NOTE: This disposition is nonprecedential.

 

United States Court of Appeals 

for the Federal Circuit ______________________ 

ALEXSAM, INC.,

Plaintiff-Appellant

v.

MASTERCARD INTERNATIONAL 

INCORPORATED,

Defendant-Appellee

______________________ 

2021-1785

______________________ 

Appeal from the United States District Court for the 

Eastern District of New York in No. 1:15-cv-02799-ILGVMS, Senior Judge Israel Leo Glasser.

______________________ 

Decided: March 3, 2022

______________________ 

HUNTER T CARTER, Arent Fox LLP, New York, NY, argued for plaintiff-appellant. Also represented by 

JACQUELINE KNAPP BURT, Heninger Garrison Davis, LLC, 

Atlanta, GA; TIMOTHY C. DAVIS, W. LEE GRESHAM, III, Birmingham, AL; JONATHAN ROBERT MILLER, Rozier Hardt 

McDonough PLLC, Atlanta, GA, STEVEN WHITEFIELD 

RITCHESON, Insight, Chatsworth, CA. 

 ELIOT DAMON WILLIAMS, Baker Botts LLP, Palo Alto, 

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CA, argued for defendant-appellee. Also represented by 

MICHAEL HAWES, Houston, TX; CHRISTOPHER PATRICK,

ROBERT C. SCHEINFELD, JENNIFER COZEOLINO TEMPESTA, 

New York, NY 

 ______________________ 

Before NEWMAN, LOURIE, and STOLL, Circuit Judges. 

STOLL, Circuit Judge. 

In this appeal, we consider MasterCard International 

Inc.’s charge that AlexSam, Inc. took inconsistent positions 

before the Patent and Trial Appeal Board, on the one hand, 

and at the U.S. District Court for the Eastern District of 

New York, on the other, concerning the implications of a 

covenant not to sue on standing. The district court found 

that AlexSam had taken inconsistent positions and thus 

held it estopped and granted summary judgment dismissing AlexSam’s complaint with prejudice. On appeal, 

AlexSam argues that the district court abused its discretion by crediting AlexSam with a position it never actually 

took before the Board. We agree. We therefore reverse the 

district court’s summary judgment and remand for further 

proceedings. 

BACKGROUND

AlexSam is the owner of U.S. Patent Nos. 6,000,608 

and 6,189,787 (the “licensed patents”), both titled “Multifunction Card System.” Generally speaking, the licensed 

patents are directed to pre-paid cards (like a gift card) that 

can be used with point-of-sale devices. See ’608 patent, Abstract. 

Back in 2005, AlexSam and MasterCard entered into a 

non-exclusive license agreement permitting MasterCard 

“to process and enable others to process” certain licensed 

transactions, J.A. 200 ¶ 2.1, that are “covered by one of the” 

licensed patents, id. ¶ 1.3. MasterCard, in exchange,

agreed to pay AlexSam royalties for each licensed 

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transaction and to provide AlexSam with monthly reports 

itemizing the number of licensed transactions and the corresponding royalties owed for the relevant time period. 

J.A. 202–03 ¶¶ 4.1–4.2. 

A couple of years later, AlexSam contacted MasterCard, complaining that the monthly reports did not account for all of the applicable licensed transactions and, as 

a result, MasterCard had not paid all the royalties it owed 

under the license. MasterCard disagreed. In May 2015, 

AlexSam sued MasterCard in the Eastern District of New 

York for breach of contract, seeking the allegedly unpaid 

royalties. MasterCard filed counterclaims seeking (among 

other things) a declaratory judgment that the licensed patents are invalid and not infringed. 

AlexSam moved to dismiss MasterCard’s patent-related declaratory judgment counterclaims, arguing that a 

covenant not to sue contained in the license agreement 

stripped MasterCard of standing to sue for declaratory relief. The covenant recites: 

Alex[S]am hereby agrees and covenants to not at 

any time initiate, assert, or bring any claim (in any 

court, administrative agency, or other tribunal, anywhere in the world) against MasterCard, for any 

claim or alleged liabilities of any kind and nature, 

at law, in equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and 

undisclosed, relating to Licensed Transactions 

arising or occurring before or during the term of 

this Agreement. 

