Opinion ID: 763547
Heading Depth: 2
Heading Rank: 1

Heading: The Implied License Defense

Text: 15 The existence of an implied license is a question of law which we review de novo. 1 Met-Coil Sys. Corp. v. Korners Unlimited, Inc., 803 F.2d 684, 687, 231 USPQ 474, 476 (Fed.Cir.1986). Besten correctly asserts that if Simonton did have an implied license under the '582 patent to assemble spacer frames by the methods claimed therein, GED would be estopped from maintaining a suit against Simonton for infringement and Besten could not be liable for inducing Simonton to infringe. See DeForest Radio Tel. & Tel. Co. v. United States, 273 U.S. 236, 241, 47 S.Ct. 366, 71 L.Ed. 625 (1927) (holding existence of license, even if implied, to be complete defense to action for infringement); see also Met-Coil, 803 F.2d at 687, 231 USPQ at 477 (stating that, absent any direct infringement because of implied license, there can be no inducement of infringement). 16 When, as here, a party argues that the sale of a device carries with it an implied license to use that device in practicing a patented invention, that party has the burden to show that, inter alia, the purchased device has no noninfringing uses. See Carborundum, 72 F.3d at 878, 37 USPQ2d at 1172 (quoting Bandag, Inc. v. Al Bolser's Tire Stores, Inc., 750 F.2d 903, 925, 223 USPQ 982, 998 (Fed.Cir.1984)). 2 The district court concluded that Besten had shown that this test was satisfied, based on its finding that, as of September 1995 (the time of the final summary judgment hearing), there were no commercially viable methods of using the corner keys that did not infringe the '582 method patent. Noninfringing Uses 17 In Bandag, we reviewed the district court's judgment to determine whether any of the potential noninfringing uses of the patented method were reasonable. See Bandag, 750 F.2d at 925, 223 USPQ at 998 (reversing holding that infringement defendant had implied license to practice claimed invention). Here, two aspects of the district court's noninfringing use analysis were in error and led to an incorrect conclusion that there were no noninfringing uses of the corner keys. First, the court improperly limited its analysis of the existence of noninfringing uses to the time of the final summary judgment hearing. Second, the court applied an overly restrictive profitability or commercially viable requirement to the noninfringing uses. We address each of these aspects.
18 The district court concluded that GED's failure to submit evidence showing a noninfringing use by at least one spacer frame manufacturer that was ongoing at the time of the last summary judgment hearing, viewed in light of Simonton's and Louisiana Pacific's earlier change from the noninfringing cartwheel method to the patented linear method, showed that there was no current noninfringing use of the corner keys. See GED I, 929 F.Supp. at 230. The court's time frame should not have been so limited, particularly where Besten had made no showing that changes in the insulated window business that were unrelated to commercial implementation of the patented linear method had caused the previously used noninfringing uses to become unreasonable for all insulated window manufacturers.
19 The district court required that any potential noninfringing method be commercially viable, i.e., that it permit the user to sell the resulting device at a profit and afford the development and continuation of an ongoing business. GED I, 929 F.Supp. at 229 (citing Cyrix Corp. v. Intel Corp., 846 F.Supp. 522, 541 (E.D.Tex.1994), for definition of commercially viable). Applying this definition, the court held that only the most profitable method of using the corner keys would be acceptable. See id. at 230 (If the linear extrusion method is more profitable than other methods of making insulated windows using folding, locking corner keys, then such methods cannot 'afford the development and continuation of an ongoing business.' ). The court's requirement that an acceptable noninfringing use be the most profitable alternative was incorrect. 20 In Bandag, we held that a legally acceptable noninfringing use need not be as profitable as the patented method--it need only be reasonable. 3 Given the undisputed facts of this case, we hold that Besten did not meet its burden to show that there are no noninfringing uses of the folding, locking corner keys sold by Allmetal under the apparatus patent license. Besten's failure to meet its burden with respect to this element of the applicable implied license test compels us to reverse the district court's grant of a summary judgment in favor of Besten on the implied license issue.