Licenses and Patent Misuse

In addition to more formal licensing, patent holders can license the use of their patented processes or machines by the ways in which they distribute unpatented goods. Thus, courts have held that a patent holder s sale of unpatented goods that have only one use constitutes an implied license to use the products they have bought in that way. Rohm and Haas Co. v. Dawson Chemical Co., 599 F.2d 685, 203 U.S.P.Q. 1 (5th Cir. 1979), rev d on other 

Under the patent misuse doctrine, courts have put restrictions on the methods of issuing label licenses. The courts have generally held that a patent holder may not license others to use its unpatented products in the patented manner, while refusing to license its patent to parties that purchase the unpatented goods from its competitors. Moreover, patentees have been found to have misused patents by charging higher royalty rates to licensees who use the unpatented products of competitors than to purchasers of their own products. See, e.g., BJB. Chemical Co. v. Ellis, supra Ansul Co. v. Uniroyal Inc., 448 F.2d 872 (2nd Cir. 1971), cert, denied, 404 U.S. 1018 (1972). 

However, the court in Hall Laboratories, Inc. v. Springs Cotton Mills, Inc., 112 F. Supp. 29 (W.D.S.C.), affd on other grounds, 208 F.2d 500 (4th Cir. 1953), upheld a label license that operated under the following conditions  

Anyone desiring to use the patented process could do so on payment of a uniform rate per pound of the unpatented product used in the process  

The user could purchase the product wherever he chose  

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