Travelers Express v. American Express Integrated Payment

Travelers Express Company, Inc. (Travelers) (plaintiff) held patents that covered technology related to money-order processing. American Express Integrated Payment System Inc. (IPS) (defendant) marketed money orders, among other products, and provided payment-processing services. For a period, IPS managed the business of American Express Travel Related Services, Inc. (TRS) (defendant). TRS issued money orders. In 1994, Travelers sued IPS and TRS for patent infringement. In December 1994, the parties participated in a two-day settlement conference, at the end of which the parties signed a handwritten “Settlement Term Sheet,” providing generally that the infringement claims were settled through a license, subject to a definitive agreement. Two weeks later, the parties were unable to agree on any more specific terms but nevertheless signed an agreement stating that “they reached a Settlement Agreement as of December 14, 1994.” The parties also agreed that Travelers could issue a press release stating that Travelers and IPS had entered into a licensing agreement over Travelers’ technology as part of the parties’ settlement and that IPS would be paying a substantial, undisclosed sum to use Travelers’ patents. Thereafter, IPS tendered, and Travelers accepted, a $3 million royalty payment. The parties followed the settlement term sheet and Travelers’ view of the license scope. Travelers continued to inform the public and the court that the patent litigation was settled, and IPS invested over $34 million in new products based on Travelers’ technology. IPS made royalty payments to Travelers totaling $8.7 million. The parties were unable to reach final licensing terms, and in June 1998, the court made a finding that the parties had not in fact entered an enforceable settlement agreement. Travelers renewed its infringement claims, and IPS and TRS asserted the affirmative defense of implied license. The parties moved for partial summary judgment.