The Federal Circuit’s precedential decision in T-Mobile US, Inc. v. KAIFI LLC, Case No. 2025-1006 (Fed. Cir. Aug. 28, 2026), draws an important boundary between patent litigation and commercial disputes involving patents. A state-law contract claim does not fall within the Federal Circuit’s exclusive appellate jurisdiction merely because one party’s preferred interpretation would require deciding questions of prosecution disclaimer, inequitable conduct, or claim scope.
The court held that KAIFI’s breach-of-contract claim could be resolved by interpreting the settlement agreement and examining the formal result of an ex parte reexamination without resolving those patent-law questions. It therefore transferred the appeal to the Fifth Circuit rather than deciding whether T-Mobile ultimately owes the disputed contingent payment.
The decision also offers a practical lesson for patent settlements and licensing agreements. When payment depends on the outcome of an IPR, reexamination, post-grant review, or other Patent Office proceeding, shorthand such as whether a claim “survives” may seem clear during negotiations. Unless the agreement identifies exactly what outcomes trigger payment, however, the settlement may replace a patent dispute with a contract dispute.
Background of the Dispute
KAIFI LLC sued T-Mobile in the Eastern District of Texas in 2020 for infringement of U.S. Patent No. 6,922,728, directed to Wi-Fi calling technology. During the litigation, T-Mobile requested ex parte reexamination of the patent.
With trial approaching and the reexamination still pending, the parties entered into a Settlement and Patent License Agreement in January 2022. T-Mobile received a license and made an initial payment. It also agreed to make a second contingent payment, identified as the “EPR 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. It also prohibited T-Mobile from challenging the validity or enforceability of the licensed patents, while expressly exempting its already-filed reexamination request from that covenant.
The Patent Office eventually confirmed claims 1, 2, 3, 5, 10, 11, and 20 as patentable without amendment. Claim 7 was determined patentable as amended.
T-Mobile nevertheless declined to make the contingent payment. It contended that the claims had not truly “survived” because KAIFI allegedly adopted claim-construction positions during reexamination that materially changed their scope from the positions KAIFI had taken in the infringement litigation. T-Mobile also alleged that KAIFI failed to disclose inconsistent claim-construction positions to the Patent Office, conduct that T-Mobile characterized as inequitable conduct.
T-Mobile then filed a declaratory-judgment action in the Eastern District of Texas, relying on diversity jurisdiction and seeking a determination that no asserted claim survived the EPR. KAIFI counterclaimed for breach of contract.
The district court concluded that the agreement was unambiguous: an asserted claim survived if the Patent Office confirmed it as patentable in the Reexamination Certificate. Because several asserted claims had been confirmed without amendment, the court entered summary judgment for KAIFI and ordered T-Mobile to make the EPR Payment.
The resulting appeal presented an unusual threshold question. Both parties ultimately argued that the Federal Circuit had appellate jurisdiction, but the Federal Circuit disagreed.
The Federal Circuit Looked to the Contract Claim, Not T-Mobile’s Patent-Law Theories
Federal Circuit appellate jurisdiction under 28 U.S.C. § 1295(a)(1) extends to district court cases arising under federal patent law. Under Christianson v. Colt Industries Operating Corp. and Gunn v. Minton, that category includes claims created by patent law and a much narrower class of other claims satisfying the Supreme Court’s four-part federal-question test.
Under Gunn, a state-law claim arises under federal law only when a federal issue is necessarily raised, actually disputed, substantial to the federal system, and capable of resolution in federal court without disrupting the federal-state balance approved by Congress.
Because T-Mobile brought a declaratory-judgment action, its own characterization of the dispute did not control. Under ABB Inc. v. Cooper Industries, LLC, the jurisdictional inquiry looks to the declaratory defendant’s hypothetical well-pleaded complaint. Here, that hypothetical action was essentially the same as KAIFI’s actual counterclaim: breach of contract under Texas law. The relevant question therefore was not whether T-Mobile could identify patent-law issues in its own theory of the case, but whether KAIFI had to establish a patent-law proposition to recover for breach of contract.
T-Mobile identified patent-law questions embedded in its own theories, principally whether KAIFI’s statements during reexamination altered claim scope through prosecution disclaimer and whether KAIFI engaged in inequitable conduct before the Patent Office. Those issues might have mattered to T-Mobile’s defense, but the Federal Circuit concluded that KAIFI could prevail without resolving either of them.
One available route was the one the district court had already taken: interpret “survives the EPR” by examining the agreement and the Reexamination Certificate. Under 35 U.S.C. § 307(a), the Patent Office concludes an ex parte reexamination by canceling claims finally determined to be unpatentable, confirming claims determined to be patentable, and incorporating patentable amended or new claims.
Seven of the eight asserted claims here were confirmed without amendment. A court therefore could find that at least one asserted claim survived by applying the ordinary meaning of the contract language to the formal result of the reexamination. Neither prosecution disclaimer nor inequitable conduct was indispensable to that theory, which was sufficient to defeat the first Gunn requirement.
