Package Licenses are not Per Se Misuse

The U.S. Court of Appeals for the Federal Circuit, reviving a controversial decision by the U.S. International Trade Commission, has held that a package license that includes "nonessential" patents along with "essential" patents, at no additional charge for the nonessential patents, is not per se patent misuse. U.S. Philips Corporation v. International Trade Commission, Case No. 04-1361 (Fed. Cir. Sept. 21, 2005) (Bryson, J.).

The U.S. International Trade Commission (ITC) held that notwithstanding its finding of infringement by several of the respondents, several of Philips’ patents directed to the manufacture of compact discs (CDs) were unenforceable due to patent misuse. As its reason, the ITC noted that Philips had not allowed its licensees to select which individual patents it wished to license at a fee corresponding to the selected patents. Instead, the challenged license was a package license where Philips charged a flat fee per disc for patents that were "essential" to