Unreported / Non-Citable
Background
Ameranth, Inc. sued Brink Software, Inc. and its parent, PAR Technology Corporation, in California state court in July 2025. It alleges that Defendants stopped paying royalties in April 2020 and owe more than $45 million under a 2011 patent license agreement. The agreement licensed Ameranth's patents to Brink within the Field of Use only, defined as customer or consumer online, mobile and call-center food and drink ordering and menu hosting, in exchange for lump sum and quarterly royalties. Defendants removed the case to federal court in September 2025, and the court denied remand in March 2026.
In August 2026 the court dismissed four of Defendants' counterclaims. Three were conceded to be moot and were dismissed without leave to amend. The fourth, a declaratory claim of patent misuse, was dismissed with leave to amend. The court explained that Defendants' two theories did not appear to fall within recognized categories of misuse. Defendants cited no authority that obtaining continuation patents claiming priority to ineligible patents is misuse. Their royalty theory resembled Zenith Radio but focused on Ameranth's litigation conduct rather than the contract language. Defendants then filed an amended answer and second amended cross-complaint, and Ameranth moved to dismiss or strike only the twelfth counterclaim and sixth affirmative defense, both for patent misuse.
The Court’s Holding
Applying Rule 12(b)(6) and Iqbal, the court accepted Defendants' factual allegations as true and drew reasonable inferences in their favor, without crediting conclusory allegations. It described patent misuse as a narrow doctrine confined to conduct with anticompetitive effects, under which a patentee may not use a patent to acquire a monopoly not embraced in the patent. Citing Brulotte, Zenith Radio, Transparent-Wrap and Princo, it noted that a patentee has wide discretion to license, to limit a license to a field of use, and to charge royalties the patent's leverage permits. It may not, however, insist on royalties measured by products that do not use the patent's teachings over the licensee's objection.
The court found the amended allegations sufficient. Defendants allege that the license covers only the Licensed Patents within the Field of Use and that Ameranth did not disclose in negotiations an intent to demand royalties on all Field of Use transactions. They further allege that Ameranth, under threat of litigation, demanded royalties on all such activity whether or not any patent claim is practiced, and refused to tie royalties to actual use, including in 2020 and 2025 letters. They allege this raises costs and restrains competition. The court summarized the claim as an allegation that Ameranth abused its patents to extract royalties on products beyond their scope. It noted that Ameranth did not appear to disavow Defendants' characterization of its reading of the agreement and argued instead that the complaints concerned only post-execution conduct or litigation tactics. The court answered that Defendants' allegations are not so limited. It denied the motion to dismiss and to strike, while acknowledging that royalties may in fact be properly due under the agreement.
Key Takeaways
- The order denies a motion to dismiss and strike. It does not decide that Ameranth engaged in patent misuse or that any royalties are or are not owed.
- Allegations that a patentee demanded royalties on all field-of-use activity regardless of whether any patent claim is practiced, and refused use-based alternatives, can state a patent misuse claim at the pleading stage.
- The court rejected Ameranth's argument that the allegations concerned only post-execution conduct or litigation tactics, finding that the allegations were not so limited.
- The earlier dismissal with leave to amend was not a final judgment, and Defendants were allowed to replead the patent misuse theory.
- The court expressly left open that royalties may be properly due under the agreement, as Ameranth contends in its own complaint.
Why It Matters
This is a pleading-stage order from a single district judge in a case that is not reported, so its precedential weight is limited and mainly persuasive. The analysis is brief and applies settled Supreme Court and Federal Circuit misuse authority to allegations the court had to accept as true. It shows that a licensee can plead misuse by alleging a royalty demand untethered from actual use of the licensed patents, particularly after a first attempt framed around litigation conduct was dismissed with leave to amend.
The case remains pending. Ameranth's royalty claims and Defendants' counterclaim and defense will proceed. Defendants' assertion that misuse renders the patents and the license agreement unenforceable is an allegation that has not been tested. Ameranth may contest the facts, the meaning of the Field of Use provision and any anticompetitive effect on a developed record.