A federal judge in Texas this week ruled that emails exchanged between Medtronic (NYSE:MDT) and Neurovision hashing out a settlement in their patent infringement dispute constitute a valid agreement, setting the stage for a hearing on whether the subsequent, unsigned contract is binding.
Neurovision sued Medtronic in the the U.S. District Court for Eastern Texas in February 2016, alleging infringement of a pair of patents covering the “Electrode for Prolonged Monitoring of Laryngeal Electromyography” by Medtronic’s NIM nerve monitoring system. The case was stayed after Medtronic asked the Patent Trial & Appeals board for inter partes review of the patents, which the board launched for 1 of the patents Dec. 29, 2016, according to court documents.
By February settlement talks had progressed to the point that a Medtronic director and Neurovision founder & owner Dr. James Rea had hammered out a deal that included “Medtronic’s upfront and subsequent payment obligation to Neurovision in addition to Medtronic’s agreement to withdraw the 4 IPR petitions, in exchange for a license to the patents and Neurovision’s release from the district court action,” according to the documents.
Rea wrote Feb. 17 that he had “briefed the shareholders and [that] we accept your offer,” summarizing the terms of the deal and concluding, “Advise us as to how you wish to proceed to create the contract.” Lawyers for both sides began drafting the agreement, according to the documents, and by March 23 Neurovision had sent a signed agreement to Medtronic.
But the PTAB threw a wrench in the works that same day, agreeing to inter partes review of the other Neurovision patent. That prompted Medtronic to back out of the deal March 27, citing the patent board’s decision; Neurovision filed a motion to enforce the deal March 28, according to the documents.
Magistrate Judge Roy Payne agreed with Neurovision in part, finding that the Feb. 17 emails between Rea and the Medtronic director established a valid agreement.
“Because the court finds that there is no dispute of material fact that Neurovision and Medtronic entered into a valid settlement agreement by email on February 17, 2017, Neurovision’s emergency motion … is granted-in-part,” Payne wrote. “The court believes that this determination will enable the parties to resolve their dispute regarding the settlement. Accordingly, and given the time-sensitive nature of the dispute, Neurovision’s request that the court enforce the March 23 agreement is deferred. To the extent foreshadowing may affect the parties’ final resolution of this action, the court would likely find an evidentiary hearing necessary before determining whether the March 23 agreement is enforceable without defendants’ signatures.”