Patent Law

MedPointe Healthcare v. Walter Kozachuk (Fed. Cir. 2010)(nonprecedential)

Kozachuk is a former employee of MedPointe's predecessor company and as part of his employment agreement, Kozachuk had agreed to assign "any and all inventions, discoveries, or improvements made, discovered, or conceived by him during his employment." About 18-months after leaving his job, Kozachuk began filing patent applications on clinical uses of the drug Felbamate for the treatment of neurological problems. In 2004, MedPointe sued ? claiming ownership rights and breach of the employment agreement.

Settlement: In May 2008, the parties reached an agreement on the material terms of a settlement. The terms (including the transfer of patent rights to MedPoint and a small payment ($60k) to Kozachuk) were put "on the record" by the magistrate judge who was mediating the settlement negotiations. Kozachuk, however, refused to sign the final settlement agreement and instead argued that he had been inadequately represented in the negotiations. Despite the lack of a signed document, the district court agreed to enforce the settlement, ordered Kozachuk to sign the documents and hit Kozachuk with $30k in sanctions.

On appeal, the Federal Circuit affirmed. Applying New Jersey law, the court found that a settlement agreement "is a binding contract enforceable regardless whether it has been reduced to writing" and that a contract is created once the parties agree upon the "essential terms of the settlement." The kicker here was that Kozachuk had agreed to the terms on the record.

Kozachuk's complaints of inadequate assistance of counsel went nowhere: "In light of Kozachuk's high level of education, his obvious familiarity with the litigation process, and his failure to express any lack of understanding except after the fact, the court did not clearly err in finding that a binding settlement agreement had been formed."

Appellate Jurisdiction: One issue not addressed by this case is why the Federal Circuit is hearing the appeal of an employment dispute. I looked up the original complaint to find the answer: The complaint seeks to correct inventorship of the patents under 35 U.S.C. § 256. As such, the case arises under the US patent laws and therefore provides the Federal Circuit with appellate jurisdiction over the final judgment. Hunter Douglas, Inc. v. Harmonic Design, 153 F.3d 1318, 1330 (Fed. Cir. 1998).