Intel Corp. v. Negotiated Data Solutions, Inc.

United States Court of Appeals
for the Federal Circuit
__________________________

INTEL CORPORATION,
Plaintiff-Appellee,

v.

NEGOTIATED DATA SOLUTIONS, INC.,
Defendant-Appellant,

AND

ASUS COMPUTER INTERNATIONAL, INC.,
ACER AMERICA CORPORATION, ACER, INC.,
LENOVO GROUP LTD., AND LENOVO, INC.,
Defendants.
__________________________

2011-1448
__________________________

Appeal from the United States District Court for the
Eastern District of Texas in Nos. 08-CV-0319 and 11-CV-
0247, Chief Judge David J. Folsom.
__________________________

Decided: December 17, 2012
__________________________

GARLAND STEPHENS, Fish & Richardson, P.C., of
Houston, Texas, argued for plaintiff-appellee. With him
2 INTEL CORP v. NEGOTIATED DATA

on the brief were JOHN A. DRAGSETH and DEANNA J.
REICHEL, of Minneapolis, Minnesota.

JOEL L.THOLLANDER, McKool Smith, P.C. of Austin,
Texas, argued for defendant-appellant. With him on the
brief were THEODORE STEVENSON, III and DAVID SOCHIA of
Dallas, Texas.
__________________________

Before PROST, LINN,* and WALLACH, Circuit Judges.

LINN, Circuit Judge.

Negotiated Data Solutions, Inc. (“N-Data”) appeals
from the district court’s grant of summary judgment of
license and noninfringement in favor of Intel Corp. (“In-
tel”). Intel Corp. v. Negotiated Data Solutions, LLC, No.
2:11-cv-247 (E.D. Tx. May 9, 2011). Because Intel is
licensed to practice the patents-in-suit pursuant to a
licensing agreement with N-Data’s predecessor in inter-
est, National Semiconductor Corp. (“National”), this court
affirms.

I. BACKGROUND

By the 1970s both Intel and National were actively
developing semiconductor technology. On June 1, 1976,
Intel and National entered into a patent cross-licensing
agreement. Agreement between Intel Corp. and National
Semiconductor Corp. (June 8, 1976) (J.A. 284) (“National
Agreement” or “Agreement”). The Agreement gave Intel
“non-exclusive, non-transferrable, royalty-free, world-wide
licenses under NATIONAL PATENTS and NATIONAL
PATENT APPLICATIONS to make, to have made, to use,
to sell (either directly or indirectly), to lease and to other-

* Circuit Judge Linn assumed senior status on No-
vember 1, 2012.
INTEL CORP v. NEGOTIATED DATA 3
wise dispose of LICENSED PRODUCTS,” id. at 5, for the
life or lives of the patents, id. at 7. The Agreement de-
fined “NATIONAL PATENTS” (“National Patents”) as:

all classes or types of patents and utility models of
all countries of the world, applications for which
have a first effective filing date in any country
prior to the date of expiration or termination of
this Agreement, in respect of which, as of the
EFFECTIVE DATE, or thereafter during the term
of this Agreement, NATIONAL owns or controls
. . . [or has] the right to grant licenses of the scope
granted herein . . . .

Id. at 2–3. The Agreement gave National similar rights
in Intel’s patents. The parties extended the five year
agreement three times, finally allowing it to expire on
December 31, 2003.

In 1998, National assigned U.S. Patents No. 5,361,261
(“’261 Patent”), No. 5,533,018 (“’018 Patent”), No.
5,566,169 (“’169 Patent”), No. 5,594,734 (“’734 Patent”)
(collectively the “Original Patents”), and others to Vertical
Networks, Inc. (“Vertical”), a corporation consisting
partially of former National engineers. Each one of the
Original Patents was indisputably a National Patent
under the Agreement. Then between 1998 and 1999
Vertical filed broadening reissue applications with the
United States Patent and Trademark Office (“PTO”) for
the latter three of the Original Patents. In filing these
reissue applications, Vertical increased the total number
of claims in the three patents from 77 to 378. In 2003 and
2005, Vertical assigned the Original Patents and their
corresponding reissue applications to N-Data. In 2005
and 2006, well after the Agreement had expired, the PTO
issued to N-Data U.S. Reissue Patents RE38,820 (“RE’820
Patent”), RE39,216 (“RE’216 Patent”), and RE39,395
(“RE’395 Patent”) (collectively the “Reissue Patents”)
4 INTEL CORP v. NEGOTIATED DATA

corresponding to the ’018, ’734, and ’169 Patents, respec-
tively.

