Amp Incorporated v. The United States
156 U.S.P.Q. (BNA) 647, 389 F.2d 448, 182 Ct. Cl. 86 (1968)
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Rule of Law:
When a party licenses the right to practice an invention for valuable consideration, the doctrine of legal estoppel creates an implied license under any separate, dominant patent that the licensor subsequently acquires which would be infringed by practicing the licensed invention.
Facts:
- On May 27, 1950, AMP, Inc. entered into a research and development contract with the United States Army to develop a wire-splicing tool.
- The contract granted the government a royalty-free license to practice any 'Subject Invention,' defined as any invention 'conceived or first actually reduced to practice' during the contract, regardless of patentability.
- Pursuant to the contract, an AMP employee, G. H. Byrem, invented a wire-splicing tool, and AMP delivered 60 experimental models to the Army.
- After AMP filed a patent application for the Byrem tool, the contract was completed in June 1953.
- The government subsequently procured approximately 26,000 tools identical to the Byrem tool from other manufacturers, as permitted by the license.
- After the contract's completion, AMP discovered that a pre-existing patent owned by a third party, the Vinson Patent, dominated its Byrem Patent, meaning the Byrem tool infringed the Vinson Patent.
- On November 4, 1963, ten years after the contract was completed, AMP acquired the dominant Vinson Patent.
Procedural Posture:
- AMP, Inc. filed a patent suit against the United States in the U.S. Court of Claims, seeking compensation for unauthorized use of its Vinson Patent.
- The United States raised an affirmative defense, arguing it possessed an implied license under the Vinson patent arising from its prior contract with AMP, Inc.
- The parties stipulated to the facts relevant to the license issue and agreed to defer trial on patent validity and infringement pending the court's resolution of the license defense.
- The case is before the U.S. Court of Claims to decide the sole issue of whether an implied license exists.
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Issue:
Does a contractor who grants the government a royalty-free license to practice a 'Subject Invention' developed under a contract, thereby grant an implied license under a separate, dominant patent that the contractor acquires after the contract's completion?
Opinions:
Majority - Durfee, Judge
Yes. A contractor who grants the government a license to practice an invention developed under a contract also grants an implied license under a dominant patent later acquired by the contractor. This implied license arises by operation of the doctrine of legal estoppel, which prevents a grantor from derogating from or detracting from a right that has been granted for valuable consideration. The contract licensed the government to use the 'Subject Invention'—the idea of the tool itself, not just the Byrem patent. By acquiring the dominant Vinson patent and suing for infringement, AMP is attempting to take back the very right it granted. The court distinguished this from estoppel in pais, noting that legal estoppel does not require a showing of misrepresentation but simply prevents a grantor from negating their own grant through subsequent acts.
Concurring - Davis, Judge
Yes. The government has the right to use the tool, but this right is based on an express license, not an implied one. The contract explicitly granted the government the right to practice the 'Subject Invention,' defined as the 'invention, improvement or discovery (whether or not patentable).' This licensed the underlying idea or conception, not a specific patent. Therefore, the government's right to use the idea is effective against any patent AMP holds that covers that idea, regardless of when or how AMP acquired it. The government was licensed to use the idea, and that idea remains free for government use as against AMP, whether it is embodied in one patent or two.
Analysis:
This case establishes a significant protection for licensees by applying the doctrine of legal estoppel to after-acquired patents. It clarifies that a licensor cannot grant a right with one hand and then effectively take it away with the other by acquiring and asserting a dominant patent. The decision emphasizes that a license for an 'invention' can be broader than a license for a specific patent, thereby protecting the licensee's full benefit of the bargain. This precedent makes it difficult for patent holders to use strategic acquisitions to undermine existing licensing agreements, promoting stability and predictability in technology contracts.
