Federal Circuit Does Not Favor Forfeitures of Rights

General Mills, Inc. v. Kraft Foods Global, Inc., [06-1569, -1606](May 16, 2007) [LINN, Bryson, Clevenger] The Federal Ciruit affirmed the dismisal of General Mills' claim of patent infringement on the ground that the claim was barred by a covenant not to sue Kraft's predecessor in interest.
BRIEF: General Mills sued Farley for infringement of U.S. Patent Nos. 5,287,667 and 5,723,163 on rolled fruit snacks. The suit was settled with a covenant not to sue Farley and its "successors". Kraft succeeded to the business of Farley, sold off some of Farley's assets to Catterton, and eventually sold the rolled fruit snack business to Kellogg. General Mills sued Kraft for infringement, Kraft motion to dismiss in view of the settlement agreement and covenant not to sue, was granted. General Mills argued that the covenant not to sue was lost when Kraft sold some of the Farley assets to Catterton. The district court rejected this argument, because the agreement only addressed the fact that all of Farleys assets must be transferred in order to transfer the convenant, and did not address whether all of the assets must be retained in order to retain the covenant. The Federal Circuit said that it has taken a "dim view of purported forfeitures of patent rights". Finding no language to support a forfeiture of rights triggered by the tranfer of assets to Catterton, the Federal Circuit found no basis to conclude that Kraft's rights under the covenenant not to sue were terminated by the Catterton transaction.
In an interseting procedural ruling, the Federal Circuit held that the deadline for answering an amended complaint is not suspended by the filing of a motion to dismiss. The result being that Kraft was not permitted to file an answer and counterclaim to the amended complaint, once the amended complant was dismissed.