On July 12, 2012, the Second Circuit Court of Appeals unanimously held that patent licensing agreements reached before litigation cannot be used to bar a licensee from later challenging the validity of a patent, even if the deal is styled as a legal settlement or covenant not to sue. The Second Circuit ruling clarified a well-known 1969 United States Supreme Court case, Lear v. Adkins, and rejected a proposed limitation on its scope.

In Lear v. Adkins, the Supreme Court held that a patent licensing agreement cannot bar a licensee from later challenging the patent’s validity because of “the important public interest in permitting full and free competition in the use of ideas which are in reality a part of the public domain.” Over the years, the Lear doctrine has been extended to other forms of intellectual property.

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