Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-15-01235/USCOURTS-ca13-15-01235-0/pdf.json

Parties Involved:
Alcatel-Lucent USA Inc.
Not party
Ericsson, Inc.
Appellee
High Point SARL
Appellant
Nokia Solutions and Networks US LLC
Appellee
T-Mobile USA, Inc.
Appellee

Document Text:

NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit ______________________ 

 

HIGH POINT SARL,

Plaintiff-Appellant

v.

T-MOBILE USA, INC., ERICSSON, INC., NOKIA 

SOLUTIONS AND NETWORKS US LLC,

Defendants-Appellees

______________________ 

2015-1235

______________________ 

Appeal from the United States District Court for the 

District of New Jersey in No. 1:12-cv-01453-JEI-AMD, 

Judge Joseph E. Irenas.

______________________ 

Decided: February 18, 2016 

______________________ 

 MARTIN J. BLACK, Dechert LLP, Philadelphia, PA, 

argued for plaintiff-appellant. Also represented by DEREK 

J. BRADER; ROBERT RHOAD, Princeton, NJ.

 ASIM BHANSALI, Keker & Van Nest, LLP, San Francisco, CA, argued for defendant-appellee T-Mobile USA, 

Inc. Also represented by DAN L. BAGATELL, Perkins Coie

LLP, Phoenix, AZ; RYAN J. MCBRAYER, CHRISTINA JORDAN 

MCCULLOUGH, Seattle, WA.

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2 HIGH POINT SARL v. T-MOBILE USA, INC. 

 WILLIAM L. MENTLIK, Lerner, David, Littenberg, 

Krumholz & Mentlik LLP, Westfield, NJ, argued for 

defendant-appellee Ericsson, Inc. Also represented by 

JONATHAN A. DAVID, ROBERT BENJAMIN HANDER, ROY 

HENRY WEPNER. 

 ADAM CONRAD, King & Spalding LLP, Charlotte, NC, 

argued for defendant-appellee Nokia Solutions and Networks US LLC. Also represented by DARYL JOSEFFER, 

Washington, DC; ALLISON H. ALTERSOHN, CHRISTOPHER 

CARNAVAL, ROBERT FRANCIS PERRY, New York, NY.

______________________ 

Before REYNA, MAYER, and CHEN, Circuit Judges.

PER CURIAM. 

High Point SARL (“High Point”) appeals the final 

judgment of the United States District Court for the 

District of New Jersey holding that its patent rights were 

exhausted by the authorized sales of telecommunications 

infrastructure equipment substantially embodying the 

asserted claims of U.S. Patent Nos. 5,195,090 (the “’090 

patent”), 5,195,091 (the “’091 patent”), 5,305,308 (the 

“’308 patent”), and 5,184,347 (the “’347 patent”). See High 

Point SARL v. T-Mobile USA, Inc., 53 F. Supp. 3d 797 

(D.N.J. 2014) (“District Court Decision”). We affirm.

I. BACKGROUND

A. The Asserted Patents

The asserted patents relate to the transmission of 

packetized cellular telephone traffic within the terrestrial 

portion of a wireless telecommunications system. These 

patents were originally owned by AT&T Corp. (“AT&T”), 

but AT&T assigned them to its spin-off company, Lucent 

Technologies Inc. (“Lucent”) in 1996. See id. at 800. 

Avaya Technology Corporation (“Avaya”) acquired the 

asserted patents from Lucent in 2000. High Point, a 

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HIGH POINT SARL v. T-MOBILE USA, INC. 3

Luxembourg-based entity, purchased these patents from 

Avaya in 2008. Id. at 800 n.1. At issue in this appeal is 

the scope of a series of licenses and sublicenses to make 

and sell products practicing the claimed technology.

B. The Alcatel Cross-License

In 1996, AT&T granted a nonexclusive license to a 

portfolio of patents—including the asserted patents—to 

Alcatel Alsthom Compagnie Generale d’Electricite S.A. 

(“Alcatel”). Joint Appendix (“J.A.”) 5394–5405. The 

license agreement automatically extended sublicenses to 

current and future subsidiaries of both AT&T and Alcatel. 

J.A. 5396; see District Court Decision, 53 F. Supp. 3d at 

801. The agreement only extended, however, to “products 

and services of the kinds which [were] furnished or used” 

by AT&T and Alcatel, or their related companies, on the 

effective date of the agreement. J.A. 5395.

In 2006, following a reverse triangular merger, Lucent and Alcatel combined to form Alcatel-Lucent, S.A. 

(“Alcatel-Lucent”). Alcatel USA Marketing Inc. (“Alcatel 

Marketing”) was a subsidiary of Alcatel. See District 

Court Decision, 53 F. Supp. 3d at 801. In 2008, Alcatel 

Marketing merged with an Alcatel-Lucent subsidiary to 

form Alcatel-Lucent USA Inc. (“Alcatel U.S.”). 

C. The Siemens Cross-License

In 1988, AT&T entered into a non-exclusive patent 

cross-licensing agreement with Siemens AG (“Siemens”). 

In 1995, AT&T announced that it was planning to undergo a major corporate restructuring and that it would split 

its business into three separate legal entities. J.A. 4881. 

AT&T wanted to ensure that these three new entities—

and those entities’ own future divested businesses—would 

have the same licenses and rights that AT&T itself possessed under its 1988 cross-license with Siemens. J.A. 

