Appendix — Kozachuk v. Medpointe Healthcare, Inc.

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OFFICE OF THE C

nn Tok HE CLERK

SUPREME COURT OF THE UNITED STATES

WALTER E. KOZACHUK, M.D

Petitior ?]

MEDPOINTE HEALTHCARE, IN‘

(Doing Business as Wallace Pharmaceuticals, In¢

RP : pond ruil

On Petition for a Writ of Certiorari

To the United States Court of Appeal

For the Federal Circuit

SUPPLEMENTAL APPENDIX TO

PETITION FOR WRIT OF CERTIORARI

Walter EK. Kozachuk, M.D., pro

757 Frederick Road

suite 102

Catonsville, MD 21228

301-807-9346

Pr Litioners Pro

TABLE OF CONTENT;

APPENDIX

Upinions and Order Jelow: Rule 140)0))

Appendix A

ederal Circuit Opinion, April 6, 2010

Appendix B

Distmect Court Order. June 29. 2009

Appendix ©

District Court Memorandum Opinio:

June 10, 2009

Other Relevant Rulings: Rule 14(0)0ii)

Appendix D ¥

Magistrate Judge and Report &

Recommendations. March 3. 2009

Appendix

Judgment to be Reviewed: Rule 144)

Other Essential Material!

Appendix Ff

Tran: cript District Court, May 14, ZU0U0e

Appendix A

United States Court of Appeals for the

Kederal Circuit

2009-1500

MitDPOINTE HEALTHCARE ING¢

(doing business as Wallace Pharmaceutical

Piaintiff App lle«

WALTER FE. KOZACHUK

Defendant-Appecllant

Kichard i} brow! an iJ rie

Morristown New Jersey ior piaintifl ( f

mm the brief VA i Anthony | Mar hett

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United States Court of Appeals for the

Federal Circuit

2009-1500

MEDPOINTE HEALTHCARE INC.,,

(doing business as Wallace Pharmaceuticals),

Plaintiff-Appellee,

WALTER Ek. KOZACHUK,

Defendant-Appellant.

Appeal from the | nited State Distrmct Court for the

District oo] new Jerseys n Cause Ne »O4-¢ V-O7019 bude

Mary | { OOpPe!

DRC THED: Apml 6. 2010

Before LOURILE, GAJARSA, and MOORE, Circuit Judge

PER CURIAM

Walter li. Kozachuk appeals from an order of the

United States District Court for the District of New Jers

enforcing a settlement agreement in which Dr. Kozachul

igreed to transfer ownership of | . Patents 5.728.722

(“the “728 patent’); 5,942,540 (the ‘540 patent’); and

6,515,019 (the ‘O19 patent”) to MedPointe Healtheare, Tne

(“MedPointe’) We attirm

3a

BACKGROUND

Between February 1, 1993, and October 4, 1994,

Kozachuk worked for MedPointe’s predecessor, Carter-

Wallace, Inc., supervising clinical studies of the drug

Felbamate. Under the terms of his employment agreement,

Kozachuk agreed to assign to Carter-Wallace and its

successors any and all inventions, discoveries, or

improvements made, discovered, or conceived by him

during his employment. Eighteen months after leaving

Carter-Wallace, on April 10, 1996, Kozachuk filed the first

in a series of patent applications, which issued as the “728,

‘540, and ‘019 patents, all of which claim clinical uses of

Felbamate to treat neurological indications. On April 28,

2004, MedPointe brought suit against Kozachuk claiming

ownership of the ‘728, ‘540, and ‘019 patents based on

Kozachuk’s breach of his employment agreement and duty

of loyalty and seeking to correct the patents’ inventorship

under 35 U.S.C. § 256.

After years of litigation and with tnal set for May 19,

2008, the parties participated in a settlement conference

before Magistrate Judge Bongiovanni, on May 14, 2008.

The parties negotiated for over four hours, after which the

court placed the material terms of a settlement agreement

on the record. The terms included: (1) a $60,000 payment

by MedPointe to Kozachuk; (2) a transfer of all right, title,

and interest in Kozachuk’s patents to MedPointe; (3) an

agreement to arbitrate any disputes over Kozachuk’s

ownership of a pending U.S. patent application related to

Felbamate; and (4) a reservation of rights by MedPointe

with respect to any foreign patents or patent applications.

Both MedPointe’s representative and Kozachuk assented to

those terms on the record, and the parties agreed that

MedPointe’s counsel would incorporate them, along with

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other ancillary terms, into a written settlement agreement.

On June 16, 2008, MedPointe’s counsel provided

Kozachuk with a draft Settlement Agreement and Release

and a draft Assignment (“the Settlement Documents”).

Kozachuk, however, refused to sign the Settlement

Documents, accusing his counsel, Joseph Posillico, of

inadequate representation and misleading him into a

settlement. On October 29, 2008, having still not received

executed Settlement Documents from Kozachuk,

MedPointe filed a motion to enforce the settlement

agreement and for sanctions against Kozachuk.

On March 4, 2009, Magistrate Judge Bongiovanni

issued an order recommending that the district court grant

MedPointe’s motion to enforce the settlement, concluding

that an enforceable settlement had been reached on May

14, 2008, despite the lack of a written document.

MedPointe Healthcare, Inc. v. Kozachuk, No. 04-2019, 2009

WL 540680, at *4-*5 (D.N.J. Mar. 4, 2009) (“Report and

Recommendation”). Judge Bongiovanni found that

Kozachuk’s claims that he did not understand the

proceedings and did not intend to settle “lack credibility”,

as he is a well-educated and sophisticated individual who is

familiar with the litigation process and the court had made

clear the proceedings’ purpose before putting the settlement

terms on the record. Id. At *4. The judge also rejected

Kozachuk’s claim that a voir dire was necessary. Id. At *5.

Kozachuk filed an objection to the Report and

Recommendation pro se.

On June 15, 2009, the district court, after a de novo

review of the record, adopted the findings and conclusions

of the Report and Recommendation. MedPointe Healthcare,

Inc. v. Kozachuk, No. 04-2019, 2009 WL 1662226 (D.N.J.

