In litigation settlements, including those related to patent infringement claims, litigants generally seek to achieve peace through some combination of voluntary dismissals, exchanges of cash or other consideration, or ongoing commercial arrangements between the parties. Standard tools of the trade used to construct such settlements include limited and general releases, dismissals with and without prejudice, court-ordered settlements and consent judgments, and licenses and covenants not to sue. Since the U.S. Supreme Court’s 2008 decision in Quanta Computer Inc. v. LG Electronics Inc.,1 practitioners have had to consider how best to deploy such tools in light of Quanta’s pronouncements on patent exhaustion.
In its recent decision in TransCore, LP v. Electronic Transaction Consultants Corp.,2 the U.S. Court of Appeals for the Federal Circuit provided some guidance in the area, particularly with respect to covenants not to sue. In TransCore, the Federal Circuit addressed the question of whether an unconditional covenant not to sue is equivalent to a non-exclusive patent license in the patent exhaustion context.