J.A. 201 ¶ 2.2. 

In AlexSam’s view, this covenant prevented AlexSam 

from suing MasterCard for patent infringement and, accordingly, MasterCard could have no reasonable apprehension of a patent infringement suit. Continuing, AlexSam

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argued, if there is no threat of infringement suit, there is 

no justiciable case or controversy and thus no standing.

In November 2015, the district court, citing the Supreme Court’s decision in MedImmune, Inc. v. Genentech, 

Inc., 549 U.S. 118 (2007), denied AlexSam’s motion. The 

court determined that MasterCard’s counterclaims met the 

requirements to bring claims for declaratory relief under 

the Declaratory Judgment Act, 28 U.S.C. § 2201. J.A. 3–4 

¶ 2. It went on to explain, however, that whether declaratory relief would ultimately be appropriate would “depend, 

in part, on how the [c]ourt (or a jury) interprets” the parties’ license agreement, something the court could not do 

“as a matter of law in the context of” AlexSam’s motion. Id. 

A couple of years later, in March 2017, MasterCard petitioned for covered business method (CBM) review of the 

licensed patents. AlexSam opposed institution in its preinstitution patent owner response, arguing that MasterCard lacked standing under 37 C.F.R. § 42.302(a)—a requirement for CBM review. In particular, AlexSam 

asserted that standing was not established under 

§ 43.302(a) because AlexSam had not “sued” or “charged” 

MasterCard with patent infringement. Section 43.302(a) 

states:

A petitioner may not file with the Office a petition 

to institute a covered business method patent review of the patent unless the petitioner, the petitioner’s real party-in-interest, or a privy of the 

petitioner has been sued for infringement of the patent or has been charged with infringement under 

that patent. Charged with infringement means a 

real and substantial controversy regarding infringement of a covered business method patent exists such that the petitioner would have standing 

to bring a declaratory judgment action in Federal 

court.

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Id.1 (emphases added). As it had argued to the district 

court, AlexSam argued to the Board that it had not actually 

sued MasterCard for patent infringement. AlexSam also 

argued that it had not “charged” MasterCard with patent 

infringement, asserting that the covenant not to sue prevented AlexSam from doing so. 

The Board requested supplemental briefing on the 

question of MasterCard’s standing to petition for CBM review, specifically regarding the effect of the covenant not to 

sue. Ultimately, in September 2017, the Board denied institution for both patents, determining that MasterCard 

did not have CBM standing under § 43.302(a). See Mastercard Int’l Inc. v. Alexsam, Inc., No. CBM2017-00041, 

2017 WL 4221401 (P.T.A.B. Sept. 21, 2017).2 

1 The U.S. Patent and Trademark Office promulgated § 42.302(a) in 2012, citing Section 18 of the 

Leahy–Smith America Invents Act, Pub. L. No. 112–29, 

125 Stat. 284, 329 (2011) as authority. See Changes to Implement Inter Partes Review Proceedings, Post-Grant Review Proceedings, and Transitional Program for Covered 

Business Method Patents, 77 Fed. Reg. 48,680, 48,727,

48,731 (Aug. 14, 2012). AIA Section 18(a)(1)(B) relates to 

standing and recites:

A person may not file a petition for a transitional 

proceeding with respect to a covered business 

method patent unless the person or the person’s 

real party in interest or privy has been sued for infringement of the patent or has been charged with 

infringement under that patent.