June 15, 2009). And on June 30, 2009, the court ordered

Kozachuk to execute the Settlement Documents and

imposed sanctions on Kozachuk of $32,555.13, representing

MedPointe’s reasonable attorney’s fees and costs incurred

enforcing the settlement. MedPointe Healthcare, Inc. v.

Kozachuk, No. 04-2019, slip op. at 1-2 (D.N.J. June 30,

2009). Kozachuk appealed. We have jurisdiction pursuant

to 28 U.S.C. § 1295(a)(1).

DISCUSSION

The court reviews a decision to enforce a settlement

agreement, an issue not unique to patent law, under the

law of the appropriate regional circuit. See Schaefer Fan

Co. v. J. & D Mfg., 265 F.3d 1282, 1288 (Fed. Cir. 2001).

Under Third Circuit law, we review the district court’s

factual findings regarding the existence of an enforceable

settlement agreement for clear error. See Tierman v.

Devoe, 923 F.2d 1024, 1031 n.5 (3d Cir. 1991). *A factual

finding is clearly erroneous when the reviewing court on

the entire evidence is left with the definite and firm

conviction that a mistake has been committed.* Brisbin v.

Superior Valve Co. 398 F.3d 279, 285 (3d cir. 2005)

(Internal citations omitted).

Kozachuk makes three arguments on appeal. First,

he argues that because he did not understand the

proceedings on May 14, 2008, and had no intention of

settling, there was no “meeting of the minds” necessary to

effectuate a settlement agreement. Kozachuk contends

that the transcript of the proceedings does not clearly

reflect his agreement to the settlement terms, faults the

court for failing to engage him in a comprehensive voir dire,

and claims that his actions demonstrate that he did not

believe he had settled. Alternatively, Kozachuk next

6a

argues that the settlement terms are unconscionable,

requiring him to transfer patents assertedly worth millions

of dollars to MedPointe for a paltry $60,000 simply because

MedPointe’s predecessor briefly employed him over a

decade ago. Finally, Kozachuk alleges that the settlement

is unenforceable because of unseemly conduct by his

attorney, and specifically because after inadequately

preparing the case for trial, Posillico coerced him into

settling by adopting an overwhelmingly assessment of the

case and threatening to withdraw as counsel.

MedPointe responds that the direct court did not

clearly err in finding that Kozachuk entered into an

enforceable settlement agreement at the conference on May

14, 2008. Specifically, MedPointe contends that the

transcript of the conference, in addition to Kozachuk’s e-

mails and sworn statements, demonstrate that the parties

agreed to the essential terms of the settlement on May 14,

2008. Further, according to MedPointe, a voir dire was

unnecessary given the Magistrate Judge’s active

participation in the negotiations and Kozachuk’s

sophistication and familiarity with the litigation process.

With regard to the enforceability of the settlement terms,

MedPointe argues that Kozachuk did not make the

argument below, but regardless, the argument lacks merit

as there is no evidence that $60,000 in exchange for the

transfer of Kozachuk’s three patents is in any way

disproportionate, let alone unconscionable. Finally,

MedPointe argues that there is no evidence that

Kozachuk’s counsel intended to or did in fact pressure

Kozachuk into settling by threatening to withdraw.

We agree with MedPointe and reject all three of

Kozachuk’s arguments. Under New Jersey law, which

governs a settlement agreement made in New Jersey, a

settlement agreement is a binding contract that is

enforceable regardless whether it has been reduced to

writing. United States v. Lightman, 988 F. Supp. 448, 459

(D.N.J. 1997). “Where the parties agree upon the essential

terms of a settlement, so that the mechanics can be ‘fleshed

out’ in a writing to be thereafter executed, the settlement

will be enforced notwithstanding the fact the writing does

not materialize because a party later reneges”. Lahue v.

Pio Costa, 623 A.2d 775, 788 (N.J. Super, App. Div. 1993).

In this case, the district court did not clearly err in finding

that the transcript of the May 14, 2008, settlement

conference established that Kozachuk had entered into an

enforceable settlement agreement with MedPointe. Report

and Recommendation at *4.

The transcript of the proceedings clearly evinces both

parties’ intent to settle the suit brought by MedPointe on

specific terms. At the conclusion of the May 14, 2008,

conference, the Magistrate Judge summarized the purpose

of the day’s proceedings, concluding that “it appears that.

we have terms that we’d like to place on the record.” J.A.

75. Judge Bongiovanni then went on to describe the

process, explaining how MedPointe’s counsel would state

the terms of the settlement for the record and that the

court would then ask each party for its agreement.

Specifically, the court stated:

So, Mr. Brown [MedPointe’s counsel], as

plaintiff, I would ask you [to place the

terms on the record]. And then, Ms.

French [Med?Pointe’s representative] I

would ask you if you concur in the

terms. And then I would turn to you,

Mr. Posillico, likewise ask you if — make

sure we have all of our basis covered

Sa

and then ask Dr. Kozachuk if he agrees

as well.

Id. After assent by MedPointe’s counsel, MedPointe’s

representative, and Kozachuk’s counsel, the court asked

Kozachuk, “Do you agree as well?” Id. at 75-78. And

Kozachuk replied, “Yes.” Id. at 78. At no time did

Kozachuk ask for clarification or in any way indicate that

he did not understand that he was agreeing to a settlement

on the terms stated by MedPointe’s counsel. In light of

Kozachuk’s high level of education, his obvious familiarity

with the litigation process, and his failure to express any

lack of understanding except after the fact, the court did

not clearly err in finding that a binding settlement

agreement had been formed.

Moreover, Kozachuk’s assertions that he never

intended to settle and did not realize that he had settled

are directly contradicted by evidence of record. For

example, in a sworn declaration, Kozachuk recalls a

conversation between Judge Bongiovanni and his counsel

on the day of the conference and states, “I was prepared to

negotiate a settlement, if possible.” Id. at 274. And, after

receiving a bill from his counsel, Kozachuk replies that,

“We settled this case for $60K.” Id. at 182. Thus, both

before and after the settlement conference, Kozachuk

clearly understood the purpose and consequences of the

proceedings.