4881. AT&T was willing to grant reciprocal rights to any 

future businesses divested by Siemens. J.A. 4881. AcCase: 15-1235 Document: 81-2 Page: 3 Filed: 02/18/2016
4 HIGH POINT SARL v. T-MOBILE USA, INC. 

cordingly, in November 1995 AT&T and Siemens executed 

a divestment rider which provided that:

[I]n the future, if [Siemens] or any of the three 

[AT&T divested] entities divest[] a portion of its 

present business, the licenses and rights granted 

in the [1988 cross-license between Siemens and 

AT&T] may be sublicensed to the divested business by the divesting company. Such sublicenses 

may be granted and retained only while the future 

divested business operates as a separately identifiable business and only to the extent applicable to 

products and services sold by the future divested 

business prior to its divestiture. J.A. 4881.

On April 1, 2007, Siemens divested its carrier division 

and formed a new joint venture entity, Nokia Siemens 

Networks B.V., with a networks business divested from 

Nokia Inc. (“Nokia”). J.A. 6231–33. Nokia Siemens 

Networks B.V. “was a distinct operational group with its 

own board of directors, governance, and organization.” 

J.A. 6235. In 2009, Siemens granted Nokia Siemens 

Networks B.V. a sublicense in the asserted patents. J.A. 

5305–11. This sublicense was made retroactive to April 1, 

2007. J.A. 5308. In 2011, Nokia Siemens Networks B.V. 

granted a retroactive sublicense in the asserted patents to 

its U.S. subsidiary, Nokia Siemens Networks US LLC 

(“Nokia Siemens Networks U.S.”).1 J.A. 5356–59.

D. The LM Ericsson Cross-License

In 1996, Lucent entered into a cross-licensing agreement with Telefonaktiebolaget LM Ericsson (“LM Ericsson”). That agreement, which covered the asserted 

patents, afforded LM Ericsson the right to grant subli-

 

1 In August 2013, Nokia Siemens Networks U.S. 

changed its name to Nokia Solutions and Networks US 

LLC. J.A. 1096.

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HIGH POINT SARL v. T-MOBILE USA, INC. 5

censes to its subsidiaries and other “related companies.” 

J.A. 1781. It also specifically provided that such sublicenses could “be made effective retroactively.” J.A. 1781.

In January 2013, LM Ericsson granted its U.S. subsidiary, Ericsson Inc. (“Ericsson U.S.”), a nunc pro tunc

sublicense to the patents-in-suit. This sublicense was 

made retroactive to January 1, 2002. 

E. The District Court Litigation

On March 8, 2012, High Point filed an infringement 

suit against T-Mobile USA, Inc. (“T-Mobile”), a wireless 

network communications services provider. According to 

High Point, T-Mobile used transmission technology disclosed in the ’090, ’091, ’308, and ’347 patents to transfer 

voice packets within its network. In response, T-Mobile 

sought declaratory judgments that High Point’s patents 

were invalid and not infringed. J.A. 880–92. In May 

2013, the district court permitted Nokia Siemens Networks U.S. and Ericsson U.S., two of T-Mobile’s suppliers, 

to intervene in the suit as defendants. J.A. 451–56.

Before the district court, High Point asserted that TMobile’s assembly and use of its third generation cellular 

wireless network (the “3G network”) infringed claims of 

each of the asserted patents. High Point’s infringement 

contentions focused on three principal pieces of equipment 

in T-Mobile’s 3G network: (1) the Node B (sometimes 

referred to as a “radio base station”); (2) the radio network 

controller (“RNC”); and (3) the media gateway (“MGW”). 

As High Point explains, Node Bs “are used to convey 

digital traffic ‘over the air’ to and from mobile users in a 

geographic area near the Node B.” Br. of PlaintiffAppellant at 12; see J.A. 6298. Each Node B communicates with—and is connected to—an RNC via transmission media and interconnect equipment. J.A. 6298. An 

RNC controls and processes voice traffic sent to and 

received from the Node Bs. J.A. 6298, 7125–26. MGWs 

connect the cellular voice network to the conventional 

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6 HIGH POINT SARL v. T-MOBILE USA, INC. 

Public Switched Telephone Network. J.A. 6074, 6296–98. 

MGWs typically communicate with multiple Node Bs 

through one or more RNCs. J.A. 2734–35, 6074. 

T-Mobile purchased MGWs from Alcatel U.S. and its 

predecessor, Alcatel Marketing (collectively “Alcatel 

Marketing U.S.”). It purchased Node Bs and RNCs from 

Nokia Siemens Networks U.S., and Node Bs, RNCs, and 

MGWs from Ericsson U.S. See District Court Decision, 53 

F. Supp. 3d at 805 n.10.

In February 2014, T-Mobile and Nokia Siemens Networks U.S. filed a combined motion for summary judgment, arguing that “High Point’s patent rights [were] 

exhausted by the sale of licensed articles that substantially embod[ied] the asserted claims of High Point’s asserted 

patents.” J.A. 2721. Ericsson U.S. filed a separate summary judgment motion in which it contended that its 

sales of equipment to T-Mobile were fully authorized by 

the sublicense it obtained from LM Ericsson. J.A. 1178–

98. Ericsson U.S. further contended that any infringement claim against T-Mobile based on T-Mobile’s use of 

equipment supplied by Ericsson U.S. was barred by 

exhaustion. J.A. 1212.

