Brief Fact Summary. SPS (Defendant) allowed USM (Plaintiff) to license out its patented product, but charged a higher fee if Plaintiff sublicensed with certain companies.
Synopsis of Rule of Law. Patent misuse charges should be evaluated under antitrust principles, and there is no antitrust prohibition against a patent owner’s use of price discrimination to maximize his income.
As such, the doctrine of patent misuse has largely been confined to a handful of specific practices by which the patentee seemed to be trying to extend his patent grant beyond its statutory limits.View Full Point of Law
Issue. Should patent misuse charges be evaluated under antitrust principles?
Held. (Posner, J.)Â Yes.Â Patent misuse charges should be evaluated under antitrust principles and there is no antitrust prohibition against a patent owner’s use of price discrimination to maximize his income.Â Patent misuse has been described as an equitable concept designed to prevent use of a patent in opposition to public policy.Â However, this definition is too formal.Â There is an overlap between misuse and antitrust principles, as revealed by examination of prior patent misuse cases.Â Besides the conventional applications of patent misuse (such as tying in unpatented products or resale price maintenance), there are no cases where standards different from those of antitrust law were actually applied to obtain different results.Â Therefore, antitrust principles are applied.Â The price discrimination practice complained of here is not prohibited by antitrust law, and Plaintiff presented no evidence of anticompetitive effect as required to satisfy a rule of reason antitrust determination.Â Reversed in part and affirmed in part.
Discussion. The line between patent misuse and antitrust law is blurry at best, as Judge Posner indicated in USM.Â Notably, the Federal Circuit does not have exclusive jurisdiction over patent-antitrust cases, but recall that patent misuse only arises as an equitable defense to a charge of patent infringement.Â Therefore, the standards determining patent misuse are a matter controlled solely by the Federal Circuit.