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Patent Litigation: Antitrust and Patent Misuse Counterclaims

In the last few years, parties seeking to enforce patent rights through litigation are increasingly faced with counterclaims for patent misuse or violations of Sherman Act anti-trust laws. Defendants essentially argue that the plaintiff inequitably attempted to extend the licensor’s patent monopoly. If Defendants are successful, then all of plaintiff’s asserted licenses and patents may be unenforceable.Top San Francisco Patent Litigation Attorneys

However, the law is rather unsettled and often unclear as to which and how licensing terms violate the Sherman Act or otherwise constitutes misuse. As a result, parties seeking to enforce patent rights face great costs and risks in responding to such counterclaims, which greatly complicate litigation and enforcement. Sherman Act antitrust violations turn an infringement action into a complex antitrust dispute as well.

The issue commonly arises when a licensor conditions the license of intellectual property on the purchase of other goods or services. Software companies that provide software services often desire to have licensees use the company’s own products. Companies that overstep their boundaries may lead to allegations of patent misuse, which may include mandatory package licenses, grant-back clauses, covenants not to contest a licensor’s patents, etc.

Antitrust claims can limit patent owners and licensors from enforcement, and attempts to enforce invalid patents may result in antitrust liability. Accordingly, licensors and businesses must take care to purge any anti-competitive practices or risk antitrust liability or allegations of patent misuse.

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