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Supreme Court Clears Patent Invalidity Suits
The Empiricist writes "The United States Supreme Court has cleared the way for entities to sue over the validity of a patent — even while paying user fees to the patent holder. The eight-to-one Medimmune v. Genetech decision, written by Justice Scalia, held that by paying royalties to a patent holder, one does not necessarily waive the right to challenge the validity of the patent."
You might be. It depends on what kind of agreement you signed when you licensed me the patent. Many patent agreements either license the patent for n units (i.e., You agree to license your PatentWidget(tm) technology to me for a flat fee on 1,000,000 units of my product that incorporates your PatentWidget(tm) technology), x years (i.e., You agree to license your PatentWookie(tm) system to me for a period of 1 year), or some are even in perpetuity, but say, limited to a specific geographic area. Many do, however, have stipulations that the license becomes revoked if a lawsuit is filed against the patent holder.
IANAL
My blog
For those who are talking about auto-revoke clauses in lawsuits (of which I've seen a number post), read the article:
During arguments in October, Chief Justice John G. Roberts Jr. suggested there may be some way to structure a licensing agreement to diminish the threat of a lawsuit. Best predicts companies will likely try including contractual provisions prohibiting filing suit, potentially charging lower fees for those who agree to waive that legal right. But it's unclear whether such measures are legal. Courts generally hold that the right to sue should be retained - a sentiment that came out in this case.
Simply because a clause is within a contract/agreement, doesn't make it legally valid. As the courts have established through decisions, the right to sue should be retained and it's likely that clauses stipulating the prohibition of filing suit would be deemed legally unenforceable. A contract/agreement could be structured to make it undesirable to file suit or more desirable to persuade a licensee not to, but clauses that seek to waiver that right most likely will fail.
This decision has a more profound effect then simply the right to sue. It also raises the bar in the establishment of knowingly violating a patent. If a person/company sues to invalidate a patent, then only if the lawsuit is unsuccessful and the person/company continues to violate the patent can it be established they "knowingly" violated the patent. So this will also have an effect of making it more difficult to seek treble damages. Any person/company with the foresight and resources would file an invalidation lawsuit for that very reason, I suspect.
I agree with the Supreme Courts interpretation that just because you license, doesn't mean "Actual Controversy" requirements for filing an invalidation suit are voided. Previous court decisions established that you had to violate a patent first in order to file suit to fulfill "Actual Controversy" requirements. The Catch-22 of this is that by the very act of violating the patent, you are doing so "knowingly" in order to pursue an invalidation suit. Which means that should the suit fail, you'll automatically be nailed for treble damages since you've already established you knowingly violated the patent in order to pursue the invalidation suit in the first place.
The previous logic was flawed. It was like saying that if someone portends you owe them money, you would have to acknowledge you do owe them money before you could file a suit to establish you don't. The refusal to acknowledge a patent as valid should be grounds enough to fulfill the actual controversy requirements.