125 Stat. at 330.

2 The Board issued a nearly identical decision denying institution for the ’608 patent. See Mastercard Int’l Inc. 

v. Alexsam, Inc., No. CBM2017-00042, 2017 WL 4221130 

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In its decision, the Board began by noting that MasterCard had not actually been sued with patent infringement, 

and thus focused its inquiry on whether MasterCard had 

been “charged with infringement” under § 42.302(a). The 

Board explained that § 42.302(a)’s “charged with infringement” inquiry requires consideration of whether a party 

has “the ability to seek relief in Federal court” for patent 

infringement. Id. at *4. Accordingly, the Board considered 

“case law addressing when a party might have Article III 

standing to bring a declaratory judgment action,” including 

the Supreme Court’s decision in MedImmune. Id. Ultimately, in determining that MasterCard had not been 

“charged with infringement” under § 42.302(a), the Board 

determined that “the broad language of the covenant not to 

sue provision” in the parties’ license agreement “remove[d] 

any imminent possibility that [AlexSam] could bring an infringement action against [MasterCard].” Id. at *5. In the 

Board’s view, MasterCard faced no “imminent” threat of infringement, and thus had no standing to petition for CBM 

review under § 42.302(a). 

In July 2018, MasterCard moved for summary judgment in the district court, asserting that AlexSam’s arguments to the Board regarding the covenant not to sue and 

MasterCard’s standing to petition for CBM review judicially estopped AlexSam from pursuing its breach of contract claim against MasterCard. In MasterCard’s view, 

because AlexSam argued that the breadth of the covenant 

not to sue removed any threat of a suit for patent infringement (thus depriving MasterCard of standing to petition 

for CBM review), AlexSam’s decision to press forward with 

its breach of contract claim and claim for royalties despite 

the breadth of the covenant amounted to an inconsistent 

position warranting judicial estoppel. 

(P.T.A.B. Sept. 21, 2017). For brevity, we cite only the decision denying institution for the ’787 patent. 

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The magistrate judge recommended denying MasterCard’s motion for summary judgment. The district court, 

however, agreed with MasterCard and entered judgment 

dismissing AlexSam’s complaint with prejudice and dismissing MasterCard’s patent-related counterclaims without prejudice. Alexsam, Inc. v. Mastercard Int’l Inc., 15-

CV-2799 (ILG) (SMG), 2020 WL 3286785 (E.D.N.Y. 

June 17, 2020) (Judgment Op.). 

AlexSam appeals. We have jurisdiction under 

28 U.S.C. § 1295(a)(1). 

DISCUSSION

We review the district court’s summary judgment under the law of the regional circuit, here the Second Circuit. 

See Convolve, Inc. v. Compaq Comput. Corp., 812 F.3d 

1313, 1317 (Fed. Cir. 2016). The Second Circuit reviews 

the grant or denial of summary judgment de novo. Ashmore v. CGI Grp., Inc., 923 F.3d 260, 271 (2d Cir. 2019). 

We also apply regional circuit law to questions of judicial 

estoppel. Egenera, Inc. v. Cisco Sys., Inc., 972 F.3d 1367, 

1378 (Fed. Cir. 2020). The Second Circuit reviews a “district court’s decision to invoke judicial estoppel . . . for 

abuse of discretion.” Ashmore, 923 F.3d at 271. “While deferential, abuse of discretion review is not a rubber stamp. 

A district court may not do inequity in the name of equity.” 

Id. (quoting Clark v. All Acquisition, LLC, 886 F.3d 261, 

266 (2d Cir. 2018)). In addition, a district court’s decision 

to invoke judicial estoppel is an abuse of discretion when it 

rests on an error of law or clearly erroneous factual findings. See, e.g., id. at 277, 283.

The Supreme Court in New Hampshire v. Maine outlined several factors that “typically inform the decision 

whether to apply” judicial estoppel. 532 U.S. 742, 750

(2001). The Second Circuit has adopted the so-called New 

Hampshire factors, explaining that “[j]udicial estoppel is 

properly invoked where: (1) a party’s later position is 

clearly inconsistent with its earlier position, and (2) the 

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party’s former position has been adopted in some way by 

the court in an earlier proceeding.” Ashmore, 923 F.3d 

at 272 (citing New Hampshire, 532 U.S. at 750–51). The 

Second Circuit also “often, but not always, require[s] a 

showing that the party asserting the two inconsistent positions would derive an unfair advantage against the party 

seeking estoppel.” Id. (citing New Hampshire, 532 U.S. 

at 751).

