IP Law Daily, PATENT—D. Del.: SXM beats patent infringement suit on equitable estoppel grounds, (Mar 26, 2026)

By Carolin Dennis, B.Sc., LL.B., LL.M.

The patent owner’s infringement suit was barred by equitable estoppel because the satellite radio company established the remaining element of reliance.

A satellite radio company established the remaining element of reliance and thus established equitable estoppel, the U.S. District Court in Detroit has held. The district court found that the satellite radio company established that it relied on the patent owner’s misleading conduct in connection with its decision to migrate to the accused high-band system as opposed to the non-infringing low-band alternative (Fraunhofer-Gesellschaft Zur Forderung der angewandten Forschung e.V. v. Sirius XM Radio Inc., No. 1:17-cv-00184-JFB-SRF (D. Del. Mar. 24, 2026)).

Background. Fraunhofer-Gesellschaft zur Forderung der Angewandten Forschung, e.V. (Fraunhofer) is a prominent German non-profit research organization engaged in the development and global licensing of advanced technologies, including digital communication systems. Sirius XM Radio Inc. (SXM) is a major U.S. satellite radio broadcaster that offers subscription-based audio entertainment services across North America, including music, news, sports, and talk radio channels. SXM through its predecessor in interest XM began using Fraunhofer’s technology in the late 1990s. SXM and Fraunhofer were in a long-term, collaborative relationship. That relationship extended back to 1998 through XM but also included various interactions between SXM and Fraunhofer during the migration process.

Fraunhofer was the owner of U.S. Patents Nos. 6,314,289 (the ‘289 patent), 6,931,084 (the ‘084 patent), 6,993,084 (the’084 patent), and 7,061,997 (the ’997 patent) (collectively, Asserted Patents), each of which concerned multicarrier modulation technology used in satellite radio. Fraunhofer sued SXM for infringing its patents. The trial court granted summary judgment in favor of SXM under a theory of equitable estoppel, finding that Fraunhofer had engaged in misleading conduct over a period of years which led SXM to believe that Fraunhofer did not intend to assert its patents, that SXM reasonably relied on that conduct, and that SXM would be materially prejudiced if Fraunhofer was now allowed to proceed with an infringement action. On appeal, however, the Federal Circuit determined that a genuine question of material fact existed on the issue of reasonable reliance and vacated the summary judgment. On remand, the district court took the Federal Circuit’s roadmap, bifurcated the issue of equitable estoppel, and scheduled a bench trial on the reliance element.

Equitable estoppel. The elements required to establish the defense of equitable estoppel are: (1) the patentee engages in misleading conduct that leads the accused infringer to reasonably infer that the patentee does not intend to assert its patent against the accused infringer; (2) the accused infringer relies on that conduct; and (3) as a result of that reliance, the accused infringer would be materially prejudiced if the patentee is allowed to proceed with its infringement action. The district court noted that the Federal Circuit already found that the first and third elements of equitable estoppel have been satisfied, leaving only the reliance element. Further, to show reliance, SXM must have had a relationship or communication with Fraunhofer that lulled it into a “sense of security” in continuing its use of the accused high-band system.

Reliance. The district court found that SXM established reliance by a preponderance of evidence for two independent reasons. First, SXM showed that it considered Fraunhofer’s silence or inaction and that such consideration influenced its decision to migrate to the accused high-band system. SXM continuously evaluated the cost of the migration, such that a substantial change in cost like an infringement threat or future royalties from Fraunhofer would have figured in to its ongoing analysis of the lengthy process. On this basis too, SXM considered Fraunhofer’s silence, and Fraunhofer’s silence influenced SXM’s continued migration to the high-band system.

Moreover, SXM’s reliance on Fraunhofer’s silence was reasonable and provided an independent ground to find reliance. SXM reasonably expected entities it did business with to raise an issue if they had one; if they did not raise an issue that indicated there was none. This expectation especially makes sense here because SXM and Fraunhofer had a close, collaborative, and long-term relationship. Not only did SXM rely on Fraunhofer’s silence generally due to their close relationship, but SXM also relied on Fraunhofer’s silence at specific touchpoints after 2010 where Fraunhofer would be most likely to raise an issue with the Asserted Patents if it had one. Therefore, in the context of the parties’ relationship and interactions, SXM’s belief that Fraunhofer would have raised an issue with SXM’s use of the high-band system if Fraunhofer had one was entirely reasonable, as was SXM’s continued migration to the high-band system based on that belief.

Secondly, SXM also established reliance because it has shown evidence of its corporate practice that it continuously sought to ensure it had licenses to intellectual property. The district court found that SXM had a corporate practice of seeking, and that it otherwise continuously sought to ensure, that it was licensed to intellectual property rights for its broadcast systems, such as the high-band system. Putting aside the Asserted Patents, SXM continuously entered into and maintained licenses to intellectual property used by the high-band and low-band systems. SXM has entered into numerous licenses with third parties. Additionally, in the course of their lengthy relationship, SXM also entered into many license agreements with Fraunhofer.

SXM also closely tracked its third-party licenses to ensure payments were made and costs were tracked. This too supported SXM’s practice of seeking to ensure it was licensed to intellectual property it uses. Therefore, the district court concluded that had Fraunhofer raised an infringement issue, SXM would have sought to minimize its exposure, either through negotiating a license or pursuing other ways to limit its potential exposure to Fraunhofer’s infringement claims. This provides an independent basis for reliance.

Accordingly, SXM established the remaining element of reliance and thus established equitable estoppel.

The Case is No. 1:17-cv-00184-JFB-SRF.

Judge: Bataillon, J.

Attorneys: Brian E. Farnan (Farnan LLP) for Fraunhofer-Gesellschaft Zur Forderung Der Angewandten Forschung e.v. Philip A. Rovner (Potter Anderson & Corroon, LLP) for Sirius XM Radio Inc.

Companies: Fraunhofer-Gesellschaft Zur Forderung Der Angewandten Forschung e.v.; Sirius XM Radio Inc.

Cases: Patent DelawareNews