UPDATE 1-Cephalon, Barr settle patent infringement suit

* Cephalon, Barr end Fentora patent dispute

* Agreement gives Barr right to enter market in 2018

* Deal does not resolve litigation with Watson

(Updates with details)

NEW YORK, Nov 12 (Reuters) - Cephalon Inc CEPH.O said on Thursday it has come to an agreement to settle its patent infringement dispute with Barr Pharmaceuticals over the pain drug Fentora.

Under the agreement, Cephalon will grant Barr a non- exclusive, royalty-free right to market and sell a generic version of Fentora in the United States. The license will become effective in October 2018.

If another generic version of Fentora enters the United States market before that date, Barr will be allowed to enter the market at the same time, assuming no other company has won a period of marketing exclusivity.

Cephalon had claimed Barr infringed Fentora patents that do not expire until 2019. Under the settlement Barr will not attempt to enter the market earlier than October 2018.

Cephalon is still in litigation with generic drugmaker Watson Pharmacetuicals Inc (WPI.N) over Fentora.

Barr is owned by the generic drugmaker Teva Pharmaceutical Industries Ltd (TEVA.TA) of Israel. (Reporting by Toni Clarke; editing by Andre Grenon)