Licensee Estoppel: Coping the Licensee's Dilemma

摘要

After careful consideration, a licensee takes a license to a patent to use the technology developed by the patent owner. The royalty rate is reasonable, and the scope of the license permits the licensee to fully practice the technology free from fear of a patent infringement suit for infringing the licensed patent. Everything is going along nicely when someone alerts the licensee to the fact that the owner publicly disclosed the patented subject matter more than one year before the patent's filing date and the patent therefore is invalid under 35 U.S.C. S 102(b). The licensee is suddenly stricken with the realization that it has been paying royalties to practice technology in the public domain, free to everyone. The next royalty payment is coming due. The licensee checks the license agreement only to find that there is no mention of potential invalidity of the licensed patent. Despite the lack of any mention of invalidity, the failure to continue to pay royalties is clearly stated in the license as a breach of contract. The licensee's attorney advises that, under the waiver principal of licensee estoppel established many years ago by the US Supreme Court, a licensee can contest the validity of the licensed patent. But, unless the licensee stops paying royalties, a court may refuse to hear the case because there is no case or controversy. So, the licensee is faced with a choice: Stop paying royalties and breach the contract, and concomitantly bring a declaratory judgment action for patent invalidity, or continue to pay the licensor for essentially free technology. The problem presented by this situation is known as the licensee's dilemma.