In MedImmune, the Supreme Court reserved the question whether a patent challenge would have been precluded by a license term wherein the licensee expressly promised not to challenge the patent’s validity or enforceability.

One response to MedImmune that licensor firms will no doubt try is including such clauses in their new running-royalty licenses. (Of course, they will also be seeking many more paid-up-front licenses.) They should not blithely assume that such a term is enforceable. There’s good authority, in the years just after Lear, holding that such a term is void and unenforceable - whether in the license context, or the consent decree context. Massillon-Cleveland-Akron Sign Co. v. Golden State Advertising Co., 444 F.2d 425 (9th Cir. 1971) (license); Business Forms Finishing Service, Inc. v. Carson, 452 F.2d 70 (7th Cir. 1971) (consent decree). Of course, there’s also authority pointing the other way, especially in the Federal Circuit.

In thinking about the issue, consider these words (and their antitrust law flavor) from the Business Forms case:

An undertaking not to challenge the validity of a patent is, in effect, a covenant not to manufacture or sell the patented commodity without the consent of the patentee. It is, therefore, not surprising to find the same competing policy considerations reflected in common law cases dealing with the enforceability of covenants not to compete and in Supreme Court decisions limiting and ultimately repudiating the doctrine of licensee estoppel. Although the lines of authority have wavered from time to time, there has been consistent recognition of the fact that the private dispute has ramifications that may affect the public interest in free competition and in the free circulation of ideas. For that reason enforceability cannot be determined without reference to matters beyond the private interests of the litigants. …

Under the common law authorities, because of the public interests which are affected, the covenantee has the burden of justifying the restraint on competition. Some covenants, such as those unlimited in time or scope, are flatly condemned; others, if limited and ancillary to a valid business purpose, may be justified as reasonable. Presumably a private agreement between competitiors to refrain from challenging a patent may be justified in certain situations, but it seems clear that the burden of justification must rest on the covenantee. As we read the recent decisions of the Supreme Court, which are strikingly unanimous in result as well as reasoning, the desirability of settling a lawsuit would not in itself establish sufficient justification for such an agreement. …

We believe that the policy considerations which underlie Blonder-Tongue, Lear, Sears and Compco lead inescapably to the conclusion that the defendants’ agreement to accept the validity of plaintiff’s patent is unenforceable. We so hold.

452 F.2d at 73-75. The author of Business Forms? Then Judge, now Justice, John Paul Stevens.