In Pactiv Corp. v. Dow Chemical Co., Plaintiff Pactiv Corporation appealed a lower court’s order dismissing its declaratory judgment action for noninfringement, invalidity, and unenforceability against patent owner Dow Chemical Company. The Federal Circuit affirmed, finding that Pactiv’s claims were barred by the doctrine of res judicata.

In 1995, Dow sued Pactiv for infringement of two patents, and Pactiv counterclaimed for invalidity and unenforceability. The litigation eventually resulted in settlement/license agreements, and the suit was dismissed with prejudice. Pursuant to the settlement/ license agreements, Pactiv began paying royalties to Dow for its continued use of the patents until 2002. In 2003, Pactiv filed a lawsuit seeking declaratory judgment that the patents were not infringed, invalid, and unenforceable. Dow moved for dismissal, arguing that Pactiv’s suit was barred by the doctrine of res judicata.

The Federal Circuit affirmed the district court’s ruling dismissing Pactiv’s declaratory judgment action, finding that the settlement/license agreements failed to preserve Pactiv’s right to litigate a claim that would otherwise be barred by res judicata, stating that: 

“The question is not whether the 1998 Agreement precluded Pactiv from future litigation; the question is whether the 1998 Agreement expressly permitted Pactiv to participate in future litigation.” (emphasis in original)

Thus, an accused infringer that settles a patent infringement case may be barred from challenging the patent at issue in the future unless the settlement/license agreement expressly reserves the party’s future right to challenge the patent at issue.

 Pactiv Corporation v. Dow Chemical Company, No. 05-1260 (Fed. Cir. June 5, 2006), click here to view a full copy of the opinion.