RELEASE AND SETTLEMENT AGREEMENT This Release and Settlement by keara

VIEWS: 207 PAGES: 9

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                       RELEASE AND SETTLEMENT AGREEMENT

       This Release and Settlement Agreement (“Settlement Agreement”) is entered into as of
December 4, 2009, by FURminator, Inc. (“FURminator”), PorterVision, Inc., David Porter, and
Angela Porter on the one hand and Munchkin, Inc. (“Munchkin”) on the other hand (collectively
“the Parties”) with respect to all causes of action and all claims the parties have brought or could
have brought as of the effective date of the Settlement Agreement, including but not limited to
claims and counterclaims asserted by both FURminator and Munchkin in connection with Case
No. 4:08-cv-367 currently pending in the United States District Court for the Eastern District of
Missouri (“Missouri Action”), and Case No CV09-4393-RSWL currently pending in the United
States District Court for the Central District of California (“California Action”). The California
and Missouri Actions are collectively the “Litigation.”

                                            RECITALS

       A.     FURminator owns U.S. patents 6,782,846, 7,077,076, 7,222,588, 7,334,540, and
7,509,926 directed to pet grooming tool technology and methods of use (the “FURminator
Patents”).

        B.      Munchkin, Inc. makes, uses, sells, offers for sale, and/or imports into the United
States certain pet grooming tools previously marketed as the Bamboo FurBuster Professional
DeShedding Tools (the “Munchkin Tools”).

        C.     The Parties wish to resolve the Litigation and all other outstanding issues between
them.

                                              TERMS

        In consideration of the mutual promises and obligations described herein, the parties
agree to the following:

        1.      Munchkin, through the manufacture, use, sale, offer for sale, and importation into
the United States of the Munchkin Tools, has directly infringed, induced others to infringe, and
contributed to the direct infringement by others of the five FURminator Patents. In particular,
Munchkin, through the manufacture, use, sale, offer for sale, and importation of the Munchkin
Tools has directly infringed, induced others to infringe, and contributed to the direct
infringement by others of at least the following claims: (a) claims 1-16 of U.S. Patent 6,782,846;
(b) claims 1-20 of U.S. Patent 7,077,076; (c) claims 1-29 of U.S. Patent, 7,222,588; (d) claims 1-
50 and 63-73 of U.S. Patent 7,334,540; and (e) claims 1-31 of U.S. Patent 7,509,926.
        2.      Munchkin and its officers, directors, employees and agents, all heirs, successors
and assigns, and any company controlled by Munchkin or its officers or directors or employees,
shall not after March 31, 2010, manufacture in, use in, sell in, offer for sale in, and/or import into
the United States: Munchkin Tools and colorable imitations thereof, any of the other pet
grooming tools accused of infringement in the Litigation and colorable imitations of such other
pet grooming tools, and any other tools that infringe any claim of any of the FURminator
Patents. Purchasers of FurBuster tools shall not be liable for infringing any of the FURminator
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Patents based on FurBuster tools sold by Munchkin on or before March 31, 2010. From the
execution date of this Settlement Agreement until March 31, 2010, Munchkin may import into
the United States a maximum of 100,000 Munchkin Tools (“Imported Munchkin Tools”), and
Munchkin may export after March 31, 2010, any of the Imported Munchkin Tools that it did not
sell in the United States on or before March 31, 2010. To ensure that Munchkin will not dump
excess inventory in the United States, Munchkin, from the execution date of this Settlement
Agreement through March 31, 2010, may sell Munchkin Tools in the United States to retailers at
prices that are discounted no more than 20 percent (20%) from ordinary prices that have been
charged to Munchkin’s customer’s prior to the date of the Settlement Agreement, and may sell
to others, such as wholesalers and liquidators, at prices not less than the ordinary prices that have
been charged to Munchkin’s customers prior to the date of the Settlement Agreement. Any sale
or offer of sale of a Munchkin tool made outside of the United States for retail distribution in a
country other than the United States that physically remains outside of the United States shall not
be considered to be a sale or offer for sale in the United States.
        3.     The Parties have prepared consent judgments to be filed in the Missouri and
California Actions that the Parties will execute along with the execution of this Settlement
Agreement. Within one hour of all of the Parties signing this Settlement Agreement and the two
consent judgments, FURminator shall file in the Missouri Action FURminator’s Motion To
Withdraw Its Motions For Sanctions As To Defendant Munchkin, Inc., But Not As To Defendant
Kim Laube & Co., Inc. (copy attached) along with the consent judgment for the Missouri Action.
The consent judgments shall bind the parties and are fully intended to have res judicata effect
with respect to all matters recited therein and in this Settlement Agreement.
        4.      None of the claims of U.S. Patent Nos. 6,782,846, 7,077,076, 7,222,588,
7,334,540, and 7,509,926 are invalid. No claim of any of the FURminator Patents is anticipated
under 35 USC §102 by any of the references identified in the Defendants’ Amended and
Annotated Invalidity Contentions served July 7, 2009 in the Missouri Action, nor by any of the
other alleged prior art references made of record or attempted to be made of record by any party
in the Litigation, or the testimony proffered by any fact or expert witness (“the alleged prior
art”). Munchkin does not have and is not aware of evidence or corroboration sufficient to
establish that any of the following alleged prior art of Defendants’ Amended and Annotated
Invalidity Contentions qualify as prior art against any of the FURminator Patents: 1-18,21, 27,
29, 31, 44-65, 69-71, 73, 74, 76, 77, 81-85, 97-99, 101, 115, 117, 118, 120. The alleged prior
art, whether considered individually or in combination, do not render any of the claims of any of
the FURminator Patents obvious under 35 USC §103, nor do they provide a basis to support a
finding of a prima facie obviousness. Further, Munchkin is not aware of and does not have
evidence sufficient to establish that any of the alleged prior art includes a blade edge adapted to
remove loose hair without cutting or pulling non-loose hair. Because this limitation, inter alia, is
required by every claim of the FURminator Patents, no combination of any of the alleged prior
art references renders obvious any claim of any of the FURminator Patents. Further, a skilled
artisan would not have been motivated to combine the alleged prior art in a manner that would
render obvious any claim of any of the FURminator Patents.
        5.     Munchkin, its officers, directors, employees and agents, heirs, successors and
assigns shall not challenge and shall not assist others in challenging the validity, patentability or
enforceability of any of U.S. Patent Nos. 6,782,846, 7,077,076, 7,222,588, 7,334,540, and
7,509,926 in any proceeding, including but not limited to any proceeding before any judicial or


