U.S. ITC ALJ rejects Barnes & Noble allegations of patent misuse as a matter of law

On 31 January 2012 an administrative law judge of the U.S. International Trade Commission (“U.S. ITC”) found that Microsoft’s conduct did not amount to patent misuse as a matter of law (In the Matter of certain handheld electronic computing devices, related software, and components thereof, Investigation No. 337-TA-769).

Barnes & Noble has recently introduced an e-book reader called Nook, which uses the Android mobile operating system. According to Microsoft, Barnes & Noble is infringing Microsoft’s patents, so Microsoft has demanded that Barnes & Noble discontinue such infringement. Microsoft has offered licenses to Barnes & Noble and operates a general licensing program for manufacturers using the Android operating system.

In pending U.S. ITC proceedings against Barnes & Noble initiated by Microsoft, Barnes & Noble invoked the patent misuse defense against Microsoft. Barnes & Noble argued that Microsoft’s licensing program, unfair licensing terms and related patent transactions were part of an overall scheme to eliminate the competitive threat posed by the Android mobile operating system to Microsoft’s monopoly in PC operating systems.

The administrative law judge rejected the patent misuse defense as a matter of law. The judge found that Barnes & Noble’s theory of patent misuse fails, because the alleged course of conduct bears no relation to the patents-in-suit (see U.S. Federal Circuit’s decision in Princo discussed in Newsletter 4/2010 p. 3). Moreover, the judge noted that even if it was established that Microsoft had the intention to eliminate Android as a competitor, this point alone would not be sufficient to establish patent misuse.

In addition, the alleged licensing practices concerning the patents in suit do not amount to patent misuse, as they do not expand the scope of the patents. In particular, the administrative law judge rejected claims that the allegedly prohibitively high level of licensing fees or limitations on the scope of license could constitute patent misuse.

The U.S. ITC recently determined that it will not review the administrative law judge’s order. [Juha Vesala]