In Biocell Technology LLC v. Artho-7, No. 12-cv- 00516-RNB (C.D. Cal. April 18, 2013), the district court held that a no-challenge clause in a license agreement does not estop a defendant from arguing invalidity in litigation. Prior to any litigation, Robinson entered into a Development Agreement and License Agreement with Biocell that promised to “not challenge or oppose” the validity of Biocell patents. Biocell later sued the defendants, who counterclaimed for invalidity of the asserted patents. Biocell moved for summary judgment to dispose of Robinson’s invalidity counterclaims. Citing Supreme Court precedent, the district court denied the motion. The district court explained that licensees are often the only individuals with enough economic interest to challenge invalidity and cannot be blocked as a matter of course from challenging the patents. The district court pointed to the important public interest in permitting full and free competition. The district court also distinguished cases finding estoppel by explaining that there is a narrow exception to this rule for agreements made in the course of ongoing litigation for which invalidity was at issue, but that was not the case here.
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No-challenge clause in license does not estop defendant from arguing invalidity
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