The United States District Court for Delaware’s decision on July 15, 2014 in Comcast IP Holdings I, LLC v. Sprint Communications Company L.P., Sprint Spectrum L.P. and Nextel Operations, Inc. included some items that are particularly interesting for attorneys, business development professionals and others who negotiate or are otherwise involved with license agreements.
In this case, the license agreement at issue defined the licensed patents as “all patents (including utility models but excluding design patents and design registrations) issued...from an application filed on or before January 31, 2001” (emphasis added). Notably, the licensed patents definition did not expressly include divisional applications or continuations of any covered patent application. In this case, the relevant patent issued from a post-January 31, 2001 continuation of a couple of post-January 31, 2001 divisional applications of a patent application filed before January 31, 2001.
The court acknowledged that a patent that issues from a continuation or divisional application does not “issue from” the parent application. In such a situation, the patent claims priority to the parent application, but the license agreement did not expressly include a license to patents which “claim priority to” patent applications filed on or before January 31, 2001; the wording only expressly included patents that “issue from” applications filed on or before January 31, 2001.
The court also discussed the principle that “absent some clearly-articulated provision in the contract, the law imposes an implied license to continuation patents that issue from previously licensed patents” (emphasis added). Under an implied license, the licensor is estopped from asserting the continuation patent against the licensee because doing so would prevent the licensee from practicing the parent patent.
Notably, in this case, the court decided that the parties expressly intended to exclude continuations based on a provision stating that none of the parties “makes any representations, extends any warranties of any kind, assumes any responsibility or obligation whatever, or confers any right by implication, estoppel or otherwise, other than the licenses, rights and warranties herein expressly granted” (emphasis added). The court decided that since an implied license right arises under legal estoppel, and this provision excluded rights via estoppel, continuation patents could not be considered to be covered by an implied license.
This case provides some important reminders for business development professionals, attorneys and others who structure and draft patent license agreements or assignments, including the following:
- The “Licensed Patents” or similar definition may not include continuations or divisional applications of an identified patent application without “claim priority to” wording or express inclusion of continuations or divisional applications.
- Continuations may be included by implied license, but general provisions that exclude implied rights or rights of estoppel may serve as an express indication of intent to exclude implied license rights.