United States Court of Appeals 

for the Federal Circuit 

__________________________ 

BASELOAD ENERGY, INC., 

Plaintiff-Appellant, 

v. 

BRYAN W. ROBERTS, 

Defendant-Appellee. 

__________________________ 

2010-1053 

__________________________ 

Appeal from the United States District Court for the 

District of Columbia in case no. 08-CV-1838, Judge Paul 

L. Friedman. 

___________________________ 

Decided: September 9, 2010 

___________________________ 

JOHN M. WEYRAUCH, Dicke, Billig & Czaja, PLLC, of 

Minneapolis, Minnesota, argued for plaintiff-appellant. 

With him on the brief were PATRICK G. BILLIG and PAUL P.

KEMPF. 

WILLIAM T. BISSET, Hughes Hubbard & Reed LLP, of 

Los Angeles, California, argued for defendant-appellee. 

With him on the brief was JASON S. COHEN, of Washington, DC. 

__________________________ 
BASELOAD ENERGY v. ROBERTS 2

Before LOURIE, LINN, and DYK, Circuit Judges. 

DYK, Circuit Judge. 

Baseload Energy, Inc. (“Baseload”) sought a declaratory judgment that U.S. Patent No. 6,781,254 (“the ’254 

patent”) owned by Bryan W. Roberts (”Roberts”) was 

invalid and unenforceable. On summary judgment, the 

district court held that the terms of a 2008 Settlement 

Agreement (the “Settlement Agreement”) barred “all 

claims between the parties,” including the present action. 

See Baseload Energy, Inc. v. Roberts, 654 F. Supp. 2d 21, 

27 (D.D.C. 2009). We reverse, because we conclude that 

the language of the Settlement Agreement did not release 

either claims of infringement of the ’254 patent or the 

accompanying defenses of invalidity or unenforceability. 

BACKGROUND

This action represents the second round of litigation 

between these parties and their affiliates concerning a socalled “flying electric generator” (“FEG”). In this action, 

Baseload is the plaintiff, and Roberts is the defendant. 

The FEG is a flying wind turbine, which harvests wind 

power and transmits it through tethers to ground stations 

linked to a utility grid. The ’254 patent issued on August 

24, 2004, to Roberts. The invention of the ’254 patent 

comprises “[a] windmill kite for converting the kinetic 

energy of high altitude winds into useful work or other 

forms of energy.” ’254 patent col.7 ll.44-46. Roberts, the 

owner of the ’254 patent, founded the Sky WindPower 

Corporation (“SWPC”) to produce and market the FEG 

technology. SWPC’s president is David Shepard 

(“Shepard”), while Roberts is SWPC’s chairman. SWPC is 

the exclusive licensee of the ’254 patent pursuant to a 

written agreement dated April 15, 2008. 
3 BASELOAD ENERGY v. ROBERTS

David Resnick (“Resnick”), the founder and chief executive officer of Baseload, is a venture capitalist interested in wind energy projects. In June of 2006, Resnick 

expressed interest in a potential joint venture between 

SWPC and Baseload. Following a subsequent meeting, 

the parties allegedly entered into an oral agreement, by 

which SWPC and Roberts agreed to assign the ’254 patent 

rights to a new venture, Sky Power LLC (“Sky Power”), a 

limited liability company that would be created specifically for the venture. SWPC and Roberts would receive 

an 80% interest in Sky Power, while Resnick would have 

a 20% ownership interest and would serve as the chief 

executive officer of Sky Power. Sky Power was to raise an 

equity investment of $30 million from additional investors 

for the development of the FEG project. A written agreement memorializing the oral agreement was prepared, 

but it was never signed by the parties. Baseload, in this 

action, alleged that in reliance on Resnick’s understanding of the agreement, Resnick immediately began to 

perform under the contract, forming Sky Power LLC, 

developing a business plan, and contacting investors. 

Subsequently, the relationship between Resnick and 

Roberts broke down. On May 4, 2007, Resnick and Sky 

Power initiated litigation in the United States District 

Court for the Southern District of California against 

Roberts, SWPC, and SWPC’s president, Shepard, for 

various state law breach of contract, fraud, and promissory estoppel claims (hereinafter the “breach of contract” 

action). The complaint sought $1 million in compensatory 

damages for breach of contract, as well as an order compelling SWPC and Roberts’ performance of the terms of 

the oral agreement. Complaint at 23-24, Resnick v. 

