A settlement agreement that includes a patent license to certain patents and that contains a forum selection clause covering disputes “relating to or arising out of” the settlement agreement controls the available choice of forum for allegations of infringement of patents that are continuations of the patents covered by the license.
Previously, the patentee and the alleged infringer had settled allegations of patent infringement. The settlement agreement included a forum selection clause that all disputes “relating to or arising out of” the settlement agreement would be resolved by the court in the District of New Mexico. The patentee sued the alleged infringer for infringement of patents, which were continuations of the patents in the settlement agreement. The patentee brought its suits for infringement before the International Trade Commission (“ITC”) and the Northern District of California. In response, the alleged infringer filed a declaratory judgment action in the District of New Mexico and requested a preliminary injunction against the patentee’s pending suits. The district court granted the preliminary injunction and enjoined the patentee’s suits before the ITC and the Northern District of California. On expedited review, the Federal Circuit affirmed.
Applying its own procedural law, the court explained that the district court did not abuse its discretion in granting the preliminary injunction. On the likelihood of success on the merits, “patent disputes do arise from license agreements.” Unless the governing law provisions of a license are limited to specific license terms, the license necessarily covers patent infringement disputes. In this case, the dispute involves the scope of the settlement agreement, and under the broad “relating to or arising out of” language of the forum selection clause, this dispute is covered by the forum selection clause. Further on the likelihood of success on the merits, the alleged infringer likely possessed an implied license because, as in TransCore, a patent licensor cannot “tak[e] back in any extent that for which [it] has already received consideration,” and absent clear indication of mutual intent to the contrary, continuations of parent patents are impliedly licensed under the previous agreement.
Finally, the court agreed that additional factors – irreparable harm to the accused infringer, the balance of hardships, and the public interest – all favored entering the preliminary injunction.
A copy of the opinion can be found here.