On February 20, 2024, the New York Appellate Division affirmed the complete dismissal of contract-based claims brought against Wilson Sonsini client NETGEAR, a computer networking company. 

NETGEAR was sued in a contract dispute arising from a patent license agreement involving the plaintiff’s patent and NETGEAR’s power over ethernet technology. After a third party’s comparable products were found not to infringe the plaintiff’s patent, NETGEAR exercised its contractual right to cease royalty payments. Years later, long after both the patent license agreement and the underlying patent had expired, the plaintiff sued NETGEAR for approximately $15 million in retrospective royalties and interest payments because the U.S. Court of Appeals for the Federal Circuit had overturned the third-party non-infringement finding.

At summary judgment, Wilson Sonsini prevailed against the plaintiff’s breach-of-contract claims—obtaining complete dismissal of the claims against NETGEAR and preserving NETGEAR’s counterclaim for trial.

On appeal, the First Department of the New York Appellate Division affirmed. The appellate court ruled that the patent license agreement did not require the parties to submit to arbitration to determine whether the non-infringement finding applied to NETGEAR’s products before NETGEAR suspended royalty payments. It further found that the stipulations that the plaintiff had made to avoid arbitration foreclosed its argument on appeal that there had been a dispute that required arbitration. Finally, the court agreed with NETGEAR that there was a triable issue as to whether the plaintiff itself had breached the patent license agreement.

The Wilson Sonsini litigation team representing NETGEAR in the matter included partners Matthew R. Reed, Lucy Yen, and Ryan R. Smith, associates Ava R.M. Shelby and Josh Craddock, and paralegal Anthony Geritano.

The case is Network-1 Tech., Inc. v. NETGEAR, Inc., No. 2023-04807, 2024 NY Slip Op 00870 (N.Y. App. Div. Feb. 20, 2024).