IP Law Daily, PATENT—Fed. Cir.: Patent settlement payment dispute transferred to Fifth Circuit for lack of jurisdiction, (Sep 1, 2026)

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

Interpreting whether patent claims “survived” reexamination presented a state-law contract dispute that did not necessarily raise a substantial patent-law question.

The U.S. Court of Appeals for the Federal Circuit transferred to the Fifth Circuit a dispute between telecommunications provider T-Mobile and patent owner KAIFI LLC over an additional payment required by their patent settlement agreement. Although both parties maintained that the Federal Circuit had appellate jurisdiction, the court disagreed, holding that interpretation of the agreement’s requirement that T-Mobile make an additional payment “if any Asserted Claim survives the EPR” did not necessarily depend on resolving a substantial question of patent law. The dispute instead concerned interpretation of a contract governed by Texas law (T-Mobile US, Inc. v. Kaifi LLC, No. 25-1006 (Fed. Cir. Aug. 28, 2026)).

Background. KAIFI, the owner of a patent directed to Wi-Fi calling technology, sued T-Mobile US, Inc. and T-Mobile USA, Inc., providers of wireless telecommunications services, for patent infringement in the Eastern District of Texas in 2020. The litigation concerned U.S. Patent No. 6,922,728 (the ’728 patent). T-Mobile subsequently requested ex parte reexamination (“EPR”) of the patent at the U.S. Patent and Trademark Office.

Days before trial, the parties settled. Under their January 2022 Settlement and Patent License Agreement, KAIFI licensed the ’728 patent to T-Mobile, which made an initial payment and agreed to make another contingent payment “if any Asserted Claim survives the EPR.” The agreement defined the asserted claims as claims 1, 2, 3, 5, 7, 10, 11, and 20 and prohibited T-Mobile from challenging the validity or enforceability of the licensed patents.

The Patent Office ultimately confirmed claims 1, 2, 3, 5, 10, 11, and 20 as patentable without amendment and found claim 7 patentable as amended. T-Mobile nevertheless refused the additional payment and sought a declaratory judgment that none of the asserted claims had “survived” the EPR. KAIFI counterclaimed for breach of contract.

The district court held that the agreement unambiguously treated a claim as surviving when the Patent Office confirmed it as patentable. It granted summary judgment to KAIFI and ordered T-Mobile to make the additional payment. T-Mobile appealed.

Patent jurisdiction. The Federal Circuit concluded that it lacked jurisdiction despite both parties arguing otherwise. Under Gunn v. Minton, 568 U.S. 251 (2013), a state-law claim arises under federal law only when a federal issue is necessarily raised, actually disputed, substantial, and capable of resolution in federal court without upsetting the federal-state balance.

KAIFI’s underlying claim was for breach of contract. The court found at least one way to resolve that claim without deciding any patent-law issue: examining the reexamination certificate and determining that multiple asserted claims had been confirmed patentable without amendment.

T-Mobile argued that “survives” required determining whether KAIFI had materially changed its claim-construction positions during reexamination and whether alleged inequitable conduct before the Patent Office rendered the claims unenforceable. But those patent-law questions represented T-Mobile’s proposed defense rather than necessary elements of KAIFI’s contract claim. The agreement contained no language requiring those inquiries. Moreover, T-Mobile’s inequitable-conduct theory appeared inconsistent with its contractual covenant not to challenge the patent’s enforceability.

The court distinguished Jang v. Boston Scientific Corp., 767 F.3d 1334 (Fed. Cir. 2014), where resolving a contractual royalty dispute necessarily required deciding patent infringement. Here, prosecution disclaimer and inequitable conduct were not prerequisites to interpreting “survives.”

KAIFI separately argued that “survives” possessed a specialized patent-law meaning because Federal Circuit decisions had used the term when discussing claims emerging from reexamination or inter partes review. The court rejected that argument, explaining that those decisions merely used “survive” in its ordinary sense—claims continued to exist because they had not been found unpatentable.

No substantial issue. The court independently concluded that any patent-law questions implicated by the dispute were not substantial to the federal system as a whole. The underlying infringement litigation had been settled, and the dispute concerned a fact-specific contractual relationship between private parties.

The court found no indication that interpreting “survives” would control other cases or threaten uniform patent law. Future contracting parties remained free to use more precise language specifying that payment depended on claims being confirmed patentable. The ’728 patent also expired in January 2024, and no other litigation involving it remained pending, further reducing any broader patent-law implications.

Finally, the government had no direct interest in the private contractual dispute. The court therefore concluded that the controversy did not fall within the narrow category of state-law cases presenting sufficiently substantial federal questions to support Federal Circuit jurisdiction.

Because the Eastern District of Texas had exercised diversity jurisdiction and the Fifth Circuit would otherwise have possessed appellate jurisdiction, the Federal Circuit transferred the appeal there rather than deciding the merits of the district court’s judgment for KAIFI. The parties were ordered to bear their own costs.

The Case is No. 25-1006.

Judge: Chen, R.

Attorneys: Gregg Costa (Gibson, Dunn & Crutcher LLP) for T-Mobile US, Inc. Jason Sheasby (Irell & Manella LLP) for Kaifi LLC.

Companies: T-Mobile US, Inc.; Kaifi LLC

Cases: Patent FedCirNews