In the recent case General Protecht Group, Inc. v. Leviton Manufacturing Co., Inc., the Federal Circuit held that where continuation patents are issued after a previous settlement agreement that licensed the parent patents, the continuation patents are covered by an implied license of that settlement agreement. No. 2011-1115 (Fed. Cir. July 8, 2011).

In 2007, alleged infringer General Protecht Group (“GPG”) and patent owner Leviton entered into a settlement agreement which included a covenant not to sue for alleged infringement of U.S. Patent Nos. 6,246,558 (“’558 patent”) and 6,864,766 (“’766 patent”) and was silent with regard to future patents. Then, in 2010, Leviton alleged infringement against GPG of two patents, U.S. Patent Nos. 7,463,124 (“’124 patent”) and 7,764,151 (“’151 patent”), that were continuations of the previously asserted patents. Leviton argued that the claims of the newly asserted ‘124 and ‘151 patents were narrower in scope than the previously asserted parent ‘558 and ‘766 patents and, therefore, their allegation of infringement did not take away the right to practice the previously licensed claims.

The Federal Circuit disagreed with the patent owner, Leviton, and stated “the newly asserted continuations are based on the same disclosure as the previously licensed patents and that, by definition, the continuations can claim no new invention not already supported in the earlier issued patents.” Id. at 11. The Court went on to explain that, based on equitable estoppel, a party cannot “take back” something for which it has already received consideration. Thus, the Court held that where “continuations issue from 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.” Id. Therefore, continuations will be covered under an implied license unless there is a clear indication explicitly carving out continuations from the license.

Accordingly, when drafting a patent license, if a patentee wishes to avoid coverage of potential future patents such as continuations, clear provisions should be placed in the license to accurately convey the intention of each party for those potential future patents.