The following “Defensive Suspension” provision is an example of a clause often found in software patent licenses:
Termination for Patent Action. The Agreement will terminate automatically as of the date Licensee commences any claim that the Software infringes a patent, or otherwise supports any claim by a third party that the Software infringes a patent.
Defensive Suspension allows a patent licensor to use its patents defensively to avoid a suit in which it is accused of infringement, because the licensee would be deterred from making or supporting such a claim if faced with automatic termination of the license.
The Defensive Suspension clause is sometimes part of a boilerplate contract, and potential licensees may not realize that they may be able to negotiate this term.
Before offering two possible negotiation positions, following are two situations in which these clauses are often used.
Defensive Suspension and Open Source
This clause appears in the Open Software License (OSL). The OSL is known as “copyleft” (distinguished from copyright) license and it is used with Open software such as Magento.
Many people in the open-source software community may feel that software patents are harmful to software development in general, and to open-source software in particular, and in this context the clause is meant to discourage patent litigation generally.
Defensive Suspension and FRAND
The issue of defensive suspension also arises when dealing with standards-essential patents that must be licensed on “fair, reasonable, and non-discriminatory” (FRAND) terms.
Our introduction to FRAND is available here.
A patent holder that submits its technology to be included in a standard, such as a standard set by the IEEE, may still be able to include a defensive suspension clause. As noted in the IEEE Patent Policy FAQs:
An appropriately drafted defensive suspension clause that protects a Submitter’s access to Essential Patent Claims for the same IEEE Standard may be included as a reasonable and non-discriminatory term or condition if it is otherwise consistent with the policy. (More information about IEEE and FRAND is available in our blog here.)
Cisco Systems, Inc.’s patent statement to the Internet Engineering Task Force (IETF) is another example of defensive termination in the FRAND context:
If this standard is adopted, Cisco will not assert any patents owned or controlled by Cisco against any party for making, using, selling, importing or offering for sale a product that implements the standard, provided, however that Cisco retains the right to assert its patents (including the right to claim past royalties) against any party that asserts a patent it owns or controls (either directly or indirectly) against Cisco or any of Cisco’s affiliates or successors in title or against any products of Cisco or any products of any of Cisco’s affiliates either alone or in combination with other products…(Emphasis added.)
What Triggers a License Suspension?
As noted in the Standards Development Patent Policy Manual, acts that can trigger defensive suspension of a patent license can include:
- Initiating or supporting a patent infringement suit against the licensor
- Threatening to initiate or support such a suit
- Making or supporting any other claim against the licensor
Some standards development organization policies will permit defensive termination against a licensee who sues only the licensor or the licensor’s affiliates, whereas other policies will allow termination if a licensee takes action against any implementer of a standard.
Under some FRAND regimes, suspension is allowed only when the alleged infringement relates to essential claims of the patents at issue or to related industry standards.
Negotiating License Suspension Clauses
Licensees negotiating a license with a defensive suspension clause can limit the clause such that it would apply only to:
- suits against the licensor, and not against licensor affiliates
- filed suits, as opposed to threatened suits
- patent infringement litigation involving the licensed technology, as opposed to any other litigation
Please contact our office if you have questions about defensive suspension clauses or any other patent licensing issue.