Second Circuit Holds Clause in Patent License/Settlement Agreement Preventing Challenge to Validity of Patent Void

On July 10, 2012, the Second Circuit ruled that

a settlement agreement which bars a patent licensee from later challenging the patent’s validity is void for public policy reasons under the Supreme Court’s decision in Lear, Inc. v. Adkins, 395 U.S. 653 (1969), where the parties entered into the agreement after an accusation of infringement by the patent owner but prior to any litigation.

Rates Tech. Inc. v. Speakeasy, Inc., No. 11-4462-cv, 2012 WL 2765081, at *1 (2d Cir. July 10, 2012) (citations omitted). This decision is likely to have significant implications for parties contemplating the licensing of patents in settlement of threatened or pending patent litigation.