The opinion of the court was delivered by: Legge, District Judge.
ORDER ON MOTION FOR SUMMARY JUDGMENT
Plaintiff Security People, Inc. ("SPI") and defendant Medeco Security
Locks, Inc. ("Medeco") are in the high security lock industry. They
design, develop, manufacture and sell security related mechanisms,
software and systems. They are competitors.
In this action, SPI contends that Medeco's products infringe one of
SPI's patents, and were developed from confidential information that SPI
provided to Medeco under a confidentiality and non-disclosure agreement in
1989. The causes of action alleged in the complaint are: (1)
misappropriation of trade secrets; (2) breach of
contract, the 1989 agreement; (3) unfair competition under the California
Business and Professions Code; and (4) infringement of SPI's 043 patent.
Medeco denies the allegations, and filed a counter claim which is not at
issue in the pending motion.
Medeco has brought a motion for summary judgment on all four causes of
action. Medeco contends that SPI's state law claims (causes of action 1,
2, and 3) are barred by a 1995 settlement agreement between the parties.
Medeco also contends that the fourth cause of action, patent
infringement, is barred by collateral estoppel, because the same issues
were litigated and determined in Medeco's favor in a prior lawsuit
between the parties; Gokcebay v. Medeco Security Locks, C-93-0627-EFL, in
SPI opposes the motion. It was briefed, argued, and submitted for
decision. The court has reviewed the moving and opposing papers, the
record of the case, the arguments of the parties, and the applicable
authorities. The court concludes that there are no genuine issues of
material fact which preclude summary judgment under Rule 56 of the
Federal Rules of Civil Procedure, and that Medeco's motion should be
In the first action, SPI sued Medeco for misappropriation of trade
secrets, breach of contract, unfair competition, and patent
infringement. The state law claims were based upon the alleged breach of
the 1989 confidentiality agreement.
Medeco moved for a summary judgment that its so-called VLS product did
not infringe plaintiffs patents. The court granted Medeco's motion. In a
sixteen page order, the court construed SPI's patent claims, and then
found that Medeco's VLS device did not infringe those claims.
The parties then settled the suit in 1995, including the patent claim
and the state law claims. As a part of the settlement, Medeco paid SPI a
sum of money, and SPI gave Medeco a release of all claims and a covenant
not to sue for patent infringement. The parties also stipulated to
request vacation of the summary judgment order, but the settlement
agreement specifically stated that it was not contingent upon vacation of
that order. The order was not vacated by the court.
The present action is quite similar to the first. The state law claims
for misappropriation of trade secrets, breach of contract, and unfair
competition are again based upon the 1989 agreement. Both the present and
the prior patent infringement claims concern SPI's 043 patent. And both
infringement cases involve the same product of Medeco. The first suit
involved defendant's VLS, while the present suit alleges infringement by
defendant's PMLS product. However, at oral argument the parties agreed
that the VLS and PMLS are the same for purposes of patent infringement
As stated, Medeco's motion for summary judgment on the state law claims
(causes of action 1, 2, and 3) is on the ground that they are barred by
the 1995 settlement agreement. The settlement agreement contained a
release clause, which provided in relevant part as follows:
In consideration of the settlement amount and other
consideration described in this agreement, and the
mutual promises and covenants contained herein, SPI
and its predecessors . . . release and forever
discharge Medeco of and from any and all claims,
damages, actions which were or could have been alleged
by SPI in the suit, including any claims of actual
damages, enhanced damages, attorneys' fees, injunctive
relief, expenses and costs . . . (emphasis added).
Medeco contends that the release bars the state law claims because they
have the same genesis as the state law claims in the first action; that
is, a breach
of the 1989 confidentiality agreement. SPI contends that the release only
covered claims involving the products at issue in the prior suit, and
that this action is for acts of defendant subsequent to the release.
Therefore the issue is whether the release was limited to the products
then at issue, or whether the release bars all claims and causes of
action based upon the confidentiality agreement that was at issue between
the parties in the first case.
The settlement agreement appears to refer to settling claims and causes
of action, and not to settling disputes with ...