On October 15, 2014, the district court granted both 

summary judgment motions. In the court’s view, the 

doctrine of patent exhaustion barred all of High Point’s 

infringement claims because the accused products were 

sold under valid licenses and sublicenses. See District 

Court Decision, 53 F. Supp. 3d at 810. The court rejected 

High Point’s argument that the 1996 cross-licensing 

agreement between AT&T and Alcatel did not extend to 

Alcatel Marketing U.S. Id. at 807. It further held that 

the MGWs Alcatel Marketing U.S. sold to T-Mobile were 

licensed products, explaining that MGWs were the same 

“kind” of product that Alcatel sold at the time of its 1996 

cross-licensing agreement with AT&T. Id. at 807.

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HIGH POINT SARL v. T-MOBILE USA, INC. 7

The trial court also concluded that the sales of equipment by Nokia Siemens Networks U.S. to T-Mobile were 

authorized by the divestment rider which AT&T and 

Siemens executed in November 1995. Id. at 808. Although High Point argued that no license rights could be 

conveyed to Nokia Siemens Networks B.V., the parent 

company of Nokia Siemens Networks U.S., because it 

never operated as a “separately identifiable business,” the 

court rejected this contention, stating that “[t]he plain 

language of the [1995 divestment] rider indicates that [a] 

divested business need only operate separately from 

Siemens.” Id. The court likewise found no merit in High 

Point’s assertion that the 1988 cross-licensing agreement 

between AT&T and Siemens only authorized the sale of 

the particular product models that Siemens had sold prior 

to the time it divested its carrier division. Id. at 808 n.13.

In addition, the district court held that Ericsson U.S. 

had sold equipment to T-Mobile under a valid sublicense 

from LM Ericsson. Id. at 804–05. In the court’s view, the 

1996 cross-licensing agreement between Lucent and LM 

Ericsson placed no time limits on when sublicenses could 

be granted. Id. at 805. Finally, the district court held 

that licensed equipment sold by T-Mobile’s suppliers 

substantially embodied all of the asserted claims. Id. at 

809–10. The court rejected High Point’s argument that

“exhaustion only applies if each ‘individual component’ of 

T-Mobile’s accused network substantially embodie[d] each 

patent claim at issue,” concluding that such an approach 

“would severely undercut, if not eviscerate, the doctrine of 

patent exhaustion.” Id. at 810.

After the parties stipulated to the entry of final judgment, J.A. 36, High Point filed a timely appeal with this 

court. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

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8 HIGH POINT SARL v. T-MOBILE USA, INC. 

II. DISCUSSION

A. The Patent Exhaustion Doctrine

“The longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item 

terminates all patent rights to that item.” Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617, 625 (2008). 

Exhaustion is a judicial construct grounded on “the theory 

that an unconditional sale of a patented device exhausts 

the patentee’s right to control the purchaser’s use of that 

item thereafter because the patentee has bargained for 

and received full value for the goods.” Keurig, Inc. v. 

Sturm Foods, Inc., 732 F.3d 1370, 1373 (Fed. Cir. 2013); 

see Adams v. Burke, 84 U.S. (17 Wall.) 453, 455 (1873) 

(“We have repeatedly held that where a person had purchased a patented machine of the patentee or his assignee, this purchase carried with it the right to the use of 

that machine so long as it was capable of use.”). It can be 

invoked as an affirmative defense to an infringement 

claim, “and like other issues in which there are no disputed factual questions, may be properly decided by summary judgment.” Keurig, 732 F.3d at 1373.

On appeal, High Point challenges the district court’s 

exhaustion determination on several fronts. It asserts 

that sales of the accused infrastructure equipment were 

unauthorized because: (1) the MGWs T-Mobile purchased 

from Alcatel Marketing U.S. were not licensed because 

they were not the same “kind” of product that Alcatel sold 

when it entered into its 1996 cross-licensing agreement 

with AT&T; (2) the Node Bs and RNCs T-Mobile purchased from Nokia Siemens Networks U.S. were not 

licensed products because the carrier division that Siemens divested in 2007 did not remain a “separately 

identifiable business”; and (3) LM Ericsson could not 

convey a retroactive sublicense to Ericsson U.S. because 

its right to grant sublicenses expired in 2011. High Point 

further contends that exhaustion does not apply because 

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HIGH POINT SARL v. T-MOBILE USA, INC. 9

the articles sold under the purported licenses and sublicenses did not “substantially embody each and every 

invention claimed in the patents-in-suit.” Br. of PlaintiffAppellant at 44. We address each of these arguments in 

turn.

B. Sales by Alcatel U.S.

The 1996 cross-licensing agreement between AT&T 

and Alcatel covered “any or all products and services of 

the kinds” which the parties used or sold on the effective 

date of the agreement. J.A. 5395. In High Point’s view, 

the MGWs sold by Alcatel Marketing U.S. to T-Mobile 

were not licensed products because Alcatel was not “in the 

business of selling MGWs in January 1996.” Br. of Plaintiff-Appellant at 41. In support, it argues that the MGWs 

Alcatel Marketing U.S. sold to T-Mobile were not original 

Alcatel products, but were instead manufactured by 

Spatial Communications Technologies Inc., a company 

acquired by Alcatel in 2004.

We do not find this argument convincing. The crosslicensing agreement between AT&T and Alcatel speaks in 

exceptionally broad terms, covering “any or all products

. . . of the kinds” sold by Alcatel in 1996. J.A. 5395. There 

is no dispute that Alcatel sold switching systems in 1996. 

Its 1996 Annual Report stated that it manufactured and 

marketed “complete telecommunications systems,” and 

that its global business included “public switching networks” and “mobile communications infrastructure.” J.A. 

