Cascades Computer Innovation, LLC v. Samsung Elecs. Co., Nos. 11 C 4574 & 11 C 6235, Slip Op. (N.D. Ill. Sep. 14, 2014) (Kennelly, J.).

Judge Kennelly granted in part defendants Samsung’s and HTC’s motions for summary judgment of patent exhaustion based upon a prior settlement agreement that plaintiff Cascades Computer Innovation (“Cascades”) previously entered with Google, the parent of Motorola Mobility who was previously a defendant in a related suit.  This patent case involves a method for implementing software meant for one computer architecture on another computer architecture.  Defendants were accused based upon the alleged use of the Dalvik Virtual Machine.

The license covered:

“Google Products” including, among others, “all Motorola and Nexus devices, but . . . excludes mobile devices manufactured by third parties and running the Android OS except any Nexus-branded devices.

The license also provided a release and a covenant not to sue.  The release provided that:

Cascades releases and discharges Google, Motorola, Google Affiliates, Google Partners . . . from any and all claims, demands, debts, liabilities, actions, causes of actions or suits of whatever kind of nature, asserted or not asserted, known or unknown, arising out of the claims or matters that have been or could have been asserted by Cascades in the Actions relating to the same facts and circumstances therein, provided that such release and discharge shall not extend to any other defendant in the Actions. 

The covenant not to sue states that

Cascades covenants not to sue Google, Motorola, Google Affiliates and/or Google Partners for any infringement or any other violation of the Cascades Patents based upon any licensed activity, permitted pursuant to this Section, related to any Google Product; provided this covenant does not extend to any other defendant in the Patent Suit.

Google provided the Android operating system to numerous entities, including Samsung and HTC, as open source code, including the Dalvik Virtual Machine.  Looking to the Supreme Court’s Quanta decision, the Court held that because the license authorized Google to convey the Android operating system to others, including Samsung and HTC, the additional restrictions in the license grant were not allowed because they sought to “circumvent the patent exhaustion doctrine and reap multiple gains from a single sale.”

Having determined that there was an authorized sale pursuant to the Google license, the Court turned to the other patent exhaustion factors.  The Court held that there were no reasonable noninfringing uses.  While one Android version, KitKat, allied a user to switch off the Dalvik Virtual Machine in favor of Android Run Time, the Android website expressly warned users against doing so because making the switch runs the risk of malfunctions.  The Court, therefore, granted defendants’ motion for patent exhaustion from the date of the Google license forward.

The Court then turned to use before the Google license agreement was executed.  Holding that the release and covenant not to sue were personal to Google and Motorola and backward looking, the Court held that patent exhaustion did not flow from the release or covenant not to sue before the date of the Google license.  The Court did, however, note that some courts had disagreed holding that a backward looking covenant not to sue exhausted patents.