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administrative tribunal including without limitation any court, arbitrator, or the United States
Patent and Trademark Office. In the event of an intentional breach of this provision, the
liquidated damages sufficient to compensate FURminator for the breach shall be $5,000,000.
FURminator shall also be entitled to its reasonable attorneys’ fees and expenses incurred in
enforcing this provision. However, nothing in this Agreement shall prohibit Munchkin, its
officers, directors, employees and agents, heirs, successors, attorneys and assigns from
complying with legal process, including but not limited to giving testimony and producing
documents and/or things, in response to any lawful subpoena, discovery request, notice of
deposition or court order. The future activities of Kim Laube & Co., Inc. and Mr. Kim Laube
shall not constitute a breach by Munchkin of this provision of the Settlement Agreement.
        6.     Each of the FURminator Patents are fully enforceable and David Porter, Angela
Porter, PorterVision, FURminator, and the attorneys of Thompson Coburn LLP, committed no
inequitable conduct in obtaining and enforcing any and all of the FURminator Patents and fully
complied with their obligations required by the patent statutes and the rules of practice before the
United States Patent and Trademark Office.
        7.      FURminator, PorterVision, David Porter and Angela Porter engaged in no
injurious falsehood, nor in any product disparagement of the products of Munchkin.
       8.      FURminator, PorterVision, David Porter and Angela Porter made no false and
derogatory statements about the business dealings of Munchkin.
        9.      FURminator, PorterVision, David Porter and Angela Porter did not improperly
interfere with any economic relationships or potential contractual relationships of Munchkin.
        10.     FURminator, PorterVision, David Porter and Angela Porter did not improperly
interfere with the prospective economic advantage of Munchkin.
       11.     FURminator, PorterVision, David Porter and Angela Porter did not make false
statements or defame Munchkin.
      12.    FURminator, PorterVision, David Porter and Angela Porter did not unfairly
compete with Munchkin under California law, the common law, or the Lanham Act.
       13.    David Porter, Angela Porter, PorterVision, FURminator engaged in no civil
conspiracy against Plaintiff Munchkin.
       14.    FURminator and PorterVision did not engage in sham litigation and did not
attempt to monopolize under § 2 of the Sherman Act and the Supreme Court’s decision in
Professional Real Estate Investors v. Columbia Pictures Indus., 508 U.S. 49 (1993) and its
predecessors and progeny.
     15.    A reasonable royalty for any tool covered by one or more of the claims of the
FURminator Patents is $10.00 per tool.
      16.     FURminator deshedding tools have been properly marked with the patent
numbers of the FURminator Patents in full compliance with 35 USC §287.
        17.     Releases.     Subject to full performance of the obligations imposed upon the
parties herein:




