## Facts

- Philips and Sony collaborated to create technical standards for CD‑R/RW discs, published as the “Orange Book,” to ensure interoperability.
- Two competing methods for encoding disc position information existed: Philips’s analog “Raaymakers” approach (covered by Philips patents) and Sony’s digital “Lagadec” approach (covered by a Sony patent).
- The Orange Book standard adopted the Raaymakers-type method and did not include Lagadec, which the developers viewed as difficult to implement and error-prone.
- Philips administered “Orange Book” portfolio licenses covering Philips and certain Sony patents used for Orange‑Book‑compliant discs, with field‑of‑use limits restricting licensees to compliant products.
- Princo took an Orange Book license, later stopped paying royalties, and continued importing CD‑R/RW discs.
- Philips filed a § 337 complaint at the ITC alleging importation of infringing discs; the ITC rejected Princo’s patent-misuse defense and issued an exclusion order.
- Princo argued misuse based on (1) portfolio licensing with field‑of‑use limits and (2) an alleged Philips–Sony agreement that Sony would not license Lagadec for a competing standard, purportedly “suppressing” an alternative technology.
- The Federal Circuit, sitting en banc, reviewed whether the asserted Philips patent could be enforced despite the alleged conduct.

## Issues

1. Whether portfolio licensing with field‑of‑use restrictions for Orange‑Book‑compliant products constitutes patent misuse barring enforcement of the asserted Philips patent.
2. Whether an alleged agreement involving a different patent (Sony’s Lagadec) not to license for a competing standard can constitute misuse of the asserted Philips patent.
3. In non-per-se misuse cases, whether a misuse defense requires proof that the patentee leveraged the patent being enforced and caused substantial anticompetitive effects beyond the patent’s lawful scope.

## Decision

- The en banc Federal Circuit affirmed the ITC’s exclusion order and rejected Princo’s patent‑misuse defense.
- Package/portfolio licensing was not per se misuse, and Princo did not prove unlawful coercion extending the asserted patent beyond its legitimate scope.
- Field‑of‑use limits confining a license to Orange‑Book‑compliant products were generally lawful and did not, on this record, impermissibly broaden the patent grant.
- The alleged Lagadec “suppression” theory failed because it centered on a different patent not being enforced and was not shown to have been achieved by leveraging the asserted patent.
- Princo also failed to prove that the alleged Lagadec restriction produced substantial anticompetitive effects tied to an impermissible expansion of the asserted patent’s scope.

## Legal Principles

- Patent misuse is a judge‑made defense applied narrowly and generally focused on licensing practices that impermissibly broaden a patent’s scope with anticompetitive effect.
- Absent per se misuse, a misuse defense requires proof of (1) leveraging of the patent being enforced and (2) a substantial anticompetitive effect outside the legitimate scope of that patent right.
- Misuse must be connected to the patent in suit; alleged wrongful conduct involving other patents, without leverage from the enforced patent, does not bar enforcement.
- Portfolio licensing is not inherently improper and may be lawful even if the package includes patents beyond those strictly necessary for a standard.
- Field‑of‑use restrictions are generally permissible as limits on the scope of a license rather than expansions of the patent grant.

## Conclusion

The Federal Circuit held that Philips could enforce its asserted patent in the ITC proceeding because Princo did not show that Philips leveraged that patent to impose conditions expanding its scope or causing substantial anticompetitive effects; conduct centered on a different patent was insufficient to establish misuse.


Princo Corp. v. Int’l Trade Comm’n, 616 F.3d 1318 (Fed. Cir. 2010) (en banc)