Patent Watch: Intel Corp. v. Negotiated Data Solutions, LLC

by BakerHostetler
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§ 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.

On December 17, 2012, in Intel Corp. v. Negotiated Data Solutions, LLC, the U.S. Court of Appeals for the Federal Circuit (Prost, Linn,* Wallach) affirmed the district court's summary judgment that Intel did not infringe U.S. Reissue Patents No. 38,820 (a reissue of U.S. Patent No. 5,533,018), No. 39,216 (a reissue of U.S. Patent No. 5,594,734) and No. 39,395 (a reissue of U.S. Patent No. 5,566,169), which related to data communication networks, because Intel was licensed to practice the patents-in-suit pursuant to an agreement with N-Data's predecessor in interest, National Semiconductor Corp. The Federal Circuit stated:

The parties here ask this court to determine whether the National Agreement, which licenses National Patents to Intel, automatically extends to any reissue patents that are derived from those licensed National Patents. N-Data contends that 35 U.S.C. § 252 as a whole defines a nuanced arrangement where only substantially identical claims reach back to the date of the original patent and argues that the Agreement expressly covers only patents owned or controlled by National during the term of the license. Thus, according to N-Data, while the Agreement covered the Original Patents, it does not cover the Reissue Patents, which were each issued directly to N-Data after the Agreement had expired. According to N-Data, "upon surrender at reissue, '[t]he original claims are dead,'" and the resulting reissue patent is a distinct property right that does not simply replace the original patent in an existing agreement.

Intel, however, focuses on § 252's language that "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, when a cause of action arises after reissue, § 252 provides that the reissue patent takes the place of the original patent nunc pro tunc, as if the reissued patent had been issued at the time of, and instead of, the original. Intel points to language nearly identical to this portion of § 252 in the statutes governing certificates of correction, 35 U.S.C. §§ 254 and 255, and argues that this court has held that in that context, this same language indicates that the corrected patent replaces the original nunc pro tunc. Thus, under Intel's reading of § 252, the Reissue Patents should be treated as the Original Patents; because the Original Patents were indisputably licensed to Intel, the Reissue Patents are licensed as well.

Intel's focus on selected portions of the text of § 252 ignores the specific language of the statute that grants intervening rights to those who may infringe only new claims added by reissue. In this important aspect alone, it is clear that a reissue patent does not simply replace an original patent nunc pro tunc. Intel's argument also fails to recognize that certificates of correction are not generally available to change the scope of coverage of a patent in the same way as a reissue, are not intended to remedy the same kinds of defects, and have different standards in implementation. Intel's attempt to draw parallels between § 252 and the statutes governing certificates of correction thus falls short. At bottom, the scheme set forth in § 252 does not support Intel's simplistic proposition that a reissue patent replaces the original patent nunc pro tunc. The question remains, however, whether the National Agreement itself is properly interpreted, under California law, to extend the license granted thereunder to the Reissue Patents. N-Data's primary argument is quite straightforward: the Agreement only covers National Patents, National Patents are patents that issued directly to National during the term of the Agreement, the Reissue Patents issued directly to N-Data after the Agreement had expired, and thus, the Reissue Patents are not covered by the grant in the Agreement. N-Data further contends that California law requires that the Agreement be interpreted in light of the parties' intent while contracting, and "the parties' general intent must be informed and limited by the particular provisions of the National License." . . .

As the district court correctly noted, the key question in this case is not whether the Reissue Patents are National Patents under the definition set forth in the Agreement, but whether the Agreement evinces an intent on the part of the parties that Reissue Patents should be treated as National Patents under the Agreement. . . . Section 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 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. 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 district court granted summary judgment to Intel because the Agreement reflects the intent of the parties to license not only the literally described patents and patent applications, but also the reissue progeny of those licensed patents and patent applications from which the reissues were derived. This court agrees. The National Agreement does not explicitly discuss reissue patents, but the grant of license under the National Patents is without limitation and without reference to any specific claims. The Agreement thus evinces the parties' intent that the license so granted extend not only to the claims then in existence but also to the full scope of any coverage available by way of reissue for the invention disclosed. To interpret the Agreement otherwise would allow the unilateral act of the licensor to place the licensee, which sought to eliminate any infringement risk and effect a global peace with the licensor for all claims in all patents, in a position of being exposed to further risk relating to the exact same inventions that were subject to the license. 35 U.S.C. § 261 is not inconsistent with this conclusion. That a patent owner has the ability to assign (or reserve) any interest in its patent says nothing about interpreting a contract that does not expressly discuss that interest.

If you have questions about the material presented above, please contact Dr. Lawrence M. Sung ( lsung@bakerlaw.com or 202.861.1537) or any member of our Intellectual Property Team.

See information regarding BakerHostetler's Patent Litigation and IP Prosecution and Portfolio Management practices.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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