Purchasing Safety: an economic outlook on the use of no-challenge clauses in patent licensing agreements

Authors

  • Jorge Enrique de Azevedo Tinoco Federal University of Rio Grande do Norte image/svg+xml
  • José Augusto Fontoura Costa University of São Paulo image/svg+xml

DOI:

https://doi.org/10.5380/rrddis.v4i7.99510

Keywords:

Patents, Economic Analysis of Law, Contracts, Licensing

Abstract

Due to their nature as probabilistic assets, patents are subjected to annulment through the decision of administrative or judicial authorities. To mitigate risks derived from such volatility, patentees may choose to license their patents under the condition that licensees shall not challenge the validity of their assets – an arrangement named a “no-challenge” pact. The legitimacy of such covenants and the possible benefits or drawbacks from them are a topic of intensive debate by researchers, regulators and magistrates. This study aims to examine the effects of such pacts in market conditions and to extract from this examination different degrees of economic efficiency for the different types of no-challenge clauses. Conclusively, it is shown that certain arrangements may be considered Pareto-efficient while others are Kaldor-Hicks-efficient depending on the choice of incentive elected by the public innovation policy

Author Biographies

Jorge Enrique de Azevedo Tinoco, Federal University of Rio Grande do Norte

Advogado. Mestrando em Direito pela USP (atualmente). Especialista em Direito Internacional pela UNIFOR (2023). Bacharel em Direito pela UFRN (2022). Pesquisador do Observatório de Direito Internacional da UFRN (OBDI/UFRN). E-mail: jorge.tinoco@usp.br.

José Augusto Fontoura Costa, University of São Paulo

Professor de Direito do Comércio Internacional da Faculdade de Direito da USP. Professor da Universidade CEUMA e da Faculdade de Direito de Sorocaba. Pesquisador produtividade do CNPq. Advogado e árbitro. E-mail: jafcosta@usp.br. 

References

BARBOSA, C. R. From Brussels to The Hague - The Ongoing Process Towards Effective Multinational Patent Enforcement. IIC - International Review of Industrial Property and Copyright Law, Munique, v. 32, n. 7, p. 729–763, 2001.

BUEHLER, B.; HUNOLD, M.; SCHLÜTTER, F. No-Challenge Clauses in Patent Licensing - Blessing or Curse. CORE Discussion Papers, Lovaina, v. 29, n. 32, p. 64, 2021.

CABRAL, A. do P. Pactum de Non Petendo: a promessa de não processar no direito brasileiro. Revista do Ministério Público do Estado do Rio de Janeiro, Rio de Janeiro, v. 28, p. 19–44, 2020.

CHENG, T. K. Anti-trust Treatment of the No-Challenge Clause. New York University Journal of Intellectual Property and Entertainment Law, New York, v. 5, n. 2, p. 437–512, 2016.

GAL, M. S.; MILLER, A. D. Patent Challenge Clauses: a new antitrust offense? Iowa Law Review, Iowa City, v. 102, n. 4, p. 1477–1532, 2017.

GOLDSTUCKER, R. W. Stop the Bleeding: Medimmune Ends the Unjustified Erosion of Patent Holders’ Rights in Patent Licensing Agreements. Journal of Intellectual Property Law, Athens, v. 16, n. 1, p. 137, 2016.

HARRIS JR., H. S. An Overview of the NDRC Decision in the Qualcomm Investigation. CPI Antitrust Chronicle, Boston, v. 7, n. 2, p. 2–6, 2015.

ITÁLIA. CORTE DI CASSAZIONE. Ordinanza n. 6373 del 5 Marzo 2019. Recorrente: Cavalli Agostino. Recorrida: COMIP S.R.L. Relator: Cons. Tricomi Laura, 5 mar. 2019.

KESAN, J. P.; GALLO, A. A. Why Bad Patents Survive in the Market and How Should We Change - The Private and Social Costs of Patents. Emory Law Journal, Atlanta, v. 55, p. 61, 2006.

LEMLEY, M. A.; LICHTMAN, D.; SAMPAT, B. N. What to Do About Bad Patents. Regulation, Rochester, v. 28, n. 4, p. 10–13, 2005. Disponível em: https://doi.org/10.2139/ssrn.869826

LEMLEY, M. A.; SHAPIRO, C. Probabilistic Patents. Journal of Economic Perspectives, Nashville, v. 19, n. 2, p. 75–98, 2005. Disponível em: https://doi.org/10.1257/0895330054048650

LIETZAN, E. K. A Brief History of 180-Day Exclusivity Under the Hatch-Waxman Amendments to the Federal Food, Drug, and Cosmetic Act. Food and Drug Law Journal, Washington, DC, v. 59, n. 2, p. 287–323, 2004. Disponível em: https://www.jstor.org/stable/26660344. Acesso em: 19 jun. 2024.

MENG, S. A New Design for the Patent System. Journal of the Knowledge Economy, New York, v. 10, n. 3, p. 1204–1229, 2019. Disponível em: https://doi.org/10.1007/s13132-018-0530-4

MILLER, A.; GAL, M. Licensee Patent Challenges. Yale Journal on Regulation, New Haven, v. 32, n. 1, p. 121–160, 2015.

SALAMA, B. M. O que é pesquisa em direito e economia. Cadernos Direito GV, São Paulo, v. 5, n. 2, p. 5–58, 2009.

TAYLOR, C. C. No-Challenge Termination Clauses: Incorporating Innovation Policy and Risk Allocation into Patent Licensing Law. Indiana Law Journal, Bloomington, v. 69, n. 1, p. 215–254, 1993.

TRIGO, A. L. A. da C. Pactum de Non Petendo Parcial. Revista de Processo, São Paulo, v. 43, n. 280, p. 19–39, 2018.

Published

2025-05-13

How to Cite

Tinoco, J. E. de A., & Costa, J. A. F. (2025). Purchasing Safety: an economic outlook on the use of no-challenge clauses in patent licensing agreements. Revista Rede De Direito Digital, Intelectual & Sociedade, 4(7), 127–153. https://doi.org/10.5380/rrddis.v4i7.99510

Issue

Section

Parte II - As novas fronteiras dos direitos intelectuais

Categories