The opinion of the court was delivered by: Kenneth M. Karas, District Judge
Plaintiffs Chris Cacace ("Cacace") and Culinary Edge Creations, LLC ("CEC") (collectively, "Plaintiffs") brought this patent infringement action against Defendants Meyer Corporation U.S. ("Meyer U.S.") and its affiliate, Meyer Marketing (Macau Commercial Offshore) Co., Ltd. ("Meyer Macau") (collectively, "Defendants"), alleging that Defendants are infringing a patent of which Cacace claims ownership and to which CEC claims exploitation rights. Meyer U.S. moves for summary judgment on the argument that a written license agreement with CEC gives Defendants total release from such a claim. Plaintiffs cross-move for summary judgment, seeking to have the Court declare Defendants liable for infringement. For the reasons stated in this opinion, both motions are denied.
United States Patent No. 6,497,174 (the "'174 Patent") was issued to Cacace on or about December 24, 2002. (Pls.' Counterstatement of Undisputed Material Facts ("Pls.' 56.1-2") ¶ 1; Def. Meyer U.S.'s Resp. to Pls.' Counterstatement of Material Facts ("Def.'s 56.1-2") ¶ 1.) The '174 Patent concerns the design of raised edge cookware for sautéing and deglazing that enables the operator to "flip" food during the preparation thereof.*fn1 (Pls.' 56.1-2 ¶ 2; Def.'s 56.1-2 ¶ 2.)
Cacace thereafter licensed exploitation rights in the '174 Patent to CEC, a company of which he is a principal (Pls.' 56.1-2 ¶¶ 3-4; Def.'s 56.1-2 ¶¶ 3-4), including the right to enter into contracts for the manufacture, marketing, and distribution of products based upon the '174 Patent (Pls.' 56.1-2 ¶ 4).
B. The Parties' License Agreement Dated October 28, 2004
At the suggestion of the television shopping network QVC, in January 2004, CEC contacted Meyer U.S., a distributor of cookware and cookware-related products, including the Circulon and Farberware brands, to discuss a potential manufacturing relationship. (Pls.' Resp. to Def. Meyer U.S.'s Statement of Undisputed Facts ("Pls.' 56.1-1") ¶¶ 12-13; Pls.' 56.1-2 ¶ 6; Def. Meyer U.S.'s Statement of Undisputed Material Facts ("Def.'s 56.1-1") ¶¶ 12-13; Def.'s 56.1-2 ¶ 6.) CEC sent Meyer U.S. a sample of its pan and was informed that one of Meyer U.S.'s inventors was designing a pan similar in design to the '174 Patent. (Pls.' 56.1-2 ¶¶ 8-10; Def.'s 56.1-1 ¶¶ 13-14.) Shortly thereafter, CEC received design drawings from Meyer U.S. of its pan. (Pls.' 56.1-1 ¶ 15; Def.'s 56.1-1 ¶ 15.)
Following a trade show in May 2004, the Parties began substantive discussions regarding the business terms of a potential arrangement whereby Defendants would manufacture Plaintiffs' pan for QVC. (Pls.' 56.1-2 ¶¶ 23-24; Def.'s 56.1-2 ¶¶ 23-24.) The business arrangement was negotiated over the course of many weeks. (Pls.' 56.1-1 ¶ 27; Def.'s 56.1-1 ¶ 27.) During these negotiations, the Parties discussed the fact that Defendants wanted to be able to sell their own pan royalty-free if they were to manufacture Plaintiffs' pan for QVC. (Pls.' 56.1-1 ¶ 24; Def.'s 56.1-1 ¶ 24.) CEC asked Meyer U.S. to provide it with a drawing of the pan it wanted to exclude from a potential license agreement. (Pls.' 56.1-1 ¶ 25; Def.'s 56.1-1 ¶ 25.) In response, Meyer U.S. sent CEC a drawing of the Meyer design (the "Meyer Design") alongside the Cacace '174 Patent design. (Pls.' 56.1-2 ¶ 36; Def.'s 56.1-2 ¶ 36.) Upon receiving the Meyer Design, Plaintiffs expressed concern that the Meyer Design infringed on the '174 Patent. (Pls.' 56.1-2 ¶ 37; Def.'s 56.1-2 ¶ 37.) Meyer U.S. informed Plaintiffs that it believed the Meyer Design did not infringe, and that Meyer U.S. would not pay royalties on pans manufactured based on the Meyer Design. (Pls.' 56.1-2 ¶ 38; Def.'s 56.1-2 ¶ 38.) CEC then requested a sample of the pan for which Meyer U.S. wanted a release. (Pls.' 56.1-2 ¶ 39; Def.'s 56.1-2 ¶ 39.) On or about September 22, 2004, CEC received a pan from Defendants, made of stainless steel impact bonded, with a plastic handle, glass cover, and non-stick cooking surface (the "September 22 Pan"). (Pls.' 56.1-2 ¶ 41; Def.'s 56.1-2 ¶ 41.) After receiving the September 22 Pan, CEC ultimately agreed to include a carve-out provision in the proposed license agreement. (Pls.' 56.1-1 ¶ 26; Def.'s ¶ 26.)