5433. That report further noted that Alcatel manufactured “switching systems” compliant with worldwide 

technical standards as well as with both current and 

emerging U.S. technical standards. J.A. 5428. Because 

Alcatel indisputably sold switching systems in 1996 and 

MGWs are integral switching system components, they 

are products “of the kind[]” that Alcatel sold on the effecCase: 15-1235 Document: 81-2 Page: 9 Filed: 02/18/2016
10 HIGH POINT SARL v. T-MOBILE USA, INC. 

tive date of its cross-licensing agreement with AT&T.2 

See District Court Decision, 53 F. Supp. 3d at 807 (“High 

Point does not dispute that Alcatel sold ‘switching systems’ in 1996, and that MGWs are a type of switching 

system.”). Indeed, before the district court High Point 

argued that the accused MGWs met switching system 

limitations in the patents-in-suit. See, e.g., J.A. 6310. 

In Rembrandt Data Techs., LP v. AOL, LLC, 641 F.3d 

1331, 1338 (Fed. Cir. 2011), we construed a licensing 

provision very similar to the one at issue here. There the 

license in question extended to “products and services sold 

by [a] future divested business prior to its divestiture,” 

and the patent holder argued that this language covered 

only the specific product models that were sold by the 

divested business before it was divested. Id. at 1338 

(citations and internal quotation marks omitted). We 

rejected this argument, however, concluding that because 

the licensing agreement “specif[ied] product types using 

general, functional terms,” it was not limited to the particular products sold at the time of the divestiture. Id. 

We explained that the term “products” covered “modems 

generally, not specifically the exact types of modems in 

production at the time of the . . . divestiture.” Id. (citations and internal quotation marks omitted).

Here, the language of the licensing provision is even 

broader—covering not only “products and services,” id.,

but “any or all products and services of the kinds” sold on 

 

2 In its infringement contentions, High Point identified MGWs as integral switching system components. 

See, e.g., J.A. 5859 (“The T-Mobile Network includes a 

plurality of switching systems . . . . T-Mobile’s switching 

systems comprise one or more of the following components, either alone or in combination with one or more 

other such components: RNCs, MGWs, [Mobile Switching 

Centers] and/or components thereof.”).

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HIGH POINT SARL v. T-MOBILE USA, INC. 11

the date of the parties’ cross-licensing agreement, J.A. 

5395 (emphasis added); see District Court Decision, 53 F. 

Supp. 3d at 807 (stating that it was “difficult to hypothesize a broader grant of a license” than the 1996 license 

AT&T granted to Alcatel). Although High Point argues 

on appeal that the 1996 cross-licensing agreement was 

intended to extend only to those future products which 

had the “same features or functionality” as products sold 

in 1996, Reply Br. of Plaintiff-Appellant at 15, it fails to 

identify anything in the text of the agreement or in the 

course of the parties’ licensing negotiations to support this 

contention. To the contrary, given that the expansive 

cross-licensing agreement between AT&T and Alcatel was 

executed at a time of rapid technological evolution, we do 

not think that the parties intended to protect only those 

products that had the “same features or functionality” as 

those sold in 1996. Instead, the provision in the crosslicensing agreement identifying protected products uses

“general, functional terms,” Rembrandt, 641 F.3d at 1338, 

to cover not just the particular components sold in 1996 

but any products of the same type or “kind.”

C. Sales by Nokia Siemens Networks U.S.

In 1995, AT&T decided to split its business into three 

separate legal entities: (1) an equipment company; (2) a 

services company; and (3) a global information solutions 

provider. J.A. 4881. AT&T wanted to ensure that its 

existing patent rights were transferred to its three successor businesses. See NXP Semiconductors USA, Inc. v. 

LSI Corp., No. C08-00775 JW, 2009 WL 1507333, at *2 

(N.D. Cal. May 27, 2009) (explaining that “AT&T attempted to obtain consent from [its] licensors . . . to sublicense AT&T’s existing patent license rights to the three 

new AT&T entities”). Accordingly, it drafted a divestment 

rider to its 1988 cross-license with Siemens which provided that its three new businesses would retain the “licenses and rights” that AT&T itself possessed under that 

cross-license. J.A. 4881. Siemens was granted a correCase: 15-1235 Document: 81-2 Page: 11 Filed: 02/18/2016
12 HIGH POINT SARL v. T-MOBILE USA, INC. 

sponding right to “retain the licenses and rights” that it 

possessed under the parties’ cross-license. J.A. 4881. In 

addition, the divestment rider provided that if Siemens, 

or any of the three new AT&T entities, divested any 

“portion” of their businesses, the rights in the 1988 crosslicense could be sublicensed to the future divested business. J.A. 4881. The divestment rider stipulated, however, that such sublicenses could “be granted and retained 

only while the future divested business operate[d] as a 

separately identifiable business and only to the extent 

applicable to products and services sold by the future 

divested business prior to its divestiture.” J.A. 4881.

High Point contends that Siemens could not sublicense Nokia Siemens Networks B.V. because it did not 

qualify as a “separately identifiable business” under the 

terms of the 1995 divestment rider. We disagree. Nokia 

Siemens Networks B.V. was created in 2007 as a joint 

venture between a carrier division divested from Siemens 

and a networks business divested from Nokia. It was 

incorporated in the Netherlands as a private limited 

liability company. J.A. 5305. Nokia Siemens Networks 

B.V. was a separately operating company with its own 

board of directors and management structure. J.A. 6235. 

According to public documents from the relevant period, it 

began “independent operations” on April 1, 2007, and was 

afforded “autonomy to carry on its business independently” of either Siemens or Nokia. Because Nokia Siemens 

Networks B.V. operated as a legal entity separate from 

any other company, including Siemens and Nokia, it 

operated as a “separately identifiable business.”

