United States: District Court Stays Patent Infringement Case Pending A Decision On The Enforceability Of A Covenant Not To Sue


Licensees moved to stay a patent infringement lawsuit pending resolution of a dispute over the license's covenant not to sue. The court granted the motion, concluding that a stay would not impose an undue burden on licensor and that resolving the covenant's enforceability could reduce the issues and burden of litigation.


This case stems from an agreement in which Laser Band granted Ward Kraft a license to make and sell certain patented products. The agreement included a mutual covenant not to sue and a forum selection clause which provided that "any action by any party to enforce any provision of this Agreement shall be brought exclusively in the United States District Court for the Eastern District of Missouri, Eastern Division." While most terms of the agreement expired with the patent, certain provisions, including the covenant not to sue and the forum selection agreement survived expiration.

Zebra subsequently acquired Laser Band and sued Typenex Medical and Ward Kraft in Illinois for patent and trademark infringement, unfair competition and violation of the Illinois Uniform Deceptive Trade Practices Act. The complaint asserted 199 patent claims and 182 pages of infringement contentions.

In response, both Ward Kraft and Typenex asserted the covenant not to sue as an affirmative defense in the Illinois action.  In addition, Ward Kraft and Typenex filed their own lawsuit in Missouri for breach of contract and sought a declaratory judgment that all claims between the parties fell within the scope of the license agreement.  Ward Kraft also asked the Illinois court to stay the litigation filed by Zebra until the Missouri court decided Ward Kraft's lawsuit.

Opposing the stay, Zebra argued that the covenant not to sue did not apply to the products at issue, and that even if it did, the covenant only applied to the original contacting party, Laser Band, and not Zebra.  Typenex and Ward Kraft on the other hand, argued that the products were subject to the covenant not to sue and that the forum selection clause in the agreement required the dispute to be decided by the court in the Eastern District of Missouri.

The Zebra Decision

In determining whether to stay the case, the court considered whether a stay would (1) unduly prejudice or disadvantage Zebra, (2) simplify the issues and streamline the case, and (3) reduce the burden of litigation on the parties and the Court.

Turning to the first inquiry, the Court determined that Zebra would not be unduly prejudiced by a decision to stay the case. First, it reasoned, the fact that a stay would delay litigation is insufficient to establish undue prejudice. Secondly, Zebra's failure to pursue a preliminary injunction, enjoining defendants from producing and selling the alleged infringing products, undermined any argument that continued infringement would be unduly prejudicial. Thirdly, Zebra was aware of the alleged infringement for two years before filing suit. Finally, if Zebra prevailed, they would be able to collect damages for any infringement that occurred during the stay. Accordingly, granting the stay would not impose an undue burden on Zebra.

Turning to the second inquiry of whether the stay would simplify the issues and streamline the case, the court addressed Zebra's argument that the court was permitted to rule on the applicability of the covenant not to sue, so long as it applied Missouri law. Citing the license agreement, Zebra argued that the forum selection clause and choice of law provision were distinct in that the forum selection clause applied to "any action by any party to enforce any provision of this Agreement" while the choice of law provision provided that the agreement "shall be construed, interpreted and applied" in accordance with Missouri law.  Since the covenant not to sue was raised as an affirmative defense, Zebra argued, resolving the issue would not equate to enforcing the license agreement; thus, the court was free to address the issue so long as it applied Missouri law.

The court was unpersuaded. Noting that Zebra did not argue that the forum selection clause was invalid, the court determined that the alleged distinctions between the forum selection clause and choice of law clause were insufficient and unsupported by any of the case law cited by Zebra. And by raising the covenant as an affirmative defense, the defendants were asking the court to enforce it against Zebra—a question to be resolved in the Eastern District of Missouri.  This argument aside, the court concluded that a stay was proper because if the court in the Eastern District of Missouri first determined whether the covenant not to sue applied, it would narrow the scope of the case, if not resolve it entirely. 

As to the final inquiry, the Court concluded that a stay would reduce the burden of litigation on the parties and the Court. Noting the breadth of Zebra's infringement contentions, the court determined that the cost of litigation might be significantly reduced if the covenant not to sue applied. Such a reduction of cost would undoubtedly reduce the burden on all parties.

Accordingly, the court ordered a stay.

Strategy and Conclusion

Understanding the impact of clauses that can survive the termination of an agreement is important, as these will continue to affect the parties' conduct.  Clauses addressing forum selection and choice of law, may not seem as important at the time of negotiation, however, these clauses can dramatically affect litigation. Courts may invoke their discretion to stay the case until questions related to agreement interpretation are resolved in a forum other than where the case is pending. Parties opposing a potential stay must be ready to provide evidence showing that a stay would result in undue prejudice, including arguments showing how monetary damages alone would be insufficient to cure the negative impact of such delay.

Further Information

The Zebra decision can be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions