Transocean Offshore Deepwater Drilling Inc. v. Noble Corporation plc et al
Filing
111
MEMORANDUM AND ORDER DENIED 103 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM of Breach of Contract (Signed by Judge Nancy F Atlas) Parties notified.(sashabranner, 4)
United States District Court
Southern District of Texas
ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
§
§
§
§
v.
§
§
NOBLE CORPORATION PLC, et al., §
Defendants.
§
May 15, 2019
David J. Bradley, Clerk
TRANSOCEAN OFFSHORE
DEEPWATER DRILLING INC.,
Plaintiff,
CIVIL ACTION NO. 4-17-0123
MEMORANDUM AND ORDER
This patent case is before the Court on the Motion to Dismiss Breach of
Contract Claim (“Motion”) [Doc. # 103] filed by Defendant Noble Corporation PLC
and related corporate Defendants1 (collectively, “Noble”). Plaintiff Transocean
Offshore Deepwater Drilling Inc. (“Transocean”) filed a Response [Doc. # 108], and
Noble filed a Reply [Doc. # 109]. Having reviewed the record and applied binding
and persuasive legal authorities, the Court denies the Motion.
I.
BACKGROUND
Transocean is the owner of United States Patents No. 6,047,781 (“the ’781
Patent”), No. 6,056,071 (“the ’071 Patent”), No. 6,068,069 (“the ’069 Patent”), and
No. 6,058,851 (“the ’851 Patent”) (the “Transocean Patents”). In 2007, Transocean
1
These entities are Noble Corporation, Noble Drilling Americas LLC, Noble Drilling
Exploration Company, Noble Drilling Holding LLC, Noble Drilling Services Inc.,
Noble Drilling (U.S.) LLC, and Noble Drilling (U.S.) Inc.
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filed a patent infringement lawsuit, Civil Action No. 4:07cv0618 (“the 2007
Lawsuit”), against Noble. In the 2007 Lawsuit, Transocean alleged that Noble’s
semisubmersible drilling unit, the Clyde Boudreaux, infringed the Transocean Patents.
Shortly after the 2007 Lawsuit was filed, Noble conceded that the Clyde Boudreaux
infringed specific claims of two of the Transocean Patents.
On July 23, 2007, Transocean and Noble entered into a settlement agreement
that included a licensing agreement and provided for entry of an agreed judgment
against Noble in the 2007 Lawsuit. See Settlement and License Agreement (“2007
Settlement Agreement”), Exh. 1 to Response. On July 31, 2007, this Court entered
Final Judgment in the 2007 Lawsuit as contemplated and required by the 2007
Settlement Agreement. The Final Judgment in the 2007 Lawsuit provided that the
Court “adjudges, orders, and decrees” that Noble’s Clyde Boudreaux “infringes at
least claim 11 of the ’781 patent and claim 17 of the ’069 patent.” See Final
Judgment, Exh. 2 to Response, ¶ 3. The Final Judgment provided further that it would
“have claim and issue preclusion on all future litigation between the parties and those
in privity with them.” Id., ¶ 8.
Significantly, the 2007 Settlement Agreement included a “No-Challenge
Provision.” This provision states:
Noble Licensee covenants that it will not participate as a party or
financially support a third party in any administrative or court
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proceeding or effort in the world to invalidate, oppose, nullify,
reexamine, reissue or otherwise challenge the validity, enforceability,
or scope of any claim of the Licensed Patents.
2007 Settlement Agreement, ¶ 4.3 (emphasis added). The No-Challenge Provision
provides that any breach would be “considered a material breach which may not be
cured . . ..” Id.
In January 2017, Transocean filed the current lawsuit, alleging that Noble owns
and leases various drillships for offshore oil drilling operations that infringe the
Transocean Patents. The current lawsuit relates to Noble’s drillship known as the
Globetrotter and four other drillships built by Hyundai Heavy Industries. The patent
infringement allegations in the current lawsuit do not involve the Clyde Boudreaux.
Following the claim construction proceedings in the current lawsuit, and the
briefing on Noble’s Motion for Summary Judgment of Non-Infringement, Transocean
sought and obtained leave to file an amended complaint. In the First Amended
Complaint [Doc. # 94], Transocean alleges that Noble breached the No-Challenge
Provision of the 2007 Settlement Agreement in the current lawsuit. Specifically,
Transocean alleges that Noble improperly argued in this case that the scope of certain
claims of the Transocean Patents is more limited than the scope as construed by this
and other courts. Noble filed a Motion to Dismiss, which has been fully briefed and
is now ripe for decision.
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II.
STANDARD FOR MOTION TO DISMISS
Issues regarding the breach of a settlement agreement are not “unique to patent
law, even if arising in the context of a patent infringement suit.” See Panduit Corp.
v. HellermannTyton Corp., 451 F.3d 819, 825 (Fed. Cir. 2006) (citing Novamedix,
Ltd. v. NDM Acquisition Corp., 166 F.3d 1177, 1180 (Fed. Cir. 1999)). Therefore, the
Fifth Circuit legal standard for motions to dismiss applies to the pending Motion. See
Panduit Corp., 451 F.3d at 825.