High Point asserts that to qualify as a separately 

identifiable business under the 1995 divestment rider, the 

carrier division that Siemens divested in 2007 had to 

operate separately not just from Nokia and Siemens, but 

from any third-party entity as well. In effect, High Point 

argues that the separately identifiable business limitation 

includes an unwritten, implicit prohibition against a 

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HIGH POINT SARL v. T-MOBILE USA, INC. 13

divested division operating as part of a joint venture with 

any third-party entity.

This argument fails for four reasons. First, AT&T 

was a large and sophisticated conglomerate, and if it had 

intended to prohibit a Siemens divested division from 

entering into a joint venture relationship with a thirdparty entity, it could have done so explicitly. Indeed, in 

November 1995—the same month that it executed the 

Siemens’ divestment rider—AT&T entered into a divestiture agreement with N.V. Philips’ Gloeilampenfabrieken, 

U.S. Philips Corporation, and North American Philips 

Corporation (collectively “Philips”) which explicitly precluded a divested business from extending sublicense 

rights to a third-party entity. That agreement provided 

that the rights granted in the original license agreement 

between AT&T and Philips could be sublicensed:

to any future divested present business of Philips 

or of the three [AT&T] entities by the divesting 

company. Such sublicenses may be granted and 

retained only while the future divested business 

operates as a separately identifiable business and 

not for an existing or other acquired business of a 

third party acquiring the future divested business

and only to the extent applicable to those products 

and services sold by the future divested business 

which are substantially similar to products and 

services sold by it prior to its divestiture.

NXP Semiconductors, 2009 WL 1507333, at *2 (emphasis 

added).

Thus, in its divestiture agreement with Philips, AT&T 

explicitly provided that sublicenses could not be extended 

or retained in situations in which a third-party entity 

acquired a divested business. In marked contrast, however, AT&T included no such provision regarding thirdparty entities in its divestiture agreement with Siemens. 

Nor did AT&T include any provision specifying any parCase: 15-1235 Document: 81-2 Page: 13 Filed: 02/18/2016
14 HIGH POINT SARL v. T-MOBILE USA, INC. 

ticular corporate structure or form for a future divested 

business or any prohibition precluding a divested division 

from entering into a joint venture relationship. We decline, therefore, to substantively redraft the divestiture 

agreement between AT&T and Siemens to include such a 

prohibition.3 See Storage Tech. Corp. v. Custom Hardware Eng’g & Consulting, Inc., 421 F.3d 1307, 1317 (Fed. 

Cir. 2005) (concluding that license protection extended to 

third parties where the licensor “could have drafted the 

license agreement to explicitly disallow” third-party 

rights but failed to do so).

Second, “[i]n the case of contracts, the avowed purpose 

and primary function of the court is the ascertainment of 

the intention of the parties.” Alvin Ltd. v. U.S. Postal 

Serv., 816 F.2d 1562, 1565 (Fed. Cir. 1987) (citations and 

internal quotation marks omitted); see United States v. 

Winstar Corp., 518 U.S. 839, 911 (1996) (Breyer, J., 

concurring) (emphasizing that “[u]nder ordinary principles of contract law,” a court is bound to construe a contract “in terms of the parties’ intent, as revealed by 

language and circumstance”). Here, the circumstances 

surrounding the drafting of the 1995 divestment rider 

strongly suggest that it was intended to grant broad 

license protection to the parties’ future divested businesses. Significantly, the divestment rider was drafted by 

AT&T in preparation for its planned “trivestiture” of 

three separate businesses. See J.A. 4881. Given that 

AT&T itself was planning major divestments at the time 

it prepared and executed the 1995 divestment rider, it is 

only logical to assume that the rider was intended to 

 

3 At trial, counsel for T-Mobile explained that 

AT&T “could have put additional restrictions” in the 1995 

divestment rider, but likely chose not to do so because it 

wanted to get the “reciprocal benefit[s]” from that divestment rider. J.A. 7507. 

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HIGH POINT SARL v. T-MOBILE USA, INC. 15

facilitate, rather than to impede, AT&T’s complex restructuring efforts and to broadly shelter its future divested 

businesses from infringement liability going forward. 

Nothing in the divestiture agreement explicitly precludes 

a joint venture from receiving sublicense rights as a 

divested business, and High Point is unable to point to 

anything in the record indicating that the parties had any 

desire or incentive to curtail the rights of future divested 

businesses to enter into joint venture relationships with 

third-party entities.

Furthermore, while High Point challenges the district 

court’s interpretation of the “separately identifiable 

business” limitation, it offers no reasonable alternative 

interpretation of that provision. High Point argues, 

without meaningful support, that the “self-evident purpose of the ‘separately identifiable [business]’ provision 

[was] to ensure that [a] divestment [did] not expand the 

scope of the original license to cover the products of unlicensed third parties.” Reply Br. of Plaintiff-Appellant at 

5. Even under High Point’s proffered interpretation of the 

“separately identifiable business” limitation, however, 

“products of unlicensed third parties” are afforded license 

protection. For example, Siemens could have divested its 

carrier division and that division could have then acquired Nokia’s infrastructure equipment product lines.4 

 

4 Significantly, there is nothing to suggest that the 

joint venture between the divisions divested from Siemens and Nokia was a sham—lacking economic substance 

and entered into for the purpose of extending licensing 

protections to Nokia products. To the contrary, as a 2007 

press release makes clear, Nokia Siemens Networks B.V. 

was a “50:50 joint venture” intended “to create an industry leader that [would] meet the needs of customers in the 

converging telecommunications industry.” J.A. 5333. The 

new company was designed “to serve customers with a 

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16 HIGH POINT SARL v. T-MOBILE USA, INC. 

