## Facts

- Mid-Continent owned a “system” (combination) patent covering a domestic hot-air heating system comprised of multiple elements.
- Minneapolis-Honeywell held an exclusive license under the patent and marketed installations practicing the patented combination.
- A combustion stoker switch used in the patented system was not itself patented.
- Mid-Continent and its licensee structured licensing and sales practices to confine purchasers to acquiring the unpatented stoker switch from the licensee and to treat other sellers as contributory infringers.
- Mercoid manufactured and sold unpatented stoker switches suitable for use in installations practicing the patented system.
- Mid-Continent and Minneapolis-Honeywell sued Mercoid for contributory infringement based on Mercoid’s sales of the unpatented switch for use in the patented combination.
- Mercoid asserted patent misuse and brought a counterclaim seeking treble damages under § 4 of the Clayton Act, alleging a conspiracy to extend the patent monopoly to the unpatented switch.

## Issues

1. Whether a combination patent owner may use the patent to obtain a limited monopoly over an unpatented component used to practice the invention.
2. Whether patent misuse aimed at protecting an unpatented element from competition is a defense to a contributory infringement claim.
3. Whether an equity court’s refusal to aid a misusing patentee can be barred because the defendant did not raise misuse in earlier related litigation.
4. Whether a prior judgment in a patent infringement action bars a later treble-damages claim under § 4 of the Clayton Act that could have been pleaded as a counterclaim.
5. Whether a § 4 Clayton Act claim may be asserted as a counterclaim in a patent infringement suit under the Federal Rules of Civil Procedure.

## Decision

- The Supreme Court reversed the court of appeals.
- The Court held that a system patent cannot be used to secure a limited monopoly over an unpatented device used in practicing the patented combination, even if the device is an important or integral element.
- The Court held that misuse of a combination patent to shield an unpatented component from competition is a defense available to a defendant accused of contributory infringement.
- The Court held that an equity court’s discretion to deny relief to a patentee engaged in misuse is not foreclosed by the defendant’s failure to raise misuse in prior related litigation.
- The Court held that res judicata did not bar Mercoid’s later Clayton Act treble-damages claim merely because it could have been asserted as a counterclaim in an earlier patent suit, where the antitrust claim is a different cause of action.
- The Court held that a § 4 Clayton Act claim may be pleaded as a counterclaim in a patent infringement case under the Federal Rules.

## Legal Principles

- Patent rights are limited to the invention claimed; a patentee may not extend a patent’s practical effect to control unpatented articles used with the patented invention.
- Conditioning the practice or enjoyment of a patented combination on the purchase or use of an unpatented component from a favored source constitutes patent misuse that bars equitable patent relief until the misuse is ended.
- Patent misuse is a defense to contributory infringement when the infringement claim is used to support exclusionary control over an unpatented element of a patented combination.
- A court of equity may deny relief to a patentee engaged in misuse regardless of whether the accused infringer previously omitted the misuse defense in related litigation.
- A prior judgment precludes only matters actually determined as part of the earlier claim; it does not automatically bar a later suit on a different claim (such as Clayton Act treble damages) even if it could have been asserted earlier.
- Antitrust counterclaims for treble damages under § 4 of the Clayton Act are permissible in patent infringement litigation under the Federal Rules of Civil Procedure.

## Conclusion

The Court refused to allow a combination patent to be used to control an unpatented component through contributory infringement theories, treated such conduct as misuse that defeats patent enforcement, and confirmed that related Clayton Act treble-damages claims are not automatically barred by prior patent judgments and may be raised as counterclaims.


Mercoid Corp. v. Mid-Continent Inv. Co., 320 U.S. 661 (1944)