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         (a)   FURminator, on behalf of itself and its agents, officers, directors,
               principals, managing officers and agents, attorneys, employees,
               independent contractors, insurers, predecessors, successors, heirs, assigns
               and representatives, indemnitees and affiliated and/or related individuals,
               corporations, partnerships and limited liability companies, hereby
               expressly release and discharge Munchkin and its agents, officers,
               directors, principals, managing officers and agents, attorneys, employees,
               independent contractors, insurers, predecessors, successors, heirs, assigns
               and representatives, indemnitees and affiliated and/or related individuals,
               corporations, partnerships and limited liability companies from any and all
               claims, counterclaims, demands, liability, damages, causes of action,
               rights, obligations, costs, expenses, attorneys’ fees and compensation
               known or unknown, including without limiting the generality of the
               foregoing those arising from the Litigation, from the beginning of time to
               the date of this Settlement Agreement.

         (b)   PorterVision, on behalf of itself and its agents, officers, directors,
               principals, managing officers and agents, attorneys, employees,
               independent contractors, insurers, predecessors, successors, heirs, assigns
               and representatives, indemnitees and affiliated and/or related individuals,
               corporations, partnerships and limited liability companies, hereby
               expressly release and discharge Munchkin and its agents, officers,
               directors, principals, managing officers and agents, attorneys, employees,
               independent contractors, insurers, predecessors, successors, heirs, assigns
               and representatives, indemnitees and affiliated and/or related individuals,
               corporations, partnerships and limited liability companies from any and all
               claims, counterclaims, demands, liability, damages, causes of action,
               rights, obligations, costs, expenses, attorneys’ fees and compensation
               known or unknown, including without limiting the generality of the
               foregoing those arising from the Litigation, from the beginning of time to
               the date of this Settlement Agreement.

         (c)   David Porter and Angela Porter, on behalf of themselves and their agents,
               attorneys, heirs, assigns and representatives, indemnitees and affiliated
               and/or related individuals, corporations, partnerships and limited liability
               companies, hereby expressly release and discharge Munchkin and its
               agents, officers, directors, principals, managing officers and agents,
               attorneys, employees, independent contractors, insurers, predecessors,
               successors, heirs, assigns and representatives, indemnitees and affiliated
               and/or related individuals, corporations, partnerships and limited liability
               companies from any and all claims, counterclaims, demands, liability,
               damages, causes of action, rights, obligations, costs, expenses, attorneys’
               fees and compensation known or unknown, including without limiting the
               generality of the foregoing those arising from the Litigation, from the
               beginning of time to the date of this Settlement Agreement.




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         (d)   Munchkin, on behalf of itself and its agents, officers, directors, principals,
               managing officers and agents, attorneys, employees, independent
               contractors, insurers, predecessors, successors, heirs, assigns and
               representatives, indemnitees and affiliated and/or related individuals,
               corporations, partnerships and limited liability companies, hereby
               expressly release and discharge FURminator and its agents, officers,
               directors, principals, managing officers and agents, attorneys, employees,
               independent contractors, insurers, predecessors, successors, heirs, assigns
               and representatives, indemnitees and affiliated and/or related individuals,
               corporations, partnerships and limited liability companies from any and all
               claims, counterclaims, demands, liability, damages, causes of action,
               rights, obligations, costs, expenses, attorneys’ fees and compensation
               known or unknown, including without limiting the generality of the
               foregoing those arising from the Litigation, from the beginning of time to
               the date of this Settlement Agreement.

         (e)   Munchkin, on behalf of itself and its agents, officers, directors, principals,
               managing officers and agents, attorneys, employees, independent
               contractors, insurers, predecessors, successors, heirs, assigns and
               representatives, indemnitees and affiliated and/or related individuals,
               corporations, partnerships and limited liability companies, hereby
               expressly release and discharge PorterVision and its agents, officers,
               directors, principals, managing officers and agents, attorneys, employees,
               independent contractors, insurers, predecessors, successors, heirs, assigns
               and representatives, indemnitees and affiliated and/or related individuals,
               corporations, partnerships and limited liability companies from any and all
               claims, counterclaims, demands, liability, damages, causes of action,
               rights, obligations, costs, expenses, attorneys’ fees and compensation
               known or unknown, including without limiting the generality of the
               foregoing those arising from the Litigation, from the beginning of time to
               the date of this Settlement Agreement.