In that scenario, the divested division would presumably 

remain a “separately identifiable business” notwithstanding the fact that it was selling Nokia product lines. We 

see nothing in the record suggesting that an entity qualifies as a “separately identifiable business” only if it does 

not sell third-party products. Indeed, it is highly unlikely 

that AT&T would have advocated for a divestiture agreement which imposed such restrictions on its own future 

divested divisions by prohibiting them from selling thirdparty product lines. Instead, while the 1995 divestment 

rider contains a significant limitation on the products that 

can be sold by a divested business—those products must 

be of the same “kind” that the divested business sold prior 

to its divestiture—it contains no preclusion of a divested 

business selling third-party product lines.5

Third, although High Point argues that Siemens could 

not validly sublicense Nokia Siemens Networks B.V. 

because it was not the “divested business,” this argument 

proceeds from a misapprehension of the chronology of 

events leading to the formation of Nokia Siemens Networks B.V. Significantly, Siemens divested its carrier 

division directly into Nokia Siemens Networks B.V. 

 

best-in-class portfolio” that “combined input of experts 

from Nokia and Siemens” and “harmonize[d] platforms to 

ensure cost-efficiency in ever-toughening markets.” J.A. 

5333.

5 As the district court correctly concluded, the 

equipment sold to T-Mobile by Nokia Siemens Networks 

B.V. was the same “kind” of equipment that Siemens sold 

prior to the divestiture of its carrier division. See District 

Court Decision, 53 F. Supp. 3d at 809 n.13 (explaining 

that “Siemens was selling wireless infrastructure equipment (of which RNCs and Node Bs are a later generation 

type) long before the divestment of Siemens’ carrier 

division”).

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HIGH POINT SARL v. T-MOBILE USA, INC. 17

Nokia Siemens Networks B.V. was thus created as the 

intended consequence of the Siemens divestment. See

J.A. 6390–97. If Siemens wanted to provide licensing 

protection to its divested carrier division, the only entity 

that it could possibly sublicense was Nokia Siemens 

Networks B.V. To conclude that Siemens had no authority to sublicense Nokia Siemens Networks B.V. would be to 

eviscerate the provision in the 1995 divestment rider 

providing Siemens with explicit authority to sublicense 

any “portion” of its business it chose to divest. J.A. 4881. 

Fourth, High Point provides no explanation as to why, 

from a business perspective, it would have mattered to 

AT&T whether the Siemens carrier division and the 

Nokia networks business were joined together in a single 

step rather than in multiple steps. Siemens could have 

simply divested its carrier division as a stand-alone 

business and then granted that business a sublicense. In 

that situation, nothing in the 1995 divestment rider 

suggests that the divested company would have forfeited 

its sublicense rights if it subsequently purchased Nokia’s 

networks business and adopted “Nokia Siemens Networks 

B.V.” as its new name. High Point offers no plausible

basis for construing the “separately identifiable business” 

limitation in the divestment rider to preclude Siemens 

from sublicensing Nokia Siemens Networks B.V. simply 

because the two divested divisions were combined at the 

outset rather than sequentially. 

Furthermore, while High Point complains that the 

Siemens carrier division did not remain “separately 

identifiable” within Nokia Siemens Networks B.V., it fails 

to explain why this is dispositive. For example, suppose 

the carrier division divested from Siemens had simply 

acquired the networks division divested from Nokia and 

then combined the two divisions’ assets and operations. 

In that scenario, the resulting business would presumably 

qualify as a “separately identifiable business,” notwithstanding the fact that the former Siemens division was 

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18 HIGH POINT SARL v. T-MOBILE USA, INC. 

integrated with the former Nokia division. Alternatively, 

Siemens could have divested two of its own divisions into 

a new stand-alone entity, merging the two divested divisions’ assets and operations. In that situation, High 

Point’s unsupported interpretation of the separately 

identifiable business limitation would presumably mean 

that neither divested division could be sublicensed under 

the terms of the 1995 divestment rider because neither 

division would be “separately identifiable” from the other 

division.

D. Sales by Ericsson U.S.

High Point also contends that the sales of Node Bs, 

RNCs, and MGWs to T-Mobile by Ericsson U.S. were 

unauthorized. It does not dispute that section 1.03(c) of 

the cross-licensing agreement between Lucent and LM 

Ericsson granted both parties the right to convey sublicenses to their subsidiaries. See J.A. 1781, 1793–94. Nor 

does it dispute that such sublicenses could be granted 

retroactively. See J.A. 1781. High Point contends, however, that the sublicense that LM Ericsson granted to its 

subsidiary, Ericsson U.S., was invalid because it was 

conveyed in January 2013, see J.A. 1797–99, and the 

terms of the asserted patents expired in July 2011.

We do not find this argument persuasive. The 1996 

cross-licensing agreement between Lucent and LM Ericsson did not have a termination date. Furthermore, no 

provision in that agreement imposed any timing constraint on when LM Ericsson could convey sublicenses to 

its subsidiaries. To the contrary, section 1.03(c) of the 

agreement specifically provides that any sublicense LM 

Ericsson conveyed to a subsidiary could “be made effective 

retroactively.” J.A. 1781.

