Opinion
No. 11–41408.
2013-02-13
TEKELEC, INC., Plaintiff–Appellee v. VERINT SYSTEMS, INC., Defendant–Appellant.
Marvin Craig Tyler, Attorney, Joel Christian Boehm, Jose Antonio Valera, Wilson Sonsini Goodrich & Rosati, P.C., Austin, TX, for Plaintiff–Appellee. Jeffrey Rhodes, Dickstein Shapiro, L.L.P., Washington, DC, Jack Wesley Hill, Ward & Smith Law Firm, Longview, TX, for Defendant–Appellant.
Marvin Craig Tyler, Attorney, Joel Christian Boehm, Jose Antonio Valera, Wilson Sonsini Goodrich & Rosati, P.C., Austin, TX, for Plaintiff–Appellee. Jeffrey Rhodes, Dickstein Shapiro, L.L.P., Washington, DC, Jack Wesley Hill, Ward & Smith Law Firm, Longview, TX, for Defendant–Appellant.
Appeal from the United States District Court for the Eastern District of Texas.
Before HIGGINBOTHAM, ELROD, and HAYNES, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Concurring in the judgment only.
This appeal arises out of a contract dispute between Verint Systems, Inc. (“Verint”) and Tekelec, Inc. (“Tekelec”). The district court awarded summary judgment to Tekelec and denied Verint's cross-motion for summary judgment. We affirm.
I.
The facts of this case begin with a patent dispute between two corporate entities not directly involved in this appeal, Blue Pumpkin Software, L.L.C. (“Blue Pumpkin”), and IEX Corporation (“IEX”). In 2001, IEX—which was, at the time, a wholly owned subsidiary of Tekelec—filed suit against Blue Pumpkin for allegedly infringing U.S. Patent No. 6,044,355 (the “'355 Patent”). In 2005, Blue Pumpkin commenced its own infringement action against IEX. In April 2006, Blue Pumpkin and IEX executed the Blue Pumpkin/IEX Settlement & Cross–License Agreement (“Blue Pumpkin/IEX Agreement”) to resolve their ongoing patent dispute. Under Section 2 of the Agreement, entitled “Settlement and Dismissal of Litigations,” Blue Pumpkin and IEX agreed to settle the two pending infringement actions between them. The only condition to settlement was Blue Pumpkin's payment of an $8,250,000 lump sum fee, on or before April 7, 2006.
See Appendix, No. 1.
Under Section 6.1.2, which creates the right to payment that Tekelec seeks to enforce in this appeal, Blue Pumpkin agreed that beginning on April 1, 2007, it would make six annual payments of $500,000 to IEX (the “Section 6.1.2 Payments”). The Payments are listed under the heading “License Fee/Balancing Payment.” No provision of the Blue Pumpkin/IEX Agreement makes the settlement set forth in Section 2 contingent on Blue Pumpkin's timely tender of the Section 6.1.2 Payments.
Finally, under Section 4.3, IEX granted Blue Pumpkin an “irrevocable, perpetual” license in its '355 Patent. However, under Section 4.3.5, IEX reserved the right to terminate the license “upon Blue Pumpkin's failure to make any of the payments set forth in Section 5.1.2” (the “Termination Provision”). As there is no Section 5.1.2 in the Agreement, and as Section 5 contains no reference to payments, the parties presumably intended the Termination Provision to refer to the aforementioned Section 6.1.2 Payments.
In accordance with the terms of the Blue Pumpkin/IEX Agreement, Blue Pumpkin timely paid IEX the initial settlement fee of $8,250,000, and pursuant to Section 2 of the Agreement, the parties dismissed their infringement actions with prejudice. Shortly after Blue Pumpkin and IEX executed the Agreement, Tekelec sold IEX to NICE Systems, Inc. (“NICE”)—an entity not party to this appeal—in a stock purchase agreement. However, under the separate Assignment of Royalty Rights Agreement (“Royalty Assignment Agreement”), executed at the same time NICE finalized its acquisition of IEX, IEX assigned its right to the six Section 6.1.2 Payments to Tekelec. In the instrument of assignment, IEX also promised that it “would not terminate the [Blue Pumpkin/IEX Agreement] without [Tekelec's] written permission,” and that it would “provide reasonable assistance to [Tekelec] to facilitate the resolution of any failure of Blue Pumpkin” to timely make any of the six Section 6.1.2 Payments due under the Blue Pumpkin/IEX Agreement.
See Appendix, No. 2.
At some point after IEX assigned its right to the Section 6.1.2 Payments to Tekelec but before the first payment came due, Witness Systems, Inc.—also not a party to this appeal—assumed all of Blue Pumpkin's rights and obligations under the Blue Pumpkin/IEX Agreement, including the license in IEX's '355 Patent as well as the obligation to make the six Section 6.1.2 Payments to Tekelec. In accordance with its obligations, Witness timely made the first $500,000 payment to Tekelec on April 1, 2007. In May 2007, Verint, the appellant in this case, acquired Witness, assuming all of its rights and obligations under the Blue Pumpkin/IEX Agreement. On April 1, 2008, Verint timely made the second $500,000 payment to Tekelec.
See Appendix, No. 3.
At this time, Verint was embroiled in its own patent dispute with NICE, involving five separate infringement actions and dozens of patents. In August 2008, Verint and NICE entered into the Verint/NICE Settlement Agreement and Covenant Not to Sue (“Verint/NICE Settlement”) to resolve their ongoing patent disputes on a global, portfolio-wide basis. Both parties recited that they were entering into the Settlement to “compromise, settle, discharge, and resolve, fully and finally,” all claims for patent infringement then pending or assertable between them.
See Appendix, No. 4.
In furtherance of this objective, NICE agreed, both on behalf of itself and its subsidiaries, not to initiate or prosecute any infringement actions against Verint on any and all patents then held by NICE or its subsidiaries (the “Covenant Not to Sue”). The Covenant Not to Sue would begin on August 1, 2008 and terminate on a patent-specific basis, as set forth in the Settlement. Moreover, NICE agreed, both on behalf of itself and its subsidiaries, that “any royalties or other patent damages that may have otherwise accrued” against Verint during the pendency of the Covenant Not to Sue on any and all patents held by NICE or its subsidiaries “shall not accrue as to [Verint]” (the 662“Non–Accrual Clause”). Verint made mirror-IMAGE