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TQ Delta LLC v. Adtran Inc.

United States District Court, D. Delaware

May 21, 2018

TQ DELTA, LLC, Plaintiff,
v.
ADTRAN, INC., Defendant. ADTRAN, INC., Plaintiff,
v.
TQ DELTA, LLC, Defendant.

          Brian E. Farnan, Esq., Michael J. Farnan, Esq., FARNAN LLP, Wilmington, DE; Peter J. McAndrews, Esq., Timothy J. Malloy, Esq., Thomas J. Wimbiscus, Esq., Paul W. McAndrews, Esq., Anna M. Targowska, Esq., James P. Murphy, Esq., MCANDREWS, HELD & MALLOY, Chicago, IL.

          Attorneys for TQ Delta.

          Kenneth L. Dorsney, Esq., MORRIS JAMES LLP, Wilmington, DE; Paul M. Sykes, Esq., John E. Goodman, Esq., David W. Holt, Esq., Benn C. Wilson, Esq., Jake M. Gipson, Esq., BRADLEY ARANT BOULT CUMMINGS LLP, Birmingham, AL.

          Attorneys for Adtran.

          MEMORANDUM OPINION

          ANDREWS, U.S. DISTRICT JUDGE

         Presently before the Court are Defendant's Motion for Summary Judgment on the License Issue (D.I. 231) and related briefing (D.I. 232, 255, 274).[1]

         For the reasons that follow, the Court will GRANT Defendant's Motion for Summary Judgment on the License Issue, as to the twenty-eight Patents-in-Suit asserted against products that comply with G.992.3 [ADSL2], G.992.5 [ADSL2], and/or G.993.2 [VDSL2] standards, and as to the other ten Patents-in-Suit (the "Disputed Patents").[2] (D.I. 231).

         I. BACKGROUND

         The Patents-in-Suit relate to Digital Subscriber Line ("DSL") technology. DSL technology "uses digital encoding to provide high-speed data transmission over existing copper wire telephone lines." (D.I. 232 at 3).

         The Patents-in-Suit are subject to a license held by Lantiq Deutschland GmbH ("Lantiq"). (D.I. 233, Exh. 1, § 2, Schedule D). Between 1999 and 2009, Lantiq and its predecessors paid Aware, Inc. ("Aware") to develop DSL technology for use in Lantiq DSL chips. During that time, Lantiq obtained a license to any patents obtained by Aware covering the DSL chips. (D.I. 232 at 1; D.I. 255 at 4-5). As Aware invented new DSL technologies, it entered into new or amended licenses with Lantiq. (See, e.g., D.I. 233, Exh. 26, Amendments 1-7). This allowed the parties "to account for the additional value of the improved [and] different inventions." (D.I. 255 at 7).

         Lantiq purchased Aware's DSL business in 2009. In doing so, Lantiq "acquir[ed] a number of Aware's DSL-related patents, " and renewed "its license to all others" (the "Lantiq License"). (D.I. 232 at 1).

         In 2012, Plaintiff purchased the Patents-in-Suit from Aware, subject to the Lantiq License. (D.I. 232 at 1; D.I. 255 at 5-6). In 2014, Plaintiff filed this patent infringement suit against Defendant. (D.I.I).

         Defendant's accused products contain chips supplied by Lantiq. (D.I. 232 at 1). Defendant contends that as a result, it holds a license to the Patents-in-Suit. (Id.). Plaintiff, on the other hand, contends that Defendant does not hold a license to the Patents-in-Suit. (D.I. 255 atl).

         The parties agree that Defendant holds a license to the Patents-in-Suit under the Lantiq License, unless the patents are covered by an exclusion in the Lantiq License (the "Carve-Out"). (D.I. 232 at 2; D.I. 255 at 6). The only issue before the Court is whether the Patents-in-Suit are excluded from the Lantiq License by the Carve-Out. The license, including the Carve-Out, reads as follows:

(i) Aware hereby grants to Lantiq and its affiliates a non-exclusive, non-transferable (except as specified in Section 10 of the Agreement), perpetual, world wide, royalty-bearing (as set forth in Section 6), irrevocable right and license to the Non-Purchased Patents relating to the DSL Technology to use, have used, develop, have developed, make, have made, provide services related to, market, sell or lease DSL Products and/or Home Networking Products. In no event shall any right or licenses granted by Aware in this Secton 4.1.1 (i) hereunder extend to the use of any Non-Purchased Patents in Wireless Applications. The license granted in this Section 4.1.1 (i) shall not include a license to patents of Aware solely used for or applicable for products compliant with an xDSL standard other than ADSL. 128, DSL.Lite, Full Rate ADSL, ADSL2, or ADSL2, VDSL1 and VDSL2 (including all annexes, appendices, optional features and Derivatives/Extensions).

         (D.I. 233, Exh. 18, § 4.1.1). I refer to the final sentence as the Carve-Out. The license goes on to state:

For clarity: the license[] includes a license to those patents of Aware for products compliant with other standards provided that those patents are applicable to the aforementioned standards.

(Id.) (italics in original). I refer to this as the Clarity Provision.

         The "xDSL standard[s]" referenced in the Carve-Out are promulgated by the International Telecommunications Union ("ITU"). (D.I. 232 at 4). The ITU defines "xDSL" as "[a]ny of the various types of Digital Subscriber Lines." (D.I. 233, Exh. 5 at 2).

         The parties dispute whether Defendant's products are licensed to two different groups of Patents-in-Suit.

         First, the parties dispute whether Defendant's products are licensed to the ten Disputed Patents. Plaintiff alleges that the ten Disputed Patents cover the functionality specified in three particular ITU standards: ITU-T G.998.1 (entitled "ATM-based multi-pair bonding"), ITU-T G.998.2 (entitled "Ethernet-based multi-pair bonding"), and ITU-T G.998.4 (entitled "Improved impulse noise protection for digital subscriber line (DSL) transceivers"). (D.I. 255 at 15; D.I. 233, Exh. 24; D.I. 233, Exh. 7; D.I. 233, Exh. 8). ITU-T G.998.1 and ITU-T G.998.2 together are called "G.bond, " and ITU-T G.998.4 is called "G.inp." (D.I. 232 at 5).

         Second, the parties dispute whether Defendant's products are licensed to twenty-eight other patents. During discovery, Defendant served an interrogatory asking Plaintiff to "explain in detail each and every basis for [its] contention that an [accused product] is not licensed" under the Lantiq License. (D.I. 233, Exh. 2 at 4-6; D.I. 232 at 13). In response, Plaintiff stated:

[Defendant's] Accused Products that use a Lantiq DSL chipset and that implement G.992.3 [ADSL2], G.992.5 [ADSL2], and/or G.993.2 [VDSL2] are licensed under the [twenty-eight] TQ Delta patents, but only to the extent of the G.992.3, G.992.5, ...

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