Unambiguous Settlement Agreement Precludes Consideration Of Parties’ Intent

When the language of a settlement agreement is not ambiguous, the intent of the parties to include absent terms will not be considered, a Federal Circuit panel concludes in Panduit Corporation v. HellermannTyton Corporation (No. 05-1337; June 12, 2006).

Panduit filed suit against HellermannTyton alleging infringement of a Panduit patent by sale of a power box labeled “Part No. MCR-SEB.” Shortly thereafter, the parties entered into a Settlement Agreement to end the litigation in which HellermannTyton agreed not to make or sell “Subject Products.” The Agreement defined “Subject Products” in ¶ 1(b)(i) as “the HellermannTyton Multi-Channel Raceway Side Electric Box (HellermannTyton Part No. MCR-SEB)” and in ¶ 1(b)(ii) as “all products, existing now or in the future, covered by any claim of the Panduit Patent.” In exchange, Panduit waived its claims against HellermannTyton for infringement of the patent prior to the date of the Agreement. In a subsequent suit against HellermannTyton for breach of the agreement and infringement of the same patent based upon a revised power box design, a district court applying state law granted HellermannTyton's motion for summary judgment that HellermannTyton did not breach provisions of the Settlement Agreement. In addition, the patent claim was found not to be infringed. Panduit's claims were dismissed with prejudice.

On appeal, the Federal Circuit panel affirms. There is no genuine issue of material fact that the accused device does not meet the plain language of ¶ 1(b)(i) or infringe the patent as specified in ¶ 1(b)(ii). The parties here entered into a settlement agreement that expressly addressed a specific product, Part No. MCR-SEB, in ¶ 1(b)(i) of the agreement. By its express terms, ¶ 1(b)(i) does not include “colorable changes,” modifications, or variations, but mentions only Part No. MCR-SEB. Settlement agreements, like consent judgments, reflect an agreement by hostile litigants on more than just contract terms; they reflect a compromise of contested legal positions in matters that are the subject of litigation. Because the language of the Agreement is not ambiguous and because contract interpretation is ordinarily governed by state law, and the plain language of the agreement governs here, the parties' intent to include terms that are absent is not considered.