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Federal Circuit Decision Provides Guidance for Joint Licensing of Pooled Patents

By Donald W. Hawthorne
August 28, 2009

Recently, in Princo Corporation v. International Trade Commission, No. 2007-1386, 2009 WL 1035222 (Apr. 20, 2009), the U.S. Court of Appeals for the Federal Circuit issued an opinion in a long-running patent misuse litigation of potential significance for any patent owner participating in a patent pool or considering participation in a patent pool. The decision provides guidance on the criteria for determining “essential patents” that will be reassuring to many patent pool participants. At the same time, the opinion is a cautionary reminder of the risks inherent in limiting the licensing of pooled patents outside the package license provided by the pool.

The Federal Circuit's decision arises from a challenge to the licensing of patents for write-once and re-writable compact discs (“CD-Rs” and “CD-RWs”). The technology relevant to the production of CD-Rs and CD-RWs had been developed by a number of companies, including Sony and Philips. In the late 1980s and early 1990s, Sony and Philips jointly developed a technical standard for CD discs and players called the Orange Book, which ensured compatibility and inter-operability for discs, players, and ROM drives manufactured in accordance with the standard.

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