On December 13, 2006, N-Data sued Dell, Inc.
(“Dell”), one of Intel’s customers, in the United States
District Court for the Eastern District of Texas, alleging
infringement of several patents, including the Reissue
Patents. Complaint at 2–5, Negotiated Data Solutions v.
Dell, Inc., 2:06-cv-528 (E.D. Tx. July 13, 2009) (“Dell”),
ECF No. 1. Intel intervened in N-Data’s suit against Dell.
On August 15, 2008, Intel filed a complaint seeking a
declaratory judgment that under the National Agreement
Intel and its customers are licensed to the National
Patents and all reissue patents owned by N-Data that are
derived from any of the National Patents. Intel Corp. v.
Negotiated Data Solutions, LLC, No. 2:08-cv-319 (E.D. Tx.
Mar. 18, 2010). N-Data counterclaimed alleging in-
fringement against Intel and other Intel customers. Dell
and N-Data ultimately settled, leaving Intel’s declaratory
judgment action and N-Data’s counterclaim against Intel
pending. Agreed Order of Dismissal with Prejudice, Dell,
ECF No. 250.

The parties filed cross-motions for summary judg-
ment: Intel sought a declaration of non-infringement of
all claims based on its license, and N-Data sought sum-
mary judgment of non-license of the newly issued claims
of the three Reissue Patents. While Intel argued that the
Agreement naturally extends to reissue patents that
derive from National Patents, N-Data argued that the
Reissue Patents are separate patents that cover unique
property rights distinct from the rights covered by the
Original Patents. According to N-Data, because the
Reissue Patents were issued directly to N-Data after the
Agreement had expired, they are not National Patents
and are not licensed to Intel. In support of its argument,
N-Data looked to Intergraph Corp. v. Intel Corp., 241 F.3d
1353 (Fed. Cir. 2001). In Intergraph, this court examined
INTEL CORP v. NEGOTIATED DATA 5
the National Agreement and held that patent applications
momentarily possessed by National as part of an acquisi-
tion and subsequent sale of a subsidiary company did not
become National Patents subject to license simply by
virtue of that transaction. 241 F.3d at 1356. N-Data also
cited Altvater v. Freeman, 319 U.S. 359 (1943), which it
reads as foreclosing the possibility that a contract to an
original patent automatically extends to subsequent
reissues of that patent.

The district court distilled the parties’ dispute in this
case to a single issue: “under the [National] Agreement,
should the reissued patents be treated as ‘National Pat-
ents.’” Memorandum Opinion and Order at 3, Intel Corp.
v. Negotiated Data Solutions, LLC, No. 2:08-cv-319 (E.D.
Tx. Mar. 18, 2010), ECF No. 137 (“Opinion”) (emphasis
added). The district court agreed with Intel, finding that
the intent of the contracting parties was “to grant broad
rights to all patents owned or controlled by the other
party for the life of the patents . . . and avoid future
infringement suits.” Id. at 4 (citing Cal. Civ. Code § 1636
(“A contract must be so interpreted as to give effect to the
mutual intention of the parties as it existed at the time of
contracting . . . .”)). The district court found that N-Data’s
interpretation would allow a party to effectively revoke
the Agreement by putting a patent into broadening reis-
sue, thus defeating the parties’ intent when they formed
the Agreement. Id.

In the district court’s view, Intergraph was not con-
trolling because it dealt only with determining when
certain patent applications should be considered National
Patent Applications that are covered by the Agreement.
That case did not answer the question of whether the
reissue of a National Patent is “effectively” a National
Patent under the Agreement. Opinion at 6. The district
court also distinguished Altvater, concluding that, despite
some language facially supporting N-Data’s position,
6 INTEL CORP v. NEGOTIATED DATA

Altvater turned on whether there was offer and accep-
tance of a new license to the reissue patent at issue there.
Id. at 6–7. The district court ultimately found for Intel,
holding that the National Agreement “applies to all four
patents-in-suit” and “protects Intel against claims of
direct infringement as well as allegations of indirect
infringement based upon sales by third parties incorpo-
rating Intel products.” Id. at 8. The district court then
severed the N-Data/Intel claims from the claims against
other of Intel’s customers and entered final judgment for
Intel. Intel Corp. v. Negotiated Data Solutions, LLC, No.
2:11-cv-247 (E.D. Tx. May 9, 2011), ECF No. 2. N-Data
timely appealed. This Court has jurisdiction pursuant to
28 U.S.C. § 1295(a)(1).

