15-3787-cv
Serby v. First Alert, Inc.


                              UNITED STATES COURT OF APPEALS
                                  FOR THE SECOND CIRCUIT
                                        SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

       At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 22nd day of November, two thousand sixteen.
PRESENT: JON O. NEWMAN,
                 GERARD E. LYNCH,
                 CHRISTOPHER F. DRONEY,
                                 Circuit Judges.
----------------------------------------------------------------------
VICTOR M. SERBY,
                                 Plaintiff-Counter-
                                 Defendant-Appellant,

                             v.                                           No. 15-3787-cv

FIRST ALERT, INC., BRK BRANDS, INC.,
                                 Defendants-Counter-
                                 Claimants-Appellees.
----------------------------------------------------------------------

 FOR PLAINTIFF-COUNTER-                                   Victor M. Serby,   Esq.,   pro   se,
 DEFENDANT-APPELLANT:                                     Woodmere, NY.

 FOR DEFENDANTS-COUNTER-                                  Gerard Schiano-Strain, Jeffrey H.
 CLAIMANTS-APPELLEES:                                     Daichman, Kane Kessler, P.C., New
                                                          York, NY.

      Appeal from a judgment of the United States District Court for the Eastern District
of New York (Mauskopf, J. and Kuntz, J.).


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    UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the district court is VACATED and
REMANDED for further proceedings consistent with this order.

        Appellant Victor Serby, an inventor and attorney proceeding pro se, appeals from
a final judgment dismissing his complaint against First Alert, Inc. and its subsidiary,
BRK Brands, Inc. (collectively “BRK”). In 1992, Serby designed a home smoke detector,
the purpose of which was to deter consumers from removing smoke detector batteries and
failing to replace them. Serby’s smoke detector accomplished this purpose by utilizing a
lithium battery, with an approximate lifespan of ten years, and housing it in an
“unopenable” case. Serby received a patent on his design in 1995 (the “’434 Patent”).
Serby later discovered that BRK was marketing similar smoke detectors, and sued BRK
for patent infringement. Serby and BRK subsequently entered into a Settlement
Agreement, which required BRK to pay royalties to Serby on all smoke detectors that
“incorporate a lithium battery, . . . and which have a battery compartment that is
unopenable as is defined in Claims 5 or 10 of the [’434] Patent.” J. App’x at 51
(emphasis added).

       In September 2009, Serby filed the instant suit in Kings County, NY, Supreme
Court, alleging that BRK was manufacturing, distributing, and selling various smoke
detectors without paying Serby royalties, in breach of the parties’ Settlement Agreement.
After BRK removed the case to federal court, the district court (Mauskopf, J.) concluded
that four of BRK’s smoke detector models (the “E-Z Access Models”) were “openable”
and therefore not covered by the Settlement Agreement, and granted partial summary
judgment to BRK. However, the court found a genuine dispute of material fact as to
whether BRK’s remaining smoke detector model (the “SA340 Model”) was
“unopenable.” Following that decision, the district court (Kuntz, J.) held a bench trial and
concluded that the SA340 model was also “openable.” As a result of those decisions,
Serby’s claim for royalties was dismissed.

       The threshold inquiry on appeal, therefore, concerns the proper definition of the
term “unopenable.” In deciding this question below, the district court held that a “smoke
detector is ‘unopenable’ when the housing of the smoke detector cannot be opened by a
consumer without damaging the structure of the case, as necessary to deter physical
access to the battery, i.e., a smoke detector with a housing that, once assembled, will not
come apart, so as to deter physical access to the battery.” Serby v. First Alert, Inc., No.
09-CV-4229 (RRM) (ALC), 2011 WL 4464494, at *6 (E.D.N.Y. Sept. 26, 2011). Serby
contends that this was error, and urges us to instead construe “unopenable” as referring to




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a “housing which prevents physical access to the battery to deter removal of the battery.”
Appellant’s Br. at 11.1

       We review de novo a district court’s partial grant of summary judgment.
Weintraub v. Bd. of Educ. of Sch. Dist. of N.Y.C., 593 F.3d 196, 200 (2d Cir. 2010). We
review a district court’s findings of fact, following a bench trial, for clear error and its
conclusions of law de novo. Carco Grp., Inc., v. Maconachy, 718 F.3d 72, 79 (2d Cir.
2013) (per curiam). We likewise review a district court’s interpretation of contract and
patent terms de novo. Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 841 (2015)
(holding that, where no subsidiary factual dispute exists, appellate court reviews district
court’s construction of patent de novo); id. at 837 (confirming that construction of
contract generally presents question of law and is reviewed de novo).