We also reject Kozachuk’s claim that the settlement

terms are unconscionable. Although Kozachuk raised the

issue for the first time on appeal, and thus it is not properly

before us, Sage Prods., Inc. v. Devon Indus., Inc., 126 F.3d

1420, 1426 (Fed. Cir. 1997), we note that the argument is

wholly without merit. Courts ordinarily do not set aside a

9a

settlement for inadequate consideration unless “the

inadequacy of consideration is grossly shocking to the

conscience of the court”. Pascarella v. Bruck, 462 A.2d 186,

190 (N.J. Super. App. Div. 1983). Kozachuk asserts that

the ‘728, ‘540, and ‘019 patents are worth millions of

dollars, but he presents no evidence to establish their

worth. Simply nothing in the record evinces an inadequacy

of consideration, let alone an inadequacy that shocks the

conscience.

Finally, we reject Kozachuk’s claim that his

attorney’s behavior coerced him into accepting the

settlement. The transcript of the May 14, 2008, conference

lacks any indication that Kozachuk and his counsel differed

over the settlement or its terms. Furthermore, it strains

credibility to think that Kozachuk, who had already

retained new counsel once during the litigation and who

worked with sophisticated business advisors, felt that he

had no choice but to settle because its counsel indicated a

desire to withdraw in light of their disagreements over the

merits of the case. Moreover, to the extent that Kozachuk

claims inadequate representation by his chosen counsel, it

is well-established that a party is bound by the actions of

his counsel and may not after the fact disavow counsel’s

actions on his behalf. Link v. Wabash R.R. Co., 370 U.S.

626, 633-34 (1962).

Accordingly, we affirm.

1Oa

Appendix B

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

MEDPOINTE

HEALTHCARE, INC. : CIVIL ACTION NO. 04-2019

(MLC)

Plaintiff, ORDER

Vv.

WALTER E. KOZACHUK

Defendant.

For the reasons stated in the Court’s Memorandum

Opinion, dated June 10, 2009, IT IS on this 29 day of

June, 2009, ORDERED that the Report and

Recommendation of the Magistrate Judge, filed on March 4,

2009, recommending that the Court grant plaintiff's motion

to enforce settlement (dkt. entry no. 116), is hereby

ADOPTED as the findings of fact and conclusions of law of

this Court; and

IT IS FURTHER ORDERED that defendant’s

objection to the Report and Recommendation (dkt. entry no

118) is DENIED; and

IT IS FURTHER ORDERED that plaintiffs motion

to enforce settlement (dkt. entry no 103) is GRANTED;

and

lla

IT IS FORTHER ORDERED that defendant is

DIRECTED to execute the Settlement Agreement and

Release and the Assignment prepared by counsel for both

parties and submit those executed documents to plaintiff no

later than July 20, 2009; and

IT IS FURTHER ORDERED that sanctions are

awarded in favor of plaintiff and against defendant in the

amount of $9,842.78, representing plaintiffs reasonable

attorneys fees and costs incurred in attempting to execute

settlement through the time of drafting and filing the

motion to enforce settlement; and

IT IS FURTHER ORDERED that additional

sanctions are awarded in favor of plaintiff and against

defendant in the amount of $22,712.35, representing the

amount of plaintiffs reasonable attorneys fees and costs

incurred from November 1, 2008 to date, including for

preparing for and attending the January 29, 2009 hearing

(see dkt. entry no. 124); and

IT IS FURTHER ORDERED that Plaintiff may

deduct the amount of the above-referenced sanctions from

the settlement payment due to the defendant pursuant to

the Settlement Agreement and Release; and

IT IS FURTHER ORDERED that the Clerk of the

Court designate the motion to enforce settlement (dkt.

entry no. 103) and the Report and Recommendation (dkt.

entry no. 116) as DECIDED AND TERMINATED.

s/ Mary L. Cooper

Mary L. Cooper

United States District Judge

}2a

Appendix C

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

MEDPOINTE

HEALTHCARE, INC. : CIVIL ACTION NO. 04-2019

(MLC)

Plaintiff,

MEMORANDUM

v. > OPINION

WALTER E. KOZACHUK

Defendant.

THE PLAINTIFF, Meda Pharmaceuticals Inc., as

successor-in-interest to MedPointe Healthcare, Inc., having

moved for an order enforcing the settlement reached and

placed on the record during the May 14, 2008 settlement

conference, against defendant, Walter E. Kozachuk (dkt.

entry no. 103; see dkt. entry no. 101); and the Magistrate

Judge having (1) held a hearing on the motion on January

29, 2009, and (2) issued a Report and Recommendation

(“R&R”) on March 4, 2009, recommending that (a) the

motion be granted, and (b) “sanctions be imposed against

[defendant] for the amount of [plaintiffs] reasonable

attorneys fees and costs” (dkt. entry no. 108, R&R at 11);

and defendant having filed a timely objection to the

Magistrate Judge’s R&R pursuant to Federal Rule of Civil

Procedure 72(b) (2) and Local Civil Rule 72.1(c) (2) (dkt.

entry no. 118); and plaintiff opposing the objection (dkt.

entry no. 119); and

IT APPEARING that pursuant to Federal Rule of

Civil Procedure 72(b) (3) and Local Civil Rule 72.1(c) (2).