In arguing that LM Ericsson had no right to grant 

retroactive sublicenses to its subsidiaries after the asserted patents expired in 2011, High Point relies primarily on 

section 1.02 of the cross-license, which provides that “[a]ll 

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HIGH POINT SARL v. T-MOBILE USA, INC. 19

licenses granted herein under any patent shall . . . continue for the entire unexpired term of such patent.” J.A. 

1781. Section 1.02, however, was plainly designed to 

shield a licensee, offering it immunity from infringement 

claims throughout the life of the licensed patents. High 

Point’s proposed approach would twist section 1.02 like a 

pretzel, turning a provision intended to protect a licensee 

from infringement liability throughout the full terms of 

the licensed patents into a restriction on the licensee’s 

explicit right, granted by section 1.03(c), to grant retroactive sublicenses to its subsidiaries. Contrary to High 

Point’s assertions, there is nothing in section 1.02 to 

suggest that its timing provisions have any applicability 

to the sublicensing provisions of section 1.03(c). Indeed, 

section 1.02 does not mention retroactive sublicensing 

rights or refer in any way to section 1.03(c). See J.A. 

1781.

Accepting High Point’s contention that LM Ericsson’s 

ability to grant sublicenses to its subsidiaries expired in 

July 2011 would lead to anomalous and inequitable 

results. In High Point’s view, LM Ericsson had the right 

to sublicense the asserted patents to Ericsson U.S. until 

July 8, 2011, when the asserted patents expired, but 

forfeited that right the very next day. Such an approach 

would leave Ericsson U.S. vulnerable to infringement 

liability for up to six years after the patents’ expiration 

date for sales occurring prior to that date. See 35 U.S.C. 

§ 286 (“[N]o recovery shall be had for any infringement 

committed more than six years prior to the filing of the 

complaint or counterclaim for infringement in the action.”). We do not think that LM Ericsson would have 

bargained for and obtained a cross-license which broadly 

granted it the right to convey retroactive sublicenses to its 

subsidiaries while at the same time agreeing to an implicit timing restriction which would have the effect of leaving those subsidiaries vulnerable to infringement liability 

for six years after the licensed patents expired. As TCase: 15-1235 Document: 81-2 Page: 19 Filed: 02/18/2016
20 HIGH POINT SARL v. T-MOBILE USA, INC. 

Mobile correctly notes, High Point’s interpretation of 

section 1.03(c) “would have the perverse effect of encouraging delay in filing suit and providing more compensation [to the patent holder] after patent expiration than 

before.” Br. of Defendants-Appellees at 47. 

In Kimble v. Marvel Entertainment, LLC, the Supreme Court confirmed that a patent holder has no right 

to exact royalties for sales occurring after a patent’s 

expiration date.6 135 S. Ct. 2401, 2407 (2015) (“[W]hen 

the patent expires, the patentee’s prerogatives expire too, 

and the right to make or use the article, free from all 

restriction, passes to the public.”). Significantly, however, 

the Court also made clear that although a patent holder is 

barred from obtaining royalties for post-expiration sales, 

this does not mean that all negotiated provisions in a 

licensing agreement necessarily cease to be effective after 

a licensed patent expires. Id. at 2408. As the Court 

explained, a licensing agreement could, for example, be 

structured in such a way that the licensor could continue 

to receive “payments for pre-expiration use of a patent 

into the post-expiration period.” Id. Likewise, “[a] licensee could agree . . . to pay the licensor a sum equal to 10% 

of sales during the 20-year patent term, but to amortize 

that amount over 40 years.” Id. We reject, therefore, 

High Point’s argument that LM Ericsson’s contractual 

right to grant retroactive sublicenses to its subsidiaries 

was extinguished when the licensed patents expired in 

July 2011.

We also reject High Point’s assertion that the equipment sales by Ericsson U.S. were unauthorized because it 

had not yet been granted a formal written sublicense from 

 

6 Here, although LM Ericsson did not provide Ericsson U.S. with a written sublicense until 2013, the accused 

equipment sales occurred prior to the July 2011 expiration date of the asserted patents.

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HIGH POINT SARL v. T-MOBILE USA, INC. 21

LM Ericsson at the time those sales occurred.7 “[T]he 

grant of a patent does not provide the patentee with an 

affirmative right to practice the patent but merely the 

right to exclude.” TransCore, LP v. Elec. Transaction 

Consultants Corp., 563 F.3d 1271, 1275 (Fed. Cir. 2009). 

Accordingly, “a patentee, by license or otherwise, cannot 

convey an affirmative right to practice a patented invention,” but “can only convey a freedom from suit.” Id.; see 

also U.S. Philips Corp. v. Int’l Trade Comm’n, 424 F.3d 

1179, 1189 (Fed. Cir. 2005) (explaining that a license 

“simply provides the licensee with a guarantee that it will 

not be sued for engaging in conduct that would infringe 

the patent in question”). A product sale is therefore 

“authorized” when a patent holder surrenders his right to 

exclude—via a license agreement or covenant not to sue—

and thereby immunizes the seller of that product from 

infringement liability. See TransCore, 563 F.3d at 1275 

(emphasizing that for exhaustion purposes, “authorization” turns not on how an agreement characterizes the 

rights afforded to a seller, but on whether that agreement 

ultimately shields the seller from an infringement claim); 

see also Quanta, 553 U.S. at 636 (concluding that exhaustion applied where the license agreement provided the 

licensee with the right to make and sell products “free of 

[the licensor’s] patent claims”). Here, Ericsson U.S. was 

at all times authorized to sell the accused equipment to TMobile because when the sales took place neither Lucent 

nor any of its successor entities could have sustained an 

infringement claim based on those sales. To the contrary, 

if they had attempted to bring suit, LM Ericsson had the 

unrestricted right, pursuant to section 1.03(c) of its cross-

 

7 Before the district court, Ericsson U.S. argued 

that although LM Ericsson did not provide it with a 

formal written sublicense until 2013, it was at all relevant 

times operating under a valid oral sublicense from its 

parent company. See J.A. 7530.

