Andrew Melick | December 19, 2012
Intel Corp. v. Negotiated Data Solutions, Inc.
December 17, 2012
Panel: Prost, Wallach and Linn. Opinion by Linn.
Intel and National Semiconductor Corp. (“National”) entered into a cross-licensing agreement. The agreement gave Intel rights to National’s patents and patent applications having an effective filing date during the period in the agreement which lasted from 1976 to 2003. This case deals with four patents that were covered under the agreement. National assigned these patents to Vertical Networks, Inc. (“Vertical”) in 1998. Vertical then filed broadening reissue applications for three of the patents. In 2003, Vertical assigned the original patents and the reissue applications to Negotiated Data Solutions, Inc. (“N-Data”). In 2005 and 2006, well after the agreement expired, the PTO issued reissue patents to N-Data. The issue in this case is whether the agreement, which licenses National patents to Intel, automatically extends to any reissue patents that are derived from those licensed National patents. The CAFC held that the license agreement extends to the full scope of any coverage available by way of reissue for the invention disclosed.
The patents at issue in this case are U.S. Patent Nos. 5,361,261; 5,533,018; 5,566,169 and 5,594,734 to National (assigned to N-Data) and reissue patents RE38,820, RE39,216 and RE39,395 corresponding to the ‘018, ‘169 and ‘734 patents, issued to N-Data after the agreement expired.
N-Data sued Dell, one of Intel’s customers, alleging infringement of the noted patents and reissue patents. Intel intervened in N-Data’s suit against Dell seeking a declaratory judgment that under the National agreement Intel and its customers are licensed to the National patents and all reissue patents owned by N-Data that are derived from National patents. The parties filed cross-motions for summary judgment: Intel sought a declaration of non-infringement based on its license; and N-Data sought summary judgment of non-license of the newly issued claims of the three Reissue patents. The District Court found for Intel, holding that the National Agreement applies to the reissue patents.
N-Data argued that 35 U.S.C. § 252 as a whole defines an arrangement where only substantially identical claims reach back to the date of the original patent and that the agreement only covers patents owned by National during the term of the license. According to N-Data, while the agreement covered original patents, it does not cover the reissue patents, which were each issued directly to N-Data after the agreement expired.
Intel argued that according to 35 U.S.C. § 252, “every reissued patent shall have the same effect and operation in law, on the trial of actions for causes thereafter arising, as if the same had been originally granted in such amended form.” According to Intel, the original patent takes the place of the original patent as if the reissued patent had been issued at the time of, and instead of, the original. CAFC dismissed this argument because Intel’s focus of § 252 ignores the specific language of the statute that grants intervening rights to those who may infringe only new claims added by reissue. Thus, the CAFC concluded that a reissue patent does not simply replace an original patent.
Intel also argued that in order to realize the parties’ intention to avoid future patent infringement litigation, the agreement broadly licensed all of National’s patent rights; the agreement did not license specific claims of any patents. According to Intel, the reissued patent covers the licensed invention from the original patent.
Under California contract law, a contract must be interpreted to give effect to the parties’ mutual intent while contracting. Thus, the key issue is whether the agreement evinces an intent on the part of the parties that the reissue patents should be treated as National patents under the agreement.
The relevant part of § 251 at the time of the agreement is provided below. Section 251 under the AIA includes similar language.
[w]henever any patent is, through error without any deceptive intention, deemed wholly or partly inoperative or invalid, by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent, the Commissioner shall, on the surrender of such patent . . . reissue the patent for the invention disclosed in the original patent, and in accordance with a new and amended application, for the unexpired part of the term of the original patent. No new matter shall be introduced into the application for reissue.
CAFC stated that § 251 does not refer to issuance of “a” reissue patent for “an” invention; it specifically refers to reissue of “the” inoperative or invalid patent for “the” invention disclosed in the original patent. The statute prohibits addition of new matter via reissue and indicates that “the” reissued patent will be effective for the remainder of the unexpired term of the original patent. Thus, the CAFC concluded that
the text of § 251 suggests to a potential licensee that–in the absence of contrary language in the licensing agreement–a license under the patent that is not directed to any specific claims, field of use, or other limited right will extend to the full extent of protection provided by law to the invention which is the subject of that patent. (Emphasis added.)
The CAFC also stated that “Because the patent laws provide for the grant of reissue patents under specified circumstances, it is reasonable to conclude that the parties’ mutual intent at the time of contracting was that the broad and unrestricted grant of license under National patents extended to any reissues thereof.”
The CAFC cited two cases for supporting this conclusion: TransCore v. Electronic Transaction Consultants Corp., 563 F.3d 1271 (Fed. Cir. 2009), and General Protecht Group, Inc. v. Leviton Manufacturing Co., 651 F.3d 1355 (Fed. Cir. 2011). These cases analyze a licensee’s rights when the patent holder received a continuation patent, and warned about the risks of derogating rights for which the licensee had paid consideration. In General Protecht, CAFC stated that “if Leviton did not intend its license of these products to extend to claims presented in continuation patents, it had an obligation to make that clear.” The CAFC concluded that the concerns raised in these cases involving continuation patents are equally relevant to cases involving reissue patents.
When entering into license agreements for a patent, the parties should be aware of implications of reissue patents and continuation patents. The parties should consider explicitly including or excluding reissue patents and/or continuation patents. If you are in a license agreement that provides rights to a patent and it is not directed to specific claims, field of use, or some other limited right, then the license agreement could extend to the “invention” which is the subject of that patent including a reissue patent that issues from the original patent.