because an order enforcing a settlement is dispositive, the

Court must make a de novo determination of those portions

to which objection is made and may accept, reject, or

modify, in whole or in part, the findings or

recommendations made by the Magistrate Judge; but the

Court noting it need not conduct a new hearing or take new

evidence in making this de novo review, and it may

consider the record developed before the Magistrate Judge

and make a determination on the basis of that record, Fed

R. Civ. P. 72(b) (3); L. Civ. R. 72.1; and

DEFENDANT appearing to object to the Magistrate

Judge’s finding that “[wJhile the Court did not engage in an

extensive voir dire of [defendant], such a voir dire is not

necessary” (dkt. entry no. 188, Pl. Obj. at 8; see R&R at 9);

and defendant supporting his objection by arguing, inter

alia, that (1) due to the “dramatically differing goals” of

defendant and his attorney at the time of the settlement

conference, a thorough voir dire of defendant should have

been conducted “to ensure, so as to preclude any later

question, that [defendant and his attorney] had come to

agree to settle, that [defendant] understood precisely the

issues and their import, and that the settlement was the

free and voluntary act of [defendant],” and (2) “a proper voir

dire would have removed all questions regarding whether

there was a settlement, and if so, what the terms of it were’

(id. at 8-9); and

THE COURT noting the strong public policy in New

Jersey favoring settlement agreements, Brundage v. Estate

of Carambio, 951 A.2d 947, 961-62 (N.J. 2008); and the

Court further noting that, absent compelling

circumstances, courts should “strain” to uphold

settlements, see, Zuccarelli v. State, 741 A.2d 599, 604 (N.J

App. Div. 1999); Bistricer v. Bistricer, 555 A.2d 45, 49 (N.J

super. 1987); see also Borough of Haledon v. Borough of N

Haledon, 817 A.2d 965, 975 (N.J. App. Div. 2003) (finding

an agreement to settle is a contract, which a court, absent a

demonstration of fraud or other compelling circumstance

should honor and enforce): Pascarella v. Bruck, 462 A.2d

186, 191 (N.J. App. Div. 1983) (finding an oral agreement

as to the essential terms of the agreement is valid even 1f

the parties intend to later execute the formal written

document): and

THE COURT finding, in accordance with the

Magistrate Judge’s R&R and New Jersey law, that on May

14, 2008, a binding settlement was formed between the

parties (see R&R at 5-6); and the Court further finding that

the record reveals that defendant, a well-educated and

sophisticated doctor, (1) understood he was participating in

a settlement proceedings, (2) was apprised of the terms of

the settlement, and (3) agreed, without objecting during the

four hour settlement conference, to settle the matter for the

terms stated on the record (see dkt. entry no. 101, Tr. At 3

6); and the Court finding, even if defendant and hi:

attorney had “dramatically differing goals,” no evidence ha:

been presented that defendant was pressured or misled in

to agreeing to settle, see Jennings v. Reed, 885 A.2d 482

488-89 (N.J. App. Div. 2005); see also Newell v. Hludson,

868 A.2d 1149, 1161 (N.J. App. Div. 2005); and the Court

noting that defendant fails to cite any authority supporting

his position that extensive voir dire in this case wa

Mmecessaly and

PHE COURT ha thoroug! ed the R&I

elendgant onjection to the Rak (dkt f a

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the record betore the Magistrate Terie nda the

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ot tact and conclu ion ot jaw otf thi t puUrL. (2) de

dgelendant obectior LO Lne RAK (dkt entry Le

rant plaint tT] motion to entorce ettlement (dkt. |

10:33). (4) direct di enduant to execute the eLLICIMe!

rreement and Release and the Assignment prepare

counse! for both partie and ipbmit those executed

gagocument Lo plaintiff no later than <¢ Vv ‘AC). ZOOY. |

impose sanctions against defendant for the amour

pJ,6042./5, repre enting plaintill re mable attor

ind cost incurred in attempting to execute ePTLLiIeme!

through the time of drafting and filing the motion (see

enwury 1)¢) 104 frown At] \t 6 i) (>) rrnjnDoOse mcluon

wainst defendant for the amount of pliant i] rea

ittorneys lee ind COSts Incurred in preparing tor

ittending the January 29, 2009 hearing, and (7) allov

p! untiff to deduct the amount of the above-referenced

anctions from the Settlement Avreement and Release

the Court allowing plaintiff unti!] June 18, 2009 to submit

upplemental affidavit regarding the mmnount of pia ntitl

reasonable attorneys fee and costs incurred from

November 1, 2008 to date including for preparing Io!

ittending the Januaryv 29. 2009 hearing: and the Court

lowing defendant until! June 25, 2009 to resp

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Appendix D

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

MEDPOINTE

HEALTHCARE, INC. - CIVIL ACTION NO. 04-2019

(MLC)

Plaintiff,

REPORT AND

V. > RECOMMENDATION

WALTER E. KOZACHUK

Defendant.

BONGIOVANNI, Magistrate Judge

This matter comes before the Court upon the Motion

of Plaintiff MedPointe Healthcare, Inc. (“MedPointe”) for an

Order enforcing settlement against Defendant Dr. Walter

E. Kozachuk (“Dr. Kozachuk”). The Court held a hearing

on this Motion on January 29, 2009 and has fully

considered the parties’ arguments as set forth at that

hearing and in their papers. For the reasons set forth

below, the Court recommends that MedPointe’s Motion be

granted.

I. Background

Dr. Kozachuk is the record owner of all rights, title

and interest in the following three patents, all of which

lSa

relate to the medical use of felbamate: U.S. Patent No.

5,728,728 (the “ ‘728 patent”), U.S. Patent No. 5,942,540

(the “ ‘540 patent”) and U.S. Patent No. 6,515,019 (the

““019 patent”). On April 28, 2004, MedPointe initiated this

case against Dr. Kozachuk claiming that Dr. Kozachuk is

not the true inventor or at least not the sole inventor of the

‘728, ‘540 and ‘019 patents. (See generally, Pl. Compl. and

Amended Compl.) Dr. Kozachuk denied MedPointe’s

allegations and this litigation proceeded. (See generally

Def. Answer). A trial date was set in this matter for May

19, 2008.

Prior to the start of trial, on May 14, 2008, the

undersigned conducted a settlement conference with

counsel and both parties in this matter. The settlement

conference lasted approximately four hours. At the end of

the conference, the parties had agreed to settle the matter.

