RFR Industries, Inc. v. Rex-Hide Industries, Inc.

RFR Industries, Inc. (RFR) (plaintiff) owned two patents relating to a railway system that used a flangeway filler. At one point, RFR alleged that Century Steps, Inc. (Century) (defendant) was infringing the patents. In 2000, RFR and Century reached a settlement agreement under which Century agreed to purchase flangeway filler from RFR and received a license to use and sell any purchased flangeway filler. The settlement agreement also contained a release and indemnification provision. The agreement released RFR’s claims against Century, and RFR agreed to indemnify Century for any claim made against Century by any “Century Extruder” as a result of any RFR claim against any Century Extruder. Century Extruder was defined to include Rex-Hide Industries, Inc. (Rex-Hide) (defendant), but the release itself did not extend to Rex-Hide. Rex-Hide was Century’s primary supplier of the allegedly infringing flangeway filler. Rex-Hide and Century had a sales contract with each other that included an indemnification provision requiring Century to indemnify and hold Rex-Hide harmless for supplying parts specified by Century. In 2004, RFR sued Rex-Hide, alleging that Rex-Hide’s sale of flangeway filler had induced and contributed to Century’s patent infringement. Rex-Hide sued Century for indemnification, and Century crossclaimed against RFR, alleging that the 2000 settlement agreement required RFR to indemnify Century. The trial court found a circular indemnity that precluded RFR from recovering patent-infringement damages from Rex-Hide because RFR was required to indemnify Century against Rex-Hide’s claim and Century was required to indemnify Rex-Hide against RFR’s claims. The court also ruled that Century and Rex-Hide could recover their attorney fees. RFR appealed.