What a covenant not to sue achieves
A covenant not to sue (CNS) is a contractual promise by the patent owner not to assert a specific patent against a specific party. It achieves the practical effect of a license — the covenantee can practice the patented invention without facing suit — without the patent owner granting any formal rights in the patent. Patent owners use covenants rather than licenses in several contexts: when they want to protect a specific party without granting sublicensable rights; when settling litigation without admitting the patent is valid or enforceable; when participating in patent pledge programs for open source software; and when granting limited protections to specific customers or partners. A covenant is contractually binding on the patent owner. If the patent owner sues the covenantee in violation of the covenant, the covenantee has a complete breach of contract defense and may seek to enjoin the breach or recover damages.
Covenant vs. license: legal distinctions that matter
While covenants and licenses achieve similar practical results, they differ in legally significant ways. A license grants an affirmative right to practice the patent — the licensee is authorized to perform acts that would otherwise constitute infringement. A covenant does not grant any rights; it only prevents one specific patent owner from suing. The covenantee technically still infringes (practicing without authorization) but has a contractual defense against this party. In practice, the key distinctions: (1) Sublicensability — an exclusive license can be sublicensed to third parties; a covenant is personal and typically does not extend to subsidiaries, affiliated entities, or customers (unless the covenant expressly provides); (2) Running with the patent — license rights generally survive a patent sale and bind successor owners; a covenant may or may not bind a patent purchaser depending on the contract terms and notice; (3) Scope of protection — a licensee has a complete defense against any infringement claim regardless of who brings it; a covenantee has a defense only against the specific patent owner who made the covenant.
Covenants and case mootness
A pending patent lawsuit becomes moot if there is no longer an actual case or controversy — when the dispute has been resolved and a federal court can no longer provide meaningful relief. A patent owner can moot a pending infringement case by granting a covenant not to sue that covers all acts alleged to infringe. The Federal Circuit has held that a covenant must be broad enough to cover all the accused infringer's current and likely future activities to moot the case. If the covenant only covers past infringement (existing products) but carves out future products, the lawsuit may remain live as to future products. If the defendant has pending declaratory judgment counterclaims for invalidity or non-infringement, the covenant must be broad enough to eliminate the controversy underlying those counterclaims too — or they may survive. Courts are careful to prevent patent owners from using limited covenants to dismiss cases on the patent owner's preferred terms while preserving future rights.
Effect on declaratory judgment jurisdiction
Before a patent infringement lawsuit is filed, an accused infringer may proactively seek a declaratory judgment of non-infringement or invalidity if the patent owner has made credible infringement threats. The Supreme Court in MedImmune v. Genentech (S.Ct. 2007) held that even a licensee paying royalties under protest has standing to seek a DJ of invalidity. Post-MedImmune, the threshold for DJ standing is relatively low: the patent owner's conduct must have created an objectively reasonable apprehension of suit. A covenant not to sue eliminates DJ standing if it removes the threat of suit comprehensively enough that no real dispute remains. However, MedImmune's permissive standing standard means that covenants must be very broadly drafted to fully eliminate DJ jurisdiction — narrow covenants that leave open the possibility of future suits for future products often fail to eliminate DJ standing entirely.
Open source patent pledges: covenants at scale
Technology companies have increasingly used covenants not to sue to make patent pledges to the open source community. These pledges typically commit that the pledging company will not sue users of specified open source software projects for infringement of the pledging company's patents, subject to certain conditions. Notable examples: Open Invention Network (OIN) — member companies covenant not to sue each other or the Linux ecosystem for patents related to Linux; Google's Open Patent Non-Assertion Pledge (OPN) — covenants not to sue users of specified open source implementations; IBM Open Patent License; Microsoft's pledge related to OpenDocument Format patents. These pledges raise interesting questions: are they binding on successor companies (if the pledging company is acquired or the patent is sold); what is the scope of the pledge (which products, which patent claims); and can a pledge be revoked. Legal enforceability depends on how the pledge was structured — pledges made as consideration for participation in open source development are more clearly enforceable than unilateral marketing statements.
Frequently Asked Questions
What is a covenant not to sue in patent law?
