"You get what you bargain for": The Implied License Doctrine Is Limited to Continuations of Patents Listed in a License Agreement

Fed Cir vacated and remanded denial of preliminary injunction because the defendants had neither an express nor implied license to the asserted patents.

Endo Pharm. Inc. v. Actavis, Inc. , __ F.3d __ (Fed. Cir. Mar. 31, 2014) (Newman, Dyk (dissenting in part), MOORE) (S.D.N.Y. Griesa) (2 of 5 stars)

Express License: Endo had ended a prior litigation by giving the defendants a license to any applications that "claim priority to" one or more enumerated patents, "including any continuation" applications that make such a claim. The Fed Cir held that this provision did not give defendants an express license to the patents-in-suit, which resulted from applications that shared a common ancestor with the enumerated patents but did not claim priority to them.

Implied License: Narrowly interpreting the "implied license" form of legal estoppel adopted in TransCore, 563 F.3d at 1279, the Fed Cir refused to "expand" that doctrine to cover patents that merely share a common ancestor with the licensed patents: "a license or a covenant not to sue enumerating specific patents may legally estop the patentee from asserting continuations of the licensed patents in the absence of mutual intent to the contrary." Slip. op. at 13 (emphasis in original). "You get what you bargain for. And we will not use the implied license doctrine to insert ourselves into that bargain and rewrite the contract."  Id. The contract here had "an explicit disclaimer of any other licenses not within the literal terms," which was further reason not to imply one. Id. at 14. The Fed Cir also distinguished other precedent on "estoppel" because the license here was limited to specific patents and applications rather than to an "idea" generally, as in those prior cases. 

Dissent: Judge Dyk believed that one of the defendants, Actavis, had an implied license to two of the asserted patents because "there is no meaningful distinction between the provisional patent relationship at issue in this appeal and the continuation patent relationships at issue in" the implied license doctrine cases. Dissent at 5. The other defendant, however, did not have an implied license because it had learned of the applications during negotiations yet failed to secure a license to them.