Lear, Inc. v. Adkins - Case Brief
Lear, Inc. v. Adkins, 395 U.S. 653 (1969).
Facts:
Lear hired Adkins as an engineer, agreeing that Adkins would retain ownership of any inventions he developed. The agreement also provided that Adkins would license his inventions to Lear.
Adkins filed a patent application directed to an improvement he developed. Lear and Adkins entered into a licensing agreement that provided that if no patent issued or any issued patent were subsequently held to be invalid, Lear would be able to terminate the agreement. See American Machine & Metals v. De Bothezat Impeller.
During prosecution, Lear claimed that a reference uncovered during a search by the USPTO anticipated fully Adkins’ invention. Lear subsequently ceased paying the full amount of royalties due under the agreement.
Upon issue of the patent, Adkins brought suit against Lear for breach of the licensing agreement. The trial judge held that Lear was estopped by its licensing agreement from arguing that the patent was invalid as a defense to infringement. On appeal, the California Supreme Court held that the licensing agreement was still in effect, that Lear did not have the right to cease paying royalties, and that Lear was estopped from challenging the validity of the patent.
Holding:
The court overruled the holding of Automatic Radio Manufacturing Co. v. Hazeltine Research, Inc., 339 U. S. 827, 339 U. S. 836 which had held that a licensee was estopped from challenging the validity of a patent. The licensee is not estopped from challenging the validity of a patent and is not obligated to continue to make royalty payments after the date of issue of the patent if it can prove that the patent is invalid. Whether Lear was obligated to pay royalties under the agreement for the period prior to issue of the patent was left as a matter of state law.