IP Law Daily Prior settlement granted AT&T supplier a license to fiber optic communications technology
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Thursday, February 6, 2020

Prior settlement granted AT&T supplier a license to fiber optic communications technology

By Robert Margolis, J.D.

License of patent interpreted to include implied license to a continuation of patent’s continuation, leading court to affirm dismissal of infringement claim.

The U.S. Court of Appeals for the Federal Circuit has affirmed the dismissal of Cheetah Omni LLC’s patent infringement suit against AT&T Services, Inc., and Ciena Corporation, agreeing with the district court that a license Cheetah previously granted to Ciena in settlement of a prior lawsuit includes the patent at issue as well as the accused products. The district court had granted the defendants summary judgment and dismissed Cheetah’s claim on the basis that the implied license defeated Cheetah’s infringement claim, a holding that the Federal Circuit affirmed (Cheetah Omni LLC v. AT&T Services, Inc., February 6, 2020, Lourie, A.).

Infringement lawsuit. Cheetah owns a patent directed to optimal communications networks. U.S. Patent No. 7,522,836 (the ’836 Patent). Cheetah sued AT&T, alleging that AT&T’s fiber equipment and services are infringing the ’836 patent. Ciena, a manufacturer and supplier of some components for AT&T’s fiber optic systems that formed the basis of some of Cheetah’s infringement allegations, moved to intervene in the lawsuit. Ciena and AT&T then moved for summary judgment, arguing that the infringement claim was barred by a settlement agreement in prior litigation Cheetah had brought against Ciena and Fujitsu Network Communications, which included the granting of license agreements. Ciena and AT&T contended that the license granted to Ciena to settle that case included an implied license for the ’836 Patent and the accused products.

The license. Cheetah’s lawsuit against Ciena and Fujitsu alleged that certain Reconfigurable Optical Add/Drop Multiplexer ("ROADM") products infringed Cheetah’s U.S. Patent 7,339,714 (the ’714 Patent). The case settled and as part of the parties’ agreement, Cheetah executed a license agreement with each of Ciena and Fujitsu. The Ciena license gave it "a perpetual, irrevocable, worldwide, nonexclusive, fully paid-up license under the Licensed Patents" to, inter alia, offer and sell "Licensed Products." The Licensed Patents were defined to include, the ’714 Patent, its "parents, ... continuations, [and] continuations-in-part." The Licensed Products were defined to include, "all past, present or future Ciena or Ciena Affiliate products ... that could by themselves or in combination with other products, services, components or systems, be alleged to infringe at least one claim of at least one Licensed Patent in the absence of a license under this Agreement."

The ’714 Patent at issue in the prior Cheetah lawsuit is related to the ’836 Patent that is the subject of its lawsuit against AT&T and Ciena. The ’714 Patent’s parent (the ’925 Patent) has a continuation (the ’704 Patent). The ’836 is a continuation of the ’704 Patent. Because the license granted to Ciena in the prior lawsuit covers the ’714 Patent, the ’925 Patent (the parent of the ’714 Patent) is expressly included in the license. The question presented was whether a continuation of a continuation of the ’925 Patent is impliedly licensed as well. In dismissing Cheetah’s claim, the district court held that it was, reasoning that "those continuations disclose the same inventions as the licensed patent." The appellate court agreed.

Not excluded. Cheetah argued that the license should be interpreted to exclude the ’836 Patent because in settling the prior suit, at the time the license was drafted, the parties also executed a separate covenant not to sue and that covenant expressly included the ’836 Patent. Thus, Cheetah argued, by not expressly including the ’836 Patent in the license, it should be interpreted as excluding it. Since the covenant not to sue makes clear that the parties all knew about the ’836 Patent, the fact that it is not mentioned in the license should be dispositive, Cheetah argued. The court found otherwise.

In a prior Federal Circuit decision, General Protecht Group Inc. v. Leviton Manufacturing Co., 651 F.3d 1355 (Fed. Cir. 2011), the appellate court held that a patent license included an implied license to its continuations, "absent a clear indication of mutual intent to the contrary," even when the continuation claims are narrower than the claims previously asserted. Relying on that case, the appellate court found that resolving this dispute was "simple and clear." Because the ’925 Patent is expressly licensed, the license impliedly includes the continuation of its continuation, the court held. Even if the continuation claims are narrower or different from the ’925 Patent’s claims, they disclose the same "inventive subject matter" as the expressly licensed patents, the court found. Cheetah had the obligation to state clearly the intent not to include those patents within the license, and it had not done so.

The court also rejected Cheetah’s argument that because the parties knew of the ’836 Patent, they would have expressly included it had they intended it to be included. Even if other patents were expressly named, that does not establish a clear mutual intent to exclude other patents where those patents fall within the general definitions in a license agreement, the court reasoned.

Licensed products. The court also rejected Cheetah’s argument that the accused products are not "Licensed Products" under the prior agreement. The definition includes "past, present, or future Ciena products" that "could by themselves or in combination with other products, services, components or systems, be alleged to infringe at least one claim of at least one Licensed Patent." Because the accused AT&T systems include Ciena products in combination with other components, they are licensed products under the prior agreement, the court held.

This case is No. 19-1264.

Attorneys: Thomas A. Lewry (Brooks Kushman PC) for Cheetah Omni LLC. Matthew Yungwirth (Duane Morris LLP) for AT&T Services, Inc. Matthew J. Moore (Latham & Watkins LLP) for Ciena Corp. and Ciena Communications, Inc.

Companies: Cheetah Omni LLC; AT&T Services, Inc.; Ciena Corp.; Ciena Communications, Inc.

MainStory: TopStory Patent FedCirNews

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