         (f)   Munchkin, on behalf of itself and its agents, officers, directors, principals,
               managing officers and agents, attorneys, employees, independent
               contractors, insurers, predecessors, successors, heirs, assigns and
               representatives, indemnitees and affiliated and/or related individuals,
               corporations, partnerships and limited liability companies, hereby
               expressly release and discharge David Porter and Angela Porter and their
               agents, attorneys, employees, independent contractors, insurers,
               predecessors, successors, heirs, assigns and representatives, indemnitees
               and affiliated and/or related individuals, corporations, partnerships and
               limited liability companies from any and all claims, counterclaims,
               demands, liability, damages, causes of action, rights, obligations, costs,
               expenses, attorneys’ fees and compensation known or unknown, including
               without limiting the generality of the foregoing those arising from the




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                       Litigation, from the beginning of time to the date of this Settlement
                       Agreement.

         18.    Representations and Warranties. Each party hereto represents and warrants that it
has not heretofore assigned, transferred, or otherwise encumbered, or purported to assign,
transfer, or otherwise encumber any of the claims or counterclaims being released herein to any
other entity not a party hereto and is fully empowered and authorized to compromise, release and
settle the same as provided for herein.
        19.     Missouri Law, Venue and Jurisdiction. This Settlement Agreement shall be
enforced and interpreted in accordance with the laws of the State of Missouri. The United States
District Court for the Eastern District of Missouri (“the Court”) shall have exclusive jurisdiction
and venue over any dispute concerning this Settlement Agreement, Consent Judgments, and/or
any claim related to any of the FURminator Patents so that any disputes or controversies that
may arise with regard to this Settlement Agreement, the Consent Judgments or any of the
FURminator Patents shall be exclusively brought before the Court for resolution thereof.
         20.   No confidentiality. This Settlement Agreement is not confidential and any party
to this agreement may disclose the Settlement Agreement and any of its terms.
        21.     Integration. This Settlement Agreement and related Consent Judgments constitute
the entire agreement between the parties with respect to the subject matter hereof and supersede
all prior and contemporaneous oral and written agreements and discussions. This Settlement
Agreement may be amended only by an agreement in writing specifically referring to this
Settlement Agreement and signed by all of the parties hereto.
       22.      Representation by Counsel. Each party has been represented by independent
counsel of its own choice throughout all negotiations that preceded the execution of this
Settlement Agreement, and has executed this Settlement Agreement with its counsel and upon
the advice of said independent counsel.
        23.     Interpretation. Words used herein, regardless of the gender and number
specifically used, shall be deemed and construed to include any other gender, masculine,
feminine, or neuter, and any other number, singular or plural, as the context requires.
        24.    Severability. In the event any provision of this Settlement Agreement shall be
held to be void, voidable, or unenforceable, the remaining provisions shall remain in full force
and effect.
        25.     Counterparts. This Settlement Agreement shall be effective when all parties and
signatories have executed it. This Settlement Agreement may be executed in counterparts, each
of which shall constitute an original and all of which taken together shall constitute one and the
same instrument. This Settlement Agreement may be executed and transmitted by facsimile
telecopies or by e-mail in .pdf format, which facsimile copies or e-mail shall be deemed as
originals for all purposes. Each party shall provide a signed original to the other within a
reasonable period.
       26.     Investigation. Each of the parties hereto acknowledges, agrees, and warrants to
every other party hereto that each party has had the unfettered opportunity to fully and
completely investigate, to the extent of the available facts, each and every aspect of this
Settlement Agreement and related Consent Judgments including, without limitation, the terms


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and conditions, the factual and legal basis therefore, the identify of all persons and entities
specifically and generally referred to herein, each party’s rights, obligations, claims and remedies
and any other matter which has or may have some bearing upon the party’s decision to enter into
this Settlement Agreement; and, each party has relied solely upon said investigation and not
upon any communication or conduct of whatever kind or nature of any person, entity or party
other than the party’s own representatives in connection with the decision to enter into this
Settlement Agreement.
        27.    Captions. The captions of paragraphs contained in this Settlement Agreement are
for references only and are not to be construed in any way as a part of this Settlement
Agreement.
         28.     Binding Effect. All terms and stipulations of this Settlement Agreement are
binding on the parties in any future action and parties are foreclosed, in any future action, from
litigating any issue stipulated to in this Settlement Agreement and in the related Consent
Judgments. This Settlement Agreement is binding upon and shall inure to the benefit of the
parties hereto, and their respective agents, employees, representatives, officers, directors,
divisions, subsidiaries, affiliates, heirs, successors and assigns. FURminator shall have the right
to assign its rights, duties and obligations in this Settlement Agreement in connection with the
sale or other transfer of all or a substantial portion of the assets of FURminator.

                                         *       *       *

                                     (Signature Page Follows)




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