Serby v. First Alert, Inc.
664 F. App'x 105
| 2d Cir. | 2016Background
- Victor Serby, an inventor, obtained U.S. Patent No. 5,434,434 (’434 Patent) for a smoke detector using a long‑life lithium battery housed in an "unopenable" case to deter battery removal.
- Serby sued BRK Brands (First Alert/BRK) for patent infringement; the parties settled. The Settlement Agreement required BRK to pay royalties on detectors that "incorporate a lithium battery ... and which have a battery compartment that is unopenable as is defined in Claims 5 or 10 of the [’434] Patent."
- Serby later sued in state court (removed to federal court), alleging BRK sold models without paying royalties in breach of the Settlement Agreement.
- The district court granted partial summary judgment that four E‑Z Access models were "openable" and thus outside the Settlement Agreement; after a bench trial it held the SA340 model was also "openable," and dismissed Serby’s royalty claim.
- On appeal, the Second Circuit examined the proper construction of the term "unopenable," considered the patent language and settlement text, and evaluated whether the term was ambiguous and whether extrinsic evidence should be considered.
Issues
| Issue | Plaintiff's Argument (Serby) | Defendant's Argument (BRK) | Held |
|---|---|---|---|
| How to define "unopenable" in the Settlement Agreement | Means a "housing which prevents physical access to the battery to deter removal" (broad, purpose‑based) | District court defined it as a housing that "cannot be opened by a consumer without damaging the structure of the case" (narrow, mechanical) | District court’s narrow definition was incorrect; term is ambiguous and requires extrinsic evidence on remand |
| Whether the term is ambiguous such that extrinsic evidence may be considered | Argues ambiguity; party intent and prior practice (royalties paid on SA10YR) inform meaning | BRK relied on implied inclusion of SA10YR but argued district court’s definition controlled | The term is ambiguous when read in context of the Settlement Agreement and patent; remand required to weigh extrinsic evidence |
| Whether the SA10YR/SA340 fall within the Settlement scope given batteries soldered in place | Serby: models with soldered batteries achieve the patent’s deterrent purpose and should be covered | BRK: some models were "openable" (E‑Z Access, SA340) and thus excluded | Court noted SA10YR and SA340 allow access to compartments but have soldered batteries so they appear to achieve the patent’s goal; factual determination on intent/extrinsic evidence needed |
| Whether the appellate court could resolve the ambiguity as a matter of law | Serby: ambiguity and prior conduct require factual inquiry | BRK: district court’s legal construction stands | Appellate court could not resolve because district court denied opportunity to present extrinsic evidence; remanded for factfinding |
Key Cases Cited
- Teva Pharm. USA, Inc. v. Sandoz, 135 S. Ct. 831 (2015) (standard of review: legal patent constructions reviewed de novo where no subsidiary factual disputes)
- Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576 (Fed. Cir.) (1996) (court may look to patent claims, specification, and prosecution history in construing patent terms)
- Panduit Corp. v. Hellermann Tyton Corp., 451 F.3d 819 (Fed. Cir.) (2006) (settlement agreements arising from patent disputes may be interpreted using patent and contract principles)
- Olin Corp. v. Am. Home Assurance Co., 704 F.3d 89 (2d Cir.) (2012) (contract interpretation: determine plain meaning in context of entire agreement)
- Collins v. Harrison‑Bode, 303 F.3d 429 (2d Cir.) (2002) (contract ambiguity defined and extrinsic evidence rule)
- Law Debenture Trust Co. v. Maverick Tube Corp., 595 F.3d 458 (2d Cir.) (2010) (ambiguity standard: lack of definite and precise meaning)