Patent Misuse

Patent misuse is grounded in a policy desire to prevent broadening the scope of patent rights.

The concept of patent misuse arose to restrain practices that did not in themselves violate any law, but that drew anticompetitive strength from the patent right, and thus were deemed to be contrary to public policy. The policy purpose was to prevent a patentee from using the patent to obtain market benefit beyond that which inheres in the statutory patent right.

Mallinckrodt, Inc. v. Medipart, Inc., 976 F. 2d 700, 704 (Fed. Cir. 1992).

The first amendment guarantees a patentee’s right to enforce his patent even if the consequences of that action are anticompetitive.

Since a principal purpose of the patent system is to provide innovators with a property right upon which investment and other commercial commitments can be made, absent the PRE criteria the patentee must have the right of enforcement of a duly granted patent, unencumbered by punitive consequences should the patent's validity or infringement not survive litigation.

CR Bard, Inc. v. M3 Systems, Inc., 157 F. 3d 1340, 1369 (Fed. Cir. 1998).

Licensing to a party that could be found guilty of contributory infringement does not constitute misuse.

No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having done one or more of the following: (1) derived revenue from acts which if performed by another without his consent would constitute contributory infringement of the patent; (2) licensed or authorized another to perform acts which if performed without his consent would constitute contributory infringement of the patent; (3) sought to enforce his patent rights against infringement or contributory infringement; (4) refused to license or use any rights to the patent; or (5) conditioned the license of any rights to the patent or the sale of the patented product on the acquisition of a license to rights in another patent or purchase of a separate product, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned.

35 U.S. Code § 271 (d).

Licensing patents in bundles does not constitute misuse.

We rejected the Commission's theory that Philips's package licensing practice constituted patent misuse by improperly tying nonessential patents to essential ones.

Princo Corp. v. International Trade Com'n, 616 F. 3d 1318, 1323 (Fed. Cir. 2010).

Patent misuse boils down to whether the patentee impermissibly broadened the scope of their rights under the patent.

[T]he 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.

Princo Corp. v. International Trade Com'n, 616 F. 3d 1318, 1328 (Fed. Cir. 2010).

Licensing practices that may constitute misuse include:

  1. Conditioning a patent license on the purchase of unpatented products;

    Protection from competition in the sale of unpatented materials is not granted by either the patent law or the general law. He who uses his patent to obtain protection from competition in the sale of unpatented materials extends by contract his patent monopoly to articles as respects which the law sanctions neither monopolies nor restraints of trade.

    Transparent-Wrap Machine Corp. v. Stokes & Smith Co., 329 US 637, 644 (S. Ct. 1947).

  2. Requiring a licensee to pay royalties after the expiration of a patent’s term;

    Under Brulotte, royalties may run until the latest-running patent covered in the parties' agreement expires. See 379 U. S., at 30. Too, post-expiration royalties are allowable so long as tied to a non-patent right—even when closely related to a patent. [Contracts stipulating patent royalties beyond the date of patent expiration are unlawful].

    Kimble v. Marvel Entertainment, LLC (S. Ct. 2015).

  3. Enforcing a patent against the use of products obtained via an unrestricted sale; or

    As a general matter, the unconditional sale of a patented device exhausts the patentee's right to control the purchaser's use of the device thereafter, on the theory that the patentee has bargained for, and received, the full value of the goods. That "exhaustion" doctrine does not apply, however, to a conditional sale or license, where it is more reasonable to infer that a negotiated price reflects only the value of the "use" rights conferred by the patentee. Thus, express conditions accompanying the sale or license of a patented product, such as field of use limitations, are generally upheld.

    Princo Corp. v. International Trade Com'n, 616 F. 3d 1318, 1328 (Fed. Cir. 2010).

  4. Enforcing a patent known to be invalid.

    Conduct prohibited under antitrust law includes bringing suit to enforce a patent with knowledge that the patent is invalid or not infringed, and the litigation is conducted for anti-competitive purposes.

    CR Bard, Inc. v. M3 Systems, Inc., 157 F. 3d 1340, 1368 (Fed. Cir. 1998).

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