Key Takeaways

  • Patent misuse occurs when a patent holder improperly extends their patent rights to restrict competition or commerce.
  • Courts narrowly interpret this defense, focusing on whether misuse has an anticompetitive effect beyond the patent’s scope.
  • Not all aggressive patent strategies qualify; simply enforcing a patent or refusing to license is not misuse.
  • Common forms include tying arrangements, collecting royalties post-expiration, revenue-sharing beyond patent scope, or filing baseless lawsuits.
  • Misuse renders the patent temporarily unenforceable until the improper practice is corrected.
  • Patent misuse and antitrust law often overlap but remain distinct legal doctrines.
  • Defendants invoking misuse must show a nexus between the patent owner’s conduct and harm to competition.

What Is Patent Misuse?

Patent misuse occurs when patent owners abuse their patent rights, typically for utility patents, in a way that prevents normal commerce and trade. It is the first line of defense for people who are accused of patent infringement. When faced with a lawsuit from a patent holder, the goal of the alleged infringer is to prove that the patent owner is using his or her patent privileges to stifle competition.

Over the last decade, the courts have tried multiple times to define patent misuse and how to prove it. While they have made strides, there are still a few gray areas.

Historical Development of Patent Misuse

The concept of patent misuse developed in the early 20th century, beginning with the Supreme Court’s Motion Picture Patents Co. v. Universal Film (1917). The Court held that conditioning the use of a patented projector on the purchase of unpatented film unlawfully extended the patent’s reach. This precedent established that patents cannot be leveraged to control unpatented products or markets. Over time, courts refined the doctrine, often narrowing its scope to prevent overuse by defendants. Today, patent misuse is viewed less as a broad policy tool and more as a targeted defense against truly anticompetitive conduct .

Patent Misuse: A Closer Look

Patent misuse means that patent owners try to use their patent beyond what the patent allows. If a judgement is made that this has occurred, the patent becomes unenforceable — even if it is otherwise valid.

Jim Singer at IP Spotlight mentions that patent misuse is actually one of the most "misused" terms in law. For example, when a company is accused of infringing on a patent, it might counter that the patent owner is going beyond his or her legal rights and that this is a case of patent misuse. In order to prove patent misuse, the defendant must show that the owner's actions have an "anti-competitive effect" that will diminish the defendant's business. In some cases, even this isn't enough. The defendant must also show the exact expected damage to the business because of the patent owner's actions.  

Patent Misuse vs. Antitrust Violations

Although patent misuse and antitrust violations share similarities, they are not identical. Antitrust law seeks to preserve market competition broadly, while patent misuse focuses specifically on preventing overreach of patent rights. A patent owner might engage in behavior that qualifies as misuse without rising to the level of an antitrust violation. For instance, charging royalties beyond a patent’s expiration may render a patent unenforceable under misuse but would not necessarily constitute an antitrust offense. Conversely, when misuse significantly impacts market competition, it can also trigger antitrust scrutiny.

Why Is Patent Misuse Important?

Timothy J. Barron and Olivia T. Luk explained that the patent misuse defense is a way to prevent patent owners from adding extra rules in their patents that harm other companies that are licensed to use them. These might include excess royalties, outrageous limits on what they can do with the patent, and forced partnerships with other companies. Basically, the courts don't want companies to use patents as a way to bully others in the industry.  

When a company accuses a patent owner of misuse, it needs to prove two elements:

  • The valid patent was used as a way to change business outcomes
  • The anti-competitive effects extended outside of the patent's scope

Together, these prove that the patent was used in a way that it shouldn't have been to cause harm to a business. According to Finnegan, this definition went into effect in 2010 after Princo Corp. v. Int'l Trade Comm'n as a way to narrowly define patent misuse.

Consequences of a Patent Misuse Finding

If a court finds that a patent owner has committed misuse, the immediate consequence is that the patent becomes unenforceable until the misuse is corrected. This does not invalidate the patent itself, but it prevents the patent holder from bringing infringement claims. For businesses, this can mean losing the ability to enforce licensing agreements, collect damages, or seek injunctions. Importantly, once the misuse ends—for example, if unlawful licensing terms are withdrawn—the patent may become enforceable again. This temporary nature distinguishes patent misuse from patent invalidity.

Reasons to Consider Not Using Patent Misuse

While the 2010 Princo case helped the courts define patent misuse, it also helped defend other parts of patent law. The team at Kaufman & Canoles explained what patent misuse is not, as a way to remind patent owners what their rights are. Patent misuse does not include:

  • Enforcing a patent against infringement
  • Refusing to license a patent to someone in particular
  • Licensing a patent under the condition that the buyer also buy another product or patent license
  • Using one's own invention in a way that would make other people infringe upon a patent

While this list might not include the most honest business practices, they're not considered patent misuse and the term can't be used to take a patent owner to trial.

It's also important to note that patent misuse isn't meant to be a weapon. Companies aren't supposed to go after patent owners for misuse. According to Arnold B. Silverman, patent misuse is typically used as a defense in patent infringement cases. While the patent owner believes his or her patent was infringed upon, the defense believes the owner is extending beyond the scope of his or her patent.  