II. DISCUSSION

A. Standard of Review

“We review de novo the district court’s grant of sum-
mary judgment, drawing all reasonable inferences in
favor of the nonmovant.” Green Edge Enters., LLC v.
Rubber Mulch Etc., LLC, 620 F.3d 1287, 1295 (Fed. Cir.
2010) (citing Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986)). Summary Judgment is appropriate
when there is no genuine issue of material fact and the
moving party is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(a); Anderson, 477 U.S. at 247–48.

The National Agreement is governed by California
law, “under which the district court’s interpretation . . .
presents a question of law that we review de novo.”
Alfred E. Mann Found. For Scientific Research v. Co-
chlear Corp., 604 F.3d 1354, 1359 (Fed. Cir. 2010) (citing
DVD Copy Control Ass’n v. Kaleidescape, Inc., 176 Cal.
App. 4th 697, 713 (Ct. App. 2009)).
INTEL CORP v. NEGOTIATED DATA 7

B. Analysis

The parties here ask this court to determine whether
the National Agreement, which licenses National Patents
to Intel, automatically extends to any reissue patents that
are derived from those licensed National Patents.

1. 35 U.S.C. § 252

N-Data contends that 35 U.S.C. § 252 as a whole de-
fines a nuanced arrangement where only substantially
identical claims reach back to the date of the original
patent and argues that the Agreement expressly covers
only patents owned or controlled by National during the
term of the license. See Seattle Box Co. v. Indus. Crating
& Packing, Inc., 731 F.2d 818, 827 (Fed. Cir. 1984). Thus,
according to N-Data, while the Agreement covered the
Original Patents, it does not cover the Reissue Patents,
which were each issued directly to N-Data after the
Agreement had expired. See Intergraph, 241 F.3d at
1355. According to N-Data, “upon surrender at reissue,
‘[t]he original claims are dead,’” Appellant’s Br. 27 (al-
teration in original) (quoting Seattle Box, 731 F.2d at
827), and the resulting reissue patent is a distinct prop-
erty right that does not simply replace the original patent
in an existing agreement. See Altvater, 319 U.S. at 360;
Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d 852,
856 (Fed. Cir. 1999); Spectronics Corp. v. H.B. Fuller Co.,
940 F.2d 631, 636–38 (Fed. Cir. 1991).

Intel, however, focuses on § 252’s language that
“every reissued patent shall have the same effect and
operation in law, on the trial of actions for causes thereaf-
ter arising, as if the same had been originally granted in
such amended form.” According to Intel, when a cause of
action arises after reissue, § 252 provides that the reissue
patent takes the place of the original patent nunc pro
tunc, as if the reissued patent had been issued at the time
8 INTEL CORP v. NEGOTIATED DATA

of, and instead of, the original. See 35 U.S.C. § 252. Intel
points to language nearly identical to this portion of § 252
in the statutes governing certificates of correction, 35
U.S.C. §§ 254 and 255, and argues that this court has
held that in that context, this same language indicates
that the corrected patent replaces the original nunc pro
tunc. Sw. Software, Inc. v. Harlequin, Inc., 226 F.3d 1280,
1295 (Fed. Cir. 2000). Thus, under Intel’s reading of
§ 252, the Reissue Patents should be treated as the Origi-
nal Patents; because the Original Patents were indis-
putably licensed to Intel, the Reissue Patents are licensed
as well.

Intel’s focus on selected portions of the text of § 252
ignores the specific language of the statute that grants
intervening rights to those who may infringe only new
claims added by reissue. In this important aspect alone,
it is clear that a reissue patent does not simply replace an
original patent nunc pro tunc. See Spectronics, 940 F.2d
at 637–38. Intel’s argument also fails to recognize that
certificates of correction are not generally available to
change the scope of coverage of a patent in the same way
as a reissue, are not intended to remedy the same kinds of
defects, and have different standards in implementation.
Intel’s attempt to draw parallels between § 252 and the
statutes governing certificates of correction thus falls
short.

