Wednesday, February 22, 2012

Covenant Not To Sue Created Implied License As To Continuation Patents Not Expressly Excluded From Covenant

The court granted plaintiffs' motion for summary judgment on plaintiffs' implied license by legal estoppel defense where the parties' previous covenant not to sue did not expressly exclude subsequent patents in the same chain and the patent-in-suit was a continuation patent of the patents in the covenant. "[Defendant] argues that because the CNS is not supported by consideration, no implied license by legal estoppel can follow. Lack of consideration is not fatal here, however. . . . There is no consideration for the CNS given here; but [plaintiff] and its customers relied on [defendant's] promise not to sue for infringement of the eight CNS Patents under the terms set forth in that agreement. . . . In reliance on the CNS, [plaintiff] has expand its sales worldwide and has indemnified its customers against future suit. . . . Accordingly, [plaintiff] has demonstrated promissory estoppel and satisfies the element of consideration for the CNS. [Plaintiff] has therefore established that the CNS constitutes a valid license. . . . [In Gen. Protecht Group, Inc. v. Leviton Mfg. Co., Inc., 651 F.3d 1355, 1361 (Fed. Cir. 2011), the Federal Circuit held 'where, as here, continuations issue from parent patents that previously have been licensed as to certain products, it may be presumed that, absent a clear indication of mutual intent to the contrary, those products are impliedly licensed under the continuations as well.' The same result applies here, where the CNS does not expressly exclude subsequent patents in the chain."

ICOS Vision Systems Corporation N.V., et. al. v. Scanner Technologies Corporation, 1-10-cv-00604 (NYSD February 15, 2012, Order) (Crotty, J.)

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