Fraunhofer-Gesellschaft Zur Förderung Der Angewandten Forschung E.V. v. Sirius XM Radio Inc., No. 18-2400 (Fed. Cir. 2019)Annotate this Case
Fraunhofer’s patents relate to multicarrier modulation for transmitting a main data stream over multiple carrier data streams, which is useful in satellite-based communication networks. In 1998, Fraunhofer gave WorldSpace a Master Agreement for a “worldwide, exclusive, irrevocable license, with the right to sublicense” the technology. SXM entered into a Sublicense Agreement with WorldSpace. Fraunhofer assisted SXM in developing a satellite communication system utilizing Fraunhofer’s technology. In 1999, SXM and Fraunhofer entered into a Technical Consulting Contract, confirming that the patents were exclusively licensed to WorldSpace. Fraunhofer allegedly constructed a system for SXM using the technologies covered by the patents. In 2008, WorldSpace filed for bankruptcy and rejected the Master Agreement. Fraunhofer did not terminate the agreement but filed an administrative claim for amounts unpaid under the Master Agreement. WorldSpace did not terminate the Sublicense Agreement. The bankruptcy court approved a settlement between WorldSpace and SXM, stating that the sublicense would remain in effect. SXM continued to use the technology. In 2015, Fraunhofer sent SXM a letter, alleging that SXM was infringing patents that were covered in the Master Agreement and Sublicense Agreement. Fraunhofer also sent WorldSpace a letter, claiming that the Master Agreement was terminated by rejection in bankruptcy and under German law. Fraunhofer sued SXM, alleging infringement. The district court dismissed, finding that SXM had a valid license to the patents-in-suit. The Federal Circuit vacated, concluding that the license defense cannot be resolved on a motion to dismiss.