Fraunhofer-Gesellschaft v. Sirius Xm Radio Inc.

138 F.4th 1373
Court of Appeals for the Federal Circuit·Decided June 9, 2025·No. 23-2267·Published·Cited by 1 cases

Opinion

United States Court of Appeals for the Federal Circuit

FRAUNHOFER-GESELLSCHAFT ZUR FORDERUNG DER ANGEWANDTEN FORSCHUNG E.V.,

Plaintiff-Appellant

v.

SIRIUS XM RADIO INC.,

Defendant-Appellee

2023-2267

Appeal from the United States District Court for the District of Delaware in No. 1:17-cv-00184-JFB-SRF, Senior Judge Joseph F. Bataillon.

Decided: June 9, 2025

DAVID C. MCPHIE, Irell & Manella LLP, Newport Beach, CA, argued for plaintiff-appellant. Also represented by REBECCA CARSON, BEN J. YORKS; GRANT WILLIS GABRIEL, Los Angeles, CA.

MARK BAGHDASSARIAN, Herbert Smith Freehills Kramer (US) LLP, New York, NY, argued for defendant-appellee . Also represented by ALAN ROY FRIEDMAN, SHANNON H. HEDVAT, TOBIAS B. JACOBY, JASON MOFF, GARY P. NAFTALIS.

2 FRAUNHOFER-GESELLSCHAFT v. SIRIUS XM RADIO INC.

Before LOURIE, DYK, and REYNA, Circuit Judges.

LOURIE, Circuit Judge.

This case returns after we previously vacated the district court’s grant of Sirius XM Radio Inc.’s (“SXM”) motion to dismiss for failure to state a claim. See Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V. v. Sirius XM Radio Inc., 940 F.3d 1372 (Fed. Cir. 2019) (“Fraunhofer I”). Now on summary judgment, the district court again entered final judgment in favor of SXM, concluding that Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V.’s (“Fraunhofer”) claims for infringement of now-expired U.S. Patents 6,314,289, 6,931,084, 6,993,084, and 7,061,997 (“the asserted patents ”) are barred by equitable estoppel. Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V. v. Sirius XM Radio Inc., No. 17-cv-184, 2023 WL 4420414 (D. Del. July 10, 2023) (“Decision”).

We reverse.

BACKGROUND 1

Fraunhofer is a non-profit research organization based in Munich, Germany, that has spent decades developing and patenting various inventions relating to multicarrier modulation (“MCM”) technology. That technology is used for Digital Audio Radio Service (“DARS”), otherwise known as satellite radio.

On March 4, 1998, Fraunhofer entered into an agreement (“the Master Agreement”) with WorldSpace International Network, Inc. (“WorldSpace”), granting WorldSpace

1 Additional background can be found in Fraunhofer I. We recount the relevant facts here for convenience.

FRAUNHOFER-GESELLSCHAFT v. SIRIUS XM RADIO INC. 3

a “worldwide, exclusive, irrevocable license, with the right to sublicense,” to various of Fraunhofer’s patents directed to MCM technology, including those asserted here. J.A. 1629. Also in 1998, Fraunhofer began a collaboration with XM Satellite Radio (“XM”) to bring satellite radio to the United States. Because that work would require use of the MCM technology protected by the asserted patents, Fraunhofer told XM that, in light of the Master Agreement, XM would need to seek a sublicense to those patents from WorldSpace. That condition was made express in a Firm Fixed Price Contract (“FFPC”) between XM and Fraunhofer . J.A. 1707. XM obtained the requisite “irrevocable” sublicense, J.A. 1638–58, and, with the help of Fraunhofer, incorporated the patented MCM technology into its satellite radio system, the XM DARS System, which it launched in 2001.

Later, in 2008, XM, which had successfully developed the “high-band” XM DARS System, joined forces with Sirius Satellite Radio, Inc., which had developed its own “low- band” satellite radio system, to form SXM. 2 As part of that new venture, SXM was faced with the challenge of determining how to proceed with the distinct low- and high-band systems, which were technically incompatible due to physical differences in receivers. Given that both systems were already in commercial use, SXM continued to operate each system while it worked to gradually shift car manufacturers to just one of the two systems. Ultimately, SXM opted to encourage manufacturers to implement the high-band system in new vehicles.