At bottom, the scheme set forth in § 252 does not sup-
port Intel’s simplistic proposition that a reissue patent
replaces the original patent nunc pro tunc. The question
remains, however, whether the National Agreement itself
is properly interpreted, under California law, to extend
the license granted thereunder to the Reissue Patents.
INTEL CORP v. NEGOTIATED DATA 9

2. The Agreement

N-Data’s primary argument is quite straightforward:
the Agreement only covers National Patents, National
Patents are patents that issued directly to National
during the term of the Agreement, the Reissue Patents
issued directly to N-Data after the Agreement had ex-
pired, and thus, the Reissue Patents are not covered by
the grant in the Agreement. N-Data further contends
that California law requires that the Agreement be inter-
preted in light of the parties’ intent while contracting, and
“the parties’ general intent must be informed and limited
by the particular provisions of the National License.”
Appellant’s Br. 14. N-Data argues that the district court
erred by discounting Intergraph’s interpretation of the
National Agreement and Altvater’s proscription on re-
writing a private contract to include a patent that did not
exist at the time the parties formed the contract. N-Data
also points to 35 U.S.C. § 261, which makes any interest
in a patent assignable, and McCoy v. Mitsuboshi Cutlery,
Inc., 67 F.3d 917, 920 (Fed. Cir. 1995), to argue that
National’s interest in any potential reissue patents could
have been licensed by contract, but here, was not. Fi-
nally, N-Data disagrees with the district court’s conclu-
sion that excluding reissue patents from licenses like the
Agreement will allow for manipulation of the parties’
intentions; here N-Data’s Reissue Patents are broader
than the Original Patents, and Intel therefore never had
any rights under the new reissue claims. Thus, there is
no way N-Data’s conduct manipulates the system.

Intel agrees that under California law, a contract
must be interpreted to give effect to the parties’ mutual
intent. See Cal. Civ. Code § 1636. Intel contends, how-
ever, that in order to realize the parties’ intention to avoid
future patent infringement litigation, the Agreement
broadly licensed all of National’s patent rights; the
Agreement did not license specific claims of any patents.
10 INTEL CORP v. NEGOTIATED DATA

Instead, the reissued patent covers “the” licensed inven-
tion from “the” original patent. See Oral Arg. at 22:55–
23:50, available at http://www.cafc.uscourts.gov/oral-
argument-recordings/2011-1448/all/intel.html. Thus,
according to Intel, the district court correctly interpreted
the contract as granting Intel a license to not only original
patents, but also to any reissue patents that were derived
therefrom and were directed to the inventions disclosed
therein.

As the district court correctly noted, the key question
in this case is not whether the Reissue Patents are Na-
tional Patents under the definition set forth in the
Agreement, but whether the Agreement evinces an intent
on the part of the parties that Reissue Patents should be
treated as National Patents under the Agreement. In this
regard Intergraph is inapposite—that case only dealt with
whether or not the National Agreement covered patent
applications held momentarily by National as part of a
corporate transaction in which a subsidiary possessed the
applications but then immediately sold them, such that
the applications never issued as National Patents. See
Intergraph, 241 F.3d at 1355–56.

Nor does Altvater compel the conclusion that the Reis-
sue Patents are not covered by the National Agreement.
319 U.S. 359. The issue that the Supreme Court consid-
ered in Altvater was whether there was a controversy
between the parties when the district court found that
there was not a valid license between the parties. 319
U.S. at 364–66. The language facially supporting N-
Data’s position is a restatement of the district court’s
findings, not a holding of the Supreme Court. The Court
in Altvater was not deciding whether the license agree-
ment between the parties terminated because of surren-
der and reissue. Id. at 362, 364. Altvater cannot mean
that reissue of certain National Patents terminates the
National Agreement; Altvater has no bearing on whether
INTEL CORP v. NEGOTIATED DATA 11
the National Agreement grants to Intel rights to reissue
patents derived from National Patents and it does not
compel adoption of the sweeping rule N-Data derives from
it.

Section 251, which at the time the Agreement was
signed provided in relevant part:

[w]henever any patent is, through error without
any deceptive intention, deemed wholly or partly
inoperative or invalid, by reason of a defective
specification or drawing, or by reason of the pat-
entee claiming more or less than he had a right to
claim in the patent, the Commissioner shall, on
the surrender of such patent . . . reissue the patent
for the invention disclosed in the original patent,
and in accordance with a new and amended appli-
cation, for the unexpired part of the term of the
original patent. No new matter shall be intro-
duced into the application for reissue.

