The patentee usually thinks its case looks pretty good when patent litigation begins. Discovery can change the patentee’s outlook. A new prior art reference may create unanticipated invalidity issues. The accused infringer’s product may not be what was expected, and infringement becomes questionable. The amount of recoverable damages may be less than expected and may not exceed the patentee’s anticipated legal fees and expenses. In all these circumstances, and more, the patentee may want to end the litigation before judgment.
Settlement is an option, but the accused infringer is not always willing to settle or settle on terms acceptable to the patentee. The accused infringer may have invested heavily in its claim for a declaration judgment of invalidity or unenforceability and may demand its fees and expenses. If there is a pending summary judgment motion or trial is about to begin, the patentee may want to act quickly. The settlement negotiations may take too long. A covenant not to sue the alleged infringer for infringement of the patent can be the patentee’s best option. The covenant strips the court of its jurisdiction to hear the case and abruptly ends the litigation, usually without any requirement that the patentee pay the accused infringer’s fees or explain its reasons.