The U.S. Court of Appeals for the Federal Circuit affirmed a district court’s denial of the patentee’s motion for partial relief from the district court’s final judgment of non-infringement and underlying claim construction. Louisville Bedding Co. v. Pillowtex Corp., Case No. 05-1595 (Fed. Cir. July 25, 2006) (Lourie, J.).
In separate actions, Louisville Bedding filed suit against Pillowtex in 1994 and Perfect Fit Industries in 1998, accusing both of infringing the U.S. Patent No. 5,249,322 ("the `322 patent"). Both Pillowtex and Perfect Fit are competing manufacturers and sellers of mattress pads. Both cases were eventually terminated via settlement agreements, and the district court in each of the cases entered final judgment. Subsequent to its settlement with Louisville Bedding in 1998, Pillowtex went out of business. One ramification of Pillowtex’s dissolution was that Xymid, LLC, with whom Pillowtex originally had an exclusive supply agreement for the 4059 mattress pad skirt material used in the accused Pillowtex mattress pad (the "4059 mattress pad"), was no longer bound by its exclusive supply agreement with Pillowtex. Free from that agreement, Louisville Bedding asserts, Xymid began selling its 4059 mattress pad skirt material to other manufacturers of mattress pads, including Perfect Fit and National Sleep Products (NSP). Based on these events in the mattress pad industry after Pillowtex went out of business and what Louisville Bedding perceived to be a conflicting judgment that issued from its case against Perfect Fit, Louisville Bedding sought to reopen the Pillowtex case and have the district court in that case vacate a portion of its final judgment. In a summary order issued after a hearing, the court denied Louisville Bedding’s motion. Louisville Bedding appealed.
On appeal, Louisville Bedding argued that Pillowtex’s closure was an unforeseen event in the mattress marketplace, and when it agreed to have the district court enter a final judgment of non-infringement as to the 4059 mattress pad and thereby accept the underlying claim construction, Louisville Bedding had assumed that no other competitor would have access to Xymid’s 4059 mattress pad skirt material. Louisville Bedding also argued that it would be in the interest of justice to grant its motion due to conflicting judgments as to the infringement of certain claims of the `322 patent by mattress pads using Xymid’s 4059 skirt material. In particular, Louisville Bedding argued that the final judgment in the Pillowtex case determined that the 4059 mattress pad did not infringe claim 34 of the `322 patent, but the district court in the Perfect Fit case entered a judgment confirming an arbitrator’s determination that the Perfect Fit mattress pad would infringe claim 34 if it used Xymid’s 4059 skirt material. The Federal Circuit concluded that the district court did not abuse its discretion in denying Louisville Bedding’s motion because businesses fail every day, and that the failure of Pillowtex in this case was not an "exceptional or extraordinary circumstance." In so doing, the Federal Circuit rejected Louisville Bedding’s request to nullify what Louisville Bedding conceded was a bargained-for provision in the settlement agreement. Citing Supreme Court precedent, the Court noted that "[p]ublic policy dictates that those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered forever settled as between the parties," a concern even stronger when a case is ended by the deliberate choice of the parties.
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