Patent misuse

In United States patent law, patent misuse is a patent holder's use of a patent to restrain trade beyond enforcing the exclusive rights that a lawfully obtained patent provides. If a court finds that a patent holder committed patent misuse, the court may rule that the patent holder has lost the right to enforce the patent. Patent misuse that restrains economic competition substantially can also violate United States antitrust law.

Patent misuse is a patent owner's improper use of patent rights, speaking very generally, to expand the scope or term of the patent. Examples of such patent misuse include forcing customers to agree to pay royalties on unpatented products or to pay royalties on an expired patent. This type of patent misuse can take place without a violation of antitrust laws. But it violates such policies of US patent law as the monopoly of a patent is confined to what its claims cover and once a patent expires the public has an unlimited right to practice the formerly claimed subject matter.

Patent misuse may also occur when the patentee's conduct is a violation of antitrust laws. For example, a company buying all the patents in a given field (relevant market) to stall competition would be misusing patents, and (assuming other statutory requirements are met) also violating section 7 of the Clayton Act (15 U.S.C. § 18) and section 2 of the Sherman Act (15 U.S.C. § 2). Other antitrust patent misuse includes (again assuming that other statutory requirements are met) a licensor's exercising control over the price that several licensees charge for a product or service; attempting to enforce a patent that the patentee knows to be invalid or not infringed; and selling patented goods on the condition, agreement, or understanding that the buyer will not deal in the goods of a competitor of the seller.

In the early 20th century, patent misuse was not yet a well recognized defense to patent infringement, although it had been recognized in Adams v. Burke in 1873. Courts at that time recognized relatively few limitations to patentees' rights. In 1912, the Supreme Court did not recognize a doctrine of patent misuse in Henry v. A.B. Dick Co., a case in which a patent license was tied to a purchase of another product. According to the Court, because a patent owner had the greater right to withhold its patented product from market entirely, it had the inherent lesser right to selectively withhold it from people who did not purchase other products.

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Wikipedia