Practical Aspects of the Law of Misuse: Misuse in the Litigation Context

The effect of a wel l-founded misuse defense on an intellectual
property lawsuit can be significant. If the alleged infringer prevails on
misuse, it may have a complete defense to a suit for royaltie s.1 The alleged
infringer also may be able to enjoin the intellectual property owner’s
challenged conduct, even if it is not affected by that conduct. This chapter
discusses the procedural issues implicated by misuse claims.
A. Pleading Misuse
1. Misuse as an Affirmative Defense or Counterclaim
Misuse is an affirmative defense to infringement.2 Like other
affirmative defenses,3 if not pleaded, it may be waived.4 Courts have
1. Qualcomm Inc. v. Broadcom Corp., 548 F.3d 1004, 1025 (Fed. Cir. 2008)
(“When used successfully, [the patent misuse] defense results in rendering
the patent unenforc eable until the misuse i s purged.” (quoting B. Braun
Med. v. Abbott Labs., 124 F.3d 1419, 1427 (Fed. Cir. 1997)).
2. U.S. Philips Corp. v. ITC, 424 F.3d 1179, 1184 (Fed. Cir. 2005) (“Philips
I”) (“Patent misuse is an equitable defense to patent infringement.”); cf.,
Leviton Mfg. Co. v. Pass & Seymour, Inc., 264 F. Supp. 3d 421, 42325
(E.D.N.Y. 2017) (concluding that settlement and licensing agreement’s
release of claims did not bar subsequent assertion of affirmative defense
of patent misuse).
PRACTICE AND PROCEDURE § 1278 (3d ed. 2004). The patent misuse
defense is analogous to defenses such as estoppel, fraud, and illegality, all
of which must be pleaded under Rule 8(c) of the Federal Rules of Civil
Procedure. FED. R. CIV. P. 8(c). See, e.g., My Pie Int’l v. Debould, Inc.,
687 F.2d 919 (7th Cir. 1982) (estoppel); Stanish v. Polish Roman Catholic
Union of Am., 484 F.2d 713 (7th Cir. 1973) (illegality); Ramada Franchise
Sys. v. Royal Vale Hosp. of Cincinnati, 2004 WL 2966948, at *6 (N.D.
Ill. 2004) (fraud).
4. See Bio-Rad Labs. v. Nicolet Instrument Corp., 739 F.2d 604, 617-18
(Fed. Cir. 1984) (defense of patent misuse to patent infringement action
128 Intellectual Property Misuse
discretion, however, to deny a patentee injunctive relief based on patent
misuse even where the defendant failed to raise that defense in an earlier
action involving the same parties and patents, such that res judicata
otherwise would apply.5
In addition to pleading misuse as an affirmative defense, most courts
that have considered the issue have allowed infringement defendants to
plead misuse as a counterclaim.6 As one court explained, pleading misuse
waived as to patent owner’s alleged refusal to sel l its product without
purchase of a license under the patent where that defense was not pleaded
in the answer or presented to the jury); Trio Process Corp. v. L.
Goldstein’s Sons, 461 F.2d 66, 74 (3d Cir. 1972) (failure of an alleged
infringer to raise misuse defense in its answer resulted in waiver). See also
Cummins, Inc. v. TAS Distrib. Co., 700 F.3d 1329, 1337-38 (Fed. Cir.
2012) (affirming summary judgment that res judicata barred patent misuse
declaratory judgment claim because plaintiff could have asserted misuse
defense in prior suit between the parties concerning same operative facts
and resulting in final j udgment on the merits); Glitsch, Inc. v. Koch Eng’g
Co., 216 F.3d 1382 (Fed. Cir. 2000) (affirming dismissal of declaratory
judgment claim based on patent misuse where lower court denied leave to
amend to assert patent misuse defense in earlier case involving the same
parties and same patent). But see U.S. Philips Corp. v. Infodisc Tech.
USA, Inc., 2005 WL 6141291, at *5 (C.D. Cal. 2005) (because defendant
disclosed reliance on misuse defense in interrogatory response, it did not
waive that defense by failing to plead it in answer); CMI, Inc. v.
Intoximeters, Inc., 866 F. Supp.342, 347 (W.D. Ky. 1994) (misuse
defense is properly before the court when the court accepts proof of patent
misuse despite defendant’s failure to plead it).
5. Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 66970 (1944)
(res judicata does not restrict court’s discretion to deny injunctive relief
based on public interest in restricting patent misuse b ecause private
“parties cannot foreclose the courts from the exercise of that discretion by
the failure to interpose the same [patent misuse] defense in an earlier
litigation”); Glitsch , 216 F.3d at 1385 (“On the issue of res judicata [in
Mercoid], [the Supreme Court] held that principles of public policy
required that the issue of patent misuse be available to [the defendant] in
the second case even though it had not been raised as a defense in the
first.”); Leviton Mfg. Co., 264 F. Supp. 3d at 425 (“[T]he Supreme Court
has exempted the defe nse of patent misuse from the usual rules of res
judicata on the ground of what was then called equity and is now called
public policy.”).
6. See, e.g., Moss v. Moss, 2014 WL 4669302, at *6 (N.D.N.Y. 2014)
(“[G]enerally, patent misuse is not an affirmative claim but merely a
Misuse in the Litigation Context 129
as both an affirmative defense and a counterclaim “serves a useful
purpose because, without the counterclaim the plaintiff might withdraw
the suit and leave the rights of the parties in uncertainty.”7 This is
particularly important in the context of misuse, where the defendant
represents not only itself, but, in a sense, also the public which is likewise
excluded from the field of monopoly that an in-force patent grants to the
defense or counterclaim.”); Procter & Gamble Co. v. CAO Grp., 2013 WL
5353281, at *5 (S.D. Ohio 2013) (rejecting argument that patent misuse
counterclaim should be dismissed because “because patent misuse is an
affirmative defense and not an independent cause of action”); Marchon
Eyewear, Inc. v. Tura LP, 2002 WL 31253199, at *9 (E.D.N.Y. 2002)
(same); Internet Pipeline v. Aplifi, Inc., 2011 WL 4528340, at *3 (E.D.
Pa. 2011) (patent misuse counterclaims are permissible in the appropriate
case); Otsuka Pharm. Co. v. Apotex Corp., 143 F. Supp. 3d 188, 19697
(D.N.J. 2015) (concluding that defendant stated a plausible patent misuse
counterclaim); In re Gabapentin Patent Litig., 649 F. Supp. 2d 340, 349
(D.N.J. 2009) (same); Miotox LLC v. Allergan, Inc., 2015 WL 2084493,
at *6 (C.D. Cal. 2015) (same); Apple Inc. v. Psystar Corp., 2009 WL
303046, at *3 (N.D. Cal. 2009) (rejecting copyright owner’s “argument
that [copyright] misuse may never be asserted as a counterclaim”). But see
Too Marker Prod. v. Shinhan Art Materials, Inc., 2010 WL 786041, at *5
(D. Or. 2010) (“[M]ost courts have held that a defense of patent misuse
may not be converted to an affirmative claim for damages simply by
restyling it as a declaratory judgment counterclaim.”); Cummins, Inc. v.
TAS Distrib. Co., 676 F. Supp. 2d 701, 705 n.2 (C.D. Ill. 2009), aff’d, 700
F.3d 1329 (Fed. Cir. 2012) (“It appears that patent misuse is only a defense
to a patent-infringement claim, not an affirmative basis for relief.”); PSN
Ill., Inc. v. Ivoclar Vivadent, Inc., 2005 WL 2347209, at *3 (N.D. Ill.
2005) (dismissing counterclaim for patent misuse); Depuy Inc. v. Zimmer
Holdings, 343 F. Supp. 2d 675, 684 n.4 (N.D. Ill. 2004) (“[P]atent misuse
is an affirmative defense, not a counterclaim.”); Bernhardt LLC v.
Collezione Europa USA, Inc., 2002 WL 1602447, at *2 (M.D.N.C. 2002)
(“[P]atent misuse is not an affirmative claim, b ut rather a defense . . .”).
See also Amaretto Ranch Breedables, LLC v. Ozimals, Inc., 790 F. Supp.
2d 1024, 1033 (N.D. Cal. 2011) (“There is no consensus on whether
copyright misuse can be brought as an independent claim (as opposed to
as an affirmative defense) and district courts come down on both sides of
the issue.”) (collecting cases).
7. Procter & Gamble, 2013 WL 5353281, at *5 (citation and quotation marks
8. Id.

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