Shepard, No. 07-CV-0813-L (S.D.C.A. May 7, 2004). The 

complaint included no allegations of patent invalidity. 
BASELOAD ENERGY v. ROBERTS 4

On March 19, 2008, the parties entered into the Settlement Agreement. The Settlement Agreement contained the following release provision, releasing claims 

that Resnick, Baseload, and Sky Power (collectively, the 

“Resnick Parties”) could have brought against Shepard, 

SWPC, and Roberts (collectively, the “SWPC Parties”): 

3. Resnick Parties’ Release. Resnick, SPLLC [Sky 

Power], BEI [Baseload], and Grenier, on behalf of 

themselves, any entity in which any of them has 

an interest and any employee, affiliate, or coowner of any such entity, and their respective 

spouses, agents, partners, members, representatives, heirs, attorneys, shareholders, officers, directors, employees, affiliates, parents, 

subsidiaries, successors and assigns (collectively, 

“Resnick Parties”), forever release and discharge 

Shepard, the Shepard estate, SWPC and Roberts, 

any entity in which any of them has an interest 

and any employee, affiliate or co-owner of such entity, and their respective predecessors, successors 

and present or former affiliates and their respective spouses, agents, members, representatives, 

heirs, attorneys, shareholders, officers, directors, 

employees, affiliates, parents, subsidiaries, successors and assigns (collectively, “SWPC Parties”), 

of and from any and all losses, liabilities, claims, 

expenses, demands and causes of action of every 

kind and nature, known and unknown, suspected 

and unsuspected, disclosed and undisclosed, fixed 

and contingent, whether direct or by way of indemnity, contribution or otherwise, that the Resnick Parties ever had, now have, or hereafter may 

have or be able to assert against the SWPC Parties by reason of any matter, cause or circumstance whatsoever arising or occurring prior to 
5 BASELOAD ENERGY v. ROBERTS

and including the date of this Agreement, as 

stated in its first sentence, that arise from or relate in any way, directly or indirectly, to SWPC, 

the Resnick Action, the Grenier Action or any 

plan or effort to research or develop a flying electric generator (“FEG”). 

Settlement Agreement ¶ 3 (emphasis added). Paragraph 

4 of the Settlement Agreement contained an identical 

release of claims that could be brought by the SWPC 

Parties against the Resnick Parties. See id. ¶ 4.1 Paragraph 6 provided that the parties “hereto represent and 

warrant that they are aware of no right or claim, and no 

fact that might give rise to a right or claim, against a 

released party or his or its related persons and entities 

referred to in paragraphs 3 or 4 above that this Agreement does not effectively release.” Additionally, the 

Settlement Agreement included an Option Agreement, by 

which Roberts and SWPC granted Baseload an option to 

acquire a nonexclusive license under the ’254 patent at a 

price of $1.75 million, payable in installments; the Option 

 1 Paragraph 4 contains language identical to Paragraph 3: “The SWPC Parties forever release and discharge the Resnick Parties of and from any and all losses, 

liabilities, claims, expenses, demands, and causes of 

action of every kind and nature, known and unknown, 

suspected and unsuspected, disclosed and undisclosed, 

fixed and contingent, whether direct or by way of indemnity, contribution or otherwise, that the SWPC Parties 

ever had, now have, or hereafter may have or, be able to 

assert against the Resnick Parties by reason of any matter, cause or circumstance whatsoever arising or occurring 

prior to and including the date of this Agreement, as 

stated in its first sentence, that arise from or relate in any 

way, directly or indirectly, to SWPC, the Resnick Action, 

the Grenier Action or any plan or effort to research or 

develop an FEG.” 
BASELOAD ENERGY v. ROBERTS 6

Agreement was appended to the Settlement Agreement as 

“Exhibit C,” while the Nonexclusive Patent License (“the 

License Agreement”) was appended as “Exhibit D.”2 The 

release expressly exempted disputes arising from the 

Option Agreement and License Agreement from the scope 

of the release. J.A. 78 (”Anything herein to the contrary 

notwithstanding, the releases given in paragraphs 3 and 4 

above shall not cover or extend to any losses, liabilities, 

claims, expenses, demands and/or causes of action arising 

from or relating to the breach by any party of this Agreement or Exhibits C or D attached hereto.”). Pursuant to a 

joint stipulation of the parties, the breach of contract 

action was dismissed by the district court.

On September 15, 2008, the option granted to 

Baseload pursuant to the Settlement Agreement lapsed 

when Baseload was unable to secure financing to pay the 

licensing fee. As a result, Baseload could not develop the 

FEG technology without risking an infringement suit 

brought by Roberts under the ’254 patent. On October 27, 

2008, Baseload filed this action against Roberts, seeking a 

declaratory judgment that the ’254 patent is invalid and 

unenforceable. 

