## Facts

- A research foundation owned two patents covering an apparatus and method for producing curled wood flakes used in the potpourri industry.
- The foundation granted Meadow River an exclusive license to make, use, and sell products made on the patented machine in the United States; an amendment expanded rights to a worldwide exclusive license to make, have made, use, and lease the patented equipment.
- Meadow River granted sublicenses to Curlpak and others; Curlpak also issued sublicenses.
- The license agreement expressly disclaimed representations or warranties concerning the patents.
- Meadow River later learned facts suggesting the patented invention may have been in commercial use more than one year before the patent application, potentially rendering the patents invalid under federal patent law.
- Meadow River stopped paying royalties and demanded that the foundation act against alleged infringers.
- Meadow River and Curlpak sued for breach of contract (including lack of consideration based on alleged invalidity), fraud in the inducement, and indemnity for potential liability to sublicensees.
- The foundation counterclaimed for breach of contract based on nonpayment of royalties and related alleged breaches.
- The trial court converted a motion to dismiss into a motion for summary judgment and granted judgment for the foundation on all claims; Meadow River and Curlpak appealed.

## Issues

1. Whether alleged patent invalidity (and alleged knowledge of invalidity) rendered the license void for lack of consideration or supported a breach-of-contract claim despite an express disclaimer of warranty.
2. Whether the evidence created a genuine issue of material fact that the foundation fraudulently induced the license by misrepresenting or concealing facts bearing on patent validity.
3. Whether the foundation owed indemnity to the licensee/sublicensee for losses or liabilities to sublicensees arising from alleged patent invalidity.

## Decision

- The Court of Appeals affirmed summary judgment for the foundation.
- The license was supported by consideration notwithstanding alleged invalidity, given the rights granted and the contract’s express risk allocation.
- The fraud in the inducement claim failed for lack of evidence sufficient to create a triable issue, including in light of the express disclaimer and lack of reasonable reliance.
- The indemnity claim failed because the agreement did not provide indemnity for invalidity-related losses and no actionable fraud was shown.

## Legal Principles

- Summary judgment is proper where the record shows no genuine issue of material fact and the movant is entitled to judgment as a matter of law, with evidence construed against the movant.
- A license agreement granting exclusive rights and related permissions may be supported by consideration even if the licensed patents are later alleged to be invalid.
- An express disclaimer of representations or warranties regarding patent validity can bar claims that recast the agreement as implicitly promising validity and can defeat asserted reliance for fraud based on implied assurances.
- Indemnity obligations must arise from contract or an established legal duty; absent an indemnity provision or actionable wrongdoing, a licensor is not liable for a licensee’s downstream sublicensee exposure tied to alleged patent invalidity.

## Conclusion

The court enforced the parties’ contractual allocation of risk: because the license expressly disclaimed any warranty concerning the patents, alleged invalidity did not defeat consideration or support breach, fraud, or indemnity theories, and summary judgment for the licensor was affirmed.


Meadow River Lumber Co. v. Univ. of Ga. Research Found., Inc., 233 Ga. App. 169, 503 S.E.2d 655 (Ga. Ct. App. 1998)