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JP Morgan Chase Bank v. DataTreasury Corp.
United States Court of Appeals for the Fifth Circuit
823 F.3d 1006 (2016)
A license agreement between JP Morgan Chase Bank, N.A. (Chase) (plaintiff) and DataTreasury Corporation (Data) (defendant) granted Chase unlimited use of Data’s patented check-processing technology. The agreement was the result of a settlement between Chase and Data in prior litigation in which Data alleged that Chase infringed its patents. Under the agreement, Chase paid Data $70 million in installments that the agreement expressly treated as a lump-sum payment and not a running royalty. Thus, Chase was obligated to pay the entire $70 million royalty from the outset of the agreement and could not stop paying the installments even if Chase stopped using Data’s patents. The agreement also granted Chase most-favored-licensee status. Specifically, if Data licensed the patents to any other entity, Chase was entitled to the benefit of any more favorable terms granted to the other licensee. The most-favored-licensee provision also required Data to notify Chase upon the execution of any more favorable license. Data subsequently licensed the patents to a lower-volume licensee at a much lower lump-sum price and did not timely notify Chase under the terms of the license agreement. Chase sued Data for breach of contract, and the district court entered judgment in favor of Chase. Data appealed.
Rule of Law
Holding and Reasoning (Davis, J.)
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