On June 9, 2025, the U.S. Court of Appeals for the Federal Circuit (CAFC) breathed new life into a long-running patent infringement battle between German research organization Fraunhofer-Gesellschaft and Sirius XM Radio Inc., reversing a prior summary judgment ruling that had favored the satellite radio giant.
The dispute centers on Fraunhofer's patented multicarrier modulation (MCM) technology, which it began licensing to XM Satellite Radio nearly two decades ago for the U.S. market. XM merged with Sirius Satellite Radio in 2008, the same year WorldSpace—the global sublicense holder for Fraunhofer's MCM patents—filed for bankruptcy. Fraunhofer contended that after the bankruptcy court approved WorldSpace's settlement in 2010, all rights to license its MCM patents reverted to it.
Despite this, Fraunhofer waited until 2015 to notify Sirius XM of potential infringement liability related to its use of MCM technology, a silence that stretched over five years. The Delaware district court had previously granted summary judgment in favor of Sirius XM on the basis of equitable estoppel, reasoning that Fraunhofer's prolonged silence misled Sirius XM. The satellite radio provider had spent years and hundreds of millions of dollars migrating its broadcasts to the high-band system, which Fraunhofer claimed infringed its patents. The court found that Sirius XM was prejudiced by this delay and that the company could have opted to continue using the low-band system as a non-infringing alternative if it had been warned earlier.
However, the Federal Circuit panel, in a precedential opinion authored by Judge Alan D. Lourie, disagreed with the district court's grant of summary judgment. While the appellate court agreed that Fraunhofer's more-than-five-year silence from 2010 to 2015 amounted to misleading conduct—given the patent owner's clear knowledge of the infringement—it found that Sirius XM had not established through undisputed evidence that it relied on that silence when deciding to transition to the high-band system.
Testimony from Sirius XM representatives indicated that the decision to migrate was driven primarily by pragmatic business considerations, notably the higher market penetration rate of high-band receivers, rather than any perceived safety from patent infringement claims due to Fraunhofer's silence. The Federal Circuit emphasized that reliance on misleading conduct is a key element of the equitable estoppel defense, requiring the accused infringer to show it reasonably inferred the patent owner did not intend to assert its patents and that it acted upon this inference to its detriment.
In this case, the appellate court found that, while there was circumstantial evidence that could support a finding of reliance, the record was insufficient to grant summary judgment in favor of Sirius XM. The court thus reversed the district court's ruling and remanded the case for further proceedings, instructing the lower court to reassess any remaining summary judgment motions.
The Federal Circuit also noted that if Sirius XM can establish reliance on Fraunhofer's silence during the remand, there is no genuine dispute that it suffered prejudice by investing heavily in the high-band system migration, despite the availability of a non-infringing low-band alternative. Fraunhofer had argued that replacing low-band receivers was impractical, but the court found this did not negate the possibility that Sirius XM's choice was influenced more by market factors than technical constraints.
This ruling marks the second time the Federal Circuit has revived Fraunhofer's patent infringement suit against Sirius XM. Previously, the appellate court reversed the district court's dismissal of the case on the grounds that Sirius XM had a valid license. Now, with the equitable estoppel defense reconsidered, the case will proceed, potentially setting important precedents on how silence and delay in patent infringement claims affect licensing disputes and business decisions.
Fraunhofer-Gesellschaft, based in Munich, is a renowned research organization that has contributed significantly to technology development worldwide. Its MCM technology was integral to XM Satellite Radio's early systems, and the dispute highlights the complex interplay between patent rights, licensing agreements, and corporate strategy in the evolving satellite radio industry.
Sirius XM, meanwhile, has navigated a complicated technological transition over the past decade, shifting its satellite broadcasts to the high-band system to capture a larger market share. The company's legal team maintains that its decisions were based on business pragmatism rather than any assumptions about patent enforcement.
The case underscores how patent holders’ strategic decisions about when and how to enforce their rights can dramatically impact the accused infringer's operations and investments. It also illustrates the challenges courts face in balancing equitable principles like estoppel with the technical and commercial realities of rapidly changing industries.
As the litigation unfolds on remand, industry observers will be watching closely. The outcome could influence how patent owners and licensees negotiate and assert rights in sectors where technology and market dynamics evolve swiftly, and where delays in enforcement may carry significant financial consequences.
For now, the Federal Circuit's June 9 ruling serves as a reminder that silence in the face of infringement allegations is a double-edged sword: it may mislead, but proving that an accused infringer relied on that silence is a separate hurdle that can determine the fate of complex patent disputes.
