On June 9, 2025, the U.S. Court of Appeals for the Federal Circuit issued a precedential opinion in Fraunhofer-Gesellschaft zur Förderung der angewandten Forschung e.V. v. Sirius XM Radio Inc., addressing the doctrine of equitable estoppel in patent litigation. The decision reversed a lower court’s ruling that had barred Fraunhofer’s claims due to its five-year delay in filing suit. While the Federal Circuit agreed that Fraunhofer’s silence was potentially misleading, it emphasized that equitable estoppel in patent infringement cases also requires a clear showing of reliance by the accused infringer. Sirius XM failed to meet that burden, making summary judgment inappropriate.
Background
Fraunhofer, a German-based company, developed and patented inventions related to multicarrier modulation (“MCM”) technology, which is used in satellite radio. In 1998, Fraunhofer entered into a Master Agreement with WorldSpace granting it an exclusive license, including the right to sublicense, to patents related to MCM technology.
XM Satellite Radio obtained a sublicense from WorldSpace as part of a collaboration with Fraunhofer to bring satellite radio to the United States. In 2008, XM merged with Sirius Satellite Radio to form Sirius XM Radio Inc. and continued to use Fraunhofer’s patented technology to implement high-band systems in new vehicles. That same year, WorldSpace filed for bankruptcy.
In 2010, WorldSpace rejected the Master Agreement as part of its bankruptcy proceedings, which the court explained was equivalent to a breach of contract. This breach granted Fraunhofer the right to terminate the agreement. Although Fraunhofer did not formally terminate the license agreement, it maintained that WorldSpace’s bankruptcy ended all sublicenses granted by WorldSpace under the Master Agreement, including the sublicense to Sirius XM as of 2010.
Although Fraunhofer knew Sirius XM was still using the patented technology, it did not raise any infringement concerns until 2015 and did not sue until 2017. The district court found Fraunhofer’s prolonged silence misleading, and that Sirius XM reasonably relied on Fraunhofer’s silence and was prejudiced as a result. Thus, the district court concluded that all elements of equitable estoppel were met and granted summary judgment for Sirius XM. The Federal Circuit Court reversed on appeal.
Federal Circuit Decision
The Federal Circuit reversed the district court’s ruling, holding that while Fraunhofer’s delay in asserting its patent rights was misleading, there was a genuine dispute over whether Sirius XM actually relied on that silence.
Elements of an Equitable Estoppel Defense
The Federal Circuit identified the three elements required to establish an equitable estoppel defense:
- misleading conduct by the patent holder;
- the accused infringer reasonably relies on that conduct; and
- material prejudice to the accused infringer because of that reliance if the patentee is allowed to proceed with its infringement action.
Analysis
The Court agreed with the district court that Fraunhofer’s five-year silence to raise infringement concerns, despite knowing Sirius XM was using technology Fraunhofer believed was practicing its patent claims, amounted to misleading conduct. However, the Court held that Sirius XM failed to show that it actually relied on that silence when making business decisions. Testimony from a Sirius XM representative indicated the company chose the patented high-band system for market-based reasons, not because it believed Fraunhofer would not sue.
The Court found Sirius XM could not demonstrate prejudice because Sirius XM did not make a threshold showing of reliance required to grant summary judgment. However, it noted that prejudice could be proven at trial due to Sirius XM’s heavy investment in the infringed technology if reliance were shown.
Because the evidence presented was insufficient to prove the reliance element, and consequently the prejudice element, of an equitable estoppel defense, the Court reversed the district court’s decision and determined summary judgment to be improper.
Implications for Patent Infringement Litigation
This decision clarifies an important limitation on the equitable estoppel defense in patent infringement cases. A prolonged delay in asserting patent rights is not enough on its own to preclude a claim. The Federal Circuit’s ruling in Fraunhofer v. Sirius XM highlights that defendants must present clear evidence of reliance and resulting prejudice. The case is a reminder that silence alone does not satisfy the elements of equitable estoppel, and that careful factual development remains essential when raising this defense.