In order to memorialize the settlement reached by

MedPointe and Dr. Kozachuk, the Court had counsel and

the parties place the terms of their settlement on the

record. (See generally, May 14, 2008 Settlement Tr.).

Given the settlement reached in this matter, on May 15,

2008, the Court dismissed MedPointe’s Complaint and gave

the parties sixty days to reduce their settlement agreement

to writing, and, if desired, to file an additional stipulation of

dismissal with the Court. (See Hon. Mary L. Cooper's

5/15/08 Order).

On June 16, 2008, counsel for MedPointe provided

counsel for Dr. Kozachuk with a draft Settlement

Agreement and Release and a draft Assignment

(collectively, the “Settlement Documents”). (See October 29,

2008 Brown Aff. at 78). Because the Settlement

Documents were not executed by July 14, 2008, the Court

extended the previously entered 60-day Order until August

19a

13, 2008. (Hon. Mary L. Cooper’s 7/14/08 Order). The

Court subsequently extended the parties’ deadline for

reducing their agreement to writing a second time on

August 13, 2008, giving them until August 28, 2008 to

consummate the written agreement. (Hon. Tonianne J.

Bongiovanni's 8/13/08 Order).

Between August 7, 2008 and August 27, 2008 counsel

for both parties’ communicated in an effort to finalize the

written settlement agreement and MedPointe sent revised

Settlement Documents to Dr. Kozachuk’s counsel. (See

October 29, 2008 Brown Aff. at 910-13). However, on

August 27, 2008, counsel for Dr. Kozachuk informed

counsel for MedPointe that he was unable to obtain his

client’s signature on the revised Settlement Documents.

(id. at 413). Counsel for Dr. Kozachuk also indicated that

he would be filing a motion to withdraw as counsel, which

he did later that day. On September 3, 2008, the Court

conducted a telephone conference regarding the status of

the settlement of this matter. During the telephone

conference, the Court extended the 60-day Order a third

time until November 1, 2008 and instructed counsel for Dr.

Kozachuk to inform Dr. Kozachuk that if he fails to execute

the Settlement Documents and if the Court finds that in

light of the settlement reached on May 14, 2008 his failure

to do so is unwarranted, sanctions may be imposed against

him. (Hon. Tonianne J. Bongiovanni’s 9/4/08 Order). The

Court also required Dr. Kozachuk to obtain a copy of the

transcript of the May 14, 2008 settlement proceedings and

to furnish a copy of that transcript to MedPointe. (/d.)

On October 29, 2008, having not received executed

Settlement Documents from Dr. Kozachuk, MedPointe filed

the instant Motion seeking to enforce settlement and for

sanctions. Dr. Kozachuk opposes MedPointe’s Motion. The

20a

parties’ arguments are set forth in detail in their papers

and were heard by this Court during the January 29, 2009

hearing. As a result, the Court shall not restate them at

length herein.

To summarize, MedPointe seeks to enforce the

settlement reached and placed on the record during the

May 14, 2008 settlement conference. MedPointe argues

that an enforceable agreement was reached on May 14,

2008 and the fact that the agreement was never reduced to

writing is irrelevant. Specifically, MedPointe argues that

the essential terms of the settlement, which follow, were

agreed upon by the parties at the May 14, 2008 conference:

(1) MedPointe will pay $60,000 to Dr. Kozachuk; (2) Dr.

Kozachuk will transfer all right, title and interest in the

three United States patents in suit, namely the ‘728, ‘540

and ‘019 patents, to MedPointe or its successor; (3)

MedPointe will review Dr. Kozachuk’s pending United

States patent application regarding felamate to determine

whether in MedPointe’s view all or part of the application

triggers Dr. Kozachuk’s obligations under his agreement

with Carter Wallace. If MedPointe thinks that all or part of

it does, counsel for MedPointe and Dr. Kozachuk will confer

in an effort to reach an agreement on a proper course of

action and if an agreement cannot be reached the parties

will arbitrate the dispute to determine whether Dr.

Kozachuk’s patent application or patent, if issued, needs to

be transferred to MedPointe’s successor, understanding

that the arbitration may only bear on part of Dr.

Kozachuk’s application; and (4) the settlement is without

prejudice to MedPointe or its successor’s rights with respect

to any foreign patents or patent applications for foreign

patents obtained by Dr. Kozachuk that relate to felamate.

MedPointe also argues that because Dr. Kozachuk has no

basis for failing to sign the Settlement Documents as

dla

revised on August 12, 2008, Dr. Kozachuk should be

sanctioned and MedPointe awarded the fees and costs it

has occurred since August 12, 2008. In this regard,

MedPointe suggests that the Court set off $9,842.78 from

the $60,000 due te Dr. Kozachuk according to the

settlement.

As previously stated, Dr. Kozachuk opposes

MedPointe’s Motion to enforce settlement. Dr. Kozachuk

argues that he did not understand the May 14, 2008

proceedings and that he “had no conception that the ‘offer’

being discussed was accepted by him|[.]” (Dr. Kozachuk’s Br.

at 1). Dr. Kozachuk claims that he had no idea that he was

foregoing his right to try this matter. Dr. Kozachuk alleges

that on May 3, 2008 he told his counsel to not even respond

to an offer that was nearly identical to that put forward at

the May 18, 2008 hearing (it called for a payment of

$40,000 instead of $60,000). Dr. Kozachuk further argues

that also relevant is the fact that after he informed his

counsel not to counter MedPointe’s settlement offer and to

prepare to go to tnal, on May 5, 2008, only nine days prior

to the Court’s settlement conference and fourteen days

before the tral of this patent litigation was slated to begin,

his attorney attempted to coerce him into settling this

matter by threatening to withdraw as counsel.

