Wi-Lan USA v. Ericsson: Interpretation of a Most-Favoured Licensee ("MFL") Provision

Category: Licensing  
By: Christian Hannon, Contributor 
TitleWi-LAN USA Inc. v. Ericsson, Inc., No. 2013-1566 (Fed. Cir. Aug. 1, 2014).
IssueThe parties disagree about the correct interpretation of multiple parts of the [Most-Favoured Licensee ("MFL")] Provision, including whether it applies to patents that Wi-LAN acquried after the execution of the PCRA.
Wi-LAN USA, Inc., at *7.
HoldingBecause we conclude that the MFL Provision does not apply to patents acquired after the execution of the PCRA, Ericsson's rights under the MFL Provision were not triggered by the Texas suit. We therefore, reverse the Florida court's dismissal of Wi-LAN's infringement suit with respect to the Florida Patents. [...] We also affirm the Texas court's finding that the MFL provision did not bar Wi-LAN's Texas suit, albeit on different grounds.
Id. at *17. 
Procedural HistoryThe parties asked both [Florida & Texas] district courts to interpret a prior agreement between Wi-LAN and Ericsson, which allegedly limited Wi-LAN's ability to assert certain patents against Ericsson. The Texas and Florida courts granted contradictory summary jdugements, which the parties appeal.
Wi-LAN USA, Inc., at *3.
Legal Reasoning (Moore, O'MALLEY, and Wallach)
Wi-LAN -Ericsson Agreement
To resolve [] alleged infringement [...] [Wi-LAN and Ericsson] executed the Patent Conflict and Resolution Agreement ("the PCRA") on February 13, 2008. The PCRA granted certain rights to Ericsson in exchange for $100,000 as consideration. The exact scope of those rights is at issue in this appeal.
Wi-LAN USA, Inc., at *4.
Three Articles in the PCRA grant rights to Ericsson: (1) Article III, titled "Non-Assert and Release" ("the Non-Assert Provision"); (2) Article IV, titled "Patents Other Than the Wi-LAN Patents" ("the Damages Provisoin"); and (3) Article VII, titled "Most-Favoured Licensee Provisions") ("the MFL Provision"). The Parties disagree about the scope of each of these provisions.
Id. at *4-5.
Texas CaseOn October 5, 2010, Wi-LAN filed suit against Ericsson in the Texas court, alleging infrignement of four patents ("the Texas Patents"). Wi-LAN acquired the Texas Patents in April 2009--over a year after the effective date of the PCRA.[...] In its answer, as both affirmative defenses and counterclaims, Ericsson alleged that, by filing the Texas action, Wi-LAN breached the Non-Assert and MFL Provisions of the PCRA. [...] On June 4, 2013, the Texas court granted Wi-LAN's motion for partial summary judgement, finding that Wi-LAN did not breach the Non-Assert and MFL Provisions in the PCRA.
Id. at *7-8.
Florida CaseOn October 1, 2012--two years after Wi-LAN filed the Texas complaint and while the Texas litigation was still ongoing--Wi-LAN sued Ericsson in the Florida court, alleging infringement of three different patents ("the Florida Patents"). [...] Again, the patents in suit were patents which issued after the effective date of the PCRA. As it did in the Texas action, Ericsson asserted affirmative defenses and counterclaims based on the Non-Assert and MFL provisions of the PCRA. On June 20, 2013--two weeks after the Texas court addressed the PCRA in its summary judgment order--the Florida court granted summary judgement in favor of Ericsson, findingt that, because Ericsson was entitled to, and was willing to accept, a most-favored license pursuant to the MFL Provision of the PCRA, the controversy between Wi-LAN and Ericsson was moot.
Id. at *9-10.
Summary Judgement StandardSummary judgement is appropriate if the movant "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."
Id. at *11.
Analysis: Two Provisions
Two Provisions to Interpret and StandardThis appeal requires us to interpret two provisions of the PCRA: the Non-Assert Provision and the MFL Provision. [...] When an agreement is unambiguous on its face, it must be enforced according to the plain meaning of its terms. [...] We may not, however, consider any extrinsic evidence as to the parties' intentions if the agreement is unambiguous.
Wi-LAN USA, Inc., at *11.
The Covenant Not to SueThe PCRA, when read as a whole, evidences the parties' clear intent to restrict the Non-Assert Provision to the four identified Wi-LAN Patents. [...] The rest of the Non-Assert Provision further supports the intent to limit the Non-Assert Provision to the four WiLAN patents by referring to only those patents. [...] We therefore conclude that the Texas court correctly interpreted the Non-Assert Provision as providing a covenant not to sue which is limited to the four Wi-LAN Patents only.
Id. at *13-14.
The Most-Favored Licensee Provision[I]t is clear the parties intended the MFL Provision to only cover patents Wi-LAN owned or controlled as of the effective date of the PCRA. The MFL Provision uses the present tense to refer to patents that "WI-LAN owns or controls." [...] This interpretation finds further support in other sections of the contract that explicitly account for later acquired patents. The fact that the PCRA uses specific terms to denote coverage of later acquired patents in some provisions implies the exclusion of later acquired patents when those terms are not used. We therefore conclude that, based on the language of the PCRA as a whole, the MFL Provision only applies to Wi-LAN's patents owned or controlled as of the effective date of the PCRA[.]
Id. at *16-17.
Texas CourtFor the foregoing reasons, we affirm the judgment of the United States District Court for the Eastern District of Texas, No. 10-CV-0521. Affirmed.
Wi-LAN USA, Inc., at *17.
Florida CourtAs to the judgment of the United States District Court for the Sourthern District of FLorida, No. 12-CV-23569, we reverse and remand for proceeedings consistent with this decision. Reversed and Remanded.
Id. at *17.
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