Interspiro USA, Inc. v. Figgie Intern. Inc.

• Citation: 18 F.3d 927
• Decision Date: 08 March 1994
• Docket Number: No. 93-1445,93-1445
• Parties: , 30 U.S.P.Q.2d 1070 INTERSPIRO USA, INC., n.k.a. Pharos Protection USA, Inc. and Pharos Tech USA, Inc., Plaintiffs-Appellees, v. FIGGIE INTERNATIONAL INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 927

18 F.3d 927

62 USLW 2595, 30 U.S.P.Q.2d 1070

INTERSPIRO USA, INC., n.k.a. Pharos Protection USA, Inc. and Pharos Tech USA, Inc., Plaintiffs-Appellees, v. FIGGIE INTERNATIONAL INC., Defendant-Appellant.

No. 93-1445.

United States Court of Appeals Federal Circuit.

March 8, 1994.

Mari M. Gursky Shaw, Dechert, Price & Rhoads, of Philadelphia, Pennsylvania, argued for plaintiffs-appellees. With her on the brief was Martin J. Black. Also on the brief were Dale M. Heist and Albert J. Marcellino, Woodcock, Washburn, Kurtz, MacKiewicz & Norris, of Philadelphia, Pennsylvania.

Regan J. Fay, Jones, Day, Reavis & Pogue, of Cleveland, Ohio, argued for defendant-appellant. With him on the brief was John A. Wasleff. Also on the brief was Donald F. Parsons, Jr., Morris, Nichols, Arsht & Tunnell, of Washington, Delaware, of counsel.

Before NEWMAN, LOURIE, and SCHALL, Circuit Judges.

LOURIE, Circuit Judge.

Figgie International Inc. appeals from the decision of the United States District Court for the District of Delaware granting the motion of Pharos Protection USA, Inc. to enforce the terms of a settlement agreement requiring Figgie to pay royalties on sales of breathing regulators covered by U.S. Patent 4,361,145 and awarding Pharos attorney fees under 35 U.S.C. Sec. 285 (1988). Interspiro USA, Inc. v. Figgie Int'l, Inc., 815 F.Supp. 1488, 27 USPQ2d 1321 (D.Del.1993). We affirm.

BACKGROUND

The undisputed facts of the instant case are recounted here to the extent they are material to the issues on appeal. On May 9, 1988, Interspiro U.S.A, Inc. ¹ filed an action against Figgie in the Delaware district court alleging infringement of U.S. Patent 4,361,145, entitled "Respirator Mask." That action was dismissed with prejudice on November 13, 1989, pursuant to a settlement agreement entered into by the parties. The settlement agreement stipulated, among other things, that Figgie would pay royalties on domestic sales of regulators falling within the scope of the '145 patent and that Figgie would permit Pharos to conduct audits of Figgie's records in order to monitor compliance with the agreement.

Some time after dismissal of the infringement suit, Figgie began to manufacture and sell a regulator known as the "E-Z Flo." Through an audit conducted in 1991, Pharos discovered that Figgie was not paying royalties on sales of the E-Z Flo, a product that Pharos believed was subject to the settlement agreement's royalty provisions. Pharos, however, encountered difficulty in conducting a complete audit of Figgie's sales of the E-Z Flo regulator due to Figgie's refusal to provide information requested by Pharos.

On October 16, 1991, Pharos filed a motion requesting that the district court enforce the settlement agreement. Pharos alleged that Figgie had breached the agreement by failing to remit royalty payments on E-Z Flo sales and by failing to supply information requested by Pharos in conducting its audit. Pharos also moved for an award of attorney fees on the ground that Figgie had failed to act in good faith in complying with its obligations under the agreement.

Upon determining that it possessed jurisdiction to entertain Pharos' motion, the district court found that the E-Z Flo infringed claim 1 of the '145 patent, both literally and under the doctrine of equivalents, and that it was thus subject to the royalty payment provisions of the settlement agreement. The court also concluded that Figgie had improperly calculated the royalty payments owing on sales of regulators made through its subsidiary, SSA. The court construed the agreement as requiring that royalties on Figgie's sales made to unaffiliated, "end-user" customers via SSA be based on the invoices from SSA to the end-users and not from Figgie to SSA. Finally, the court found that the case was "exceptional" within the meaning of 35 U.S.C. Sec. 285 (1988) and awarded Pharos attorney fees.

DISCUSSION

I. Jurisdiction

Before we reach the merits, we will dispose of Figgie's preliminary argument that subject matter jurisdiction was improperly retained by the district court to enforce the settlement agreement after dismissal of the original infringement suit. As an appellate body, we have inherent jurisdiction to determine whether a lower tribunal had jurisdiction. See C.R. Bard, Inc. v. Schwartz, 716 F.2d 874, 877, 219 USPQ 197, 200 (Fed.Cir.1983). Whether the district court possessed jurisdiction to entertain Pharos' motion is an issue we review de novo. See Benderson Dev. Co. v. United States Postal Serv., 998 F.2d 959, 962 (Fed.Cir.1993).