In addition, Dr. Kozachuk claims that it is clear that

he did not intend to settle this matter because a number of

triable issues remained in the case. Further, he argues

that his lack of intent to settle is evident by the fact that

MedPointe’s offer “constituted an unfathomable

capitulation” given the fact that Dr. Kozachuk believed and

continues to believe that he has “an excellent chance to

prevail at trial”. Ud. at 4-5). Dr. Kozachuk argues that it is

“unthinkable that he understood that he was turning over

his three patents to an employer of a decade ago for

$60,000: no license, no royalty, indeed no compromise at

all.” Ud. at 27). Indeed, he states that it is plain that he

did not understand the settlement or intend to settle

because the alleged settlement would mean he had agreed

“to walk away from his three multi-million-dollar patents

for a mere $60,000.00 (far less than even the cost of

obtaining the patents).” Ud. at 6). Moreover, the alleged

settlement would mean he had agreed “to turn over four”

patents when he had only been sued on three. (Ud. at 27)

(Emphasis in original). Dr. Kozachuk also argues that his

actions following the purported settlement show that he

never intended to settle this matter. Further, Dr.

Kozachuk claims that the May 14, 2008 proceedings lacked

any voir dire by the Court or his counsel to ensure that he

understood the settlement to which he purportedly agreed.

IT. DISCUSSION

A settlement agreement is a type of contract. See

Mortellite v. Novartis Crop Prot. Inc., 460 F.3d 483, 492 (3d

Cir. 2006) (citing Borough of F'aledon v. Borough of N.

Haledon, 358 N.J. Super. 289, 305 (App. Div. 2003)).

Consequently, courts look to state contract law when

determining whether an enforceable settlement agreement

has been reached. See Id.

In New Jersey, there is a strong policy favoring

settlements. Nolan v. Lee Ho., 120 N.J. 465, 472 (1990).

Consequently, courts “strain to give effect to the terms of a

settlement whatever possible.” Dep’t of Pub. Advocate uv.

N.J. Bd. Of Pub. Util., 206 N.J. Super.523, 528 (App. Div.

1985). Nevertheless, courts will note enforce “[a]

settlement... ‘where there appears to have been an absence

of mutuality of accord between the parties or their

attorneys in some substantial particulars, or the stipulated

agreement is incomplete in some of its material and

essential terms.” Bistricer, 231 N.J. Super 143, 147 (Ch.

Div. 1987) (quoting Kupper v. Barger, 33 N.J. Super. 491,

494 (App. Div. 1955)). However, “a contract is no less a

contract because some preferable clauses may be omitted

either deliberately or by neglect. So long as the basic

essentials are sufficiently definite, any gaps left by the

parties should not frustrate their intention to be bound.”

Id. (internal quotation marks and citation omitted).

Moreover, under New Jersey law, as long as “the

parties orally agree on the essential terms,” a contract is

formed. McDonnell v. Engine Distributors, Civil Action No.

03-1999, 2007 WL 2814628, *3 (D.N.J. Sept. 24, 2007).

This is true “even though [the parties] contemplate the

later execution of a formal document to memorialize their

undertaking.” /d. (quoting United States v. Lightman, 988

F. Supp. 448, 459 (D.N.J. 1997). As a result, “as long as

those essential terms are agreed to, ‘the settlement will be

enforced notwithstanding the fact that a writing does not

materialize because a party later reneges.” Jd. (quoting

Lahue v. Pio Costa, 263 N.J. Super. 575, 596 (App. Div.

1993).

Under these principles, the Court finds that an

enforceable settlement was reached on May 14, 2008.

While Dr. Kozachuk argues that he did not understand the

May 14, 2008 proceeding and did not intend to settle this

matter, the Court finds Dr. Kozachuk’s arguments in this

regard to lack creditability. While not an attorney, Dr.

Kozachuk is a well educated and sophisticated individual

who is not entirely unfamiliar with the litigation process.

Dr. Kozachuk was in Court for approximately four hours on

May 14, 2008, while the undersigned worked with counsel

24a

and the parties in an effort to settle this matter. At the end

of four hours, counsel reported that the parties had agreed

to settle the matter. The Court then placed the parties’

settlement on the Record. In so doing, the Court made

clear the purpose of the day’s proceedings:

THE COURT: Okay. I understand

we've been participating in settlement

discussions. It’s nearly seven o'clock.

You gentlemen and ladies have been

here since 2:30 and its appears that we

have terms we'd like to place on the

record.

(May 14, 2008 Settlement Tr. At 3:10-14). The Court then

set forth how the terms of the parties’ settlement would be

placed on the Record:

THE COURT: So, Mr. Brown, as

plaintiff, I wouid ask you to do that

[place the terms of the settlement on the

Record]. And then, Ms. French, J would

ask you if you concur in the terms. And

then I would turn to you, Mr. Posillico,

likewise ask you if — make sure we have

all our bases covered and then ask Dr.

Kozachuk if the agrees as well.

(Ud. at 3:15-20). As the Record indicates, counsel and the

parties then placed the terms of the settlement on the

record in accordance with the procedure outlined above.

MR. BROWN: All right. Your Honor,

we ve — we've agreed to the - the

settlement and principle on the

following terms: MedPointe will pay to

Dr. Kozachuk $60,000. Dr. Kozachuk

will transfer all nght, title and interest:

in the three U.S. patents at suit — in

suit in this case to — MedPointe will

review a pending Felamate (phonetic)

application of Dr. Kozachuk’s to

determine whether in our view it

triggers his obligations under his

agreement with Carter Wallace. If it

does, I will — I will speak with Mr.

Posillico. And if we cannot reach

agreement on a proper course of action

in light of our view that it triggers his

obligation, the parties will agree to

arbitrate that dispute. And we will — |

will work with Mr. Posillico in selecting

a mutually acceptable arbitrator

Dr. Kozachuk has presented that

that application that I just referred to 3

his only U.S. patent application

involving Felamate. This settlement is

without prejudice to MedPointe’s or

Meda Pharmaceutical’s rights with

respect to any foreign patents or patent

applications for foreign patents obtained

by Dr. Kozachuk or pending foreign

applications by Dr. Kozachuk relating to

Felamate. The parties will execute

releases that are consistent with the

foregoing terms. And Mr. Posillico and |

will — will reduce these terms, as well as

any other — other terms, ancillary terms

26a

in a written settlement agreement.