Limitations of the Patent Misuse Defense

Relying on patent misuse as a defense carries notable risks. Courts apply the doctrine sparingly, and defendants must provide clear evidence of anticompetitive effects. In many cases, what might seem like unfair patent enforcement still falls within a patent holder’s rights. Additionally, proving misuse requires substantial litigation resources, and even a successful defense only renders the patent unenforceable—not invalid—meaning the patent could be enforced again once the misuse ends. Defendants often pursue misuse claims alongside other defenses, such as invalidity or non-infringement, to avoid putting all their resources into a difficult argument.

Reasons to Consider Using Patent Misuse

Once you understand what patent misuse is not, it's easier to identify what patent misuse is. Glen P. Belvis explained that patent misuse happens when the scope or term of the patent is over-extended.

  • The scope includes the area that the patent should cover
  • The term includes the length of time that the patent should cover

With this definition, there are four immediate examples of patent misuse, according to PatentEducation.com.

  • Requiring a patent licensee to buy other products as part of the patent license
  • Trying to collect royalties after the patent expires
  • Requiring a licensee to pay a portion of revenue from sales that the patent doesn't cover
  • Filing a baseless patent infringement lawsuit

Even small acts, like filing a baseless lawsuit, can cost a competitor thousands in legal fees and tie them up for months. Baseless lawsuits are also a problem for the courts, so they are considered patent misuse.

Belvis also explains that charges for patent misuse can be both civil and criminal. This depends on whether they're based on patent misuse, antitrust, or "inequitable conduct."

Key Elements Needed to Prove Patent Misuse

To successfully argue patent misuse, a defendant must generally prove three elements:

  1. Patent Leverage – The patent owner used their patent rights to influence conduct beyond the patent’s legal scope.
  2. Nexus to Licensing or Enforcement – The misuse occurred in connection with licensing conditions, royalty structures, or litigation tactics.
  3. Anticompetitive Effect – The conduct had a demonstrable negative impact on competition, not just the individual defendant’s business.

Courts emphasize that speculative harms are insufficient; the defendant must show a concrete link between the misuse and market harm.

Examples of Patent Misuse

It's hard to find examples of patent owners who have been accused of patent misuse. Fortunately, many patent lawyers publish explanations of cases to review why the courts made their decisions — and why they could have been different.

The origin of the idea of patent misuse was the 1917 decision Motion Picture Patents. A projector company would only license a its projector technology if the licensee also bought unpatented film through the company. The court ruled that this was an overly broad use of the company's patent.

Dennis Crouch at Patently-O highlighted a key example of a patent misuse allegation. In 2010, Philips and Sony chose one method of encoding CDs while suppressing a different technology for CD creation. While the court decided this wasn't patent misuse, it's an important example of how something like it could be misuse. In fact, many lawyers have argued that this case should have been considered misuse, despite what the court said. Crouch also notes that Sony and Philips could have also been found guilty of antitrust (monopoly prevention) laws. The idea that these two concepts go hand-in-hand helps explain patent misuse.

Another example was Dawson Chemical in 1980. According to Cyber.Harvard.Edu, the patent owner wanted to tie the right to use a patent with an agreement to buy a non-staple, non-patented product. The court decided this was not patent misuse, because the inventor was protected by patent law. For further reading, this section falls under 35 USC 271(d) in the patent rule book.

Modern Case Studies and Industry Impact

Recent disputes highlight how courts apply misuse principles narrowly. For example, in Princo Corp. v. ITC (2010), the Federal Circuit rejected claims of misuse where two companies allegedly suppressed alternative CD technology. The court held that mere suppression of innovation was not enough without clear proof of extending patent power improperly. Similarly, licensing practices requiring royalties after patent expiration were condemned in Brulotte v. Thys Co., though later reaffirmed in Kimble v. Marvel (2015). These cases demonstrate that misuse often arises in industries where intellectual property licensing is central—such as technology, pharmaceuticals, and manufacturing—making the doctrine a critical consideration in R&D-heavy sectors .

Frequently Asked Questions

1. Does patent misuse invalidate a patent?

No. Patent misuse makes a patent temporarily unenforceable but does not invalidate it. Once the misuse ends, enforcement rights may be restored.

2. How is patent misuse different from antitrust law?

Antitrust law broadly protects competition, while patent misuse prevents overextension of patent rights. Conduct may qualify as misuse without meeting antitrust thresholds.

3. What are common examples of patent misuse?

Examples include tying unpatented products to a license, extending royalties beyond patent expiration, or filing baseless infringement lawsuits.

4. Can patent misuse be used offensively?

No. Patent misuse is strictly a defensive doctrine. It cannot form the basis of an independent lawsuit; it can only be raised against infringement claims.

5. What industries are most affected by patent misuse disputes?

High-tech, pharmaceutical, and manufacturing industries face frequent misuse challenges due to complex licensing agreements and high-value intellectual property.

If your company licenses a patent and has been accused of patent misuse, you might be able to argue against it. Consider posting a job to get free custom quotes from the top 5% of patent attorney through UpCounsel. From talking to patent lawyers, you can then consider your options to determine if you have a strong case and what your rights are.