Figgie does not dispute that the district court had jurisdiction over the original action pursuant to 28 U.S.C. Sec. 1338(a) (1988) and that the dispute was resolved through a binding settlement agreement. Nor does Figgie deny that the agreement expressly provided that the district court would have "jurisdiction over the implementation of or disputes arising out of the settlement of this action for a period of two (2) years from the date of execution hereof [October 19, 1989]." These facts notwithstanding, Figgie insists that the district court was without jurisdiction to enforce the agreement because the agreement was not legally incorporated into the dismissal order, as is required in the Third Circuit.

Under the law of the Third Circuit, a court may retain jurisdiction to enforce an agreement settling a case over which it once presided by incorporating the agreement into an order of dismissal. See Sawka v. Healtheast, Inc., 989 F.2d 138, 141 (3d Cir.1993). Figgie argues that the requisite incorporation of the agreement was not achieved because the order failed to use the express language "incorporate" when referring to the agreement.

Figgie's assertion that there is a "substantial question" concerning jurisdiction borders on the frivolous. In urging its position, Figgie squarely disregards settled law that a court is not required to use explicit language or "any magic form of words" to effect a valid incorporation of an agreement into an order. See Halderman v. Pennhurst State School & Hospital, 901 F.2d 311, 317 (3d Cir.) (quoting McCall-Bey v. Franzen, 777 F.2d 1178, 1188 (7th Cir.1985)), cert. denied, 498 U.S. 850, 111 S.Ct. 140, 112 L.Ed.2d 107 (1990). Rather, the court need only manifest an inferable intent to retain jurisdiction. Id.

The dismissal order at issue provided that

[t]he parties hereto have entered into an agreement settling the issues before [the district court], and by and through their attorneys, and pursuant to that agreement hereby stipulate that the complaint and counterclaim ... be dismissed with prejudice with each party bearing its own costs and attorney fees. [Emphasis added.]

Consistent with the law of the Third Circuit, we conclude that the order did effectively incorporate the terms of the agreement and that it adequately manifested the court's intent to retain jurisdiction for the purpose of enforcing the agreement. Thus, we hold that the district court had jurisdiction to entertain Pharos' motion. We now turn to the merits of the appeal.

Figgie makes a number of challenges to the various findings of fact and legal conclusions upon which the district court relied in granting Pharos' motion. We review the district court's decision in this case, as we would any bench trial, for errors of law and clearly erroneous findings of fact. See Fed.R.Civ.P. 52(a); Gould v. Quigg, 822 F.2d 1074, 1077, 3 USPQ2d 1302, 1304 (Fed.Cir.1987).

II. Royalties

A. Infringement

The parties do not dispute that the settlement agreement requires Figgie to pay royalties on sales of regulators covered by the '145 patent. Thus, the issue whether the E-Z Flo is a regulator subject to royalty payment turns on whether the E-Z Flo infringes the '145 patent. The district court found that all the limitations of claim 1 of the '145 patent were met literally or by an equivalent in the E-Z Flo.

Specifically at issue are two limitations contained in claim 1 that are written in We view Figgie's assertions of error to be unpersuasive, particularly in light of the competent and workmanlike nature of the court's infringement analysis. After consideration of evidence that included expert testimony presented by both parties on the issue of infringement of claims containing means-plus-function limitations, the district court determined that the E-Z Flo performed the identical function recited in each of the two means clauses using a structure disclosed in the specification of the '145 patent or an equivalent thereof. We have carefully considered each of Figgie's assertions and hold that the district court committed no reversible error in concluding that the E-Z Flo literally infringed the '145 patent and was thus a regulator subject to royalty payment. Having thus held, we need not reach the issue of infringement under the doctrine of equivalents.

                means-plus-function format:  one reciting a "means for establishing gauge pressure" and the other directed to a "detent means."   Figgie argues that the district court erred in finding infringement of claim 1 because the court incorrectly identified the structure disclosed in the specification that performed the function of establishing gauge pressure and misconstrued the function performed by the detent means.  The district court's construction of the means limitations at issue is reviewed de novo, see Durango Assocs., Inc. v. Reflange, Inc., 843 F.2d 1349, 1356, 6 USPQ2d 1290, 1294 (Fed.Cir.1988), and its finding that the E-Z Flo meets the limitations is reviewed for clear error, see id. at 1357, 6 USPQ2d at 1295
                

B. Royalty Calculations

Figgie argues that the district court erred in interpreting the provisions of the settlement agreement governing the calculation of royalties on regulators sold by SSA, Figgie's affiliated distributor, to unaffiliated customers. Under this sales arrangement, two separate sales occur, the first from Figgie to SSA and the second from SSA to the...