35 U.S.C. § 251 (1976) (emphasis added).

Section 251 does not refer to issuance of “a” reissue
patent for “an” invention; it specifically refers to reissue of
“the” inoperative or invalid patent for “the” invention
disclosed in the original patent. 35 U.S.C. § 251. The
statute prohibits addition of new matter via reissue and
indicates that “the” reissued patent will be effective for
the remainder of the unexpired term of the original pat-
ent. Id. Thus, the text of § 251 suggests to a potential
licensee that—in the absence of contrary language in the
licensing agreement—a license under the patent that is
not directed to any specific claims, field of use, or other
limited right will extend to the full extent of protection
provided by law to the invention which is the subject of
that patent. Because the patent laws provide for the
grant of reissue patents under specified circumstances, it
12 INTEL CORP v. NEGOTIATED DATA

is reasonable to conclude that the parties’ mutual intent
at the time of contracting was that the broad and unre-
stricted grant of license under National Patents extended
to any reissues thereof.

This court’s decisions in TransCore v. Electronic
Transaction Consultants Corp., 563 F.3d 1271 (Fed. Cir.
2009), and General Protecht Group, Inc. v. Leviton Manu-
facturing Co., 651 F.3d 1355 (Fed. Cir. 2011), while not
controlling, lend support to the interpretation made by
the district court and affirmed by us here. In both of
those cases this court analyzed a licensee’s rights when
the patent holder received a continuation patent that, if
asserted against the licensee, would derogate from the
licensee’s right to practice the previously licensed patents.

Specifically, in General Protecht we observed that “the
newly asserted continuations are based on the same
disclosure as the previously licensed patents and that, by
definition, the continuations can claim no new invention
not already supported in the earlier issued patents.” 651
F.3d at 1361 (emphasis added). The “same inventive
subject matter was disclosed” in the continuation patents
as in the licensed patents, and “[i]f Leviton did not intend
its license of these products to extend to claims presented
in continuation patents, it had an obligation to make that
clear.” Id.

TransCore and General Protecht recognized that al-
lowing the patent holder to sue on subsequent patents,
when those later patents contain the same inventive
subject matter that was licensed, risks derogating rights
for which the licensee had paid consideration. In situa-
tions where the full extent of an invention disclosed in a
patent is licensed, the concerns raised in General Protecht
and TransCore are equally relevant, regardless of
whether the case involves reissue patents or continuation
patents.
INTEL CORP v. NEGOTIATED DATA 13
N-Data repeatedly argues that “it has made and will
make no assertion of infringement based on reissue
claims that existed in any form prior to 2005,” Appellant’s
Br. 9, thus there is no chance that N-Data will derogate
from Intel’s bargained for rights under the National
Agreement. As support, N-Data cites to its counterclaim,
where it alleged that Intel’s acts exceed the scope of its
license coverage, and to its motion for summary judgment
of non-infringement of newly issued claims of the Reissue
Patents. Intel disagrees, stating that N-Data has broadly
asserted the Reissue Patents, including claims that were
not new claims specific to the Reissue Patents. Appellee’s
Br. 9 (“N-Data asserted . . . original claims of the reissued
patents (e.g., RE39,395 claims 1, 3, 7 and 14, RE39,216
claim 15, and RE38,820 claims 8, 30, 34) . . . .”). Ulti-
mately it is irrelevant which claims were asserted and
when they were asserted. The district court granted
summary judgment to Intel because the Agreement
reflects the intent of the parties to license not only the
literally described patents and patent applications, but
also the reissue progeny of those licensed patents and
patent applications from which the reissues were derived.
This court agrees.

The National Agreement does not explicitly discuss
reissue patents, but the grant of license under the Na-
tional Patents is without limitation and without reference
to any specific claims. The Agreement thus evinces the
parties’ intent that the license so granted extend not only
to the claims then in existence but also to the full scope of
any coverage available by way of reissue for the invention
disclosed. To interpret the Agreement otherwise would
allow the unilateral act of the licensor to place the licen-
see, which sought to eliminate any infringement risk and
effect a global peace with the licensor for all claims in all
patents, in a position of being exposed to further risk
relating to the exact same inventions that were subject to
the license. 35 U.S.C. § 261 is not inconsistent with this
14 INTEL CORP v. NEGOTIATED DATA

conclusion. That a patent owner has the ability to assign
(or reserve) any interest in its patent says nothing about
interpreting a contract that does not expressly discuss
that interest.

CONCLUSION

For the foregoing reasons, the judgment of the district
court is affirmed.

AFFIRMED