On appeal, AlexSam argues that the district court 

abused its discretion by invoking judicial estoppel. At its 

core, AlexSam’s argument is that its position has been consistent throughout: the covenant not to sue precludes 

AlexSam from suing MasterCard for patent infringement, 

thus depriving MasterCard of standing to petition for CBM 

review and to bring declaratory judgment counterclaims of 

patent noninfringement and invalidity. At the same time, 

AlexSam contends that the covenant not to sue does not 

preclude it from suing for breach of contract and seeking 

royalties for the breach. We agree that AlexSam’s arguments have been consistent. The district court’s contrary 

finding—crediting AlexSam with a position that it never 

actually took before either the Board or district court—is 

clearly erroneous, and therefore its decision to invoke judicial estoppel was an abuse of discretion. 

In its decision, the district court stated: “When 

Alex[S]am argued before the [Board] that the covenant not 

to sue eliminates MasterCard’s standing for declaratory relief, it also necessarily took the position that the same covenant prohibits a claim for royalties under the license 

agreement.” Judgment Op., 2020 WL 3286785, at *5 (emphasis added). This conclusion is wholly inconsistent with 

the record. 

In response to the Board’s request for supplemental 

briefing on the effect of the covenant, MasterCard (who 

filed its brief first) argued that AlexSam’s decision to sue 

for breach of contract voided the covenant not to sue. 

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According to MasterCard, this was so because the covenant 

was broad enough to bar AlexSam for suing for any claim 

relating to the licensed transactions arising out of the parties’ agreement, including a breach of contract claim. 

J.A. 1485–86. AlexSam pushed back on this in its responsive supplemental brief. Specifically, AlexSam argued that 

the covenant prevented AlexSam from suing for patent infringement (and only patent infringement), stating: “On 

the one hand, the [covenant] was included to provide [MasterCard] with assurance that it would not be sued for patent infringement. On the other hand, [AlexSam] intended 

to enter into a [l]icense [a]greement and have the ability to 

enforce its terms.” J.A. 1502. Thus, AlexSam argued, the 

covenant was “further evidence” that AlexSam could not 

sue MasterCard for patent infringement. J.A. 1500; see 

also J.A. 1503 (“The [covenant not to sue] further clarifies 

that [AlexSam] cannot sue [MasterCard] for patent infringement.”). None of this supports the district court’s 

conclusion that AlexSam “necessarily took” the position 

that the covenant prohibits a claim for royalties under the 

license agreement. AlexSam argued only that the covenant 

barred it from suing MasterCard for patent infringement. 

In defense of the district court’s conclusion, MasterCard repeatedly quotes (without context) a single sentence

from AlexSam’s supplemental briefing before the Board. 

According to Mastercard, this single sentence shows that 

AlexSam argued that the covenant was broad enough to 

bar it from suing for royalties. E.g., Appellee’s Br. 13, 16, 

24–28, 35. The sentence is not limited to “infringement” 

and states: “The [covenant] is also sufficient to moot a 

claim for declaratory relief.” J.A. 1501 (citing Already, 

LLC v. Nike, Inc., 568 U.S. 85, 93 (2013)). This sentence 

comes from a section of AlexSam’s supplemental brief directly responding to what it characterized as MasterCard’s 

“misleading” arguments. MasterCard argues that this 

statement, in combination with the Supreme Court’s decisions in MedImmune and Already, shows AlexSam should 

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be judicially estopped from pursuing its breach of contract 

claim because it was taking inconsistent positions. 

