Dave:
Most contracts make a statement that there is consideration. As a rule, the answer is a "fact question" to be decided by a jury. A mere recitation of consideration is not proof of consideration. Think about your house deed. "Ten dollars and other good and valuable consideration." Many times "good consideration" for the terms in a contract is a function of power. Did the party with the most power unilaterally shove a contract term down the smaller parties throat. A good example is the litigation many years ago when auto manufacturers gave no warranties and forced buyers to sign a waiver of warranty in order to buy a car. The Supreme Court refused to enforce these waivers as without consideration.
Your third question may be a key, but the real question is "if you have a contractual duty to provide a defense, without regard to total cost, can you demand a reimbursement agreement?" This appears to be IDCC's point. The problem is we don't know all the facts regarding how F&J was hired. In most "duty to defend" claims under casualty insurance, defense firms are chosen by the insurance carrier. However, sometimes the carrier will allow the insured to decide. Until we know, it's not possible to determine whether or not Federal had a legitimate complaint about F&J's fees.
Regarding IDCC's acknowledgement. We will probably allege that we were intimidated and coerced. I picked this up from our statements regarding our fear that they would refuse to pay any further litigation expenses. As I recall from reading other members posts during the period after Motorola, we were in bad shape financially.
Finally, your two quoted paragraphs are good indications of the dispute. The Ericy lawsuit started with Ericy and contained some claims which might not have been covered by the policy. Then we counterclaimed for infringement and damages. F&J handled both sides. Federated is saying that the consideration was their paying for all fees and costs, even for non covered claims and counterclaims. IDCC counters with Pa. case law on this point and alleges these facts do not entitled Federal to demand the reimbursement agreement. Time will only tell as Tucker correctly states.
Greg
PS
This will not be a ten year battle. The discovery is relatively simple compared to the infringement issues of the ERICY case. There also won't be a need for a five year abatement to await appeals and the patent office decisions on revalidation. I would guess a trial could be had in a year and one-half, with mediation likely.
JMO
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