A covenant not to sue (CNS) is a contractual promise by a patent owner not to sue the covenantee for infringement of specified patents. Unlike a patent license (which grants a right to practice the patented invention), a covenant not to sue is a negative promise — it does not grant the covenantee any affirmative rights; it simply binds the patent owner not to exercise its right to sue. Patent owners use covenants not to sue in several contexts: (1) settlement of patent infringement litigation — the patent owner covenants not to sue for past or future acts, allowing the parties to settle without the covenantee admitting infringement; (2) cross-licensing arrangements — as part of a portfolio cross-license, each party covenants not to sue the other for acts within the licensed scope; (3) open source and patent pledge programs — patent owners covenant not to sue open source software users or specified categories of implementers; (4) partial resolution of disputes — a patent owner may covenant not to sue for current products while reserving the right to sue for future products. The covenant is contractually binding and can be enforced as a breach of contract claim.
Does a covenant not to sue moot a pending patent lawsuit?
Yes — a sufficiently broad covenant not to sue can moot a pending patent infringement lawsuit, eliminating the case or controversy required for federal court jurisdiction. If the patent owner covenants not to sue the defendant for all infringing acts related to the accused products (past, present, and future acts), there is no longer an actual dispute between the parties and the case becomes moot. The Supreme Court addressed this in Already, LLC v. Nike, Inc. (2013) in the trademark context, holding that a broad covenant not to sue eliminated standing for a declaratory judgment counterclaim. In the patent context, the Federal Circuit has held in multiple cases (e.g., Revolution Eyewear v. Aspex Eyewear, Fed. Cir. 2008) that covenants not to sue for future infringement must be sufficiently broad to moot a pending case — if the covenant carves out future products, a live controversy may remain. Patent owners who grant covenants to moot lawsuits must be careful that the covenant's scope actually covers all pending claims, including declaratory judgment counterclaims.
What is the difference between a covenant not to sue and a patent license?
A patent license and a covenant not to sue achieve similar practical results — the licensee/covenantee can practice the patented invention without fear of infringement suit — but they are legally distinct. A patent license grants an affirmative right to practice the patented invention; it is a transfer of rights from the patent owner. A licensee can rely on the license as a complete defense to any infringement claim (not just a defense against this patent owner). A covenant not to sue is a contractual promise by the patent owner not to sue; it does not grant any rights. A covenantee is still technically 'infringing' (using the patented invention without authorization) — they simply have a contract defense against this patent owner. Practical differences: (1) A license transfers a right that can be sublicensed (if it's an exclusive license); a CNS generally cannot be transferred; (2) A license may run with the patent if the patent is sold to a new owner; a CNS obligation may or may not run with the patent depending on the contract terms; (3) A licensee under a limited license has a complete defense against all patent owners; a covenantee only has a contractual defense against the specific patent owner who made the covenant.
Can a covenant not to sue be transferred when a patent is sold?
Whether a covenant not to sue runs with the patent (i.e., binds a subsequent purchaser of the patent) depends on the terms of the covenant and the circumstances of the patent sale. Courts apply a transferability analysis: (1) If the covenant was structured as a contract right against a specific party (not as a property right in the patent), it may not automatically bind subsequent patent purchasers; (2) If the patent purchaser had actual notice of the covenant (e.g., the covenant was recorded at the USPTO or the purchaser was told of it in due diligence), courts may hold the purchaser bound under equitable principles; (3) Some jurisdictions treat covenants structured as limitations on the patent right itself (not merely personal promises) as running with the patent. TransCore v. Electronic Transaction Consultants (Fed. Cir. 2009) held that a covenant not to sue a patent's licensees ran with the patent on sale, binding the new patent owner. Companies acquiring patents in M&A transactions should identify all outstanding covenants not to sue and assess their enforceability, as they may significantly limit the value of acquired patent rights.
How does a covenant not to sue affect declaratory judgment standing?
A patent owner who has made credible infringement threats may face a declaratory judgment lawsuit from the accused infringer seeking a declaration of non-infringement or invalidity. A sufficiently broad covenant not to sue can eliminate the 'case or controversy' required for federal court jurisdiction over the declaratory judgment action. For the covenant to eliminate DJ standing, it must be broad enough that there is no remaining actual dispute: the covenant must cover all current and future acts that could form the basis of the DJ action; if the covenant carves out future products or only covers current products, the DJ action for future products may remain viable; if the DJ action includes counterclaims for invalidity of other patents in the same family (not covered by the covenant), those counterclaims may survive. MedImmune v. Genentech (S.Ct. 2007) lowered the threshold for DJ standing — even a licensee who is paying royalties under protest can seek a DJ of invalidity. Post-MedImmune, covenants that might have eliminated DJ standing before MedImmune may be insufficient under the more permissive current standard.