The Cross-Border Biotech Blog

Biotechnology, Health and Business in Canada, the United States and Worldwide

Tag Archives: Kirkland & Ellis

Patent Licenses Litigated Lately: Transcore v. ETC and Euclid Chemical v. Vector Corrosion

Horton CropAs a corporate lawyer, I always aim to not wind up facing the pointy end of a deposition.

Here are two object lessons courtesy of the U.S. Court of Appeals for the Federal Circuit:

TransCore, LP v. Electronic Transaction Consultants Corp. (pdf)

TransCore deals with the doctrine of patent exhaustion — that when a customer purchases a patented item in an authorized sale, the owner of the patent has no rights against the purchaser or anyone downstream.  Two of my U of C classmates, Dennis Crouch at PatentlyO, and Shira Kapplin at Kirland & Ellis (pdf), have written about this case in much more detail (so you should click those links … hi guys!); but the gist is that the Federal Circuit rejects any distinction in a settlement agreement between a “covenant not to sue” and a “patent license.”

The two are functionally the same but there was a school of thought that maintained that the doctrine of exhaustion did not apply in the case of a “covenant not to sue” since the sales weren’t actually “authorized.”  No dice.

Euclid Chemical v. Vector Corrosion (pdf)

Another Federal Circuit case picked up by Dennis deals with contract ambiguity.  The majority of the court held that a 2001 assignment of patent rights from Bennett to Vector was ambiguous as to whether it included a specific patent — U.S. Patent No. 6,217,742 — that a third party, Euclid, claims it had later purchased from Bennett.  The ambiguity arose because the ‘742 patent was already issued at the time of the license, and was within the catch-all language of the license, but was excluded from the express list of licensed patents and applications.  The court remanded the case for consideration of extrinsic evidence in light of its holding that the contract was ambiguous.

My bottom line in both cases:  If you meant what you said and said what you meant, the courts will be faithful one hundred percent. (Thanks and apologies to Dr. Seuss and Horton.)


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