USM Corp. v. SPS Technologies, Inc. case brief

USM Corp. v. SPS Technologies, Inc. case brief summary
694 F.2d 505 (1982)

CASE SYNOPSIS

Appellant corporation challenged the orders of the United States District Court for the Northern District of Illinois, Eastern Division, which held that appellee corporation's patent was invalid and that appellee corporation committed fraud on the patent office, but not on the court, and that appellee was entitled to royalties it paid since the date it had filed the suit.

CASE FACTS
Appellee sued appellant for patent infringement. Although appellant contended that it had a license to use the patent, the district court determined that it did not. The parties entered into a settlement agreement, in which appellee granted appellant a license to use its patent but required it to pay royalties. Years later, appellant filed a suit against appellee, seeking to invalidate appellee's patent. The court held that appellee had committed a fraud on the patent office, but not on the court, and that appellant was entitled to royalties. Both parties appealed.

DISCUSSION

• One issue on appeal was whether appellee committed patent misuse when it included a differential royalty schedule in the license agreement entered into as part of the settlement agreement. 
• The court held that there was no antitrust prohibition against a patent owner's using price discrimination to maximize his income from the patent. 
• Accordingly, the court determined appellee had not committed patent misuse.

CONCLUSION

The court vacated the lower court's order, which held that appellee's patent was invalid and granted appellant relief. However, the court otherwise affirmed the orders appealed from and determined that appellee did not commit patent misuse by including a differential royalty schedule in its license agreement.