graphic of fountain pen with words sue, yes, no

Case No. 2016-1357
Appeal from the United States District Court for the District of Delaware
Decided: May 16, 2017

This dispute between the parties made its third appearance before the Federal Circuit. The Court affirmed the grant of summary judgment of noninfringement and the finding of invalidity of claims 24 and 25 of U.S. Patent No. RE44,153 (“RE’153 patent”) for being improperly broadened on reissue. The majority opinion noted that the “case has a convoluted history,” involving multiple lawsuits and appeals. That case history is not repeated in this summary.

ArcelorMittal raised the following arguments on this appeal:

1) that it never asserted claims 24 and 25 against defendants in the “050 lawsuit”; and

2) that the dispute with defendants was moot because it tendered a covenant not to sue.

With regard to the first issue, ArcelorMittal argued that the 050 lawsuit was previously remanded so that ArcelorMittal could consider whether to assert claims 24 and 25; as a result, it argued that the district court improperly injected those claims into the case by invalidating them sua sponte. However, the Court, applying MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007), found that ArcelorMittal’s prior “statements to this court and its tacit acceptance of Defendants’ representations about the litigation status of claims 24 and 25 reflect ArcelorMittal’s continued attempt to assert those claims” and that “our mandate contemplated ‘further proceedings’ in the 050 case, which were necessary only because ArcelorMittal told us that it was asserting RE’153 claims 24 and 25. In light of ‘all the circumstances,’ there was a substantial controversy between the parties over RE’153 claims 24 and 25.”

The majority also found that there was a case or controversy under the Declaratory Judgment Act, pursuant to which Defendant’s counterclaims arose. The Court considered not only the covenant to sue, but also the terms and conditions of a letter transmitting the covenant, and found that the covenant not to sue did not extinguish the dispute.

ArcelorMittal indicated in a brief that it was prepared to grant a covenant not to sue in favor of defendants. In a reply brief, ArcelorMittal attached an unexecuted covenant not to sue. Subsequently, ArcelorMittal tendered a letter and an executed covenant. The letter indicated that the covenant was conditioned upon resolution of its motion to amend in a related (685) case. The lower court issued summary judgment against ArcelorMittal in the 050 lawsuit without first resolving the motion to amend in the related case. The Court found that “the letter’s condition remained unsatisfied, and no unconditional covenant was ever unconditionally delivered to Defendants before the court resolved the merits of the validity of claims 24 and 25 of the RE’153 patent.” “The conditional nature of the covenant’s delivery here differentiates this case from others where we have found jurisdiction defeated by less than a fully executed covenant not to sue.”

Judge Wallach issued a lengthy dissent, stating that “[t]he Covenant moots the instant action because it leaves no live controversy for judicial resolution.” His dissent stated that “the Covenant’s terms reveals that it contains no conditional terms, as the majority concedes,“ and that “[a]lthough Appellants conditionally tendered the covenant to the District Court, the Covenant itself contained no conditions precedent and was fully executed.” The dissent posited that “[w]hen as here a covenant’s terms are unambiguous, we may not interpret those terms using extrinsic evidence, such as a cover letter.” Judge Wallach stated that the majority’s approach “elevates a procedural gimmick over substance and permits a party to dictate whether a case has become moot.”

Judge Wallach stated that the “majority ignores the statement in the cover letter that the Covenant is ‘executed’ and fails to explain why it has elevated one aspect of the cover letter over another.” Further, he maintained that the “Appellants’ description in the cover letter of the manner in which they delivered the Covenant to the District Court (i.e., conditionally) does not inform the effect of the covenant itself.” In his view, “all live disputes” were extinguished.

Judge Wallach also found that the covenant satisfied the burden imposed by the voluntary cessation test. The covenant prohibited suit against Appellees and their customers for past present and future conduct.

Read more:  Federal Bar member attorneys may access the full case summary by Barnwell Whaley attorney Bill Killough in the June 2017 issue of Federal Circuit Case Digest. 

Additionally, you may read the full opinion here.

thumbnail headshot image of patent attorney BC KilloughB.C. “Bill” Killough is a registered patent attorney with Barnwell Whaley law firm with offices in Charleston, SC and Wilmington, NC. On behalf of his clients, Bill has obtained more than 275 United States patents, participated in prosecuting more than 100 foreign patent applications and he has filed more than 1000 trademark applications with the US Patent and Trademark Offices.