Express License of Patent Includes Implied License of Continuations

CHEETAH OMNI LLC v. AT&T SERVICES, INC.

Before Lourie, Bryson, and Chen.  Appeal from the United States District Court for the Northern District of Texas.

Summary: The express license of a patent includes an implied license for its continuations, including continuations of continuations, because they disclose the same inventions as the licensed patent.

Cheetah Omni LLC (“Cheetah”) sued AT&T Services, Inc. (“AT&T”) for infringement of U.S. Patent No. 7,522,836 (“the ’836 patent”) directed to optical communication networks. Ciena Communications, Inc. and Ciena Corporation (collectively, “Ciena”) moved to intervene in the suit because it manufactures and supplies components for AT&T’s fiber optic systems which formed the basis of Cheetah’s infringement allegations. Ciena and AT&T moved for summary judgment claiming Cheetah’s claim was barred by a license agreement, which settled a previous litigation involving Cheetah and Ciena. In 2011, Cheetah sued Ciena for infringement of U.S. Patent 7,339,714 (“the ’714 patent”), which resulted in a license agreement between Cheetah and Ciena (the “Ciena License”). Ciena and AT&T argued that the Ciena License included an implicit license to the ’836 patent. The district court agreed, granting summary judgment and dismissing the suit with prejudice. Cheetah appealed.

The Federal Circuit affirmed the district court.  The Federal Circuit looked to the language of the Ciena License to determine whether it included an implicit license to the ’836 patent.  In the Ciena License, “Licensed Patents” were defined broadly to include the Patents-in-Suit and “all parents, provisionals, substitutes, renewals, continuations, continuations-in-part, divisionals, foreign counterparts, reissues, oppositions, continued examinations, reexaminations, and extensions of the Patents-in-Suit.” The Federal Circuit explained that it is key to the dispute to understand the relationship between the ’836 patent and the ’714 patent. The ’714 patent is a continuation-in-part of its parent, U.S. Patent No. 6,943,925 (“the ’925 patent”). Accordingly, the Federal Circuit held that the ’925 patent is expressly licensed in the Ciena License. In a separate chain from the ’714 patent, the ’836 patent is a continuation of a continuation of the ’925 patent, as shown in the figure below. The Federal Circuit explained that because the ‘925 patent is an expressly licensed patent in the Ciena License, the agreement also includes an implied license to a continuation of its continuation (or “grandchild”), the ’836 patent. The Federal Circuit further stated that Cheetah had an obligation to clearly state if it did not intend its license to extend to claims presented in continuation patents, which it failed to do.

Editor: Paul Stewart

Written by: Bita Kianian & Kendall Loebbaka