Opinion ID: 207814
Heading Depth: 2
Heading Rank: 2

Heading: The License Grant

Text: Underlying both the district court's Rule 12(c) opinion and the instant appeal is the issue of whether the court should construe each of the Agreement's license grants as a single, unitary grant of a license or an agreement to grant multiple licenses over time. Philips maintains that the language in Article 2, which states that Philips agrees to grant and does hereby grant, is a grant of multiple licenses over time. In other words, Philips contends that each party grants some licenses at the time of execution (`does hereby grant') and some in the future (`agrees to grant'), Appellees' Br. 23, as new patents or Subsidiaries come into existence. Under this theory, which the district court adopted, the time frame during which additional licenses may be granted closes with the expiration date, and licenses that had been granted prior to the expiration date, pursuant to Article 4, would continue for the life of the licensed patents. Appellants, on the other hand, argue that Article 2 effects a present grant to Imation and its Subsidiaries as a groupand the term of these licenses is the life of the licensed patents. Under this logic, once GDM and Memorex became Subsidiaries, as defined in the Agreement, they automatically received the benefits of the group licenses granted to all Imation Subsidiaries. Consequently, this court must interpret the license grants in Article 2, and specifically the language that Philips agrees to grant and does hereby grant. Although New York courts do not seem to have addressed language similar to that in Article 2, this court has considered similar agrees to grant and does hereby grant language in the context of patent assignments. The assignment provision in Filmtec Corp. v. Allied-Signal Inc., 939 F.2d 1568, 1570 (Fed.Cir.1991), for example, provided that the assignor agrees to grant and does hereby grant to the Government the full and entire domestic right, title and interest in ... any invention ... made in the course of or under this contract. This court held that this language effected a present assignment of rights in future inventionsand thus a valid assignment of legal title to an invention: [T]he contract between MRI and the Government did not merely obligate MRI to grant future rights, but expressly granted to the Government MRI's rights in any future invention. Ordinarily, no further act would be required once an invention came into being; the transfer of title would occur by operation of law. Id. at 1573. More recently, this court again considered agrees to and does hereby grant language and reaffirmed the FilmTec holding. See DDB Tech., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1290 (Fed.Cir.2008) (If the contract expressly grants rights in future inventions, `no further act [is] required once an invention [comes] into being,' and `the transfer of title [occurs] by operation of law.' (quoting FilmTec, 939 F.2d at 1573)). Philips nonetheless argues that the FilmTec line of cases stands for the proposition that any assignment of an invention made prior to the existence of the invention grants only an expectant interestan equitable title. This court disagrees. Both FilmTec and DDB distinguished [c]ontracts that merely obligate the inventor to grant rights in the future, DDB, 517 F.3d at 1290, from an express grant of rights in future inventions, and held that agrees to grant and does hereby grant constitutes a present grant of rightsalbeit to future inventions, but nonetheless a present grantthat vests immediately. Id.; FilmTec, 939 F.2d at 1573. [2] Applied to this case, each of the Article 2 licenses in which Philips agrees to grant and does hereby grant to [Imation] and its SUBSIDIARIES a personal, nonexclusive, indivisible, non-transferable, irrevocable, worldwide, royalty-free license is a singular, present grant to a class composed of Imation and its Subsidiaries of rights to existing and future patents that fall within the definition of Licensed Patents (emphasis added). As discussed above, Licensed Patents includes patents filed after the expiration date as long as they claim priority to a date on or before the expiration date. As of the effective date of the Agreement, each license to Imation and its Subsidiaries vested immediately, and thus the licenses had been granted prior to the expiration date, pursuant to Article 4. As discussed in the next section, the unambiguous language of the Subsidiary definition allows class membership to grow (or shrink) over time, and so the non-existence of GDM and Memorex at the time of the license grant did not prevent either entity from receiving the benefits of the fully vested licenses. The district court's basis for rejecting the group license argument was that it was incompatible with the language of the CLA, which ... plainly contemplates the grant of multiple `personal' licenses. Rule 12(c) Opinion, at 1051 n. 5. In so holding, the district court cited the plural licenses in the heading of Article 2, Grant of Royalty-Free Licenses, and the language in Article 3 that states, [t]he term of the licenses granted under Article 2. Id. (emphasis added). The cited language does not resolve the issue, however, because Article 2 includes at least four separate license grants: two to Imation and its Subsidiaries, and two to Philips and its Subsidiaries. The Article 2 heading refers to these licenses. [3] Philips further disputes the application of the group license construction adopted by this court because it conflicts with Article 2's description of the licenses as personal. Relying on an Eighth Circuit case from 1948, Philips thus argues that personal means that the licenses are unique to the individual grantee. Appellees' Br. 21 (citing Rock-Ola Mfg. Corp. v. Filben Mfg. Co., 168 F.2d 919, 922 (8th Cir.1948).) Article 2 uses personal in its property context, however, and refers merely to the absence of a property right. See, e.g., Ulead Sys., Inc. v. Lex Computer & Mgmt. Corp., 351 F.3d 1139, 1147 (Fed. Cir.2003) ([A] non-exclusive licensee of a patent has only a personal and not a property interest in the patent.) (quoting In re CFLC, Inc., 89 F.3d 673, 679 (9th Cir. 1996)); Rhone Poulenc Agro, S.A. v. DeKalb Genetics Corp., 284 F.3d 1323, 1328 (Fed.Cir.2002) (recognizing the need for a uniform national rule that patent licenses are personal and non-transferable in the absence of an agreement authorizing assignment, contrary to the common law rule that contracts are freely assignable). In other words, the licensed parties under the Agreement acquire no ownership right in the licensed patents that would allow the licensed parties to transfer rights to third parties or to confer standing to sue for infringement. Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1345 (Fed.Cir.2001) ([A] nonexclusive license ... confers no constitutional standing on the licensee under the Patent Act to bring suit or even to join a suit with the patentee because a nonexclusive (or `bare') licensee suffers no legal injury from infringement.). Instead, as licensees, they acquire the right not to be sued by Philips for infringement: [A] patent license agreement is in essence nothing more than a promise by the licensor not to sue the licensee. Even if couched in terms of `[l]icensee is given the right to make, use, or sell X,' the agreement cannot convey that absolute right because not even the patentee of X is given that right. His right is merely one to exclude others from making, using or selling X. Indeed, the patentee of X and his licensee, when making, using, or selling X, can be subject to suit under other patents. In any event, patent license agreements can be written to convey different scopes of promises not to sue, e.g., a promise not to sue under a specific patent or, more broadly, a promise not to sue under any patent the licensor now has or may acquire in the future. TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d 1271, 1275-76 (Fed.Cir.2009) (quoting Spindelfabrik Suessen-Schurr, Stahlecker & Grill GmbH v. Schubert & Salzer Maschinenfabrik Aktiengesellschaft, 829 F.2d 1075, 1081 (Fed. Cir.1987)). Philips' contention that each Article 2 license grant is a grant of multiple licenses over time also conflicts with the plain language of Article 2's use of the singular form of license. In addition, the plain language of Article 3 provides that the term of the licenses granted under Article 2 shall commence on the effective date of this Agreement. If Article 2 granted multiple licenses over time, then Article 3 likely would have provided a method of determining multiple dates of commencement based on later-filed patents and/or later-acquired Subsidiaries, rather than a single commencement date for each unitary license granted to each party's class of entities. Article 2 thus grants two licenses to the collective group of Imation and a class of entities that meet the definition of Subsidiary in Section 13. As each license existed prior to the March 1, 2000 expiration date, GDM and Memorex may claim the benefits of each license as long as they each qualify as an Imation Subsidiary.