Omega Engineering, Inc. v. Omega, S.A.

• Citation: 432 F.3d 437
• Decision Date: 21 December 2005
• Docket Number: Docket No. 04-5084-CV.
• Parties: OMEGA ENGINEERING, INC., Plaintiff-Appellee, v. OMEGA, S.A., Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

432 F.3d 437

OMEGA ENGINEERING, INC., Plaintiff-Appellee, v. OMEGA, S.A., Defendant-Appellant.

Docket No. 04-5084-CV.

United States Court of Appeals, Second Circuit.

Argued May 12, 2005.

Decided December 21, 2005.

COPYRIGHT MATERIAL OMITTED

Matthew C. Wagner, Ossining, New York (Jess M. Collen, Collen IP, Ossining, New York, of counsel), for Defendant-Appellant.

Thomas A. Smart, New York, New York (Paul C. Llewellyn, Michelle Tepper, Kaye

Scholer LLP, New York, New York, of counsel), for Plaintiff-Appellee.

Before: FEINBERG, CARDAMONE, and SACK, Circuit Judges.

CARDAMONE, Circuit Judge.

On this appeal we revisit the field of settlement agreements and their enforcement. It is an area of the law well worked over the years. But because the rules governing it have not recently been set out, we think it helpful to write again on this topic. This case presents a new chapter in a long-running trademark dispute between defendant Omega, S.A. (OSA) and plaintiff Omega Engineering, Inc. (Omega Engineering). Omega Engineering seeks enforcement of a settlement agreement the parties concluded in May 2003. OSA contends the agreement was never properly executed and is therefore unenforceable. The United States District Court for the District of Connecticut (Covello, J.) enforced the settlement agreement in a judgment entered August 12, 2004.

BACKGROUND

A. Origin of the Dispute

Omega Engineering is a Delaware corporation headquartered in Stamford, Connecticut. It manufactures and markets industrial and scientific control and measurement devices and holds trademark registrations for the word "Omega" and a stylized "Ω" for use on such products. See, e.g., U.S. Trademark Registration No. 2,220,409 (Jan. 26, 1999); U.S. Trademark Registration No. 2,208,326 (Dec. 8, 1998); U.S. Trademark Registration No. 818,251 (Nov. 8, 1966). OSA is a Swiss corporation that manufactures and markets watches, clocks, and other precision timepieces also under the "Omega" brand, and also uses the Greek letter "Ω" as its stylized mark. OSA holds U.S. trademark registrations for the word "Omega" and the "Ω" symbol for use on timepieces and timepiece accessories. See, e.g., U.S. Trademark Registration No. 660,541 (Apr. 15, 1958); U.S. Trademark Registration No. 578,041 (July 28, 1953); U.S. Trademark Registration No. 577,415 (July 14, 1953); U.S. Trademark Registration No. 25,036 (July 24, 1894).

In the 1980s Omega Engineering began manufacturing and marketing scientific and industrial timing devices under the "Omega" brand name bearing its stylized "Ω" OSA responded by bringing a series of trademark infringement suits against Omega Engineering that resulted in several limited settlement agreements. See Omega S.A. v. Omega Eng'g, Inc., 228 F.Supp.2d 112, 115-16 (D.Conn.2002) (recounting the history of early litigation between the parties). A global settlement agreement was reached in 1994 (1994 Agreement) that set forth the parties' respective rights to the word "Omega" and the "Ω" mark. The 1994 Agreement provided, in relevant part, that Omega Engineering would use the "Omega" brand name and its stylized "Ω" on timing devices "industrially and/or scientifically employed for measuring or controlling variable parameters such as temperature, pressure, force, load, vibration, electrical conductivity, liquid level, acidity, humidity, strain and flow." OSA agreed not to oppose Omega Engineering's trademark applications so long as it abided by this condition.

In fact the 1994 Agreement did not settle the parties' disputes. Instead litigation intensified. In subsequent years, Omega Engineering and OSA engaged in numerous lawsuits with each other alleging various breaches of the 1994 Agreement, including actions in the United States, see, e.g., Omega S.A., 228 F.Supp.2d 112 (action under the Anti-Cybersquatting Consumer Protection Act regarding OEI's registration of the internet domain names "Omegawatch.com" and "Omegatime.com"), the United Kingdom, see, e.g., Omega Eng'g Inc. v. Omega S.A., ___ F.3d ___, 2005 WL 3485871 F.S.R. 12, 219 (2d Cir.2005) (Eng. Ch.2004) (noting that "there have been many differences and disputes between [the parties] as to their respective intellectual property rights. They are . . . currently engaged in some 20 disputes"), and the European Union, see, e.g., Case T-90/05, Omega, S.A. v. Office for Harmonisation in the Internal Mkt. (Trade Marks & Designs), 2005 O.J. (C 115) 24 (Ct. First Instance 2005) (action by OSA to reverse a decision awarding certain trademarks to OEI).