On or about October 28, 2004, the Parties executed a license agreement for Defendants to manufacture pans based on the '174 Patent (the "License Agreement"). (Pls.' 56.1-2 ¶ 42; Def.'s 56.1-2 ¶ 42.) The License Agreement granted Defendants a "non-exclusive, non-transferable, non-assignable and non-sublicensable license to manufacture, sell and advertise Products based upon the Patents." (Pls.' 56.1-2 ¶ 43; Def.'s 56.1-2 ¶ 43; Decl. of Christelette A. Hoey in Supp. of Mot. of Meyer Corporation U.S. for Summ. J. on Defense of Release, Ex. 4 (License Agreement) § 2(a).) Under the License Agreement, Defendants agreed to pay a royalty of one dollar per pan sold based upon the '174 Patent. (Pls.' 56.1-1 ¶ 28; Def.'s 56.1-1 ¶ 28; License Agreement § 3(a).)
The License Agreement contained language in Section 1(b) carving out the "Licensee's Pan" from the definition of the term "Products." As a result of the carve-out, no royalties would be due upon any sales of the "Licensee's Pan." (Pls.' 56.1-1 ¶ 39.) Further, the legend required to be displayed on the "Licensee's Pan" differed from the legend borne by the "Products." (Id. ¶ 40.) Under the terms of the License Agreement, neither the manufacturing nor the sale or advertisement of the "Licensee's Pan" constituted infringement of the '174 Patent. The relevant language is set forth below:
(a) The word "Patents" means a certain cooking pan design, United States patent no. 6,497,174 (Canadian patent pending). A copy of this Patent is annexed to this Agreement as Exhibit "A".
(b) The word "Products" means any products based upon the Patents. For purposes of this Agreement, a "Product" shall refer to each single item manufactured according to the Patents, notwithstanding that Licensor may choose to group several Products together into one SKU. The parties hereby agree that the product depicted on Exhibit "B", a representative sample of which having been submitted to Licensor by Federal Express sent September 22, 2004 ("Licensee's Pan") is not a "Product" and that neither the manufacturing nor the sale or advertisement of Licensee's Pan constitutes infringement of any kind and Licensor hereby releases Licensee from any such liability, provided however that at all times, during the term of this Agreement and after its termination, for so long as the Patent is valid, Licensee ensures that Licensee's Pan bears the following legend on its bottom stamp: "Manufactured on consent, U.S. patent no. 6,497,174" or "Mfrd. on consent, U.S. pat. no. 6,497,174". Should Licensee's Pan not bear the legend as agreed, then no release will be effected under this Agreement and Licensor reserves all rights against Licensee. (License Agreement § 1(a)-(b); Pls.' 56.1-1 ¶ 33; Def.'s 56.1-1 ¶ 33.)
The Parties dispute the meaning of the above provisions and, in particular, the definition and scope of the term "Licensee's Pan." (Decl. of Edward Ryan in Opp. to Def.'s Mot. for Summ. J. and Supp. of Pls.' Cross-Mot. for Summ. J. ¶ 2 ("The issue before the Court is a determination of the scope of 'Licensee's Pan' as defined in Section 1(b) of the License Agreement.").)
D. The Circulon and Farberware Pans
The License Agreement required Defendants to manufacture a minimum of 50,000 pans based on the '174 Patent, which they did, and Defendants paid CEC royalties of at least $50,000. ...