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Lear Doctrine Requires Licensee's Explicit Notice Of Invalid Claims

Client Alert | 1 min read | 10.30.06

In Go Medical Indus. Pty., Ltd. v. Inmed Corp. (formerly known as Medical Marketing Group, Inc. (“MMG”)), (No. 05-1241, October 27, 2006), the Federal Circuit vacates and remands for recalculation the damages awarded by the district court. The Federal Circuit finds that the district court misapplied the doctrine set forth by the Supreme Court in Lear, Inc. v. Adkins , 395 U.S. 653 (1969) (“ Lear ”), which permits a licensee to cease payments due under a license during the time it is challenging patent validity in the court.

In determining that the district court improperly reduced the amount of damages awarded as a result of MMG's breach of its license agreement with Go Medical, the Federal Circuit clarifies that a licensee cannot invoke the protection of Lear until it (i) actually ceases payment of royalties, and (ii) provides notice to the licensor that the reason for ceasing payment is because it has deemed the relevant claims to be invalid. Under this strict interpretation of Lear , the Federal Circuit finds that MMG's notice that it was placing its royalty payments “in an escrow account until such time as the [pending invalidity] appeal is decided” did not provide sufficient notice as to the reason for ceasing payment, and was an implicit acknowledgment that Go Medical was entitled to the royalty payments. Accordingly, MMG is found not to be entitled to the protection of the Lear doctrine.

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Client Alert | 6 min read | 03.26.24

California Office of Health Care Affordability Notice Requirement for Material Change Transactions Closing on or After April 1, 2024

Starting next week, on April 1st, health care entities in California closing “material change transactions” will be required to notify California’s new Office of Health Care Affordability (“OHCA”) and potentially undergo an extensive review process prior to closing. The new review process will impact a broad range of providers, payers, delivery systems, and pharmacy benefit managers with either a current California footprint or a plan to expand into the California market. While health care service plans in California are already subject to an extensive transaction approval process by the Department of Managed Health Care, other health care entities in California have not been required to file notices of transactions historically, and so the notice requirement will have a significant impact on how health care entities need to structure and close deals in California, and the timing on which closing is permitted to occur....