In a divided panel decision, the US Court of Appeals for the
Federal Circuit concluded that a merger clause in the parties'
settlement agreement did not extinguish a prior covenant not to
sue. Molon Motor & Coil Corp. v. Nidec Motor Corp.,
Case No. 19-1071 (Fed. Cir. Jan. 10, 2020) (Lourie, J) (Reyna, J,
dissenting).
In 2004, Molon sued Nidec's predecessor, Merkle-Korff, for
infringement of Molon's patent. In response, Merkle-Korff filed
declaratory judgment counterclaims against two other Molon patents,
seeking declarations of invalidity and non-infringement. Molon
subsequently offered Merkle-Korff a covenant not to sue (2006
covenant) on the counterclaim patents. The covenant provided a
unilateral non-exclusive license covering products existing at the
time with no limits to specific markets.
