Opinion ID: 403701
Heading Depth: 3
Heading Rank: 3

Heading: payment of royalties until the patents' validity was challenged

Text: 29 A licensee remains obligated to pay all royalties under a licensing agreement which accrue until it takes an affirmative step that would prompt the early adjudication of the validity of the patent, such as filing an action contesting the patent's validity or notifying the licensor that the payments were being stopped because the patent was believed to be invalid. 7 PPG Industries, Inc. v. Westwood Chemical, Inc., 530 F.2d 700, 701 (6th Cir.), cert. denied, 429 U.S. 824, 97 S.Ct. 76, 50 L.Ed.2d 86 (1976); accord, American Sterilizer Co. v. Sybron Corp., 614 F.2d 890, 895-98 (3d Cir.), cert. denied, 449 U.S. 825, 101 S.Ct. 88, 66 L.Ed.2d 29 (1980) (the crucial date for terminating the obligation to pay royalties occurs when the licensee makes a prompt challenge to the patent, not necessarily when the action is filed); cf. St. Regis, 552 F.2d at 314 (a licensee is not entitled to the refund of royalties paid before it challenged the validity of the patent); Kraly v. National Distillers & Chemical Corp., 502 F.2d 1366, 1372 (7th Cir. 1974) (the obligation to pay royalties stopped when the licensee repudiated the license agreement by ceasing to represent that its product was licensed under the patent); see also USM Corp. v. Standard Pressed Steel Co., 524 F.2d 1097, 1099-100 (7th Cir. 1975). 30 Here, Bristol Locknut stopped paying royalties seven weeks before it filed suit. Because its letter to SPS did not prompt the early adjudication of the patents' validity, it remained obligated to pay royalties until it filed this declaratory judgment action to contest the patents' validity.