## Facts

- DataTreasury Corporation (DTC) owned patents covering electronic check-processing technology.
- DTC previously sued JP Morgan Chase Bank, N.A. (JPMC) for willful patent infringement; the dispute ended in a 2005 settlement and license.
- The license granted JPMC unlimited rights to use the patented technology as to time and volume in exchange for a $70 million lump-sum payment made in installments over multiple years.
- The agreement characterized the consideration as a lump sum rather than a running royalty; JPMC owed the full amount regardless of later usage.
- The license included a most-favored licensee (MFL) clause intended to ensure JPMC received terms at least as favorable as terms later granted to other licensees.
- DTC later granted another bank an unlimited license for a substantially lower lump-sum price and did not timely notify JPMC as contemplated by the agreement.
- JPMC sued for breach of contract, seeking a refund equal to the difference between its lump-sum obligation and the lower lump sum paid by the later licensee.

## Issues

1. Whether the later license’s lower lump-sum price constituted “more favorable” terms under the MFL clause, entitling JPMC to equivalent terms.
2. Whether the proper comparison under the MFL clause was a direct comparison of the lump-sum economic terms of two unlimited licenses, rather than an analysis based on transaction volume or other asserted structural differences.

## Decision

- The Fifth Circuit affirmed the judgment for JPMC.
- The court held the later agreement was “more favorable” because it provided comparable unlimited rights for a lower lump sum.
- The court approved a monetary remedy placing JPMC on equal economic footing: a refund equal to the difference between what JPMC owed/paid and the later licensee’s lesser lump sum.

## Legal Principles

- An MFL clause in a license agreement is enforced according to its contract terms to prevent a licensor from granting later licensees materially better economic terms without extending the benefit to the protected licensee.
- Where both agreements are unlimited licenses purchased for lump-sum consideration, a lower lump-sum price in a later agreement can be “more favorable” even if the later licensee’s usage volume differs.
- When an MFL clause is triggered by a later lower-priced lump-sum license, an appropriate remedy may be a refund or monetary adjustment that equalizes the protected licensee’s total consideration to the later, more favorable deal.

## Conclusion

The Fifth Circuit enforced the MFL clause by treating the relevant comparison as the overall lump-sum economic bargain for comparable unlimited rights and affirmed a refund remedy to ensure JPMC did not pay more than a later licensee for the same type of license.


JP Morgan Chase Bank, N.A. v. DataTreasury Corp., 823 F.3d 1006 (5th Cir. 2016)