Sky Windpower (Sky) is a California company that markets high altitude wind capture technology. Sky is the exclusive licensee of U.S. Patent No. 6,781,254 (’254 Patent), which is entitled “Windmill kite” and relates to a flying electric generator (FEG).
The FEG is essentially a kite with several rotors comprising aerofoil blades (their swept areas indicated by circles 5) attached to platform frame members (3, 4). Each rotor extends from a nacelle (6) that contains a gear box, a dynamo and a control mechanism to control the angle of the rotor.
Cables (8) may contain tethering lines to maintain the platform at a substantially fixed location and conductors to connect the dynamos to a ground level electrical supply.
According to the ‘254 Patent, the FEG solves problems of the prior art relating to platform stability and the need to winch down the platform during times of weak or no wind.
The ‘254 Patent explains that having at least three strategically placed rotors susceptible to blade pitch control stabilizes the platform. In addition, the dynamos receive power and function as motors to drive the rotors for short periods, thereby keeping the kite aloft when there is no wind.
Bryan W. Roberts, the inventor and owner of the ‘254 Patent, has been involved in two rounds of litigation with a company called Baseload Energy (Baseload) over the validity of the patent and certain rights to the technology.
The first case – a dispute over an agreement between Roberts and Baseload to enter into a joint venture – ended in a Settlement Agreement.
The Settlement Agreement granted Baseload an option to take a nonexclusive license under the ‘254 Patent and contained fairly standard releases from liabilities, claims, etc. for both parties, though the releases expressly excluded disputes arising from the option provision.
After the option lapsed in the fall of 2008, Baseload filed a lawsuit against Roberts in federal court in Washington, DC seeking a declaratory judgment that the ‘254 Patent is invalid and unenforceable. Roberts moved for summary judgment on the ground that Baseload’s claims were barred by the Settlement Agreement.
The district court granted the motion and held that the terms of the Settlement Agreement barred “all claims between the parties.”
Baseload appealed, and in a recent decision, the U.S. Court of Appeals for the Federal Circuit reversed. The Federal Circuit held that the language of the Settlement Agreement did not release claims of infringement of the ‘254 Patent or the accompanying defenses of invalidity or unenforceability.
According to the decision, the release provision was not sufficiently clear and unambiguous to release patent invalidity claims because it lacked specific language regarding invalidity issues. The existence of the option provision was also significant because, the Federal Circuit reasoned, a license wouldn’t be necessary where infringement claims are barred:
Most importantly, the parties could not possibly have intended to release any and all patent infringement claims, because the Settlement Agreement granted Baseload an option to acquire a nonexclusive license to use the technology claimed by the ‘254 patent. The license provision would be unnecessary if all infringement claims under the ‘254 patent were released. . . .The parties must have intended to exclude infringement from the scope of the Settlement Agreement.
The Federal Circuit went on to hold that if infringement claims were preserved, the associated defenses of invalidity and unenforceability were also preserved.
The Federal Circuit remanded the case to the district court, where Baseload’s invalidity and unenforceability claims will go forward.
Eric Lane is a patent attorney at Luce, Forward, Hamilton & Scripps in San Diego and the author of Green Patent Blog. Mr. Lane can be reached at email@example.com.