As the pace of invention (and litigation) has increased over the past several decades, so has the pressure for companies to design around their competitors’ patents. The freedom to develop non-infringing alternatives to protected products fosters both competition and innovation, two crucial aspects of the modern patent system. But what happens when two companies settle an infringement suit, only to have the alleged infringer immediately come to market with a different product utilizing the same technology?
According to District of Delaware Chief Judge Gregory M. Sleet, it is for the jury to decide whether the design around breached the parties’ settlement agreement. In the underlying litigation, defendant agreed to forego selling the disputed voltage regulator or “any other” products incorporating plaintiff’s circuitry. After defendant began marketing its design around, plaintiff brought an action seeking to enforce the settlement agreement.
On summary judgment, the Court declined the invitation to draw the boundaries of the design around, noting that competing expert opinions precluded an early disposition:
Although a close question, the court’s conclusion is supported by the parties’ experts’ opinions, which – not surprisingly – are diametrically opposed. . . . Thus, there appears to be a classic battle of the experts on the issue of whether the [design around] contains the ZX circuitry . . . . (slip op. at 11)
This factual issue, in turn, prevented the Court from determining whether plaintiff could enforce the settlement agreement against the disputed product. Practitioners take note: As a first litigation step, the jury must decide the composition of the design around.