In the Fifth Circuit, a motion to dismiss under Rule 12(b)(6) of the Federal
Rules of Civil Procedure is viewed with disfavor and is rarely granted. See Turner v.
Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (citing Harrington v. State Farm Fire &
Cas. Co., 563 F.3d 141, 147 (5th Cir. 2009)). The complaint must be liberally
construed in favor of the plaintiff, and all facts pleaded in the complaint must be taken
as true. Harrington, 563 F.3d at 147. The complaint must, however, contain
sufficient factual allegations to state a claim for relief that is “plausible on its face.”
See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Patrick v. Wal-Mart, Inc., 681 F.3d
614, 617 (5th Cir. 2012). When there are well-pleaded factual allegations, a court
should presume they are true, even if doubtful, and then determine whether they
plausibly give rise to an entitlement to relief. Iqbal, 556 U.S. at 679. Rule 8
“generally requires only a plausible ‘short and plain’ statement of the plaintiff’s claim,
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not an exposition of his legal argument.” Skinner v. Switzer, 562 U.S. 521, 530
(2011).
III.
ANALYSIS
As noted above, a claim asserting breach of a settlement agreement is not
“unique to patent law, even if arising in the context of a patent infringement suit.” See
Panduit Corp., 451 F.3d at 825. Generally, and unless the settlement agreement
provides otherwise, the construction and enforcement of settlement agreements
entered into in Texas are governed by Texas contract law. See Eastern Energy, Inc.
v. Unico Oil & Gas, Inc., 861 F.2d 1379, 1380 (5th Cir. 1988); Lockette v. Greyhound
Lines, Inc., 817 F.2d 1182, 1185 (5th Cir. 1987). In this case, the 2007 Settlement
Agreement provides that it “shall be governed by and construed in accordance with
the federal laws of the United States and the laws of the State of Texas . . ..” See 2007
Settlement Agreement, ¶ 11.1. Under Texas law, the elements of a breach of contract
claim are: “(1) the existence of a valid contract; (2) performance or tendered
performance by the plaintiff; (3) breach of the contract by the defendant; and
(4) damages sustained by the plaintiff as a result of the breach.” Conn Credit I, L.P.
v. TF LoanCo III, L.L.C., 903 F.3d 493, 499–500 (5th Cir. 2018) (citing Smith Intern.,
Inc. v. Egle Grp., LLC, 490 F.3d 380, 387 (5th Cir. 2007)).
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It is uncontested Transocean has alleged the existence of a valid contract – the
2007 Settlement Agreement. No-challenge clauses in patent litigation settlement
agreements are generally valid and enforceable. See Flex-Foot, Inc. v. CRP, Inc., 238
F.3d 1362, 1369-70 (Fed. Cir. 2001). This promotes an important public policy
recognized by the Federal Circuit:
Settlement agreements must be enforced if they are to remain effective
as a means for resolving legal disagreements. Upholding the terms of
settlement agreements encourages patent owners to agree to settlements
and promotes judicial economy.
Id. at 1370. Therefore, no-challenge provisions in a settlement agreement are
enforceable where the language is clear and unambiguous. See Baseload Energy, Inc.
v. Roberts, 619 F.3d 1357, 1362 (Fed. Cir. 2010); see also Flex-Foot, 238 F.3d at
1370.
It is also uncontested that Transocean alleges that it performed its obligations
under the contract. With reference to the damages element of the breach of contract
claim, Transocean quotes the No-Challenge Provision of the 2007 Settlement
Agreement, which states that a breach of that provision will be material and will result
in an obligation for Noble to pay damages to Transocean. See First Amended
Complaint [Doc. # 94], ¶ 39 (quoting 2007 Settlement Agreement, ¶ 4.3). Therefore,
the dispositive issue on the pending Motion to Dismiss is whether Transocean has
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alleged sufficient facts to state a plausible claim that Noble breached the NoChallenge Provision of the 2007 Settlement Agreement.
Noble argues that the No-Challenge Provision of the 2007 Settlement
Agreement is restricted to a “direct challenge” to the limited scope established by the
parties’ agreement that “the configuration of the Clyde Boudreaux fell within the
scope of certain infringed claims.” See Motion, pp. 3-4. Noble argues that “a
‘challenge to the scope’ would necessarily mean advancing a construction directly
inconsistent with the Clyde Boudreaux’s acknowledged infringement of certain
claims.” See id. at 8. Absent allegations of this direct challenge to the scope of the
claims admittedly infringed by the Clyde Boudreaux, Noble argues the breach of
contract claim must be dismissed.2
Transocean bases its breach of contract claim on paragraph 4.3 of the 2007
Settlement Agreement, not on the agreed Final Judgment in the 2007 Lawsuit. The
No-Challenge Provision in the 2007 Settlement Agreement is not limited to the scope
of the claims in the 2007 Lawsuit that Noble admitted infringing. Instead, the clear
and unambiguous language of the No-Challenge Provision precludes a challenge to
2
The Final Judgment in the 2007 Lawsuit did not limit the scope of the Transocean
Patents to the claims Noble admittedly infringed. Instead, in the Final Judgment, the
Court adjudged that Noble infringed “at least claim 11 of the ’781 patent and claim 17
of the ’069 patent.” See Final Judgment in 2007 Lawsuit [Doc. # 21 in Civil Action
No. H-07-0618] (emphasis added).