Roberts moved for summary judgment on the ground 

that Baseload’s claims were barred by the 2008 Settle-

 2 Paragraph 8 of the Settlement Agreement 

provides: 

 Concurrently with the exchange of executed counterparts of this Agreement, SWPC, 

Roberts, BEI and Resnick shall exchange executed 

counterparts of an option agreement, in the form 

attached hereto as Exhibit C (“Option Agreement”), providing BEI an option to acquire a nonexclusive patent license pursuant to an agreement 

in the form attached hereto as Exhibit D (“Nonexclusive Patent License Agreement”). 
7 BASELOAD ENERGY v. ROBERTS

ment Agreement. The district court granted Roberts’ 

summary judgment motion, concluding that the “unambiguous and expansive language” of the Settlement Agreement barred all claims deriving “from events occurring 

before March 18, 2008” and “aris[ing] from or relat[ing] in 

any way” to “any plan or effort to research or develop a 

flying electric generator.” Baseload, 654 F. Supp. 2d at 

26, 27. The court reasoned that both Roberts’ and 

SWPC’s infringement claims and Baseload’s patent invalidity and unenforceability claims clearly fell within this 

category of claims, as the development and patenting of 

the FEG technology that is the subject of the ’254 patent 

occurred before March 18, 2008, and was clearly related 

to an effort to research or develop a flying electric generator. The district court rejected Baseload’s arguments that 

this release failed to meet the standard laid out by FlexFoot, Inc. v. CRP, Inc., 238 F.3d 1362 (Fed. Cir. 2001), for 

the valid release of patent claims. It noted that while this 

court upheld the particular release provision laid out in 

Flex-Foot, “it did not announce that only provisions arising from precisely the same set of circumstances and 

containing the same or similar language could pass muster.” Baseload, 654 F. Supp. 2d at 27. Baseload timely 

appealed, and we have jurisdiction pursuant to 28 U.S.C. 

§ 1295(a)(1). 

DISCUSSION

This court reviews grants of summary judgment without deference. Young v. Lumenis, Inc., 492 F.3d 1336, 

1345 (Fed. Cir. 2007); Johns Hopkins Univ. v. Cellpro, 

Inc., 152 F.3d 1342, 1353 (Fed. Cir. 1998). Summary 

judgment is, of course, appropriate “if the pleadings, the 

discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a 

matter of law.” Fed. R. Civ. P. 56(c). 
BASELOAD ENERGY v. ROBERTS 8

Baseload asserts that the correct law for us to apply 

in this case is Federal Circuit law, because the question of 

whether a settlement agreement bars a party from challenging the validity of a patent in a subsequent action is 

intertwined with the substance of enforcement of a patent 

right. See, e.g., Flex-Foot, 238 F.3d at 1365 (“[W]hether 

public policy precluding patent license estoppel should 

extend to a waiver of validity challenges in a settlement 

agreement[] is intimately related with the substance of 

enforcement of a patent right. Therefore, we will apply 

our law to these issues.”). Roberts appears to agree. 

Under Flex-Foot, we apply Federal Circuit law in resolving the issues in this case. 

In Lear, Inc. v. Adkins, 395 U.S. 653 (1969), the Supreme Court eliminated the doctrine of “licensee estoppel,” citing the “important public interest in permitting 

full and free competition in the use of ideas.” Id. at 670. 

Under Lear, a licensee of a patent is not estopped from 

challenging the validity of the licensed patent by virtue of 

the license agreement. Id. at 671. In subsequent cases, 

our court and our predecessor court have confronted the 

question of whether consent decrees and settlement 

agreements may at one and the same time provide for a 

patent license while barring challenges to patent invalidity and unenforceability. We have held that Lear does not 

render such agreements unenforceable, because of the 

strong policy in favor of settlement of litigation and, in 

the case of consent decrees, the policy in favor of res 

judicata. See Flex-Foot, 238 F.3d at 1368 (“[T]he important policy of enforcing settlement agreements and res 

judicata must themselves be weighed against the federal 

patent laws’ prescription of full and free competition in 

the use of ideas that are in reality a part of the public 

domain.”); Foster v. Hallco Mfg. Co., Inc., 947 F.2d 469, 

474-75 (Fed. Cir. 1991) (“In [the situation where litigation 
9 BASELOAD ENERGY v. ROBERTS

is terminated by a consent decree which acknowledges a 

patent’s validity], other public policy considerations come 

into play, namely, preserving the finality of judgments as 

well as the strong public policy of encouraging settlements.”). Rather, the policies of Lear and the interests of 

