June 2003

By Nathaniel Durrance

The law governing package licensing of patents is currently undergoing a significant change. Historically, package licenses were subject to a “per se” liability under the controlling legal doctrines. Using this per se test, a package license could be rendered unenforceable absent any inquiry into the actual market effects of the license. The recent case of United States v. Microsoft, 253 F.3d 34 (D.C. Cir. 2001), marks, however, the emergence of an antitrust doctrine called the “rule of reason” that is likely to become the dominant legal doctrine for testing package licensing of patents. This is a significant change because the rule of reason is a market-based approach that balances the anticompetitive and pro-competitive benefits of the licensing practice. Thus, a package license may be held to be enforceable even if it would have failed the traditional per se test of the patent misuse doctrine or antitrust laws.

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