UK: Ten Things To Think About When Settling Patent Litigation (Video)

1. Settlement and licensing agreements have the potential to give rise to competition law risk – be aware of those from the outset and consult your in house legal team
2. Consider how complex an agreement needs to be – the simpler the agreement, the less likely it is to give rise to competition law concerns. A pure walk away will not be problematic
3. The parties to patent litigation are likely to be regarded as potential competitors – keep that in mind
4. Value transfers are broadly defined – and a significant value transfer to the potential infringer will give rise to risks for both parties
5. Monetary value transfers will be scrutinised carefully – but any arrangement which significantly benefits the potential infringer without immediate and unconstrained market entry will cause concern
6. Payments with a legitimate commercial basis such as reimbursement for litigation costs are unlikely to give rise to significant risk – as long as they are proportionate;
7. Consider the commercial justifications for any arrangement – does it have a sensible commercial rationale or is avoiding competition the most plausible explanation
8. No-challenge clauses are important to most settlements but the broader they are the more a competition concern may arise – link them clearly to the scope of the dispute
9. Licensing agreements which provide for some delay, but permit entry earlier than patent expiry are not necessarily anti-competitive, but will need to be carefully analysed; and
10. When preparing materials relating to settlement proposals, remember the potential for even innocuous statements to give rise to concern when read out of context.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.