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The Swiss company that makes Omega and Swatch watches cannot escape a settlement by refusing to sign a pact that was negotiated on the eve of trial by a fully authorized company official, the 2nd Circuit U.S. Court of Appeals has ruled. The ruling resolved a dispute between two companies, both with the word “Omega” in their name and trademark rights to the word “Omega” or the corresponding Greek letter for their respective products. More importantly, though, Judge Richard J. Cardamone wrote that the court felt it would be “helpful” to the bar to lay out in a comprehensive fashion the rules governing the enforcement of settlement agreements. While the principles regarding when agreements are enforceable have been well established over the years, he wrote in Omega Engineering Inc. v. Omega S.A., 04-5084, the court has not addressed the subject recently. A settlement was negotiated on May 19, 2003, the day before the matter was to go to trial in the U.S. District Court in Connecticut, with both sides advising the magistrate judge and the district court judge handling the matter that their agreement had been reduced to writing. But the two judicial officers were advised it would take the Swiss company about two weeks “to get the agreement signed and on file.” The underlying dispute was between the Swiss-based watch maker and a Connecticut company, Omega Engineering, which makes industrial and scientific measuring devices. Both companies held trademarks to “Omega” and the Greek character with respect to their products. The two companies began to clash over their trademark rights in 1980 when the Connecticut company began to manufacture scientific and industrial timing devices. An accord was reached in 1994. But in the latest battle the Swiss company objected to a trademark application filed by the Connecticut company to use the disputed “Omega” marks with respect to its industrial and scientific clocks. The 2003 settlement soon began to unravel when officials of the Swiss company balked at signing the agreement, and instead asked for a side letter to clarify a provision that they claimed was ambiguous. The language the Swiss company objected to appeared to allow the Connecticut company to use the “Omega” marks for its “timers” as long as it also identified the product as made by “Omega Engineering, Inc.” located in Stanford, Conn. AUTHORITY TO SETTLE The 2nd Circuit, however, found no basis for letting the Swiss company out of the deal. Rather, Judge Cardamone noted, Magistrate Judge Thomas P. Smith, in setting up the settlement conference, had instructed each side to have present an official “with authority to settle.” The Swiss company was represented by Neal Gordon, the general counsel of its Swatch Group. It was only nine months later at the hearing on enforcement of the agreement, Cardamone wrote, that Gordon first indicated that his authority had been limited to making certain that the Connecticut company not register its marks with respect to “timing devices of any sort.” Even if Gordon had a “secret” negotiating limit, Cardamone wrote, “other parties may safely assume that any agreement the agent agrees to is within his authority unless there is reason to believe he is exceeding it.” Cardamone found no merit to the Swiss company’s claim that the key provision was ambiguous. Instead, he found, the provision clearly stated that the Connecticut company must identify its full name and location when it used “any Omega trademark” on its timing devices. The circumstances under which the agreement was negotiated, Cardamone wrote, suggested that the Swiss company’s arguments are “a thinly veiled attempt by OSA’s [the Swiss company] principals to rewrite an agreement to which their authorized representative assented because, upon further review, they are dissatisfied with its terms and believe their representative made a mistake.” Judges Wilfred Feinberg and Robert D. Sack joined in the opinion. Omega Engineering, the Connecticut company, was represented by Thomas A. Smart, Paul C. Llewellyn and Michelle Tepper of Kaye Scholer. Omega S.A. was represented by Jess M. Collen and Matthew C. Wagner of Ossining, N.Y.

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