separations, Inc., 66 F.3d 1211, 1221-22 , 36 USPQ2d 1225, 1232 (Fed. Cir. 1995), and therefore, each act of infringement gives rise to a separate cause of action, see A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1031, 22 USPQ2d 1321, 1326 (Fed. Cir. 1992), Augustine should be allowed to bring a claim against Progressive for the latter's alleged infringement that occurred after the date of the Settlement Agreement, even though Augustine knew the allegedly infringing actions were taking place prior to the Settlement Agreement as well. While Progressive's counter-argument is not on point because its assertion of continuing torts as a unitary claim is related to the doctrine of laches, we nevertheless find Augustine's argument unpersuasive. While issues of patent infringement do give rise to individual causes of action, those individual causes of action cannot override the unambiguous language of a Settlement Agreement that releases all possible future claims related to the matters settled by the agreement. 17 Our interpretation of the language of the Settlement Agreement is consistent with judicial interpretation of general releases in settlement agreements. Both parties agree that their settlement provided a general release containing very broad language, such as release and forever discharge, any and all manner of action or actions, relating to any acts, omissions or statements made by Progressive, and including, but not limited to, any and all claims that were or could have been asserted by AMI in the [present lawsuit]. General language such as these phrases have consistently been held by the courts to constitute a waiver of all claims and causes of action arising under or by virtue of the contract, United States v. William Cramp & Sons Ship & Engine Bldg. Co., 206 U.S. 118, 128 (1907), and of all claims based upon events occurring prior to the date of the release. Johnson, Drake & Piper, Inc. v. United States, 531 F.2d 1037, 1047 (Ct. Cl. 1976). 18 Closely analogous to the case before us is Press Mach. Corp. v. Smith R.P.M. Corp., 727 F.2d 781 (8th Cir. 1984). In that case, Smith, a newspaper printing press manufacturer, entered into a contract with DEV Industries, Inc., in which the latter agreed not to compete with Smith in the press conversion systems industry for two years. See id. at 783. Three months after the signing of the contract, DEV established Press Machinery Corp. (PMC) to compete against Smith. See id. Smith filed suit against PMC and DEV, but the parties entered into a settlement agreement immediately prior to trial. See id. That agreement released the parties from: all claims, rights of action, causes of action and demands of every kind and character which the parties hereto now have or under any circumstances could or might have, against the other arising out of, resulting from or in any way pertaining to the agreements and matters referred to in [the pleadings]. 19 Id. at 783 (emphasis added). PMC later filed suit against Smith for breach of this settlement agreement and for a declaratory judgment of noninfringement of Smith's patent. See id. The district court granted PMC's summary judgment motion. See id. Our sister circuit affirmed the decision holding that: 20 The agreement is broad and employs expansive terminology. The release in the settlement agreement is not limited to the cause of action then at issue; nor is it limited to resolving past disputes. The agreement was an attempt to resolve finally those disputes then at issue and those that might arise in the future. 21 Id. at 785-86 (emphasis added). 22 The language of the settlement agreement in Press Machinery is similar enough to the language in the Settlement Agreement between Augustine and Progressive to be instructive in this case. In Press Machinery, the agreement includes prospective language, might have, just as the Settlement Agreement does in the case at bar. Compare Press Mach., 727 F.2d at 785-86, with Pearson v. Quickturn Design Sys., No. Civ. 97-20907 SW, 1998 WL 34607, at  (N.D. Cal. Jan. 23, 1998) (holding that the language referring to claims which Pearson now has or ever has had was not prospective and therefore did not refer to claims arising out of conduct subsequent to the date of the Settlement Agreement) (emphasis added). 23 Another similarity between the settlement agreement in Press Machinery and Augustine and Progressive's agreement is that the former also allowed for a general and indirect relationship between the future claims and the matters involved in the prior settlement agreement, using the phrase or in any way pertaining to the agreements and matters referred to. Press Mach., 727 F.2d at 783. In the case before us, the Settlement Agreement contains the phrase or relating to, which implies the same permissible indirect relationship between Augustine's possible future claims and Progressive's actions. In addition, the overall release of the settlement agreement in Press Machinery is equally as general as the release contained in Augustine's and Progressive's agreement. In considering the Settlement Agreement as a whole, the natural and ordinary meaning of the agreement between Augustine and Progressive is unambiguous: it was meant to be a general release putting an end to all matters arising under the Settlement Agreement, including any patent infringement claims that Augustine may have regarding the convective warming blankets, which were the product at issue in the agreement. See William Cramp & Sons Ship & Engine Bldg., 206 U.S. at 128. 24 Consistent also with judicial interpretations of general releases, it is the burden of the parties entering into a settlement agreement to expressly reserve in the agreement any rights that they wish to maintain beyond the date of the settlement of agreement. The Supreme Court stated in Cramp that general language . . . indicates an intent to make an ending of every matter arising under or by virtue of the contract. If the parties intend to leave some things open and unsettled, their intent so to do should be made manifest. Id. at 128. Our predecessor court by which we are bound also spoke to this issue and expanded the coverage to possible claims that should have been known at the time of a settlement agreement: 25 The rule for releases is that absent special vitiating circumstances, a general release bars claims based upon events occurring prior to the date of the release. And no exception to this rule should be implied for a claim whose facts were well enough known for the maker of the release to frame a general description of it and request an explicit reservation. 26 Johnson, Drake & Piper, 531 F.2d at 1047 (emphasis added) (citations omitted). Here, Augustine had clear knowledge at the time of the Settlement Agreement that Progressive was producing and marketing the convective warming blankets at issue in the first suit and the Settlement Agreement, and it was likely obvious that the production and marketing would not cease the instant the Settlement Agreement was signed. Therefore, it was Augustine's responsibility to ma[k]e manifest its intent to leave the issue of possible future patent infringement claims open for future resolution. Because Augustine knew that factually a claim would exist after the Settlement Agreement, we can grant no exception to this rule. 27 Augustine unpersuasively counters this by arguing that its claims for patent infringement were not ripe at the time of the Settlement Agreement because the post-settlement infringing actions had not yet occurred. Augustine's argument, however, relies on cases addressing when a claim is ripe for adjudication, not when a claim exists for purposes of a release. We have held that when dealing with post-settlement claims, the issue becomes not one of when a claim is ripe, but rather whether the claimant 'had' or possessed a claim, sufficiently to reserve it from a general release. Id. at 1047. Because Augustine had clear knowledge of Progressive's manufacture and sale of the convective warming blankets at the time of the Settlement Agreement, it had a claim for alleged patent infringement against Progressive at that time and should have expressly reserved that claim.