DC dismissal affirmed as grandchild patent impliedly licensed in settlement agreement

Cheetah Omni LLC v. AT&T Services, Inc. et al.
Docket No. 2019-1264
LOURIE, BRYSON, CHEN
February 6, 2020

Brief Summary: DC dismissal of Cheetah’s claims against AT&T affirmed since grandchild patent was impliedly included in prior license to grandparent parent.

Summary: Cheetah appealed DC dismissal of its claims of infringement of US 7,522,836 relating to optical communication networks with prejudice due to a prior agreement to settle litigation (the ROADM litigation). The prior agreement was made with Fujitsu and Ciena. After Cheetah asserted the ‘836 patent against AT&T, Ciena successfully intervened as it manufacture and supplies components to AT&T that “formed the basis of some of Cheetah’s infringement allegations.” Ciena argued that its previous settlement agreement with Cheetah included the ‘836 patent through its grandparent ‘925 patent to the ‘714 patent explicitly referenced in the settlement agreement. The ‘714 patent is a continuation-in-part of parental ‘925 patent. The “Licensed Patents” covered by the settlement agreement includes “all parents” and the “Licensed Products” includes “all past, present or future Ciena…products, services or combinations, components, or systems of products or services”. The FC panel framed the question presented here to be “whether the ‘836 patent, i.e., its grandchild, is impliedly licensed under the Ciena license” as determined by the DC (“because the uncle and grandparent of the ‘836 patent, are licensed, is the ‘836 patent also licensed?”) Cheetah argued “the parties did not intend that the licenses extend to the ‘836 patent”, that “the covenants not to sue expressly included the ‘836 patent, while the licenses did not”, “all parties were aware of the ‘836 patent” (“if they had intended to include the ‘836 patent, the patent would have been expressly named in the license agreements”), and “the ‘836 patent covers an invention different from the inventions claimed in the patents at issue in the ROADM litigation”. Ciena argued that the licenses “only list[] broad categories of patents” and “if the parties had mutually intended to exclude the ‘836 patent, they would have done so explicitly.” The FC panel agreed with the DC, finding that “the license include[s] an implied license to the ‘836 patent that extends to the accused AT&T systems”, “[l]egal estoppel prevents licensors from derogating or detracting from definable license rights granted to licensees for valuable consideration”, and “the same inventive subject matter was disclosed in the expressly licensed patents” (AMP, Ct. Cl. 1968; TransCore, FC 2009 (“implied license to related, later-issued patent that was broader”); General Protecht, FC 2011 (relied on by the DC here; not-yet-issued continuations of licensed parent patents “impliedly licensed”)). The FC panel also concluded that the accused AT&T products are included in the Licensed Products (i.e., “in combination with other products, services, components or systems”). The FC panel did not “consider the scope of the covenant not to sue” as it concluded “AT&T’s products are licensed under the license agreement”. The DC decision was therefore affirmed.