How Many Feet of Fruit Does It Take to Be a 'Successor'

In a procedurally complex case spawning a virtual tutorial on civil procedure (Fed. R. of Civil Pro. 12 (b)(6) and 15(a)), the U. S. Court of Appeals for the Federal Circuit, applying regional circuit law, has construed defendants status as a "successor" to a release and settlement agreement and affirmed the dismissal of a counter-claim that the defendant did not replead in response to an amended complaint. General Mills, Inc. v. Kraft Foods Global, Inc., Case Nos. 06-1569, -1606 (Fed. Cir., May 16, 2007) (Linn, J.).

General Mills sells rolled food items under the brand name Fruit by the Foot. General Mills sued Farley for infringement of certain patents, a dispute resolved through a settlement agreement that released General Mills patent claim and granted Farley (and its successors) a covenant not to sue for past, current or future infringement. "Farley" is defined in the settlement agreement to include Farley's "parent corporations, subsidiaries, heirs, executors, administrators and corporate predecessors and successors." (Emphasis added). The settlement agreement also contained various provisions that limited assignment or transfer of rights under the agreement. Specifically, Farley was required to transfer its entire rolled food product business, including all assets, goodwill and trademarks, to the party to whom the rights and obligations are being assigned.

Through an intermediate transaction, Kraft succeeded to the entire rolled fruit product business of Farley. Afterward Kraft transferred certain Farley assets, including the Farley trademark and goodwill, to an entity known as Catterton, but retained a portion of the original Farley assets and Farley's rolled food business. Kraft later sold the remainder of its rolled food business and transferred whatever rights it had under the settlement agreement to Kellogg.

General Mills brought this action against Kraft, whereupon Kraft filed an answer and a counterclaim alleging that General Mills breached the settlement agreement by filing suit. After General Mills replied to Kraft's counterclaim, Kraft moved for summary judgment. Subsequently, General Mills filed an amended complaint in which it reasserted the patent infringement claim from the original complaint and asserted a new breach of contract claim, alleging the Kellogg transaction constituted a breach of settlement agreement.

Kraft moved to dismiss both counts of the amended complaint under Fed. R. Civ. P. 12(b)(6). However, Kraft...