Provision in an agreement, typically a limited patent license, that provides that if the beneficiary of the agreement is using infringing technology supplied by a third party vendor, the patent holder will pursue infringement litigation against the vendor/supplier of the technology – and exhaust its claims against that vendor before bringing any infringement litigation against the beneficiary. To take an example, if a patent holder has patents that are infringed by say a microprocessor, it will sue the supplier of the processor before it sues the customers that use the processor.
Vendor-first clauses can be written between say microprocessor manufacturers, in which case they are an agreement not to harass one another’s customers with patent claims, or they can be written between a major patent holder and more downstream businesses.