Go Medical Industries PTY Ltd. v. Inmed Corporation 471 F.3d 1264 (Fed. Cir. 2006).
An invalidity ruling in a separate lawsuit does not relieve a patent licensee from owing royalties under the U.S. Supreme Court’s Lear Inc. v. Adkins doctrine, the Federal Circuit has held. In Lear, the Supreme Court held that a licensee may stop making payments due under a license during the time the licensee is challenging patent validity. The Federal Circuit clarified in Go Medical Indus. v. Inmed Corp. that Lear required notice that the accused infringer considers the patent to be invalid in order to cease royalty payments, even if the same product previously had been adjudicated invalid in a separate action. Go Medical involved a patent holder that had entered into a 99-year contract allowing a licensee to distribute a patented urinary catheter designed to reduce exposure to urinary tract infections. Go Medical brought suit for breach of contract, patent infringement, and other claims. In June 1999, the licensee informed Go Medical that it considered the patent invalid. Earlier that year, in March, the patent was found invalid in a separate litigation. The district court, applying Lear, ruled upon a motion for judgment as a matter of law that Go Medical was not entitled to royalty payments after March 1999. The Federal Circuit vacated and remanded the damages award on Go Medical’s breach of contract claim, finding that the district court had misapplied the Lear doctrine. The Federal Circuit held that a patent licensee cannot invoke Lear until it actually stops paying royalties and provides notice to the licensor that it is no longer paying royalties because it considers the patent to be invalid. The Court noted that the Lear doctrine does not prevent a patentee from recovering damages up to the date the licensee challenges the patent’s validity.