A Settlement Agreement May Prevent Infringement And Validity Challenges In Subsequent Litigation

Abstract

A “No Challenge Clause” in a settlement agreement can be used to preclude a party from bringing specific affirmative defenses in an infringement claim.

Background

Kenall Manufacturing sued Cooper Lighting for infringing a patent related to modular lighting fixtures, eventually settling the case and entering into a license agreement. Kenall waived its claims for past infringement and granted Cooper a nonexclusive license to the patent and any patents stemming from the original patent. Cooper also agreed to label its products with a patent notice, to pay Kenall a one-time fee, to make quarterly royalty payments based on sales of the infringing products, and to redesign one of its products to avoid infringement.