Federal Common Law of Patent License Interpretation

Cheetah Omni LLC, v. AT&T Services, Inc. (Supreme Court 2020)

Question Presented:

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.

Petition.

11 thoughts on “Federal Common Law of Patent License Interpretation

  1. 3

    The Cert Petition indicates that the Fed. Cir. law in question is not about literal interpretation of a a patent suit settlement agreement’s contract terms, but rather a presumption that “[W]here . . . parent patents that previously have been licensed as to certain products, it may be presumed that, absent a clear indication of mutual intent to the contrary, those products are impliedly licensed under the continuations as well.” General Protecht Grp., Inc. v. Leviton Mfg. Co., 651 F.3d 1355, 1361 (Fed. Cir. 2011).
    [The petition asserts that this presumption was first created in that 2011 case, but I believe it existed before that. Judges [and most companies] obviously dislike finding lawsuits they thought were settled later springing back to life due to a drafting oversight in the settlement agreement.]

    1. 3.1

      Are you assuming your conclusion of a ‘drafting oversight’…?

      1. 3.1.1

        The assumption is not just mine, it is inherent in the legal presumption. Why would lawsuit parties and the judge settle a patent suit and deliberately not include a mere continuation of its settled parent “absent a clear indication of mutual intent to the contrary”?

        1. 3.1.1.1

          Sorry, but no Paul – it is NOT inherent in the legal presumption.

          The legal presumption is that the items listed are the items desired – the very opposite of what you are attempting to assume (hence my question to you).

          Families with odd trees are not altogether unheard of, and IF (for that legal presumption) every single node in the extended tree WERE desired, THEN it would be rather easy to include appropriate language in the agreement.

          As it is, this is the SECOND TIME that you appear to want there to be a different agreement.

  2. 2

    That federal courts must follow state law for contract law disputes absent some overriding federal law has been the case ever since Erie R. Co. v. Tompkins, 304 U. S. 64, 78 (1938). Yes, that has been ignored a few times by some Fed. Cir. panels, including some employee invention agreement and/or patent assignment agreement disputes. One of those cases should have gone to the Supremes. But this cert is on a bad facts and unattractive equities case. The license settlement agreement terms were, as usual, clearly intended by the parties and the judge to settle all disputes over all before and after patents to the same invention, and would have except perhaps for this one inadvertent “grandparent” case loophole. Furthermore, there would need to be shown a clearly different case outcome between Fed. Cir. law and State law on these facts.

    1. 2.1

      In particular, Board of Trustees of the Leland Stanford Jr. University v. Roche Molecular Systems, Inc., 583 F.3d 832, 841 (Fed. Cir. 2009), where apparently Stanford failed to even raise the vital issue that CA law should have been applied. in the Supreme Court appeal of that Stanford case one Sup. Ct. Justice even noted sua sponte that this issue should have been considered. [Note the Jan./Feb. 2011 ABA IPL “LANDSLIDE” magazine article on p. 24 with extensive legal research on inconsistencies and conflicts in Fed. Cir. cases like this with the basic Sup. Ct. principles on the state law versus “federal common law” i.e., the Fed. Cir. making up its own law. ] The Fed. Cir. even tried to take over an appeal of a state attorney malpractice case once. I think that got zero supporting votes from the Sup. Ct. ?
      The cited Rodriguez v. Fed. Deposit Ins. Corp., 140 S. Ct. 713 (2020) decision does not seem to apply to the many federal district courts that have adopted special procedural rules for handling patent cases?

    2. 2.2

      You kind of beg the question there Paul with your asserted loop-hole (on these facts, considering that a Continuation-In-Part is involved).

      1. 2.2.1

        Same parent, per the Dennis chart, and parents are covered by the license.

        1. 2.2.1.1

          Sure – but only the parent — not the other step-family members, eh?

          I mean, that’s really NOT a loophole. That’s the plain meaning of the words chosen and agreed to.

          Could they have chosen different words?

          Most assuredly. But then, they would have had a different agreement.

  3. 1

    A Cert with better than zero percent chance (hint as to how to increase chances of cert: give the Supreme Court a chance to chastise the CAFC on a ‘patent’ topic, without strengthening the underlying patent right AND making the law more complicated and less ‘bright line’ by requiring a mish mash of state by state contract law flavors)

    1. 1.1

      “give the Supreme Court a chance to chastise the CAFC on a ‘patent’ topic, without strengthening the underlying patent right AND making the law more complicated and less ‘bright line’ by requiring a mish mash of state by state contract law flavors”

      Hilariously true.

      “without strengthening the underlying patent right”

      The most painfully true.

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