Standing Cured by Revoking an “Irrevocable” License Prior to Commencing Suit
Before Lourie, Dyk, and Hughes. Appeal from the District Court for the Northern District of California.
Summary: An “irrevocable” patent license could be terminated by mutual agreement and such a license was not a right that by its nature would fall within a survival provision of a termination agreement.
Uniloc sued Google for patent infringement and Google moved to dismiss for lack of standing under the theory that Uniloc lacked standing because it had granted Fortress Credit Co. a license and right to sublicense the asserted patents pursuant to a default under a revenue sharing agreement. Uniloc argued that even if it had granted such a license to Fortress, any license was eliminated by a Termination Agreement executed between Uniloc and Fortress prior to commencing suit against Google. The district court granted the motion to dismiss, finding that an “irrevocable” license had been granted, that it survived the Termination Agreement, and that it deprived Uniloc of standing.
The Federal Circuit indicated that the sole issue was whether the Termination Agreement eliminated any license Fortress had and that if this license was eliminated, then the parties agreed that Uniloc had standing in this case. Turning to the language of the Termination Agreement, the Federal Circuit noted that the agreement appeared to terminate Fortress’s license by stating that the license and any rights “shall terminate.” The Federal Circuit then explained that the district court misunderstood the meaning of “irrevocable” in the license agreement. The term meant that the license was “irrevocable” by the unilateral actions of the licensor, but that this did not suggest that the license was “irrevocable” by mutual agreement as occurred in the Termination Agreement. The Federal Circuit also rejected Google’s reliance on a survival provision in the Termination Agreement, distinguishing the Fortress license from other rights that by their nature make them survive termination. Thus, the Federal Circuit reversed and remanded to the district court.
Editor: Paul Stewart
Written by: Hyunjin (Harry) Park & Andrew Morrell, Ph.D.