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by CPLX 4081 days ago
I am not sure if you're correct. In the This American Life episode on patents they interview someone discussing this precise issue, who is still on the hook for licensing fees despite someone else subsequently winning a patent action against the counterparty.
3 comments
danray 4081 days ago
Interesting. I tracked down the transcript (http://www.thisamericanlife.org/radio-archives/episode/496/t...) and found the section I think you're remembering:

     And for the 16 companies that did settle, the verdict may not change anything. In most cases, these licensing agreements have language that makes them nearly impossible to get out of, no matter what happens with the patent later on. This week, we heard back from a spokesman from one of the companies that chose to settle.

     The spokesman wrote in an email, quote, "We were hit hard by this lawsuit. Infringement on our part seemed completely bogus, but we could not afford to fight it. Even with the settlement, we were forced to lay off employees. We are still--" and "still" is in all caps-- "still paying out on the settlement agreement. We were unaware that the patent had been invalidated. We will be contacting our attorney to see what recourse we may have."
It looks like in this case, it was more due to the licensee's inattention than a winning legal argument. (Unfortunately, this is an all-too-common occurrence, no matter what the law says.) I'd be curious to know what happened once they did contact their lawyer.
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Dylan16807 4081 days ago
But what are they going to sue based on? If you have a contract of fees for patent use, and it becomes fees for nothing, it's no longer a contract, by definition.

If the only remaining thing is a fee to not sue for something they objectively have no rights to, that doesn't sounds like a proper exchange to me. But of course I'm not a lawyer.

Did the other person win a case about their use, or did they actually get the patent thrown out? Could make a big difference when it comes to others.

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rhino369 4081 days ago
You aren't on the hook for future royalties for invalidated patents. But you don't get back royalties you already paid.

And typically you get a royalty for that company's entire portfolio of patents. So even if a few are invalid there are bunch more.

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