“Survives” Is Not a Patent-Law Term of Art
KAIFI offered a different basis for Federal Circuit jurisdiction. It argued that “survives” itself had acquired a specialized meaning in patent law because courts frequently describe patent claims as having survived reexamination or inter partes review.
The Federal Circuit rejected that argument. Neither the Patent Act nor Patent Office regulations assign a specialized definition to “survive.” Decisions such as Spectrum International, Inc. v. Sterilite Corp. and Pavo Solutions LLC v. Kingston Technology Co. had used the word when describing claims that remained patentable after administrative review, but the court concluded that those opinions were using the ordinary English meaning of the word.
The point has significance beyond appellate jurisdiction. Language may be familiar within patent practice without becoming a legal term of art. If parties intend familiar patent-law shorthand to carry a specialized contractual consequence, they should define that consequence rather than rely on shared professional usage.
T-Mobile’s interpretation illustrates that problem. It effectively treated the contingent payment as depending on whether KAIFI’s original infringement theory, including its understanding of claim scope, had survived the reexamination. The agreement, however, referred to whether an “Asserted Claim” survived. The Federal Circuit observed that T-Mobile’s interpretation effectively substituted “litigated infringement claims” for the contractual language the parties actually selected.
The negotiating history makes the drafting problem even clearer. The parties had expressly disagreed during negotiations over whether an asserted claim that was amended during reexamination would count as surviving, and they memorialized that disagreement in a footnote to the agreement rather than resolving it. That issue ultimately did not determine the case because multiple asserted claims were confirmed without amendment.
The episode nevertheless illustrates an important transactional distinction: identifying a contingency is not the same as allocating it. If a contingent payment depends on Patent Office action, the agreement should define the treatment of each material outcome rather than preserve the disagreement for later litigation.
Importantly, the Federal Circuit did not affirm the district court’s interpretation of the contract on the merits. Its point was narrower. The ordinary-language interpretation adopted by the district court represented at least one viable way to resolve KAIFI’s contract claim without deciding patent law. The Fifth Circuit remains responsible for reviewing the actual contract judgment under Texas law.
Jang Shows When a Patent Contract Dispute Can Belong in the Federal Circuit
The most useful contrast is Jang v. Boston Scientific Corp., where the Federal Circuit did exercise jurisdiction over a state-law contract dispute involving patents.
In Jang, the agreement required additional compensation for sales of products covered by the relevant patents. Determining whether compensation was owed therefore required deciding whether Boston Scientific’s products would have infringed the patent claims. Patent infringement was not simply one argument available to a party. It was necessary to establish contractual liability.
T-Mobile falls on the other side of that line. The court relied on ClearPlay, Inc. v. Abecassis, Inspired Development Group, LLC v. Inspired Products Group, LLC, and the more recent Acorda Therapeutics, Inc. v. Alkermes PLC for the principle that a patent issue is not “necessarily raised” when the state-law claim has a viable path to resolution that does not require deciding patent law.
That distinction matters when drafting patent licenses and settlements. A royalty provision expressly conditioned on whether a product infringes identified patent claims may make infringement an indispensable element of a later contract dispute. A payment provision conditioned on an objectively identifiable Patent Office event may not.
Contract language does not itself determine appellate jurisdiction, but the substantive trigger selected by the parties can affect whether resolving a later contract claim necessarily requires adjudicating patent law.
Why the Patent Questions Were Not “Substantial” Under Gunn
The Federal Circuit independently concluded that the case failed Gunn’s requirement that the federal issue be substantial to the federal system as a whole.
Applying the considerations identified in NeuroRepair, Inc. v. Nath Law Group, the court examined whether a pure issue of federal law would be dispositive, whether resolution would control numerous other cases, and whether the federal government had a direct interest in providing a federal forum to vindicate its own administrative action. None supported Federal Circuit jurisdiction.
First, there was no dispositive patent-law question because the contract claim could be resolved without reaching prosecution disclaimer or inequitable conduct.
Second, the dispute was highly specific to one private agreement. Whatever a court ultimately decides “survives” means in this contract is unlikely to establish a generally applicable meaning of the term for other agreements. Future contracting parties remain free to use different language or define the triggering event expressly. Future contracting parties remain free to draft different language or define the triggering event expressly. That ability to contract around the result sharply reduces any threat to uniform federal patent law.
Third, the government had no direct interest comparable to a case reviewing or protecting federal administrative action. The Patent Office’s Reexamination Certificate supplied part of the factual setting, but the dispute concerned what two private parties agreed that event would mean for their payment obligations.
The expiration of the ‘728 patent in January 2024 further weakened the systemic interest. The court compared the case with the Xitronix litigation, where the Fifth Circuit had concluded that a dispute concerning a live patent presented a substantial patent-law issue because it could render the patent effectively unenforceable. Although the Federal Circuit has disagreed with the Fifth Circuit’s jurisdictional reasoning in Xitronix, it found the distinction independently significant here because the ‘728 patent had expired and no other litigation involving it was pending.
Having found Gunn’s first and third requirements unsatisfied, the Federal Circuit did not decide whether the patent issues were actually disputed for jurisdictional purposes or whether Federal Circuit jurisdiction would disrupt the congressionally approved balance between federal and state judicial responsibilities.
