Patent Owner Can Grant a License to Future Continuations Even If Issued After Patents Have Been Sold

Abstract 

A party licensed certain patents and any patents issued from continuations thereof, but after the licensor sold those patents, the licensee faced a suit for infringement of a patent that issued from a continuation application filed by the licensor but issued to its successor. Considering the issue on the licensee-defendant’s motion for summary judgment, the District of Delaware ruled that the original licensor could and did license a future continuation patent that did not ultimately issue to that licensor. Accordingly, the court granted the defendant’s motion and ruled that the defendant holds a license to the asserted patent.

Background

As part of a Settlement Agreement, Apotex Inc. and Apotex Corp. (collectively, Apotex) licensed two patents from Nuvo Research Inc. The agreement gave Apotex rights to the patents, and “any patents that issue from any divisions, continuations, reissues, or reexaminations thereof.” The next year, Nuvo filed a continuation of one of the patents, and less than one month later, it sold the patents to Horizon Medicines LLC. In 2015, the application issued to Horizon.

Several years later, Apotex received approval for a new generic product, and Horizon filed suit, claiming that Apotex infringed the ’913 patent. In response, Apotex filed a motion for summary judgment asking the court to rule that it was licensed to practice the continuation patent based on the Settlement Agreement.

The Horizon Medicines Decision

In its motion, Apotex argued that the Settlement Agreement gave it a license to the continuation patent and that license ran with the Settlement Agreement and binds Horizon. Horizon argued that the Settlement Agreement did not include the continuation patent, because the continuation patent did not exist at the time of the Settlement Agreement and issued solely to Horizon.

The court identified two key issues: (1) whether a licensor can grant “a license to a future continuation patent that does not ultimately issue to that licensor, and instead issues to a third party”; and (2) if legally possible, whether the language of the Settlement Agreement provided Apotex with a license to the continuation patent.

Turning to the first issue, the court determined that a licensor can grant a license to a future continuation patent that does not ultimately issue to that licensor. The court considered a Federal Circuit Opinion from another matter that found that a license could encompass later-issued reissue patents, even where those patents issued to a non-party and were not mentioned, because the licensor had a right to grant licenses to the full scope of the described invention. The court analogized continuation and reissue patents, ruling that because a continuation patent and its parent application are based on the same invention disclosure, the law suggests that a licensor has the right to grant a license to a future-issued continuation patent, even if the future continuation patent issues to a third party.

Turning to the second issue, the court examined whether the language of the Settlement Agreement granted a license to the continuation patent. Because the agreement specifically licensed “any patents that issue from any divisions, continuations, reissues or reexaminations” of the licensed patents, the court found that Apotex had an express license to the continuation patent, defeating Horizon’s claim of infringement. The court thus granted the motion for summary judgment.

Strategy and Conclusion

Before entering into a license agreement, both parties should carefully consider whether to license patents that share a disclosure or otherwise correspond to a licensed, issued patent. Clearly stating that a license extends to continuations, whenever issued, can avoid disputes, and protect a licensee from suit on subsequently issued patents.

Further Information

The Horizons Medicines decision can be found here.