## Facts

- Jordan Spencer Jacobs owned U.S. Patent No. 5,059,958 covering a manually held, tilt-sensitive video game control box.
- Jacobs previously sued multiple parties, including Analog Devices, Inc. (Analog), alleging infringement involving tilt-sensitive controllers using Analog accelerometers.
- Jacobs and Analog resolved their dispute in a settlement that:
  - Granted Analog an irrevocable, perpetual, fully paid license to perform acts described in 35 U.S.C. § 271 that would otherwise infringe the ’958 patent, including making and selling accelerometer components “for use in tilt-sensitive control boxes.”
  - Included a covenant that Jacobs would not sue Analog’s customers for products incorporating Analog components licensed under the agreement.
- Nintendo was an Analog customer and used Analog accelerometers in its tilt-sensitive controllers.
- After the Analog settlement, Jacobs sued Nintendo for infringement based on Nintendo’s use of Analog accelerometers in Nintendo’s controllers.

## Issues

1. Whether the settlement license and covenant between Jacobs and Analog barred Jacobs’s infringement claims against Nintendo as an Analog customer whose products incorporated Analog components licensed under the agreement.
2. Whether doctrines concerning non-infringing uses of components limited the scope of Nintendo’s protection under the settlement agreement.

## Decision

- The Federal Circuit affirmed summary judgment for Nintendo.
- The court held that the settlement’s license authorized Analog to make and sell accelerometers for use in tilt-sensitive control boxes and that the covenant not to sue extended to Analog’s customers, including Nintendo.
- The court rejected Jacobs’s reliance on the “non-infringing use” theory as irrelevant to construing the parties’ negotiated license and covenant.
- Because the agreement’s terms were clear and presented no genuine dispute of material fact, summary judgment was proper.

## Legal Principles

- A patent settlement agreement may grant a component supplier a broad license to engage in acts that would otherwise infringe under 35 U.S.C. § 271, including selling components for specified uses.
- An express covenant not to sue a supplier’s customers for products incorporating licensed components bars later infringement suits against those customers for the covered conduct.
- Background patent doctrines concerning staple articles or non-infringing uses do not override clear contractual language allocating rights and immunities in a negotiated license and covenant.
- Contract interpretation of an unambiguous license and covenant is a question of law suitable for resolution on summary judgment.

## Conclusion

The Federal Circuit held that Jacobs’s broad license to Analog and covenant not to sue Analog’s customers foreclosed Jacobs’s later patent infringement action against Nintendo for controllers incorporating Analog’s licensed accelerometers.


Jacobs v. Nintendo of Am., Inc., 370 F.3d 1097 (Fed. Cir. 2004)