U.S. District Court dismisses antitrust claims on royalty-free license to an invention

On 17 August 2011 the U.S. District Court for the District of Delaware dismissed an antitrust action, holding that a standards-development organization for financial accounting standards unlawfully claimed a royalty-free license to and refused to release its ownership interest in a patented accounting method.

The dispute arose when a patent holder (Silicon Economics) submitted comments on the website of the defendant (Financial Accounting Standards Board, below “FASB”) and also shared, by other means, information about its invention with the defendant without realizing that the terms of FASB’s website provided FASB and its affiliates a royalty-free right to use the invention. FASB later refused to release their royalty-free ownership interest in the invention. According to Silicon Economics, these practices, by creating uncertainty over the ownership of the patent, harm innovation and competition and constitute monopolization and unreasonable restraints of trade.

The court dismissed the antitrust claims on the grounds that the harm alleged by Silicon Economics, which resulted from the uncertainty remaining as to the ownership interest in the invention, did not meet the requirement of antitrust harm. The court held that Silicon Economics did not establish actual or imminent harm resulting from the royalty-free interest in the patent. In addition, the court held that Silicon Economics did not establish that the alleged conduct in the context of development of financial accounting standards was even subject to antitrust scrutiny by being commercial in its nature. However, the court allowed Silicon Economics to amend its complaint with respect to these two issues and reserved its decision on other arguments raised by FASB until after the amended complaint that addresses the above grounds for dismissal is filed. [Juha Vesala]