## Facts

- On May 26, 2000, Nano-Proprietary, Inc. (NPI), a technology company, entered into a patent license agreement with Till Keesmann, a German citizen and inventor. (Some sources note the case title misspells Keesmann’s name.)
- The agreement granted NPI an exclusive, worldwide license to certain Keesmann patents, including the right to grant sublicenses.
- The parties expected NPI to generate revenue by selling sublicenses to third parties.
- NPI agreed to support Keesmann in maintaining the patents, including work aimed at strengthening the patents, and to enforce the patents against infringers.
- Keesmann agreed not to license the covered patents to anyone else and not to unreasonably withhold approval of NPI’s proposed sublicenses.
- As consideration, NPI agreed to pay Keesmann royalties on a quarterly basis, totaling $1 million within four years from the start of the agreement.
- The patents related to carbon nanotubes, which the parties believed had significant potential in the flat-panel display market and could compete with existing display technologies.
- On March 22, 2006, Keesmann sent NPI a notice purporting to terminate the license, claiming NPI was in default for (i) failing to actively market the patents, (ii) failing to adequately enforce the patents, and (iii) failing to comply with audit requests.
- NPI disputed that it was in default and filed suit in the U.S. District Court for the Northern District of Illinois seeking to stop Keesmann from terminating the agreement.
- NPI moved for a preliminary injunction to prevent termination (and related interference with its exclusive rights) while the litigation proceeded; Keesmann argued, among other points, that the public would be harmed if valuable patents were effectively put on hold during the case.

## Issues

1. Whether NPI satisfied the requirements for a preliminary injunction to prevent Keesmann from terminating the exclusive patent license pending final resolution, including showing a likelihood of success on the merits and irreparable harm.

## Decision

- The court granted NPI’s motion for a preliminary injunction.
- The court found NPI made a sufficient showing, at the preliminary stage, that it was likely to succeed on its claim that Keesmann lacked a contractual basis to terminate the license and that NPI had performed its contractual duties.
- The court concluded NPI faced irreparable harm absent an injunction because termination would strip NPI of the exclusivity and control it had bargained for, threatening business opportunities tied to sublicensing and related commercial relationships in ways not readily fixed by money damages alone.
- The court determined the balance of harms favored preserving the status quo during the litigation: NPI risked losing its exclusive position, while Keesmann’s competing harm was primarily a delay in pursuing inconsistent arrangements until the merits were decided.
- The court rejected Keesmann’s public-interest objection that the patents would be “frozen,” concluding that interim relief was appropriate to maintain the parties’ existing contractual allocation of rights while the court adjudicated the dispute.
- The injunction barred Keesmann from terminating the license and from acting inconsistently with NPI’s exclusive rights during the pendency of the litigation.

## Legal Principles

- A party seeking a preliminary injunction must show a likelihood of success on the merits, irreparable harm without interim relief, that the balance of harms favors the movant, and that the requested relief is consistent with the public interest.
- In disputes over an exclusive patent license, loss of exclusivity and loss of the contractual right to control sublicensing opportunities may constitute irreparable harm when the resulting injury is difficult to measure with reasonable certainty.
- When termination of a contract is contested and the asserted defaults are disputed, a court may issue injunctive relief to preserve the contractual status quo until the merits are resolved.

## Conclusion

The court preliminarily enjoined Till Keesmann from terminating or otherwise interfering with Nano-Proprietary’s exclusive worldwide license to certain carbon nanotube patents, finding that NPI showed a sufficient likelihood of success that termination was not contractually justified and that loss of exclusivity and related business opportunities would cause irreparable harm pending final judgment.


Nano-Proprietary, Inc. v. Keesmann, 2007 WL 433100, No. 06 C 2689 (2007)