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ARTICLE · 09 DECEMBER 2020

Enforcing "no-challenge" Clauses: No Brushing Off An Agreed Contractual Term

A recent decision from the Ontario Divisional Court, Loops L.L.C. v. Maxill Inc., setting aside an order from the Ontario Superior Court of Justice,...

CanadaIntellectual Property

A recent decision from the Ontario Divisional Court, Loops L.L.C. v. Maxill Inc., setting aside an order from the Ontario Superior Court of Justice,1 has confirmed the enforceability of "no-challenge" clauses in Canada in patent settlements, filling a void in recent Canadian jurisprudence on the validity of such clauses.  

"No-challenge" clauses are restrictive covenants that bind one party to an agreement not to challenge the validity of the other party's intellectual property rights. They're commonly used in patent settlements (prohibiting the alleged infringer from later challenging the validity of the patent), trademark coexistence agreements (prohibiting each party from challenging the validity of the other's trademark registrations), and intellectual property license agreements (prohibiting the licensee from challenging the validity of the rights being licensed). In the context of patents, these types of clauses have been held unenforceable in certain

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