In Zenith Electronics Corp. v. PDI Communications System, Inc., the Court of Appeals for the Federal Circuit addresses the issue of an implied license as a defense to a patent infringement claim. 2007-1288, -1321 (Fed. Cir. April 16, 2008 ) (click here for a copy of the decision). Zenith owns two patents, U.S. Pat. Nos. 5,495,301 and 5,502,513. Both patents are generally directed to televisions and wired remote control devices used in hospital rooms. Three companies manufactured and distributed digital pillow speakers under licenses of the ‘301 patent. PDI began manufacturing televisions that were compatible with the digital pillow speakers that used Zenith codes. Zenith alleged that PDI directly infringed its patents by testing the televisions with speakers and indirectly infringed by providing the televisions to customers.

After several arguments regarding validity, the district court determined PDI held an implied license under the ‘301 patent. Generally, the Federal Circuit has two requirements for the grant of an implied license: ”First, the equipment involved must have no noninfringing uses” and “[s]econd, the circumstances of the sale must ‘plainly indicate that the grant of a license should be inferred.” Met-Coil Sys. Corp. v. Korners Unlimited, Inc., 803 F.2d 684, 686 (Fed. Cir. 1986). In Zenith, the court found an implied license under the ‘301 patent based on the express license between Zenith and the manufacturers of the pillow speakers. The court determined there were no limitations on the license for the ‘301 patent and use of products thereunder was therefore subject to an implied license.