Agreement Not To Challenge Patent Validity

by admin on September 9th, 2021

[8]. For one exception, see Steven C. Sunshine & Sean M. Tepe, Beyond Reverse Payments: Will Actavis Extend to Patent Activities Generally? 2 (2013), IMG/pdf/beyond_reverse_payments_-_sunshine_tepe.pdf (which states that Actavis` findings may be extended to other patent agreements and comparisons in which “a counterparty exchange would have resulted in a reduction in restrictions of competition”). Patent licenses are socially advantageous. It spreads the fruits of innovation more widely and quickly by building on the comparative advantages of parties. In particular, patent licensing agreements shift production to more efficient producers. A challenge clause is not a restriction in its own right, but is part of an information exchange agreement. This does not mean, however, that challenge clauses are necessarily beneficial. Rather, we should consider whether the prohibition of these clauses has a negative impact on the efficiency of production.

As a general rule, settlement agreements are preferred by the courts, as savings on court costs may outweigh the social value of the case decision. In most cases, these are relatively well-established legal issues and the resolution of cases would not have a foreseeable impact on third parties. Settlement agreements allow the parties (and the public) to avoid the cost of litigation without undermining the valuable ex ante incentives put in place by the court system – to respect the rights of others so as not to be sanctioned by a court. To date, no case has considered whether challenge clauses may be contrary to anti-dominant anti-cartel rules.100 To the extent that these clauses are settled, courts have relied on contract law and common good doctrines. The agreements differ with respect to: (1) the identity of the challenger with limited capabilities; (2) ways to limit the capabilities of that challenger; (3) the context in which the agreements are concluded; and (4) the nature of the consideration granted. These differences are discussed below to determine their relevance to the challenge clauses. The actions of the licensor do not weigh very heavily when weighed against the important public interest in granting full and free competition in the use of ideas that are in reality in the public domain. Licensees are often the only people who have sufficient economic incentives to challenge the patentability of an inventor`s discovery. If they are muzzled, the public may be constantly asked to pay tribute to monopolists who desire, without necessity or justification.

We believe that it is clear that the technical requirements of contractual doctrine must yield before the public interest requirements in the typical situation of negotiating a licence after the grant of a patent. [4] [202]. Unless the risk of effect on the patent is correlated with the entire portfolio, in which case even a large company may have difficulty accessing capital under the threat of several simultaneous legal actions. Rather, it is a question of whether that party can apply for that intellectual property to challenge the validity of the patent – whether the same party has voluntarily agreed to contractual obligations not to do so. . . .

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