On appeal, Verint argued that Tekelec lacked the ability to enforce rights to the disputed Section 6.1.2 Payments under three separate theories, each of which the Fifth Circuit rejected. First, Verint argued that IEX only assigned the limited and discrete right to receive the payments to Tekelec, not the power to enforce those payments against Blue Pumpkin or its assigns. The Fifth Circuit rejected this argument, noting that Texas contract law does not require that a promise to pay be accompanied by an express grant of enforcement authority.

Verint next argued that because the Blue Pumpkin/IEX Agreement set out termination as the only remedy for failure to pay, IEX (and therefore its assignee Tekelec) did not have the right to enforce the payments. However, the Fifth Circuit found nothing in the Blue Pumpkin/IEX Agreement requiring termination to be the exclusive remedy for non-payment and therefore preventing Tekelec from enforcing its inherent right to sue for contract breach. It noted that under Texas law, a court should not construe a specified remedy within an agreement as an exclusive remedy unless the parties clearly indicated or declared it to be exclusive.

Finally, Verint claimed that IEX retained the right to terminate the Blue Pumpkin/IEX Agreement and it therefore would be inconsistent to allow Tekelec to sue for the non-payment of royalties that IEX was entitled to distinguish. However, the Fifth Circuit found nothing in the Blue Pumpkin/IEX Agreement giving IEX the unilateral right to terminate the agreement.

Verint also argued that the Non-accrual Clause in the Verint/NICE Settlement Agreement extinguished its obligation to make the remaining Section 6.1.2 Payments. Verint argues that under the Non-accrual Clause, NICE agreed, on behalf of IEX, to extinguish all "royalties or other patent damages that may have otherwise accrued" against Verint on IEX's '355 patent at any point after August 1, 2008 and throughout the term of the Covenant Not to Sue. According to Verint, the parties intended the Section 6.1.2 Payments to be royalties for Blue Pumpkin's (and eventually Verint's) license under the '355 patent.

The Fifth Circuit framed the issue as whether the disputed payments fall within the scope of the "royalties or other patent damages" extinguished by the Non-accrual Clause. The court noted as an initial matter that under Texas contract law:

The Fifth Circuit interpreted the qualifying phrase "or other patent damages" to mean that the term "royalties" refers to court-ordered reasonable royalties that generally serve as the accepted measure of patent damages under Section 284 of the Patent Act, not the contractually-bargained for payment obligations under the Blue Pumpkin/IEX Agreement. It found the immediately succeeding phrase "that may have otherwise accrued" reinforced this conclusion. In the absence of the Non-accrual Clause, NICE could conceivably recover such accrued damages by breaching the covenant or suing after the covenant expired.

The opinion further notes that even if the court was presented with the question of how to characterize the disputed payments in the abstract, the Section 6.1.2 Payments did not meet the definition of a "royalty." The court concluded that the term "royalty" generally is defined as a payment that fluctuates with the licensee's actual use of the licensor's intellectual property, such as a payment based on the number of patented articles sold. It found that a fixed-fee licensing arrangement such as the one in this case is conceptually distinct from a royalty payment.