## Facts

- Wang owned two U.S. patents relating to single in-line memory modules (SIMMs).
- Wang sued Oki for infringement; the dispute was settled by a license agreement.
- Under the license, Oki paid $850,000 and agreed to pay running royalties on licensed products.
- The license included a most-favored-licensee (MFL) clause requiring Wang to notify Oki and extend the same terms if Wang later granted more favorable running-royalty terms to another licensee.
- In 1993 Wang entered a license with Hyundai covering the same patents; Hyundai paid $750,000 described as a pre-paid running royalty for a retroactive period, agreed to running royalties through 1994, and received a release for past infringement.
- Oki stopped paying royalties, asserting its products were not covered and that the Hyundai deal breached the MFL clause.
- The court referred coverage and contract issues to a special master; the decision addressed objections to the special master’s report and competing summary judgment requests, with patent invalidity issues deferred.

## Issues

1. Whether Oki’s memory modules were within the licensed scope such that Oki owed running royalties under the license.
2. Whether Wang’s later Hyundai agreement provided “more favorable” running-royalty terms triggering the MFL clause.
3. If the MFL clause was breached, whether that breach excused Oki’s nonpayment or rendered the license unenforceable as to royalties.

## Decision

- The court largely adopted the special master’s findings and concluded Oki’s modules were covered for purposes of the license, entitling Wang to royalties.
- The court held the Hyundai agreement did not provide more favorable “running-royalty” terms within the meaning of the MFL clause.
- Because no MFL breach was shown, Oki remained obligated to pay royalties under the license, and Wang was entitled to summary judgment on its royalty claim within the scope of the ruling.
- Patent invalidity defenses were held in abeyance and not decided in this order.

## Legal Principles

- Royalty obligations under a patent license turn primarily on interpretation of the license contract; where material facts relevant to construction are not genuinely disputed and the language is clear, the issue may be resolved on summary judgment.
- An MFL clause expressly tied to “running royalties” is construed to address ongoing royalty terms (rates/structure for future sales), not necessarily the overall economics of a settlement.
- Differences in lump-sum consideration and releases resolving past infringement claims do not, without clear contract language, constitute more favorable “running-royalty” terms that trigger an MFL clause.
- Absent a proven material breach by the licensor of an MFL provision, the licensee remains bound to perform ongoing royalty obligations under the license.

## Conclusion

The court enforced the Wang–Oki license, finding Oki’s products covered for royalty purposes and rejecting Oki’s MFL defense because the Hyundai agreement’s release and lump-sum payment addressed past liability rather than providing more favorable running-royalty terms; Oki’s royalty obligations therefore remained enforceable, with patent invalidity issues left for later proceedings.


Wang Labs., Inc. v. OKI Elec. Indus. Co., 15 F. Supp. 2d 166 (D. Mass. 1998)