Practical Implications for Patent Settlements and Licensing Agreements
The strongest practical lesson from T-Mobile v. KAIFI is one of transactional precision.
When settlement economics depend on an IPR, ex parte reexamination, post-grant review, or another patent proceeding, the agreement should identify the precise event that creates, eliminates, or changes the payment obligation. “Survival” may be too imprecise unless the agreement defines it.
Depending on the bargain, parties may need to address claims confirmed without amendment, amended or substitute claims, canceled claims, new claims, and the consequences of Patent Office statements affecting claim scope. The agreement should also specify when the relevant determination becomes operative, such as after an agency decision, rehearing, appellate review, or some defined point of finality.
The treatment of amended claims in this agreement illustrates the risk. The parties recognized that an amendment could create disagreement over whether a claim had survived, but preserving that disagreement in a footnote did not resolve the underlying commercial allocation. A better drafting approach would specify the consequence of each anticipated Patent Office outcome.
The treatment of enforceability challenges also deserves attention. T-Mobile’s attempt to rely on alleged inequitable conduct appeared to clash with its covenant not to challenge validity or enforceability. The Federal Circuit did not decide the ultimate contractual consequences of that tension, but the dispute illustrates why a settlement should coordinate any no-challenge covenant with intended reservations concerning Patent Office conduct, claim scope, validity, and enforceability.
More broadly, parties negotiating patent settlements should consider the legal character of the performance trigger itself. A provision requiring a later determination of infringement may place patent law at the center of a subsequent contract claim. A provision tied to an identified administrative event may permit the contract dispute to be resolved without adjudicating patent law.
Finally, the decision is a reminder that a case does not belong in the Federal Circuit simply because its record is saturated with patent issues. The jurisdictional inquiry turns on the claim that must be adjudicated. A patent question must be necessary to resolving that claim and substantial to the federal system, not merely important to the parties or useful to one side’s theory of the case.
Conclusion
T-Mobile v. KAIFI does not decide whether T-Mobile ultimately owes the EPR Payment. That issue now belongs to the Fifth Circuit. Its precedential significance concerns the boundary between federal patent jurisdiction and ordinary state-law contract litigation.
Patents may supply the commercial background of a dispute without supplying its jurisdictional basis. Where a settlement agreement can be interpreted without resolving a substantial patent-law question, the Federal Circuit does not acquire appellate jurisdiction simply because one party’s preferred interpretation would require litigating prosecution disclaimer, inequitable conduct, or claim scope.
For parties drafting patent settlements, the more immediate lesson is contractual. When payment depends on what happens to patent claims at the Patent Office, the agreement should define the triggering event rather than assume that shorthand such as “survives” will carry the same meaning after the dispute arises as it appeared to carry when the deal was signed.
Key Takeaways
- A state-law contract claim falls within Federal Circuit jurisdiction only when the applicable federal-question requirements are satisfied, including that a patent-law issue is necessarily raised and substantial to the federal system.
- Patent-law theories raised as defenses do not create Federal Circuit jurisdiction when the state-law claim can succeed without resolving them.
- “Survives the EPR” is ordinary contractual language, not a specialized patent-law term whose use itself creates Federal Circuit jurisdiction.
- Jang v. Boston Scientific provides the principal contrast: Federal Circuit jurisdiction can exist when resolving the contract claim itself necessarily requires deciding infringement or another patent-law question.
- Patent settlements should specify how confirmed, amended, substitute, new, and canceled claims affect contingent payments rather than relying on shorthand such as “survival.”
- No-challenge covenants should be coordinated carefully with any intended reservation of arguments concerning Patent Office conduct, claim scope, validity, or enforceability.
Related Analysis
- VDPP v. Volkswagen: Settlement Licenses Can Trigger Patent-Marking Consequences Under § 287
Like T-Mobile v. KAIFI, VDPP illustrates how the terms and downstream consequences of a patent settlement can become legally significant long after the underlying infringement dispute is resolved. - In re Gesture Technology: IPR Estoppel Stops at the PTAB Door, Not Ex Parte Reexamination
Gesture Technology provides additional context on ex parte reexamination and the distinct legal consequences that can follow when parties move between different Patent Office review mechanisms. - Global Tubing v. Tenaris: Federal Circuit Vacates Summary Judgment on Inequitable Conduct and Walker Process Fraud
Global Tubing examines the demanding standards governing inequitable-conduct allegations, one of the patent-law theories T-Mobile attempted to invoke in arguing that KAIFI’s claims had not effectively survived reexamination. - Azurity Pharmaceuticals v. Alkem Labs: Prosecution Disclaimer and “Consisting Of” Language Bar Infringement Finding
Azurity provides a closer look at prosecution disclaimer, the doctrine T-Mobile relied upon in contending that KAIFI’s statements during reexamination materially altered the scope of the asserted claims. - Realtek v. ITC: Federal Circuit Lacks Jurisdiction Over Section 337(h) Sanctions Appeal
Realtek addresses another boundary of the Federal Circuit’s appellate jurisdiction and illustrates that the presence of patent-related issues does not itself establish Federal Circuit jurisdiction.