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Second Agreement Supersedes Prior Agreement and Supports Summary Judgment of Contract Violation

May 14, 2001

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Last Month at the Federal Circuit - June 2001

Judges: Lourie, Bryson, and Linn (per curiam)

In Creo Products, Inc. v. Dainippon Screen Manufacturing Co., No. 00-1536 (Fed. Cir. May 14, 2001) (nonprecedential decision), the Federal Circuit affirmed a grant of SJ concerning a contract dispute and award for attorney fees in favor of Dainippon Screen Manufacturing Company, D.S. North America Holdings, Inc., and DS America, Inc. (collectively “Dainippon”).

Creo Products, Inc.’s (“Creo”) complaint asserted breach of contract, infringement of Creo’s U.S. Patent No. 4,743,091, and trade secret misappropriation. All claims involved two agreements between the parties, the first agreement dated December 1990 and the second October 1991, which placed restrictions on Dainippon’s use and disclosure of certain technologies owned by Creo. The December 1990 agreement was part of a letter including a provision providing that the effective date of the agreement is when both parties execute the contract. Dainippon was the only party to sign the December 1990 agreement. The October 1991 agreement was a formally executed contract, containing less restrictive provisions than the December 1990 letter. Also included in the second agreement was an integration clause superseding all prior agreements with respect to any subject matter that was within the scope of the October 1991 contract. Creo’s breach of contract claims was based solely on the December 1990 letter, not the October 1991 contract.

With regard to the breach of contract claims, the Court affirmed the district court’s SJ in favor of Dainippon, finding no violation of the terms of the contract. The Federal Circuit agreed with the district court that a material issue of fact existed with respect to one party executing a contract requiring execution from both parties for effectiveness. The grant of SJ, however, rested on the integration clause in the October 1991 contract, which expressly superseded all prior agreements. The Federal Circuit affirmed the district court’s analysis concluding that: (1) the technologies at issue were all incorporated in the devices developed and sold by Creo to Dainippon under the 1991 contract, and (2) Creo did not rebut this evidence.

Creo appealed the district court’s ruling that prosecution history estoppel barred application of the DOE to the asserted patent claim. But, the Federal Circuit affirmed the SJ based on Festo.

Creo also appealed the district court’s decision to award attorney fees to Dainippon under 35 U.S.C. § 285 in defending patent infringement claims and attorney fees under the Uniform Trade Secret Act (as adopted by California and Washington) in defending trade secret misappropriation claims. Creo asserted patent infringement and trade secret misappropriation claims in their complaint, but argued that the district court and Dainippon should have understood that Creo was not in fact asserting literal infringement and trade secret claims. In review of the district court’s decision to award attorney fees, the Federal Circuit disagreed with Creo’s assertion and ruled that the district court had not abused its discretion.