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the “scope of any claim of the Licensed Patents.” See 2007 Settlement Agreement,
¶ 4.3 (emphasis added). “Any claim” is unambiguous, and there is nothing in the
2007 Settlement Agreement that suggests the term is limited to the two claims
identified in the Final Judgment in the 2007 Lawsuit. If the parties had intended to
limit the No-Challenge Provision, they could easily have stated that Noble covenanted
that it would not challenge the scope of the specific claims Noble admitted infringing.
They did not do so.
Additionally, the limited construction urged by Noble would render the NoChallenge Provision superfluous because of the res judicata effect of the agreed Final
Judgment entered in the 2007 Lawsuit. See Flex-Foot, 238 F.3d at 1369 (citing Foster
v. Hallco Mfg. Co., 947 F.2d 469, 476 (Fed. Cir. 1991)). Based on the clear and
unambiguous language in the 2007 Settlement Agreement, Noble covenanted not to
challenge “any claim” of the Transocean Patents.
Noble contends also that arguing for a construction of a disputed claim term
cannot constitute a “challenge” for purposes of the 2007 Settlement Agreement’s NoChallenge Provision. Whether or not the argument is legally and factually correct, it
is inapplicable to the allegations in Transocean’s First Amended Complaint. Although
Transocean alleges that Noble’s conduct during claim construction was “treading on
the verge of breach of the Settlement,” see id., ¶ 43, Transocean does not allege in the
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First Amended Complaint that Noble breached the No-Challenge Provision by arguing
for its preferred construction of previously-unconstrued claim terms. Transocean’s
breach of contract claim is based, instead, solely on allegations that Noble challenged
the scope of claims in the Transocean Patents that had already been defined by claim
construction in this or other proceedings. See id., ¶¶ 44-45; ¶ 47.
Specifically, Transocean alleges that the Court’s construction of the “means for
advancing” claim terms in the Transocean Patents did not include structure for motion
compensation. See id., ¶ 44 (citing Markman Order [Doc. # 68]). Transocean alleges
that the Court’s claim construction ruling in this case established the scope of the
“means for advancing” claims in its patents. See id. Noble appears to agree, noting
in the Motion to Dismiss that “the court establishes the scope of asserted claims
through the claim construction process.” See Motion, p. 6. Transocean alleges that
after the scope of the “means for advancing” claims had been defined by the Court’s
claim construction ruling, Noble challenged the scope of the claims by arguing in its
summary judgment motion and briefing that Transocean was precluded (primarily by
the doctrines of estoppel and disclaimer) from asserting that the scope of the “means
for advancing” claims in its patents covered structures that lack motion compensation.
See id., ¶ 45. These factual allegations regarding Noble’s summary judgment
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arguments, together with the allegations relating to the other three elements of a
breach of contract claim, are sufficient to state a breach of contract claim.
In the First Amended Complaint, Transocean alleges also that Noble breached
the No-Challenge Provision by challenging and attempting to limit the scope of Claim
17 of the ’069 Patent by arguing that “to the seabed and into the body of water to the
seabed” has a more limited scope that previously construed. See id., ¶ 47. As
discussed above regarding the “means for advancing” claims, allegations that Noble
challenged the scope of claims in the Transocean Patents by seeking a claim
construction that contradicts the claim construction previously issued in a lawsuit or
IPR proceeding adequately state a breach of contract claim.
In summary, Transocean alleges that the 2007 Settlement Agreement precludes
Noble from challenging the scope of any claim of the Transocean Patents. Transocean
alleges that Noble in this case challenged the scope of claims in the Transocean
Patents that had previously been construed. Transocean alleges that Noble’s conduct
challenging the scope of previously-construed claims breached the No-Challenge
Provision of the 2007 Settlement Agreement. These allegations satisfy the pleading
requirements for the breach of contract claim and preclude dismissal of that claim.3
3
The sole issue in a motion to dismiss is whether the plaintiff has adequately alleged
a claim for relief. The Court’s denial of Noble’s Motion addresses only the adequacy
of the allegations in the First Amended Complaint. It should not be interpreted as a
(continued...)
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IV.
CONCLUSION AND ORDER
Transocean has adequately alleged a factual basis for its breach of contract
claim based on Noble’s alleged breach of the 2007 Settlement Agreement’s NoChallenge Provision. As a result, it is hereby
ORDERED that Defendants’ Motion to Dismiss [Doc. # 103] is DENIED.
SIGNED at Houston, Texas, this 15th day of May, 2019.
NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE
3
(...continued)
statement regarding whether Transocean will ultimately prevail on the breach of
contract claim.
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