Jacobs v. Nintendo of America, Inc.
Federal Circuit (Michel, Bryson, Linn), May 28, 2004
U.S. Patent No. 5,059,958 “Manually Held Tilt Sensitive Non-Joystick Control Box.†The invention relates to a video game controller that the operator holds in two hands…[t]he operator tilts the controller to achieve corresponding motion in the video game.
Patent owner and appellant Jordan Spencer Jacobs terminated a patent infringement lawsuit against Analog Devices, Inc., by entering into a settlement and licensing agreement with Analog. The settlement agreement having these two provisions:
3. License. Jacobs grants Analog an irrevocable, perpetual, fully paid up license to take any actions set forth in 35 U.S.C. § 271 which would, but for this license, constitute an infringement or violation of Jacobs’ patent rights under the ’958 patent. Without limiting the foregoing, the license granted hereunder includes the right to make, use, sell, import and export components, including micromachined accelerometers, for use in tilt-sensitive control boxes.
5. Covenant-not-to-sue. Jacobs covenants not to sue Analog for any alleged infringement or violation of the ’958 patent. This covenant-not-to-sue extends to any cause of action having as an element the infringement of the ’958 patent by Analog or any other party, whether occurring in the past, present, or in the future.
Jacobs later sued appellee Nintendo of America, Inc., for infringing the same patent. As a defense, Nintendo asserted that the settlement agreement between Jacobs and Analog protected not only Analog, but also Analog’s customers, including Nintendo, for making and selling devices that incorporated Analog’s components.
The district court agreed and entered summary judgment in Nintendo’s favor.
Federal Circuit found: “…the clause granting Analog the right to sell its accelerometers for use in tilt-sensitive control boxes barred Jacobs from interfering with that right by prohibiting Analog’s customers from using the accelerometers for that authorized purpose by making, using, and selling control boxes incorporating Analog’s devices. That interpretation is in accordance with the basic contract law principle that a party may not assign a right, receive consideration for it, and then take steps that would render the right commercially worthless. See AMP, Inc. v. United States, 389 F.2d 448, 453 (Ct. Cl. 1968) (“a grantor of a property right or interest cannot derogate from the right granted by his own subsequent actsâ€).”
Affirmed.
