Defensive termination is a form of implicit cross licensing of patent

Patent

A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....

 or other intellectual property

Intellectual property

Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...

 rights. Consider a case where company A licenses patent A to company B. One of the conditions of the license agreement is that if company B should ever sue company A for infringing

Patent infringement

Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...

 one of company B’s own patents, such as patent B, then Company A can terminate the license to patent A. Thus company A would be able to counter sue company B for infringing patent A. This is a strong incentive to prevent company B from suing company A for any future patent it might receive after it has licensed patent A.

The World Business Council for Sustainable Development

World Business Council for Sustainable Development

The World Business Council for Sustainable Development is a CEO-led, global association of some 200 international companies dealing exclusively with business and sustainable development....

, for example, has a defensive termination clause built into its "Eco-Patent Commons".