Retroactive License From Sole Patent Owner Can Be Sub-Licensed

Abstract

A New York district court recently held that a retroactive license agreement allowed a licensee to grant a retroactive sublicense to corporate subsidiaries. The court also found that product sales from a supplier to a sublicensed affiliate exhausted the patent owner's right to prevent the products from being resold through an unlicensed affiliate.

In Canon Inc. v. Tesseron Ltd.,¹ the District Court for the Southern District of New York held that a patent licensee could grant a retroactive sublicense to its subsidiaries. The court rejected the patent owner's argument that retroactive licenses are invalid. The court also found that product sales from a supplier to a sublicensed affiliate exhausted the patent owner's enforcement rights, and that reselling the products through an unlicensed affiliate did not constitute patent infringement.