7 7

MR. BROWN: Ms. French wanted me

to — to clamfy what the — what the

what the arbitration decision would be.

[t would be is if there’s a dispute as to

whether this patent application triggers

Dr. Kozachuk’s obligations, the

arbitrator would then decide whether

the — whether the application or if it’s

then a pending patent would need to be

transferred to — to Meda under the

terms of the agreement.

THE COURT: Okay.

MS. FRENCH: Ye:

THE COURT: Ms. French?

MS. FRENCH: That — that I agree

with.

THE COURT: Okay. And all of the

other terms as well?

MS. FRENCH: Ye:

THE COURT: Okay. Mr. Posillico, do

you have anything that you want to

clarify and do you agree to the terms as

outlined?

MR. POSILLICO: | —IlIagree. The

thing I would add, just by way of

clarification — I think this is a relative

minor point ~— is the arbitration would

be directed potentially at least to part

the patent application In other word

it’s not all or none. There may be

certain claims that MedPointe believe

are subject to the agreement and other

claims that are not. So the arbitration

may be some — some sub portion of the

patent application. With that

understanding, otherwise, I’m 11

agreement

MR. BROWN: Yeah. Yeah. We agre

that it — you know, obviously pending

review of it, it could relate to only som«e

of the plan We agree with that

THE COURT: Oka lr. Kozacl

you agree as well?

DR. KOZACHUK: Y«

THE ¢ OUR] Okay And I itl | Wants

to specifically note that you were also

representing that this 1s the only U

patent that involves Felamate?

DR. KOZACHUK: ft

,94 6:24). While the Court did 1

eLttiement conte remice a Wel} ne entire ¢

tivation See (‘hambe, JASCO). [7

took place on the Record, the Court finds that Dr. K

understood the May 14, 2008 proceeding and intends

n fact agreed to settle th matter tor the term

ibove. Dr. Kozachuk now apparently regrets his de

That regret, however, is not a reason for this Court

refuse to enforce the settlement reached in t! mat

the contrary. the Court recommends that the ettler

reached in this matter be enforced de pite the jact

writing tailed to matenalize due to Dr. Kozac! }

Tremni ro rene r

hinally, the Court finds that MedPo

arded its reasonable attorneys fe ind cost

with filing its Motion to enforce settlement and with

preparing for and attending the January 29, 2009 he

The Court notes that “|t|he general rule KNOWN a

American rule’, is that each party to a lawsuit bear

own attorneys lee Ford v. Temple Hosp., 790 |]

346 (3d Cir. 1986) (citing Alyseka Pipeline Serv. (

Wilderne Sor ay 4‘? | t] . PAY PAH 1 Zoe HY ( } yi

(here are, however, exceptions to this rule. For e»

Court may award attorneys fees to a successful part

where “hi opponent has acted in bad faith, ve iL1O

wantonly, or for oppressive reason Id. (interna

quotation marks and citations omitted). Further, tl

T) dd) cretion may aw rd attorney Tee ind COST pul

to its inherent powers to impose sanctions on parts

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Appendix E

UNITED STATES COURT OF APPEALS FOR THE

FEDERAL CIRCUIT

NOTICE OF ENTRY OF

JUDGMENT ACCOMPANIED BY OPINION

OPINION FILED AND JUDGEMENT ENTERED

04/06/10

The attached opinion announcing the judgment of

the court in your case was filed and judgment was entered

on the date indicated above. The mandate will be issued in

due course

In formation is also provided about petitions for

rehearing and petitions for rehearing en banc. The

questions and answers are those frequently asked and

answered by the Clerk’s Office.

Costs are taxed against the Appellant(s) under Rule

39. The party entitled to costs is provided a bill of costs

form and an instruction sheet with this notice

The parties are encouraged to stipulate to the costs.

A bill of costs will be presumed correct in the absence of a

timely filed objection.

Costs are payable to the party awarded costs. If

costs are awarded to the government, they should be paid

to the Treasurer of the United States. Where costs are

awarded against the government, payment should be made

to the person(s) designated under the governing statutes,

the court’s orders, and the parties’ written settlement

agreements. In cases between private parties, payment

should be made to counsel for the party awarded costs or, if

the party is not represented by counsel, to the party pro se

Payment of costs should not be sent to the court. Costs

should be paid promptly

If the court also imposed monetary sanctions, they

are payable to the opposing party unless the court's opinion

provides otherwise. Sanctions should be paid in the same

Way as COStS

Regarding exhibits and visual aids: Your attention 1s

directed to FRAP 34(g) which states that the clerk may

destroy or dispose of the exhibits if counsel does not reclaim

them within a reasonably time after the clerk gives notice

to remove them. (The clerk deems a reasonable time to be

15 days from the date the final mandate is issued)

JAN HORBALY

\ Nerk

cc: Walter E. Kozachuk

Richard H. Brown, II]

MEDPOINTE HEALTHCARE V. KOZACHUK, 2009-1500

DCT — NJ, 3:04-cev-02019

Appendix F

NITED STATES MAGISTRATE COURT

TRENTION, NEW JERSEY

CIVIL PART

DOCKET NO. CV-04-2019 (ML

MEDPOINTE HEALTHCARI LUDIO TAPED

TRANSCRIP

Plaintiff OF

SEPTLEMEN'

CONFERENCI!I

sEFORE

THE HONORABLE 'TONIANNE J. BONGIOVANNI,

S. Me

TRANSCRIPT ORDERED BY

STEFANIE TRUPPI

( Olloquy

THE COURT: Okay. We're on the record in

Medpointe versus Kozachuk and may I have appearance

please?

