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Molon Motor & Oil Co. v. Nidec Motor Corp

Merger Clause Did Not Extinguish Prior Covenant Not to Sue

Molon Motor & Oil Co. v. Nidec Motor Corp., __ F.3d __, 2020 WL 111277 (Fed. Cir. Jan. 10, 2020) (LOURIE, Reyna (dissenting), Hughes) (N.D. Ill.: Chang) (2 of 5 stars)

Fed Cir affirms summary judgment that Molon is barred from enforcing its patent against Nidec. A merger clause in a 2007 settlement agreement (which conveyed to Nidec’s predecessor rights to practice a range of Molon patents within a certain exclusive market) did not extinguish a broader, worldwide and irrevocable covenant by Molon not to sue that predecessor on two specific patents, which Molon unilaterally conveyed in 2006. The opinion closely analyzes the contracts and concludes that they do not address the same subject matter. It reasons that there was therefore neither express extinguishment of the prior covenant, nor proof of the parties’ intent to revoke it.

Dissent: Judge Reyna criticizes the majority for upending what he views as the parties’ clear intent, which was to permit Nidec to practice Molon’s patent only within a negotiated exclusive market.