Cheetah Omni LLC, v. AT&T Services, Inc. (Supreme Court 2020)
In Rodriguez v. Fed. Deposit Ins. Corp., 140 S. Ct. 713 (2020), the Court held that federal courts may not create their own court-made rules unless it is “necessary to protect uniquely federal interests.”
THE QUESTION PRESENTED IS:
Did the Federal Circuit violate Rodriguez when it invoked its own federal common law rule, superseding controlling state contract law, to hold that a patent license—one that does not expressly license a particular patent—nonetheless impliedly licenses that patent merely because it is a continuation of an expressly licensed patent, without examining whether that federal common law rule was necessary to protect uniquely federal interests?
The case here involves Cheetah’s U.S. Patent No. 7,522,836 (‘836 patent) that it asserted against AT&T.
In a prior lawsuit Cheetah asserted a family member patent – the ‘714 patent – against Fujitsu. (See the chart above). That case ended with a license to Fujitsu that included the ‘714 patent and also
“all parents, provisionals, substitutes, renewals, continuations, continuations-in-part, divisionals, foreign counterparts, reissues, oppositions, continued examinations, reexaminations, and extensions of the Patents-in-Suit … whether filed before, on or after the [License] Effective Date.”
The license covered “parents” and “continuations”, but did not expressly combine those in a way that would include the ‘836 patent — which is “a continuation of a continuation of the parent of a continuation-in-part.” In its decision, the Federal Circuit extended the license terms to cover the ‘836. And, since AT&T buys its products from the licensee, AT&T’s activity was covered by the license.
In its petition here, the patentee argues that the Federal Circuit should not – as it did here – create and extend a Federal common law of patent license contract interpretation. Rather, the license agreement should be interpreted as if it were a contract (which it is) following state law like any other contract:
Cheetah does not ask the Court to resolve the contract dispute between Cheetah and Respondents. Instead, like Rodriguez, Cheetah asks only that the Court vacate the Federal Circuit decision and remand to the Federal Circuit with instructions to apply state contract law, not federal common law, to the dispute.