Princo v. ITC: The Federal Circuit Gives Standard Setting More Latitude While Narrowing the Patent Misuse Doctrine

December 2010
New Matter
Howard Wettan

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In the previous issue of New Matter, in Four Cases and a Business Review Letter, I surveyed the case law and business review letters that determine the parameters of lawful and potentially unlawful behavior by companies participating in standard setting organizations and engaging in the standard setting process. As that article went to press, one loose end necessarily remained: the Federal Circuit, sitting en banc had not yet ruled in Princo v. ITC. Shortly thereafter, on August 30, 2010, the Federal Circuit issued its ruling en banc, striking down Princo's patent misuse defense on two separate grounds:

• the patent misuse defense only applies to anticompetitive conduct where a "patentee has impermissibly broadened the physical or temporal scope of the patent grant," and
• an agreement between two standard setting participants not to compete against the standard is not presumptively anticompetitive.

The en banc decision in Princo is of interest for two reasons. First, the case gave the Federal Circuit an opportunity to weigh in authoritatively on a new type of legal attack on standard setting in the form of an allegation that the participants in the standard setting process somehow colluded in an illegal and anticompetitive manner. Second, the case presented the Federal Circuit with the question of whether and how the patent misuse defense should apply in a case where a standard setting organization has considered or adopted the patents at issue.