Opinion ID: 334026
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 6 In 1971 Aro instituted suit against Allied, alleging infringement of its U.S. Patent No. 2,950,775. Allied filed a counterclaim, seeking declaratory judgment of non-infringement of any valid claim and alleging unfair-competition and anti-trust violation. Pursuant to settlement, the complaint and counterclaim were dismissed without prejudice by Order dated March 25, 1974. 7 The parties had engaged in protracted negotiations, involving exchange of seven license drafts over a period of almost eighteen months. They then agreed to stipulate dismissal of the action and executed a written license agreement effective from April 1, 1974, and expiring with the patent on August 20, 1977. Almost before the ink had dried on the license, Allied began questioning its terms. On April 26, 1974, Allied's attorney questioned whether Aro had notified its other licensees of the license herein and alleged 'substantial unlicensed infringing competition' from ten corporations. Aro responded that the license agreement required no disclosure of the type demanded by Allied and that the facts presented were insufficient to formulate an opinion on the alleged infringing competition. Aro suggested submission of samples of the devices alleged to be infringing. On May 17, 1974, Aro demanded the first royalty payment which had been due on April 30, 1974. Allied refused payment. On September 30, 1974, Aro filed a 'Motion to Vacate Order Dismissing Suit Under Rule 60 and Order Specific Performance of Settlement Agreement.' 8 Opposing Aro's motion, Allied challenged the court's jurisdiction arguing that because the issue was purely contractual (the license) and because diversity was lacking, the matter should be resolved in the state courts. Allied further argued that Aro had failed to perform certain oral conditions precedent to Allied's obligation to perform. 9 Addressing the jurisdictional issue, the court below stated that: 10 Jurisdiction rests upon the same footing as when the case began in 1971 since federal courts have consistently exercised their inherent power to enforce agreements settling cases in which the court originally had jurisdiction. 11 The court characterized Allied's reliance on alleged oral conditions precedent as 'specious in light of the parol evidence rule.' 12 Citing the interests of justice, the court granted Aro's motion for reinstatement of the case on the court's docket, enjoined Allied from not complying with the agreement, and again dismissed the complaint and counterclaim without prejudice.