Last month, in Serta Simmons Bedding, LLC v. Casper Sleep Inc., the Federal Circuit vacated a decision by the U.S. District Court for the Southern District of New York granting summary judgment of non-infringement to Defendant-Cross-Appellant Casper Sleep Inc. and remanded with instructions to enforce a settlement agreement between Casper and Plaintiffs-Appellants Serta Simmons Bedding, LLC and Dreamwell, Ltd.  The Federal Circuit also affirmed the District Court's denial of Casper's motion for fees and costs.

Serta, which owns U.S. Patent Nos. 7,036,173; 7,424,763; and 8,918,935, filed suit against Casper for infringement of certain claims of those patents.  In response, Casper filed three motions for summary judgment of non-infringement.  While those motions were pending, Serta and Casper executed a settlement agreement, which required Casper to pay $300,000 within ten days of the agreement, cease the manufacture of certain products within 27 days of the agreement, and substantially discontinue marketing of those products with 58 days of the agreement.  The agreement also required the parties to dismiss all claims and counterclaims and release each other from all liabilities within five days of Casper's payment, and file a joint motion to stay the case pending final settlement (which the parties filed on the same day the settlement agreement was executed).

Two days after the settlement agreement was executed and the joint motion to stay was filed, the District Court issued an order granting Casper's summary judgment motions.  Following the District Court's grant of summary judgment of non-infringement, Casper informed Serta that it would not make the payment under the settlement agreement because the agreement was "null and void" in view of the summary judgment order.  Serta filed motions to enforce the settlement agreement and vacate the summary judgment order, which the District Court denied, contending that it lacked jurisdiction to enforce the settlement agreement once the summary judgment order was issued.  Casper also filed a motion for fees and costs, which the District Court denied.  Serta appealed to the Federal Circuit and Casper cross-appealed.

In an opinion by Judge Dyk, joined by Judges Plager and Stoll, the Federal Circuit noted that "[g]enerally, a '[s]ettlement moots an action' because there is no longer a case or controversy with respect to the settled issues," citing Gould v. Control Laser Corp., 866 F.2d 1391, 1392 (Fed. Cir. 1989).  Casper argued that the settlement agreement did not moot the action because it called for future performance.  However, the opinion cites Exigent Technology, Inc. v. Atrana Solutions, Inc., 442 F.3d 1301 (Fed. Cir. 2006), for the proposition that "an enforceable settlement generally renders a case moot even though the parties have not yet performed the terms."

In Exigent Technology, the Federal Circuit encountered circumstances that were similar to those in the instant appeal -- the district court in that case granted defendant's motion for summary judgment of non-infringement and ordered the case dismissed without first determining whether the parties entered into an enforceable agreement, which would have rendered the entry of final judgment moot.  As a result, the Federal Circuit in Exigent Technology "recognized that a binding settlement generally moots an action despite the fact that the settlement agreement requires further implementing steps to be taken."  The opinion also cites four decisions from other circuits in support of this proposition.

Casper countered with two Seventh Circuit decisions that supported its argument that the case was not mooted by the settlement agreement.  However, the Federal Circuit responded by stating that "[t]hose cases are not binding on us, are questionable on the merits, and in any event, are distinguishable since one involved a settlement agreement that was not yet binding, and the other potentially required further action by the court" (citations omitted).  The panel therefore concluded "that a binding settlement agreement generally moots the action even if the agreement requires future performance," and vacated the District Court's entry of judgment and summary judgment order because the settlement agreement rendered moot the underlying infringement case.

With respect to the District Court's denial of Serta's motion to enforce the settlement agreement for lack of jurisdiction, the panel indicated that "[w]hile not binding, we find persuasive several Second Circuit cases holding that a district court has jurisdiction to enforce a settlement agreement when the proceedings are ongoing."  The panel concluded that "under Federal Circuit law a district court has jurisdiction to enforce a settlement agreement that resolves patent infringement claims if the motion to enforce is filed before the case is dismissed and the proceedings are ongoing," adding that in view of the panel's decision on appeal "there will be no final judgment dismissing the parties' claims until the remand proceedings are concluded," and therefore finding that the District Court will have jurisdiction to enforce the settlement agreement.  Thus, the panel directed the District Court to enforce the settlement agreement during remand proceedings.

Finally, with respect to Casper's motion for fees and costs, which the District Court denied, the panel noted that because it had vacated the summary judgment order, Casper was not a prevailing party, and Casper's request for fees under § 285 was moot.  The panel also rejected Casper's request for fees and costs relating to pre-settlement litigation under 28 U.S.C. § 1927 and the District Court's inherent power because the settlement agreement precluded an award of fees and costs pertaining to proceedings that occurred prior to the execution of the settlement agreement.

Serta Simmons Bedding, LLC v. Casper Sleep Inc. (Fed. Cir. 2020)
Panel: Circuit Judges Dyk, Plager, and Stoll
Opinion by Circuit Judge Dyk