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Judge Cote Interprets Covenant Not to Sue as Broader Than License Grant Within the Same Contract

On Apri1 15, 2019, District Judge Denise Cote (S.D.N.Y.) denied Defendant St. Lawrence Communications, LLC ("SLC")'s motion for summary judgment that the scope of a covenant not to sue does not preclude a separate lawsuit for patent infringement against LG Electronics, Inc. ("LG") in the Eastern District of Texas. In the E.D. Tex. lawsuit, SLC and its successor-in-interest, EVS Codec Technologies, LLC ("ECT") allege that LG infringes a patent that covers an audio coding standard called "Enhanced Voice Services" ("EVS").

On November 28, 2018, LG filed the S.D.N.Y. lawsuit for breach of a Patent License Agreement ("PLA") that the parties had entered into on December 31, 2015 to resolve a prior patent infringement dispute involving a different standard—the Adaptive Multi-Rate–Wideband ("AMR-WB") speech coding standard. LG alleges that in commencing the E.D. Tex. lawsuit, SLC violated the covenant not to sue ("Covenant") contained in the PLA. The Covenant provides: "[SLC] hereby covenants not to sue [LG] for infringement of any patents owned or controlled or licensable by [SLC] . . . solely with respect to LG Products . . . ." "LG Products" are defined in the PLA, in relevant part, as "any service or product . . . commercially available to an End-User as of the Effective Date and any upgrades, enhancements and natural evolutions thereof now or hereafter made . . . by or on behalf of [LG] and/or its Affiliates."

On March 15, 2019, SLC sought summary judgment that the scope of the Covenant is inapplicable because the E.D. Tex. lawsuit involves the EVS standard, and the PLA is limited to the AMR-WB standard. SLC pointed to the license grant in the PLA, which was "for the purpose of encoding and/or decoding data in according with the AMR-WB Standard," and which "specifically exclude[d] any rights under the Licensed Patents to practice any standard other than the AMR-WB Standard." SLC argued that applying the Covenant would render the license grant meaningless.

The Court rejected SLC's argument. It reasoned that nothing in the text of the Covenant indicates that it is limited by the scope of the license grant and that a covenant not to sue is not the same as a license.

Case: LG Elecs. Inc. v. St. Lawrence Comms., LLC, No. 18-cv-11082, Dkt. No. 97 (S.D.N.Y. Apr. 15, 2019).