A practical settlement agreement defines what can and cannot be done by the parties. An agreement that only requires Part A “not to violate the applicable IP rights of Part B” has no practical value. A settlement agreement has a number of potential advantages over a court proceeding: the applicability of non-challenge clauses in IP agreements has not been negotiated directly in New Zealand or Australia, so it is unclear how they will present themselves with respect to local patent licenses and settlement agreements. However, the global nature of intellectual property means that many licenses and comparisons will include valuable patents in the US and the EU (and other jurisdictions subject to similar restrictions). This means that any license or transaction agreement or non-complaint agreement must be drafted by someone who is familiar with the complexity of these international jurisdictions. Oran Pre-cast sued him and his company for trademark infringement and transmission. The court dismissed the action on the ground that Oran Pre-Cast knew its company name when it had agreed on the terms of the settlement, that it had compromised its claim for additional payment and that it had never set up on that basis without full disclosure of known and foreseeable claims related to its departure from Oran Pre-Cast. This may have been a surprise for Oran Pre-Cast. There are other options to consider when drawing up these agreements on behalf of IP holders, including the right to terminate the agreement if patents are challenged in the future, or long notice periods before a challenge can take place. These clauses could apply in addition to a non-challenge clause where the agreement covers jurisdictions in which no challenge clause can be enforced. However, at least in the United States, it would appear that they will not be enforced if the litigation did not begin when the agreement was signed. This position has been clarified, at least in the United States, where a license or obligation not to take legal action is granted in advance. Now, the IP holder should be very careful to rely on a non-challenge clause to prevent the other party from undermining their IP in the future.
Formulating a license agreement as a transaction agreement will not solve the problem.. . . .