CallWave Communication LLC v. Verizon Communications Inc. et al.

Filing 684

MEMORANDUM ORDER Granting 658 MOTION to Enforce Settlement Agreement. Signed by Judge Richard G. Andrews on 2/13/2017. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

CALLWAVE COMMUNICATIONS, LLC.,
Plaintiff,
v.

No. 12-cv-1704 (RGA)

VERIZON SERVICES CORP. CELLCO
PARTNERSHIP DIB/A VERIZON WIRELESS
Defendant,
TELECOMMUNICATION SYSTEMS INC.,
Intervenor.

MEMORANDUM ORDER

Regret is no basis in the law to undo a contract made. On this guiding
principle, Plaintiff Callwave's motion (D.I. 658) to enforce a settlement agreement
between itself and third party Telecommunication System Inc. is GRANTED.
Callwave sued Defendants Verizon and Google for infringing U.S. Patent No.
6, 771,970. TCS supplies the accused systems to Verizon. Accordingly, TCS has
indemnified Verizon.
An exchange of emails and phone calls between Callwave and TCS
culminated in an August 8, 2016 email that reads:
[T]hank you for the call today and for Callwave's counter proposal to the
remaining terms in disagreement-i.e., payment. We understand Callwave's
counter-proposal for this term is $850k for the first payment, and $300k for
the second payment. My client accepts.

Please provide us a draft of the settlement agreement in addition to the
motion to stay.
(D.I. 660-1 at 2). Two days later, the parties filed a joint stipulation and agreement
to stay the case because they had "reached an agreement in principle regarding
settlement .... " (D.I. 537). From that date, TCS and Callwave marched forward in
their attempt to memorialize the agreement in a formal contract. Drafts, comments,
and edits were exchanged. (D.I. 660-1 at 18-85).
On September 15, though, the attempt to formalize the agreement in writing
hit a bump. As Google remained in the case, I ruled on a§ 101 motion and
invalidated the '970 patent. That ruling is now on appeal.
Following my order, the "agreement in principle" transformed to an
agreement to agree in TCS's eye. TCS refused to continue the effort to reduce the
agreement to writing. It now argues that comments on drafts show there was not
agreement on all of the essential terms.
Delaware law directs me to enforce a settlement agreement if "a reasonable
negotiator ... would have concluded, in that setting, that the agreement reached
constituted agreement on all of the terms that the parties themselves regarded as
essential.. .. " Loppert v. Windsortech, Inc., 865 A.2d 1282, 1285 (Del. Ch. 2004). The
inquiry is an objective one. Id. When the parties agree "the contract should be
formally drawn up and put in writing," the lack of a formal writing does not defeat
the contract absent "a positive agreement that it should not be binding until so

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reduced to writing and formally executed." Id. at 1287 (quoting Universal Products
Co. v. Emerson, 179 A. 387, 394 (Del. 1935)).
Objective indicators demonstrate that a contract was made. First, the August
8th email clearly demonstrates that TCS believed an agreement had been reached.
The August 8th agreement set out the payment terms and a July 21st email set out
the boundaries of the license Callwave would offer TCS. (D.I. 660-1 at 2, 7).
Intermediate emails demonstrated that the terms from the July 21st email carried
through and were part of the agreement struck on August 8th. (See id. at 2-6). For
example, a July 22nd email thanked Callwave for "agreeing to the terms, other than
payment" and confirming that the covenant not to sue would allow damages to
accrue. (Id. at 5). These emails used the language of contract- "this formal offer"and the language of resolution-"my client accepts." (Id. at 2, 8).
Second, the stipulation filed with this court clearly indicates an agreement
had been reached. It represented to this Court that the parties had "reached an
agreement in principle .... " That stipulation evidences that Callwave considered the
matter settled and that Verizon, an interested and close observer of the
negotiations, did as well.
Furthermore, the tenor of the comments in the drafts reflect an effort to
memorialize an agreement already reached. Even if TCS' s characterization of the
comments were correct, any revisions and comments contradicting the agreement
reached on August 8th would simply be requests for modification of the agreement.

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TCS points out there were open contract terms such as assignability, notice,
choice oflaw, and confidentiality. (See id. at 7). Delaware law, however, explicitly
provides that "[a] settlement agreement is enforceable if it contains all essential
terms, even though it expressly leaves other matters for future negotiation."

Loppert, 865 A.2d at 1289.
As I have found an enforceable contract existed on August 8th, specific
performance of that contract is the appropriate remedy. Id. at 1289-90. The terms
of the contract include the agreement as memorialized in the emails of July 21, 22,
and August 8. In the effort to reduce the contract to writing in late August and early
September, several additional terms were agreed to by TCS and Callwave and are
also part of the contract. These terms were either explicitly agreed to or included in
responding drafts without comment or suggested revision.
IT IS SO ORDERED this

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day of February 2017.

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