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22 HIGH POINT SARL v. T-MOBILE USA, INC. 

licensing agreement with Lucent, to immediately grant 

Ericsson U.S. a sublicense, thereby immunizing Ericsson 

U.S. from any potential infringement liability. 

E. Substantial Embodiment

Finally, we conclude that the district court correctly 

determined that licensed equipment substantially embodied all purportedly inventive elements in the asserted 

claims. See District Court Decision, 53 F. Supp. 3d at 810. 

“[M]aking a product that substantially embodies a patent 

is, for exhaustion purposes, no different from making the 

patented article itself.” Quanta, 553 U.S. at 637; see also

United States v. Univis Lens Co., 316 U.S. 241, 251 (1942) 

(emphasizing that the authorized sale of an article which 

“embodies essential features of [a] patented invention” 

terminates a patent holder’s rights in that article). When 

a patent holder authorizes the sale of a product that 

embodies a patent’s inventive elements, he forfeits the 

right to exact royalties at subsequent points along the 

product’s distribution chain. See, e.g., Univis, 316 U.S. at 

251 (emphasizing that “the patentee has received his 

reward for the use of his invention by the sale of the 

article”).

Before the district court, High Point conceded that its 

right to assert infringement of claims 28, 29, and 31 of the 

’090 patent—which describe an individual “cell” within a 

radio-telephone communications system––was exhausted 

if the sales of Node Bs by Nokia Siemens Networks U.S. 

and Ericsson U.S. were authorized. See District Court 

Decision, 53 F. Supp. 3d at 809; see also J.A. 6194 n.14 

(“High Point acknowledges that the accused Node Bs 

substantially embody the claimed inventions of [claims 

28, 29, and 31], such that the licensed sale of a Node B 

would exhaust High Point’s rights with respect to those 

patent claims.”). As to the remaining asserted claims, TMobile persuasively established that, in view of High 

Point’s own infringement contentions, the accused Node 

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HIGH POINT SARL v. T-MOBILE USA, INC. 23

Bs, RNCs, and MGWs substantially embodied every 

purportedly inventive element of the claimed inventions. 

J.A. 2724–814. Dr. Anthony Acampora, T-Mobile’s expert, 

analyzed the asserted claims on a claim-by-claim basis, 

see J.A. 6050–98, and demonstrated that, according to 

High Point’s infringement allegations, the accused Node 

Bs read on the cell-related elements in the asserted 

claims, see, e.g., J.A. 1831, 1837, 1872–73, 1883, 1889–90, 

and the accused RNCs and MGWs read on the switching 

system elements of the asserted claims, see, e.g., J.A. 

1821–29, 1891–92, 1914. 

On appeal, High Point argues that additional discovery might reveal that unlicensed routers and interconnect 

equipment in T-Mobile’s system perform inventive features of the asserted claims. High Point notes that some 

asserted claims contain limitations that require transmitting and receiving packets in statistically multiplexed 

form, and argues that unlicensed routers and interconnect 

equipment could potentially be used to perform a “novel 

application of statistical multiplexing within a cellular 

voice telephone system architecture.” Reply Br. of Plaintiff-Appellant at 26; see J.A. 6307 (declaration of High 

Point’s expert, Richard A. Chandler).

In the Third Circuit, whose law governs our summary 

judgment review, “[s]peculation and conclusory allegations” are insufficient to defeat summary judgment. 

Ridgewood Bd. of Educ. v. N.E. ex rel. M.E., 172 F.3d 238, 

252 (3d Cir. 1999); see also Matsushita Elec. Indus. Co., 

Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986) 

(emphasizing that a party seeking to avoid summary 

judgment “must do more than simply show that there is 

some metaphysical doubt as to the material facts”); Fireman’s Ins. Co. v. DuFresne, 676 F.2d 965, 969 (3d Cir. 

1982) (explaining that a party opposing a motion for 

summary judgment may not “rely merely upon bare 

assertions, conclusory allegations or suspicions”). Despite 

being given ample opportunity to conduct discovery, High 

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24 HIGH POINT SARL v. T-MOBILE USA, INC. 

Point failed to adduce any credible evidence that unlicensed routers or interconnect equipment performed any 

inventive feature of the asserted claims. “What is ‘inventive’ about patent claims in the patent exhaustion 

context is what distinguishes them from the prior art.” 

LifeScan Scotland, Ltd. v. Shasta Techs., LLC, 734 F.3d 

1361, 1369 (Fed. Cir. 2013); see also Quanta, 553 U.S. at 

633 (explaining that licensed products will substantially 

embody a patent when “the only step necessary to practice 

the patent is the application of common processes or the 

addition of standard parts”). Here, it is undisputed that 

statistical multiplexing was well-known in the art at the 

time of the claimed inventions, see, e.g., J.A. 6060-61, 

6211–14, and there is nothing in the record to even arguably suggest that unlicensed routers or interconnect 

equipment were used in the performance of any novel 

statistical multiplexing application.

III. CONCLUSION

Accordingly, the judgment of the United States District Court for the District of New Jersey is affirmed.

AFFIRMED

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