IP News

In Princo Corp. v. International Trade Commission, 2010 U.S. App. LEXIS 18101 (Fed. Cir. Aug. 30, 2010) (en banc), the Federal Circuit held that a patent pooling agreement between Philips Corp. and Sony Corp. did not constitute patent misuse of certain asserted pooled patents, even if the agreement resulted in the suppression of technology embodied in non-asserted pooled patents.

The technology at issue concerned digital storage devices, and specifically, recordable compact discs (“CD-Rs”) and rewriteable compact discs (“CD-RWs”). The companies that developed the technology, principally Philips and Sony, generated technical standards for the industry, which were collected in a publication informally referred to as the “Orange Book.” In the course of their work, Sony and Philips each separately developed solutions to the problem of how to encode position information in a disc so that a consumer's CD reader/writer could maintain proper positioning while writing data to the disc. Philip's solution is described in two patents, (collectively the “Raaymakers patents”) and Sony's approach is described in one of its patents (the “Lagadec patent”). After reviewing the competing solutions, Sony and Philips engineers agreed that they would incorporate the Raaymakers approach in the Orange Book standard. Philips and Sony sought to commercialize their technology by offering a package license to patents covering CD-R/RW technology, including the Raaymaker and Lagadec patents. The package license contained a “field of use” restriction, limiting the licensees to using the licensed patents to produce discs according to the standards.