Patent Misuse

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Use of a patent in a manner that violates federal patent or antitrust laws may result in the patent being declared invalid or unenforceable by a court. Most often, the issue of patent misuse is raised as a defense to a patent infringement action. If the court in such an action finds that the patent was misused, it will not enforce the patent unless the owner can show that the misuse was involuntary and completely cured (“purged”). If the misuse was an antitrust violation, however, no such cure is possible and the patent will simply be declared invalid.

Misuse as a Defense

The issue commonly arises as a defense in a patent infringement lawsuit. A patent owner who has misused a patent cannot sue you for infringement. Common examples of misuse are violations of the antitrust laws, or unethical business practices. For example, if a patent owner conspired to fix the price of the patented item, this would violate antitrust laws. If the patent owner later sued for infringement, the defendant could argue that the owner is prohibited from suing because he or she has misused the patent rights. Tying is a form of patent misuse in which, as a condition of a transaction, the buyer of a patented device must also purchase an additional product.

Example: A company had a patent on a machine that deposited salt tablets in canned food. Purchasers of the machine were also required to buy salt tablets from the patent owner. The Supreme Court determined that the seller of the machine misused its patent rights and, on that basis, was prevented from suing for infringement. (Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488 (1942).)

Evolution of Misuse

In 1988, Congress enacted the Patent Misuse Amendments, which require courts to apply a “rule of reason” standard—meaning that the court must view all the relevant factors to determine if the tying arrangement is in any way justified.

In a 2010 case, the Federal Circuit narrowed the scope of patent misuse. Under the Federal Circuit’s new standard, there must be evidence of anticompetitive effects associated in addition to restrictions on use. Alleging wrongful conduct is not enough. (Princo Corp. v. International Trade Commission, 616 F.3d 1318 (Fed. Cir. 2010)).