T-MOBILE US, INC. v. KAIFI LLC
Authored by: Jeremy J. Gustrowsky
A dispute over what it means for a patent claim to “survive” a reexamination turned out not to be a patent case at all, at least not for jurisdictional purposes. The Federal Circuit concluded it had no authority to hear the appeal and transferred it to the Fifth Circuit, even though both sides wanted the Federal Circuit to decide it.
KAIFI LLC sued T-Mobile in the Eastern District of Texas for infringing U.S. Patent No. 6,922,728, which covers Wi-Fi calling technology. T-Mobile responded by requesting an ex parte reexamination of the patent at the USPTO. Days before trial, and before the reexamination concluded, the parties settled. Under their settlement and license agreement, T-Mobile made an upfront payment and promised an additional “EPR Payment” if “any Asserted Claim survives the EPR.” The agreement identified the asserted claims by number (1, 2, 3, 5, 7, 10, 11, and 20) and was governed by Texas law. T-Mobile also promised not to challenge the validity or enforceability of the licensed patent going forward.
The Patent Office then issued a reexamination certificate confirming claims 1, 2, 3, 5, 10, 11, and 20 as patentable without amendment. Claim 7 was confirmed as amended. T-Mobile nevertheless refused to make the additional payment and filed a declaratory judgment action based on diversity jurisdiction. Its theory was that “survives” meant more than formal confirmation. According to T-Mobile, KAIFI had argued for materially different claim constructions before the Patent Office than it had in litigation, effectively narrowing the claims, and had committed inequitable conduct by not disclosing its earlier litigation positions to the examiner. The district court disagreed, held the contract language clear and unambiguous, and granted summary judgment to KAIFI on its breach of contract counterclaim.
On appeal, the Federal Circuit never reached the merits. Applying the Supreme Court’s four-part test from Gunn v. Minton, the court asked whether this state law breach of contract claim necessarily raised a substantial question of patent law. It did not. The court explained that there was at least one way to resolve the contract question without touching patent law, which is exactly what the district court did. Look at the reexamination certificate. Claims confirmed without amendment survived. Claims cancelled did not. That reading uses “survives” in its everyday sense.
The court rejected both parties’ jurisdictional arguments. T-Mobile’s reliance on Jang v. Boston Scientific failed because that case genuinely required deciding infringement, while here prosecution disclaimer and inequitable conduct are more properly characterized as defenses, not necessary elements. The court also observed that T-Mobile’s inequitable conduct theory sits uncomfortably alongside its contractual promise not to challenge enforceability. KAIFI, which had earlier moved to transfer the case and then changed position, argued that “survives” carries a specialized patent law meaning. The court found no such meaning in the patent statute or regulations. Its own occasional use of “survived” in reexamination and inter partes review opinions was just ordinary English.
On substantiality, the third Gunn factor, the court found nothing that mattered to the federal system as a whole. No pure issue of federal law was dispositive. The outcome would control no other cases, since the interpretation of one contract term is backward looking and fact specific, and future parties can simply draft around it by saying something like “any asserted claim confirmed to be patentable in the reexamination proceeding.” The government has no direct stake in a private contract dispute. The court also noted that the ‘728 patent expired in January 2024 with no other pending litigation, distinguishing this situation from Xitronix, where the Fifth Circuit had emphasized that a live, enforceable patent was at risk.
The practical takeaway for anyone drafting settlement agreements with contingent payments tied to post-grant proceedings is straightforward. Do not rely on an opaque word like “survives” to carry a sophisticated meaning about claim scope, prosecution history, or candor before the Patent Office. Spell out precisely what triggers the payment, whether amended claims count, and what happens if the patent owner’s positions shift.