By
Donald Zuhn --
On
April 6, the Federal Circuit, in MedPointe
Healthcare, Inc. v. Kozachuk, affirmed a decision of the District Court for
the District of New Jersey enforcing a settlement agreement regarding the
transfer of ownership of U.S. Patent Nos. 5,728,728, 5,942,540, and 6,515,019,
which are directed to clinical uses of the drug Felbamate to treat neurological
indications. The three patents
issued from applications that were filed by Defendant-Appellant Dr. Walter
Kozachuk eighteen months after he left the employ of Carter-Wallace, Inc., the predecessor of Plaintiff-Appellee
MedPointe Healthcare, Inc. During his
employment at Carter-Wallace, Dr. Kozachuk supervised clinical studies of
Felbamate. Under the terms of Dr.
Kozachuk's employment agreement with Carter-Wallace, he agreed to assign to
Carter-Wallace and its successors any and all inventions, discoveries, or
improvements made, discovered, or conceived by him during his employment.
In
April of 2004, MedPointe brought suit against Dr. Kozachuk, claiming ownership
of the '728, '540, and '019 patents based on Dr. Kozachuk's breach of his
employment agreement and duty of loyalty, and seeking to correct the patents'
inventorship under 35 U.S.C. § 256.
In May of 2008, the parties participated in a settlement conference
before a magistrate, and following four hours of negotiations, placed the terms
of a settlement agreement on the record.
The terms included a $60,000 payment by MedPointe to Dr. Kozachuk; a
transfer of all right, title, and interest in Dr. Kozachuk's patents to
MedPointe; an agreement to arbitrate disputes over Dr. Kozachuk's ownership of
a pending U.S. patent application; and a reservation of rights by MedPointe
with respect to foreign patents or patent applications. Shortly after the conference,
MedPointe's counsel provided Dr. Kozachuk with a draft Settlement Agreement and
Release and draft Assignment, but Dr. Kozachuk refused to sign the documents. MedPointe responded by filing a motion
to enforce the settlement agreement, and the District Court, adopting the
findings and conclusions of the magistrate, ordered Dr. Kozachuk to execute the
settlement documents and imposed sanctions for MedPointe's attorneys' fees and costs incurred enforcing the settlement.
On
appeal, Dr. Kozachuk argued that he did understand the proceedings in May of
2008 and had no intention of settling, the settlement terms were unconscionable
in that they required him to transfer patents assertedly worth millions of
dollars for $60,000, and the settlement agreement was unenforceable because his
attorney coerced him into settling by adopting a negative assessment of the
case and threatening to withdraw as counsel. MedPointe countered that the transcript of the settlement conference
and Dr. Kozachuk's e-mails and sworn statements demonstrated that the parties
agreed to the essential terms of a settlement at the May 2008 conference, there was no evidence that the $60,000 exchange for the transfer of Dr. Kozachuk's
three patents was unconscionable, and there was no evidence that Dr. Kozachuk's
counsel intended to (or did) pressure him into settling by threatening to
withdraw.
In
an opinion issued per curiam, the
Federal Circuit agreed with MedPointe, rejecting all three of Dr. Kozachuk's
arguments. In response to Dr.
Kozachuk's assertion that he did understand the settlement proceedings and had
no intention of settling, the panel stated that "[t]he transcript of the
proceedings clearly evinces both parties' intent to settle the suit brought by
MedPointe on specific terms," noting that "[a]t no time did Kozachuk
ask for clarification or in any way indicate that he did not understand that he
was agreeing to a settlement on the terms stated by MedPointe's counsel." The panel also rejected Dr. Kozachuk's
argument that the settlement terms were unconscionable, determining that
although Dr. Kozachuk contended that the '728, '540, and '019 patents were
worth millions of dollars, he presented no evidence to establish their
worth. Lastly, the panel rejected
Dr. Kozachuk's argument that his attorney's behavior coerced him into accepting
the settlement, stating that "it strains credibility to think that
Kozachuk, who had already retained new counsel once during the litigation and
who worked with sophisticated business advisors, felt that he had no choice but
to settle because his counsel indicated a desire to withdraw in light of their
disagreements over the merits of the case." The panel also noted that to the extent that Dr. Kozachuk was
claiming inadequate representation by counsel, "it is
well-established that a party is bound by the actions of his counsel and may
not after the fact disavow counsel’s actions on his behalf."
Medpointe Healthcare, Inc.
v. Kozachuk (Fed. Cir. 2010)
Nonprecedential
disposition
Panel:
Circuit Judges Lourie, Gajarsa, and Moore
Per curiam opinion
Comments