Specifically, relying on MedImmune, MasterCard argues that it has declaratory judgment standing to challenge the licensed patents (either in district court or by 

petitioning for CBM review), Appellee’s Br. 23–24, and that 

AlexSam can defeat that standing only by “moot[ing]” MasterCard’s declaratory claim, id. at 25–26. According to 

MasterCard, AlexSam attempted to do just that, likening 

the covenant not to sue in the license agreement to the covenant at issue in Already. As MasterCard put it: 

“Alex[S]am’s PTAB argument presented a broad, unconditional and irrevocable covenant not to sue – as was the case 

in Already – broad enough to prohibit Alex[S]am from 

bringing any claim or making any demand against Master[C]ard related to its IP, i.e., for disputed patent royalties.” Id. at 26. MasterCard argues that because it would 

have declaratory judgment standing under MedImmune in 

the absence of AlexSam’s assertion that the covenant was 

broad enough under Already to “moot a claim for declaratory relief,” J.A. 1501, AlexSam’s assertion amounted to 

taking a position that would estop it from pursuing its royalty claims. See id. at 35 (“[B]y arguing that the . . . covenant was ‘sufficient to moot a claim for declaratory relief,’ 

Alex[S]am could not collect disputed royalties.”) 

The problem with MasterCard’s argument is that it

reads too much into a single sentence, stripping it of any 

context. Here’s that same sentence in context: 

The payment of royalties is Petitioner’s obligation 

under the License Agreement – not a condition of 

the [covenant]. Petitioner’s intentional, and admitted, refusal to pay royalties it owes supports a

claim for breach, not patent infringement. Further, the [covenant] provides no explicit means for 

its revocation. The [covenant] also is sufficient to 

moot a claim for declaratory relief. . . . The facts do 

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not support the conclusion that the [covenant] was, 

or could be, revoked by the filing of Patent Owner’s 

breach of contract claim. Finally, Petitioner contends that the [covenant] is both “not unconditional” and “void and not irrevocable.” Petitioner 

provides no evidence or support for its position that 

the parties intended the [covenant] to be conditional or revocable. Petitioner simply lacks standing and its attempts to manufacture it are wrong. 

Petitioner has not been sued for infringement and 

the [covenant] is further evidence that Patent 

Owner cannot sue Petitioner, who is a licensee, for

infringement.

J.A. 1501–02 (citation omitted) (emphasis altered). Reading this sentence in context, it is abundantly clear that 

AlexSam was continuing to argue only that the covenant 

precluded a claim for patent infringement, a position which 

the Board adopted and which AlexSam maintained in district court. AlexSam did not argue that the covenant also 

precluded its breach of contract claim. The district court’s 

finding to the contrary was clearly erroneous. 

As such, the district court’s conclusion that AlexSam 

“necessarily took” an inconsistent position was clearly erroneous in view of the record, and accordingly its invocation of judicial estoppel was an abuse of discretion.3 

3 To be sure, the district court may be entirely correct that the broadly worded covenant not to sue “prohibits 

a claim for royalties under the license agreement.” Judgment Op., 2020 WL 3286785, at *5. But that question—one 

which requires contract interpretation under the applicable law—is not before us. Indeed, the district court has not 

had briefing or the opportunity to consider this unresolved 

question but can do so on remand. All we decide today is 

that the district court erred in crediting AlexSam with a 

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CONCLUSION

We have considered the parties’ remaining arguments 

and find them unpersuasive.4 For the above reasons, we 

agree with AlexSam that the district court abused its discretion by invoking judicial estoppel based on an erroneous 

fact finding unsupported by the record. We therefore reverse the district court’s summary judgment and remand 

for further proceedings. 

REVERSED AND REMANDED

position it never took, thus abusing its discretion in invoking judicial estoppel. 

4 We specifically note that AlexSam argues on appeal that it was improper for the district court to construe 

the claims of the licensed patents prior to determining 

whether MasterCard breached the terms of the license 

agreement. We disagree. The license specifically defines 

licensed transactions as those “covered” by one of the licensed patents. J.A. 200 ¶ 1.3. The district court correctly 

determined that claim construction was a necessary prerequisite for determining whether any alleged transaction 

was a licensed transaction for which MasterCard owed royalties. We are not, however, reviewing the legal question 

of claim construction, which may affect the amount of royalties MasterCard owes as well as the validity of the licensed patents. Because this appeal is focused on the 

threshold issue of whether AlexSam can bring its suit in 

the first instance, the question of claim construction is not 

subject to interlocutory review. 

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