Meanwhile in 2008, WorldSpace filed for bankruptcy. As part of the bankruptcy proceedings, XM and

2 The terms “high-band” and “low-band” refer to the relative range of frequencies used in each system. That is, the “high-band” XM DARS System operates at a higher range of frequencies than the “low-band” system.

4 FRAUNHOFER-GESELLSCHAFT v. SIRIUS XM RADIO INC.

WorldSpace entered into a Settlement Agreement to resolve outstanding payments owed under the sublicense. J.A. 1711–13. The Settlement Agreement characterized itself as an amendment to the sublicense and provided that the agreement could not be assigned or transferred by sale or merger without written consent of the parties. J.A. 1712. Neither Fraunhofer nor SXM, XM’s parent company at that time, were parties to the Settlement Agreement . However, the agreement was made public, with notice to Fraunhofer, during formal bankruptcy proceedings . J.A. 1715–23, 1725–26; see also J.A. 6207 (Fraunhofer ’s corporate representative testifying that Fraunhofer “had long assumed that there existed a sublicensing agreement ” between XM and WorldSpace, and that “[i]t is a fact that [the] sublicensing agreement became public during the bankruptcy proceedings”). Thereafter, in 2011, XM formally merged into and with SXM, terminating the existence of XM. It remains disputed whether any of XM’s rights to the asserted patents attached to its successors, whether via the “irrevocable” sublicense from WorldSpace or via the FFPC with Fraunhofer. Compare Fraunhofer Br. 10 (noting that XM’s Settlement Agreement did not “grant any rights to SXM, which was XM’s parent company at the time”), with SXM Br. 7 (suggesting the FFPC “granted XM and its successors a license” to the asserted patents). In any event, with or without a license, SXM continued to use the XM DARS System, incorporating the allegedly infringing technology.

Also at the bankruptcy court, in 2010, WorldSpace rejected the Master Agreement, which “was equivalent to a breach occurring ‘immediately before the date of the filing of the [bankruptcy] petition.’” Fraunhofer I, 940 F.3d at 1375–76 (alteration in original) (quoting Mission Prod. Holdings, Inc. v. Tempnology, LLC, 587 U.S. 370, 374 (2019)). The breach gave Fraunhofer the right to terminate the Master Agreement. Id. It remains disputed whether

FRAUNHOFER-GESELLSCHAFT v. SIRIUS XM RADIO INC. 5

the agreement was actually terminated at that time. Compare Fraunhofer Br. 10, with SXM Br. 9.

Years later, in 2015, Fraunhofer notified SXM that it believed SXM was infringing the asserted patents. See J.A. 444, 1800–03. It explained its belief that “the [Master Agreement] between Fraunhofer and World[S]pace was terminated as part of the World[S]pace bankruptcy” in 2010, J.A. 1802, such that “substantial rights [in the asserted patents had] reverted to Fraunhofer,” J.A. 1800. The next month, Fraunhofer sent a letter to WorldSpace claiming that the Master Agreement was “terminated” in the context of the bankruptcy proceedings, and to the extent that was not the case, it had been terminated for cause under German law and by its own terms. Fraunhofer I, 940 F.3d at 1376; J.A. 1812–13. Thus, in Fraunhofer’s view, the Master Agreement “terminated [in 2010] pursuant to the [bankruptcy c]ourt-approved agreement, with all patent rights reverting to Fraunhofer.” Fraunhofer Br. 10 (citing J.A. 1769–70).

On February 22, 2017, Fraunhofer filed its complaint in the U.S. District Court for the District of Delaware, alleging that various aspects of the XM DARS System infringed the asserted patents. J.A. 167–74; see also J.A. 434–45 (Amended Complaint). The district court dismissed the case in its entirety on the ground that SXM had a valid license to the asserted patents. Fraunhofer I, 940 F.3d at 1374. We vacated the judgment and remanded for further proceedings. Id. at 1383. The case thereafter proceeded and, following discovery, the parties collectively filed thirteen motions for summary judgment.

Free access — add to your briefcase to read the full text and ask questions with AI

Fraunhofer-Gesellschaft v. Sirius Xm Radio Inc., 138 F.4th 1373 (Fed. Cir. 2025).

138 F.4th 1373 (Fraunhofer-Gesellschaft v. Sirius Xm Radio Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related