1. Home
  2. |Insights
  3. |Settlement Prevents Contingent Payment Of Litigation Royalty

Settlement Prevents Contingent Payment Of Litigation Royalty

Client Alert | 1 min read | 04.24.06

In Parental Guide of Texas, Inc. v. Thompson, Inc . (No. 05-1493; April 21, 2006), the Federal Circuit affirms the district court's grant of summary judgment that Thompson did not owe Parental Guide a contingent payment under a Release and License Agreement (“Agreement”).

During a previous lawsuit, Parental Guide and Thompson reached a settlement and entered into the Agreement. In the Agreement, Thompson was obligated to make a contingent payment of a “Litigation Royalty” if there was a favorable determination of the lawsuit. The parties defined the “Litigation Royalty” as “the lowest per unit reasonable royalty, if any, as expressly determined in the Lawsuit in accordance with the law applicable to 35 U.S.C. § 284, by the final, irrevocable, and nonappealable order in the Lawsuit.”

Because the Agreement referenced section 284, the Federal Circuit determines that the “Litigation Royalty” would be a reasonable royalty that was determined by a judge or jury. In this case, however, the parties agreed to a royalty rate in their settlement, without a judge or jury making a reasonable royalty determination. Accordingly, the Federal Circuit determines that there is no “Litigation Royalty,” and thus there can be no contingent payment.

Insights

Client Alert | 4 min read | 08.21.25

FLSA Overtime Reporting and Withholding

The One Big Beautiful Bill Act (the Act), signed on July 4, 2025, allows a deduction from an individual’s personal tax return on Form 1040 for “qualified overtime compensation” as defined in new Code § 225. The amount that can be deducted from the employee’s return is capped at $12,500 with the maximum then adjusted down if the employee’s AGI exceeds certain limits. This deduction is permitted in 2025....