       Courts look to principles of patent and contract law to interpret settlement
agreements arising out of earlier claims of patent infringement. See Panduit Corp. v.
Hellermann Tyton Corp., 451 F.3d 819, 827–30 (Fed. Cir. 2006). To determine the
meaning of a particular term, a court must look to the term’s plain meaning in the context
of the agreement as a whole. See Olin Corp. v. Am. Home Assurance Co., 704 F.3d 89, 99
(2d Cir. 2012). A court may also look to the underlying patent itself, see Aceros
Prefabricados, S.A. v. TradeArbed, Inc., 282 F.3d 92, 97 (2d Cir. 2002) (“Parties to a
contract are plainly free to incorporate by reference, and bind themselves inter sese to,
terms that may be found in other agreements.” (internal quotation marks omitted)),
including its claims, specification, and prosecution history, Vitronics Corp. v.
Conceptronic, Inc., 90 F.3d 1576, 1582–83 (Fed. Cir. 1996). If, after examining the plain
meaning of a term, a court concludes that the term is ambiguous, it may consider
extrinsic evidence of the parties’ intent. Olin Corp., 704 F.3d at 99.

       We begin by examining the district court’s definition of “unopenable,” and
conclude that it is incorrect. At trial, Serby demonstrated that he could open one of
BRK’s earlier models, the SA10YR, easily and without damage to the model’s case.
Under the district court’s definition, Serby’s actions would render the SA10YR
“openable” for purposes of the Settlement Agreement. Yet BRK paid royalties on the
SA10YR for approximately ten years, leading to the inescapable conclusion that both
parties considered it “unopenable.” Indeed, the SA10YR gave rise to Serby’s initial
patent infringement suit, and BRK’s own brief states that the Settlement Agreement—and


1
  Serby also argues that BRK breached the implied covenant of good faith and fair dealing. However, Serby failed
to plead this claim in his complaint. Because he was represented by counsel at the time, we decline to consider this
issue on appeal. See Bouboulis v. Transp. Workers Union of Am., 442 F.3d 55, 67 (2d Cir. 2006) (stating that
appellate court will not consider new claim that is absent from complaint).


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specifically the term “unopenable”—includes the SA10YR design “by implication.”
Appellee’s Br. at 26. The district court’s definition, then, cannot stand.

        We next look to the plain meaning of the term “unopenable,” and conclude that it
is ambiguous. “Contract language is ambiguous if it is capable of more than one meaning
when viewed objectively by a reasonably intelligent person who has examined the
context of the entire integrated agreement.” Collins v. Harrison-Bode, 303 F.3d 429, 433
(2d Cir. 2002) (internal quotation marks omitted). Here, the term “unopenable” appears
only once in the Settlement Agreement, in section four. As described above, that section
requires BRK to pay royalties on smoke detectors that “have a battery compartment that
is unopenable as is defined in Claims 5 or 10 of the [’434] Patent.” J. App’x at 51. Claims
5 and 10, in turn, describe the smoke detector as “comprising a case . . . [that is]
unopenable to deter physical access to [the] battery,” id. at 39, but give no further
explanation of the term “unopenable.” The specification similarly calls for a case that is
“unopenable” in order to “prevent[] physical access” to the battery and to “deter battery
removal,” id. at 38, but otherwise provides no guidance as to the term’s precise
definition.

        In light of the language of the Settlement Agreement and the underlying patent, we
are left with the impression that any definition of the term “unopenable” must center on
the ’434 patent’s purpose of deterring access to and removal of the batteries by
consumers. And, under any such definition, BRK’s E-Z Access models—which plainly
instruct consumers how to remove and replace the models’ batteries—are unlikely to fall
within the scope of the Settlement Agreement.2 Nonetheless, we conclude, based on the
present record, that the term “unopenable” remains capable of more than one meaning.
For example, “unopenable” might mean “not capable of being opened by a consumer for
the purpose of accessing, removing, and replacing the battery for continued use of the
smoke detector.” Or, as Serby alleges, it might refer more broadly to a “housing which
prevents physical access to the battery to deter removal of the battery.” Appellant’s Br. at
11. Thus, the term “unopenable” lacks a “definite and precise meaning,” rendering it
ambiguous. See Law Debenture Trust Co. v. Maverick Tube Corp., 595 F.3d 458, 467 (2d
Cir. 2010).

       When faced with ambiguous contractual language, an appellate court has two
options: it may resolve the ambiguity in the contract language “as a matter of law if there
is no extrinsic evidence to support one party’s interpretation of the ambiguous language
or if the extrinsic evidence is so one-sided that no reasonable factfinder could decide
2
  Both the SA10YR and SA340 models allow access to the compartments that hold the batteries, but,
because the batteries are soldered to the compartments, the batteries cannot be removed or replaced. Thus,
in our view, these models would appear to achieve the goal of the ’434 patent.


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contrary to one party’s interpretation,” or, it “may remand for the [district] court to
consider and weigh extrinsic evidence to determine what the parties intended.” Collins,
303 F.3d at 433 (internal quotation marks omitted). Here, because the district court found
the term “unopenable” to be unambiguous, it did not offer the parties an opportunity to
present extrinsic evidence of their intent. Accordingly, we cannot resolve the ambiguity
on appeal. See id. at 434. We therefore remand the case to the district court to consider
and weigh the parties’ extrinsic evidence as to the meaning of the term “unopenable.”

                                     *      *      *

    For the foregoing reasons, we VACATE the judgment of the district court and
REMAND for further proceedings consistent with this order.

                                  FOR THE COURT:
                                  Catherine O’Hagan Wolfe, Clerk of Court




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