Princo Corp. v. Int'l Trade Comm'n, 2007-1386 (Fed. Cir. Aug. 30, 2010)

The patentee and its joint venture partner established standards for compact disks. The patentee and its joint venture partner each owned various patents covering these standards and jointly licensed their combined patents. The alleged infringer argued that the patentee had misused its patents because in conjunction with the patentee, the joint venture partner refused to license separately the joint venture partner’s patent, which could compete with the patentee’s patents. The International Trade Commission (“ITC”) held that the doctrine of patent misuse did not bar the patentee from enforcing its patents against the alleged infringers. On appeal, the Federal Circuit affirmed that the patentee’s conduct in agreeing with its joint venture partner to license the joint venture partner’s patent as part of the standard license with the patentee’s patents was not patent misuse.

“[T]he doctrine of patent misuse is [] grounded in the policy-based desire to ‘prevent a patentee from using the patent to obtain market benefit beyond that which inheres in the statutory patent right,’” and “the key inquiry under the patent misuse doctrine is whether, by imposing the condition in question, the patentee has impermissibly broadened the physical or temporal scope of the patent grant and has done so in a manner that has anticompetitive effects.”

Here, the patentee was not imposing restrictive conditions on the use of its patents to enlarge the physical or temporal scope of those patents. Instead, the alleged act of patent misuse was the claimed horizontal agreement between the patentee and the joint venture partner to restrict the availability of the joint venture partner’s patent—an entirely different patent that was never asserted in this case. Because “[p]atent misuse will not be found when there is ‘no connection’ between the patent right and the misconduct in question, or no ‘use’ of the patent” the court found no link between the putative misconduct at issue in this case and the licensing of the patents-in-suit.

The purported agreement between the patentee and the joint venture partner had none of the features that courts have characterized as constituting patent misuse. “In particular, it does not leverage the power of a patent to exact concessions from a licensee that are not fairly within the ambit of the patent right.” “If the purported agreement between [the patentee and the joint venture partner] not to license the [joint venture partner’s] technology is unlawful, that can only be under antitrust law, not patent misuse law; nothing about that agreement, if it exists, constitutes an exploitation of the [patentee’s] patents against [the patentee’s] licensees.”

The court also found that the alleged infringers failed to establish that the alleged agreement to suppress the joint venture partner’s technology had anticompetitive effects “in the relevant market.” “Whether viewed as a matter of patent misuse or in light of general antitrust principles, [the] claim regarding the alleged agreement fails because [the patentee and the joint venture partner] acted legitimately in choosing not to compete against their own joint venture.” The alleged infringer also failed to show that the asserted agreement had any anticompetitive effects because, as the Commission found, “the [joint venture partner’s] technology was not a viable potential competitor to the technology embodied in the [patentee’s] patents.”

A copy of the opinion can be found here.