Licensee estoppel is the doctrine that if you contract with a patent holder for a license, you are barred from contesting the validity of the patent. Patent law has typically refused to enforce licensee estoppel.
When you set up a licensing agreement with an inventor, you agree to pay him royalties for the right to manufacture and sell his product. However, if the patent is not valid, then the inventor has no right to bar others from manufacturing and selling it and your exclusive license is worthless. If the patent is invalid, you should not have to pay royalties to the person who licensed the invention to you.
You can challenge the validity of a patent at almost any time. It is probably in your best interest to challenge it as soon as possible so you can avoid paying a lot of money in royalties. However, there are some limitations regarding when you can challenge patent validity, such as:
If you choose to challenge the validity of the patent that has been licensed to you, you have several options.
Generally, you will not have to pay royalties while challenging patent validity. So, once you challenge the validity of the patent, you have a variety of options regarding royalty payments:
No. You can only collect the royalties you paid after you challenged the patent's validity.
If you have questions about the validity of the patent that was licensed to you, or if you are involved in a dispute over a license, you should definitely consider contacting a patent attorney. An experienced patent attorney can let you know if you should contest the validity of a patent and offer you guidance through the complicated patent law system.
Last Modified: 02-15-2012 02:03 PM PSTLaw Library Disclaimer
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