settlement must be balanced. As we noted in Foster, 

“[b]arring subsequent challenges favors the public policy 

of encouraging voluntary settlement; at the same time, a 

narrow construction of such provisions favors challenges 

to validity. Id. 480. Thus, a balance in the policy expressed in Lear and the interest in encouraging settlement is achieved.” The result is that invalidity and 

unenforceability claims may be released, but only if the 

language of the agreement or consent decree is clear and 

unambiguous.3 

Baseload first argues that the district court erred in 

granting summary judgment because the Settlement 

Agreement fails to meet the standard set out in Flex-Foot

for a valid release of patent claims. In Flex-Foot, the 

parties had settled two prior patent-related suits. 238 

F.3d at 1363-64. The first suit, an infringement suit by 

Flex-Foot, Inc. (“Flex-Foot”) against CRP, Inc. d/b/a 

Springlite (“Springlite”), resulted in a settlement agree-

 3 See Ecolab, Inc. v. Paraclipse, Inc., 285 F.3d 1362, 

1377 (Fed. Cir. 2002) (holding that the consent decree 

language “the ’690 patent is a valid patent” was not 

sufficiently clear to foreclose a validity defense in a new 

infringement suit involving a new product); Flex-Foot, 238 

F.3d at 1370 (“Based on the clear and unambiguous 

waiver of future challenges to the validity of the ’363 

patent in the settlement agreement voluntarily entered 

into by the parties in this case, we hold that Springlite is 

contractually estopped from challenging the validity of 

the ’363 patent . . . .”); Diversey Lever, Inc. v. Ecolab, Inc., 191 F.3d 1350, 1352 (Fed. Cir. 1999) (“[A]ny surrender of 

the right to challenge validity of a patent is construed 

narrowly.”). 
BASELOAD ENERGY v. ROBERTS 10

ment and a corresponding license agreement for U.S. 

Patent No. 4,822,363 (“the ’363 patent”) to Springlite that 

allowed Springlite to challenge patent validity in a later 

action. Id. at 1363. The second suit, a declaratory judgment action to invalidate the ’363 patent brought by 

Springlite, proceeded through discovery and a fully 

briefed motion for summary judgment regarding 

Springlite’s invalidity allegations. Id. While that motion 

was pending, however, the parties settled the case, resulting in the following settlement agreement: 

The CRP Group agrees not to challenge or cause 

to be challenged, directly or indirectly, the validity 

or enforceability of the ’913 patent and/or the ’363 

patent in any court or other tribunal, including 

the United States Patent and Trademark Office. 

As to the ’363 and ’913 patents only, the CRP 

Group waives any and all invalidity and unenforceability defenses in any future litigation, arbitration, or other proceeding. This waiver applies to 

any product made, used, or sold by the CRP Group 

or any of their assignees, successors or those who 

act for or in concert with any of them at any time 

during the life of either the ’363 or ’913 patents. 

Id. at 1364. In 1997, Flex-Foot filed a new complaint 

alleging that Springlite’s product infringed the ’363 

patent. In accordance with the arbitration clause of the 

settlement agreement, the dispute was sent to an arbitration panel, which found that the device infringed the ’363 

patent. Springlite objected to the award on the ground 

that the ’363 patent was invalid and unenforceable. The 

district court granted Flex-Foot’s motion to enforce the 

arbitration award, concluding that Springlite was “collaterally estopped” from challenging the validity and enforceability of the ’363 patent. Id. 
11 BASELOAD ENERGY v. ROBERTS

We affirmed, once again reaffirming the requirement 

that the release language must be clear and unambiguous 

to release patent invalidity claims. We concluded that 

“[b]ased on the clear and unambiguous waiver of future 

challenges to the validity of the ’363 patent in the settlement agreement voluntarily entered into by the parties in 

this case . . . Springlite is contractually estopped from 

challenging the validity of the ’363 patent.” Id. at 1370. 

We cited the following factors relevant to our analysis: 

Once an accused infringer has challenged patent validity, has had an opportunity to conduct 

discovery on validity issues, and has elected to 

voluntarily dismiss the litigation with prejudice 

under a settlement agreement containing a clear 

and unambiguous undertaking not to challenge 

validity and/or enforceability of the patent in suit, 

the accused infringer is contractually estopped 

from raising any such challenge in any subsequent proceeding. 

Id. 

