Videray Technologies Inc. f/k/a Narcray Technologies et al. v. Viken Detection Corporation (D. Mass. 23-cv-13035).

Videray and Videray investor/distributor Tek84, Inc. filed a declaratory judgment action against Viken, seeking declarations of noninfringement and invalidity of three Viken patents, as well as a breach of a settlement agreement count.  The parties make and sell portable hand-held x-ray imagers for security usage, to which the patents relate.  Viken had previously sued Videray in 2019, accusing Videray of using confidential and trade secret information to start the company and directly compete with Viken.  A second suit was filed shortly thereafter, in which Viken accused a Videray employee of hacking into Viken’s computer system and planting files to support a fraudulent inequitable conduct defense.

The parties settled these litigations in October 2020.  The settlement included a release of “all claims [and] acts… of every name and nature… known or unknown” that had occurred prior to the effective date of the agreement.  After receiving a pair of cease and desist letters from Viken in 2022 asserting patent infringement, Videray and Tek84 brought the instant case.  Judge Joun agreed that Tek84 was not a party to the settlement agreement, which did not cover future affiliates, shareholders, owners or successor, and that the Complaint did not allege when Tek84 became a shareholder/investor in Videray, or whether Tek84 exerted any control over Videray’s activities.  This was insufficient to show that Tek84 was covered by the settlement agreement.

Judge Joun did, however, find the complaint to suitably allege that Tek84 is immune from suit as a downstream distributor, however, which would give Tek84 an implied license to the patents, and denied the motion to dismiss in this regard.  The agreement, by releasing claims of all pre-Agreement acts, necessarily release claims that a particular product (which Tek84 currently distributes) infringes the patents, and this implied license would therefore extend to Tek84 (although Judge Joun noted that the implied license would not apply were Tek84 to develop and manufacture other products that allegedly infringes the patents).

Viken also moved to dismiss the claims against two of the patents that, at the time of the settlement agreement, had not yet issued.  Judge Joun found that these patents would not be covered as claims that “may have existed” prior to the settlement agreement, as they did not come into being until the patents actually issued subsequent to that date.  He found, however, that the agreement released not only claims, but also acts, that preceded the agreement, and that Videray’s manufacturing of the allegedly infringing product predated the agreement.  Accordingly, he refused to dismiss the declaratory judgment counts relating to these patents.