This appeal stems from three U.S. trademark applications filed by Omega Engineering on January 21, 1994 seeking rights to its "Omega" marks for "period timers . . . industrially and/or scientifically employed" and "industrial and scientific clocks." OSA opposed these applications on the ground they would infringe OSA's registered marks, and Omega Engineering as plaintiff filed a complaint in the United States District Court for the District of Connecticut alleging that OSA's opposition to Omega Engineering's trademark applications constituted a breach of the 1994 Agreement. It is the settlement of that litigation that is the subject matter of this appeal.

B. The Settlement Conference

District Court Judge Covello referred Omega Engineering's complaint to Magistrate Judge Thomas P. Smith for settlement discussions. The magistrate judge directed the parties to attend a settlement conference on May 19, 2003, one day before trial was scheduled to begin before the district court. The magistrate judge directed each party to be represented by counsel and that an appropriate representative of the party with authority to settle be present. The parties met in Magistrate Judge Smith's chambers on that day. Omega Engineering was represented by its corporate president, Betty Hollander, and OSA was represented by Neal Gordon, general counsel of the Swatch Group, an OSA affiliate of the Swiss company in the United States. The negotiations concluded during that afternoon, at which time a written settlement had been reached (Settlement Agreement). The parties informed the magistrate judge that the case was settled.

The parties together with the magistrate judge went before Judge Covello to report the settlement. Magistrate Judge Smith informed Judge Covello

It's my understanding that the case has been settled, and that all of the terms and conditions have been agreed upon by the parties through counsel, and that this agreement has been reduced to writing. And, it's been represented to me by counsel who are present that the document which contains all of the terms and conditions will be signed by the appropriate individual, located in Switzerland.

Omega Engineering's counsel confirmed that the case was indeed settled, but stated that it was his understanding that defendant needed two weeks to get the agreement signed and get it on file. Counsel for Omega Engineering stated further that the parties "have reached an agreement, [and] it has been reduced to writing." Judge Covello asked OSA's counsel whether this was correct and whether counsel was "in control of this situation as far as being able to note this matter as closed," to which OSA's counsel replied "Yes." The district court then postponed the trial that had been slated to begin the next day.

C. OSA Objects to the Settlement Agreement

After reading the terms of the Settlement Agreement, OSA officers in Switzerland refused to sign it. In particular, OSA objected to paragraph 2, which states

[Omega Engineering] will include a reference to Omega Engineering, Inc., Stamford, Conn., or Omega Engineering, Inc. and its location, on the shipping boxes for all Omega Engineering timers. If [Omega Engineering] uses the name Omega Engineering or any Omega trademark on the goods themselves, Omega Engineering will include a reference to Omega Engineering, Inc., Stamford, Conn., or Omega Engineering, Inc. and its location.

Ironically, the language in this clause was copied, in substantial part, from a proposal made by OSA's counsel in pre-settlement discussions. OSA's proposal in pre-settlement discussions did not specify which marks would trigger Omega Engineering's obligation to include a reference to "Omega Engineering, Inc., Stamford, Conn.," requiring such a reference if "any name or mark is used on the goods themselves." Nonetheless, OSA principals in Switzerland concluded that the language was ambiguous and informed Omega Engineering that they wished to enter into a side letter clarifying this clause. OSA stated that it interpreted the clause to require Omega Engineering not to use the word "Omega" or the stylized "Ω", but only the mark "Omega Engineering, Inc."

Omega Engineering refused this request and filed a motion on June 5, 2003 to enforce the Settlement Agreement. OSA opposed the motion, asserting that the parties never mutually assented to the Settlement Agreement and, absent OSA's signature, there was no agreement for the court to enforce.

D. The Enforcement Proceeding

The district court referred Omega Engineering's motion back to Magistrate Judge Smith for an evidentiary hearing on whether there had, in fact, been mutual assent to the Settlement Agreement. On February 18, 2004 the magistrate judge heard testimony from OSA's general counsel Neal Gordon and Omega Engineering's in-house counsel, Christine Riggs. Riggs, who participated in the settlement conference, testified that the parties informed the magistrate judge on May 19, 2003 that the case was settled and that it had not been made contingent on its being signed. Gordon testified that he had been authorized to settle the dispute with Omega Engineering on OSA's behalf and that he understood the case to be settled on the day of the settlement conference. But, he continued, his authorization to settle was confined within certain limits secretly communicated to him by OSA's principals — to wit, that he would "make certain that Omega...