Baseload argues that these factors are determinative, 

and that the Settlement Agreement in this case is inadequate to release its patent invalidity claims, because the 

prior litigation between the parties did not involve patent 

invalidity issues or actual litigation on those issues. We 

disagree. Contrary to Baseload’s argument, while the 

absence of a prior dispute and litigation as to invalidity is 

pertinent, we do not think that a settlement agreement is 

ineffective to release invalidity claims unless the exact 

circumstances described in Flex-Foot are present. Each 

case must be examined on its own facts in light of the 

agreement between the parties. In the context of settlement agreements, as with consent decrees, clear and 

unambiguous language barring the right to challenge 
BASELOAD ENERGY v. ROBERTS 12

patent validity in future infringement actions is sufficient, even if invalidity claims had not been previously at 

issue and had not been actually litigated.

Here, however, there is no such clear language, and 

there was no release of either patent claims or defenses. 

There is no specific language in the settlement agreement 

making reference to invalidity issues. There is also 

reason to question whether the general language of the 

agreement was intended to cover such disputes. This is so 

because there was no issue in the breach of contract 

litigation concerning patent infringement or patent invalidity and unenforceability and no prior dispute between 

the parties as to such issues. Most importantly, the 

parties could not possibly have intended to release any 

and all patent infringement claims, because the Settlement Agreement granted Baseload an option to acquire a 

nonexclusive license to use the technology claimed by the 

’254 patent. The license provision would be unnecessary 

if all infringement claims under the ’254 patent were 

released. At the same time, the parties could not have 

intended to bar infringement claims if the Resnick parties 

did not acquire a license. The parties must have intended 

to exclude infringement from the scope of the Settlement 

Agreement. We reached a similar conclusion in Howmedica Osteonics Corp. v. Wright Medical Technology, 

Inc., 540 F.3d 1337 (Fed. Cir. 2008). In that case, there 

were two settlement agreements, one including broader 

release language,4 (“the New Jersey agreement”) and a 

more narrowly tailored agreement (“the Massachusetts 

 4 The release language stated that the agreement 

applied to “any and all manner of claims . . . that [Howmedica] . . . has, ha[s] had, or may have against Wright 

Medical . . . including, but not limited to, any and all 

claims and counterclaims that were or could have been 

asserted in the lawsuit.” Howmedica, 540 F.3d at 1342. 
13 BASELOAD ENERGY v. ROBERTS

agreement”) that was limited to the claims or controversies that “were or could have been asserted” in the settling litigation over four patents. Id. at 1342. After the 

execution of the releases, Howmedica brought suit alleging infringement of U.S. Patent No. 5,824,100 (“the ’100 

patent”), which had not been at issue in the prior litigation. We held that broad release language of the New 

Jersey agreement did not cover claims of infringement of 

the ’100 patent, because the companion Massachusetts 

agreement made clear that the release provision was only 

intended to resolve the previously pending litigation over 

four patents asserted in the first litigation (which did not 

include the ’100 patent). Id. at 1350. The New Jersey 

settlement also included cross-licenses for four asserted 

patents, although there was no license under the ’100 

patent. We concluded that “[g]iven the structure of the 

agreements it is on its face unlikely that the parties 

would exclude the ’100 patent from the cross-licensing 

provisions but effectively grant rights in the patent . . . by 

virtue of the release provision.” Id. 

Similarly, in this case it is impossible to read the Settlement Agreement in light of the license provision as 

releasing infringement claims relating to the ’254 patent. 

If infringement claims were preserved, then it necessarily 

follows in the circumstances of this case that the defenses 

to infringement, including invalidity defenses, were also 

preserved. As we noted earlier, the language of the 

agreement is general and makes no specific reference to 

other patent claims or defenses. The language of the 

agreement cannot be read to distinguish between infringement and invalidity claims. There is nothing in the 

text of the Settlement Agreement to suggest in this case 

that somehow the infringement claims were preserved 

while patent invalidity defenses were released. Thus, the 
BASELOAD ENERGY v. ROBERTS 14

clear and unambiguous language necessary to effect a 

release of patent invalidity defenses is not present.5

We conclude that the Settlement Agreement did not 

release the defenses of invalidity and unenforceability. 

REVERSED AND REMANDED 

 5 It is also noteworthy that the license provision 

of the Settlement Agreement did not bar an invalidity 

challenge. In both Lear and in MedImmune, Inc. v. 

Genentech, Inc., 549 U.S. 118 (2007), the Supreme Court 

held that a licensee under such an agreement may challenge the validity of the patent. See MedImmune, 549 

U.S. at 135 (holding that a licensee could challenge the 

validity of the patent despite a promise to pay royalties on 

patents “‘which have neither expired nor been held invalid by a court . . . .’ Promising to pay royalties on patents 

that have not been held invalid does not amount to a 

promise not to seek a holding of their invalidity.” (quoting 

the relevant agreement)).