For the Plaintiff

MR. BROWN: Yes. Your Honor

Day Pitney. Witt

MedPointe Healthcare. Richard Brown

;

me iis is Elizabeth French from the clien

THE COURT yk Ane rDr. K

MR. POSILLICO: Joseph Posill ynne in

Lechner. And Dr. Kozachuk is ore

THE COURT UKay | understand we ve bee

participating in settlement discussions. It’s nearly seven

o'clock. You gentlemen and ladies have been here since

.:30 and it appears that we have terms that we'd like t

place on the record

So, Mr. Brown, as plaintiff, | would ask you to do

And then, Ms. French, I would ask you if you concur

And then I would turn to you, Mr. Posillico,

Lnat

in the terms

likewise ask you if

covered and then ask Dr. Kozachuk if he agrees as wel!

you can be seated as you go through this if you’d like

make sure we have all of our bases

So

MR. BROWN: It’s easier for me to stan

THE COURT: Okay

(Transcript at page 3

Colloquy

MR. BROWN: All night, Your Honor, we’ve — we’ve

agreed to the — the settlement and principle on the

following terms: MedPointe will pay to Dr. Kozachuk

$60,000.00. Dr. Kozachuk will transfer all right, title and

interest in the three U.S. patents at suit — in suit in this

case to — to MedPointe or its — its successor, Meda

(phonetic) Pharmaceuticals. We — we — that is MedPointe

will review a pending Felamate (phonetic) application of

Dr. Kozachuk’s to determine whether in our view it triggers

his obligations under his agreement with Carter Wallace.

If it does, I will — I will speak with Mr. Posillico. And if we

cannot reach agreement on a proper course of action in

light of our view that it triggers his obligation, the parties

will agree to arbitrate that dispute. And we will — I will

work with Mr. Posillico in selecting a mutually acceptable

arbitrator

Dr. Kozachuk has represented that that application

that I just referred to is his only U.S. patent application

involving Felamate. This settlement is without prejudice to

MedPointe’s or Meda Pharmaceutical’s rights with respect

to any foreign patents or patent application for foreign

patents obtained by Dr. Kozachuk or pending foreign

applications by Dr. Kozachuk relating to Felamate. The

parties will execute releases that are consistent with the

foregoing terms. And Mr. Posillico and I will — will reduce

these terms, as well as any other — other terms, ancillary

terms in a written settlement agreement.

{Transcript at pages 4-5)

Colloquy

THE COURT: Okay. And, Ms. French, I know

you're here on behalf of your client. Do you agree to those

terms. Anything that you want to

(Ms. French and Mr. Brown conferring at this time)

MS. FRENCH: I’m sorry, Your Honor

MR. BROWN: Yeah

THE COURT: That’s okay. Take your time

MR. BROWN: Ms. French wanted me to — to clarify

what the — what the —- what the arbitration decision would

be. It would be is if there’s a dispute as to whether this

patent application triggers Dr. Kozachuk’s obligations, the

arbitrator would then decide whether the — whether the

application or if it’s then a pending patent would need to be

transferred to - to Meda under the terms of the agreement.

THE COURT: Okay

MS. FRENCH: Yes

THE COURT: Ms. French?

MS. FRENCH: That — that I agree with

(Transcript at page 5

Colloquy

THE COURT: Okay. And all of the other terms as

well?

MS. FRENCH: Yes

THE COURT: Okay. Mr. Posillico, do you have

anything that you want to clarify and do you agree to the

terms as outlined?

MR. POSILLICO: I-—I agree. The only thing I

would add, just by way of clamfication — I think this is a

relatively minor point — is the arbitration would be directed

potentially at least to part of the patent application. In

other words, it’s not all or none. There may be certain

claims that MedPointe believes are subject to the

agreement and other claims that are not. So the

arbitration may be some — some sub portion of the patent

application. With that understanding, otherwise, I’m in full

agreement.

THE COURT: Mr. Brown?

MR. BROWN: Yea. Yea. We agree that it — you

know, obviously pending review of it, it could relate to only

some of the plans. We agree with that.

THE COURT: Okay. Dr. Kozachuk, do you agree as

wel]?

(Transcript at pages 5,6]

40a

Colloquy

DR. KOZACHUK: Ye:

THE COURT: Okay. And I just wanted to

specifically note that you were also representing that this 1s

the only U.S. patent that involves Felamate?

DR. KOZACHUK: It is

THE COURT: Okay

MR. BROWN: Application I think you're

THE COURT: Thank you

MR. BROWN: Yeah

THE COURT: Felamate patent. Right. An

application.

Okay. Then what I will do just advise Judge Cooper

that this matter has been reported as settled and placed on

the terms on the record. Ill ask her to enter the standard

60-day order to give you ample time to dot your I’s and

cross your T’s as Id like - - like to say. If you have issues,

my door is open. Although I don’t want to have extensions

granted freely, I don’t expect that either of you will take

advantage of that. But if you for some reason are having

(Transcript at pages 6,7]

Colloquy

issues with getting this document prepared and finalized

within the 60 days, just let me know and I will work with

you to give you some breathing room there

But I really do appreciate the efforts here. I know it

was a little heated and at times literally because they have

turned off the air. We're lucky we still have lights. But it’s

your tax dollars being saved. So I'll send you all off. Pll

keep my fingers crossed that you have no other litigation in

the future. And I applaud the efforts. I’m just sorry we

didn’t have this team working together three years ago. I’m

really sorry that we didn’t because perhaps we wouldn’t

have arrived here, but you never know. Sometimes it just

takes the eve of trial. I do really appreciate the

professionalism that everyone brought today. So good luck

Thank you

MR. BROWN: Thank you, Your Honor

MS. FRENCH: Thank you

MR. POSILLICO: Thank you, Your Honor

THE COURT: Get out of here safely We still have

some daylight

Whereupon the proceeding: W re concluded }

MARYANN MAHON. the one

lerebDy certily that the toregoing tran cript ol

rroceedinygs before the United States Distmnet yu

LD) trict oT New Jey ey l‘renton 4 A ir roe

May 14, 2008 prepared in full comphane

urrent Transcription Format for Judicial Proceec

a true and ac Irate non-comopre ed tra Ipt

ceedin 0 me ( | 1 WY | qd | .

(Jyrigina l ta

[ r pt iT Da r{

1 Yani Maho A

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