IP Law Daily, PATENT—Fed. Cir.: Fraunhofer’s satellite radio patent infringement suit against Sirius XM revived on appeal, (Jun 9, 2025)

By Saurabh Kashyap, B.A., LL.B., LL.M.

The district court erred in finding equitable estoppel barred Fraunhofer's claims because Sirius XM failed to show reliance on Fraunhofer's silence.

The U.S. Court of Appeals for the Federal Circuit reversed and remanded a Delaware district court’s decision that had dismissed patent infringement claims brought by Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V. (Fraunhofer ) against Sirius XM Radio Inc. The Federal Circuit held that the district court erred in granting summary judgment based on equitable estoppel because Sirius XM failed to show that it actually relied on Fraunhofer’s silence in continuing to use technology allegedly covered by four now-expired U.S. patents, which Fraunhofer claimed had reverted to its sole ownership following the bankruptcy of their licensee (Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V. v. Sirius XM Radio Inc., No. 23-2267 (Fed. Cir. June 9, 2025)).

Background. The plaintiff/appellant, Fraunhofer, is a prominent German non-profit research organization engaged in the development and global licensing of advanced technologies, including digital communication systems. The defendant/appellee, Sirius XM Radio Inc., 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.

In this lawsuit, Fraunhofer asserted its expired U.S. Patent Nos. 6,314,289 (the ’289 patent), 6,931,084 (the ’084 patent), 6,993,084 (the ’084 II patent), and 7,061,997 (the ’997 patent). These patents cover techniques in multicarrier modulation that improve bandwidth efficiency and signal robustness in satellite transmissions.

In 1998, Fraunhofer granted WorldSpace International Network Inc. a worldwide, exclusive, irrevocable license, with the right to sublicense, covering certain U.S. patents (including the asserted patent) related to multicarrier modulation (MCM) technology. Around the same time, Fraunhofer collaborated with XM Satellite Radio Inc. to develop a high-band digital audio radio system for the U.S. market. Because the relevant technology was already licensed to WorldSpace, Fraunhofer required XM to obtain a sublicense from WorldSpace, which it did. Fraunhofer also provided technical assistance to XM in building the system. The XM DARS (Digital Audio Radio Service) system, a high-band satellite radio platform developed by XM using Fraunhofer’s patented technology, launched commercially in 2001 and became widely used in vehicles.

In 2008, XM merged with Sirius Satellite Radio Inc. to form Sirius XM Radio Inc. (SXM). SXM inherited both XM's high-band and Sirius's low-band satellite systems, which were technically incompatible. SXM ultimately chose to migrate toward XM's high-band system due to greater market penetration. That same year, WorldSpace filed for bankruptcy. As part of the proceedings, in 2010, WorldSpace formally rejected the Master Agreement with Fraunhofer. Fraunhofer took the position that this amounted to the termination of the agreement and that all licensed patent rights reverted to it.

Despite SXM’s continued use of the XM DARS system after 2010, Fraunhofer did not assert infringement until 2015. At that point, it sent letters to both SXM and WorldSpace asserting that the Master Agreement was terminated and that all rights in the patents had reverted to Fraunhofer. On February 22, 2017, Fraunhofer sued SXM in the U.S. District Court for the District of Delaware, asserting infringement of four now-expired U.S. patents. The district court initially dismissed the claims, but the Federal Circuit reversed in 2019. On remand, the district court granted summary judgment in favor of SXM based on equitable estoppel, prompting Fraunhofer's present appeal.

Equitable estoppel analysis. The Federal Circuit began its analysis by affirming that equitable estoppel, as a defense to patent infringement, requires proof of three elements. Citing its decision in Ferring B.V. v. Allergan, Inc., 980 F.3d 841, 853 (Fed. Cir. 2020), the court stated that the accused infringer must show: (1) the patentee engaged in misleading conduct leading the accused infringer to reasonably infer that the patentee did not intend to enforce its patent rights; (2) the accused infringer relied on that conduct; and (3) as a result of that reliance, the accused infringer would suffer material prejudice if the patentee were allowed to proceed with its claims.

Misleading conduct. On the first element, misleading conduct, the court agreed with the district court’s conclusion. It found no genuine dispute that Fraunhofer remained silent between 2010 and 2015, despite believing that its rights in the asserted patents had reverted to it and knowing that Sirius XM was using the high-band XM DARS system incorporating the patented technology. Fraunhofer had also played a direct role in helping XM develop the system and had publicly touted its success. The court held that this combination of prior assistance, awareness of ongoing use, and prolonged silence constituted potentially misleading conduct. It relied in part on High Point SARL v. Sprint Nextel Corp., 817 F.3d 1325 (Fed. Cir. 2016), which held that similar conduct by a patentee could support an estoppel defense.

Actual reliance. While SXM argued that Fraunhofer’s silence had influenced its decision to invest in and expand the high-band system, the court found no undisputed evidence to support that assertion. On the contrary, a Sirius XM representative testified that the decision to phase out the low-band system in favor of the high-band system was based entirely on business considerations, such as market penetration and ease of transition—not any belief about Fraunhofer’s enforcement intentions. The court emphasized that business decisions made independently of a patentee’s conduct do not establish the kind of reliance required for equitable estoppel. Citing SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 767 F.3d 1339 (Fed. Cir. 2014), it held that Sirius XM’s showing failed as a matter of law.

Material prejudice. Turning to the third element, the court acknowledged that Sirius XM had made substantial investments in the high-band system. However, it reiterated that equitable estoppel requires a causal connection between the alleged prejudice and the accused infringer’s reliance on the patentee’s conduct. Without a showing of reliance, prejudice alone is insufficient. The appellate court relied on ABB Robotics, Inc. v. GMFanuc Robotics Corp., 52 F.3d 1062 (Fed. Cir. 1995), to reinforce this point. The court concluded that while the record might support a finding of prejudice if reliance were proven at trial, summary judgment was improper because reliance had not been established.

Fraunhofer also requested that the Federal Circuit enter judgment in its favor on Sirius XM’s estoppel defense. The court declined, explaining that the district court had not yet considered Fraunhofer’s cross-motion for summary judgment, which had been rendered moot by the lower court’s ruling. The Federal Circuit emphasized that as an appellate court, it would not resolve such factual matters in the first instance.

Conclusion. Because reliance is a necessary element of equitable estoppel and had not been established on the summary judgment record, the Federal Circuit concluded that the district court erred in granting judgment for Sirius XM. It reversed the decision and remanded the case to the District of Delaware for further proceedings.

The Case is No. 23-2267.

Judge: Lourie, A.

Attorneys: David C. McPhie (Irell & Manella LLP) for Fraunhofer-Gesellschaft Zur Forderung Der Angewandten Forschung E.V. Mark Baghdassarian (Herbert Smith Freehills Kramer LLP) for Sirius XM Radio Inc.

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

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