U.S. Federal Circuit rules on alleged patent misuse by a patent pool

On 20 April 2009 the Federal Circuit ruled on an appeal brought against the rejection by the U.S. International Trade Commission (”ITC”) of patent misuse defenses raised by importers of CD-R and CD-RW compliant optical discs. The Court affirmed the rejection of a defense of an allegedly non-essential patent being tied to essential patents but remanded for further proceedings a defense based on an alleged anti-competitive agreement.

The tying defense rejection was affirmed on the basis that the patent in question in fact qualified as an essential patent. That was because an objective manufacturer at the time of the license could believe a license to the patent reasonably might be necessary, particularly in view of one patent claim. The Court noted the pro-competitive benefits of reduced uncertainty that would be lost if package licensing of patents that ultimately prove not to be essential were held as patent misuse.

The Court was less sympathetic with the alleged agreement not to license the patent for use as part of technologies that could develop into competing alternatives to CD-R and CD-RW. According to the Court, such agreements lack pro-competitive justification and as agreements between competitors not to compete constitute ”classic antitrust violations”. The existence of the alleged agreement not to compete and whether the alternative technology would have been sufficiently commercially viable were left for the ITC to determine on remand. [Juha Vesala]