Recent ITC Decision Underscores Need for Caution With Purchase Orders and IP Licenses

This article originally appeared as an IP Hot Topic. 

A recent opinion issued by the U.S. International Trade Commission in Certain Power Converter Modules and Computing Systems Containing the Same (Inv. No. 337-TA-1370) serves as a reminder for sellers to be cautious with any IP-related provisions woven into purchase orders submitted by their clients and buyers.

Respondent’s License Defense

In this Section 337 investigation, Complainant Vicor sued various respondents for patent infringement, including Respondent Foxconn. The scope of accused products included various power converter modules used in data center servers as well as artificial intelligence and cloud computing systems. Foxconn raised a license defense based on an IP licensing provision contained in its purchase orders for Vicor power converters. The provision granted Foxconn “a perpetual, irrevocable, non-transferable, and royalty-free license under all intellectual property rights included in the Products supplied” to Foxconn by Vicor, which the Commission found included the relevant patent asserted against Foxconn’s accused products. Because the Administrative Law Judge determined there was no valid acceptance of an offer, he concluded there was no binding contract or license provision. But the Commission disagreed and reversed.