Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176 (1980), is a 1980 5–4 decision of the United States Supreme Court. limiting the patent misuse doctrine and explaining the scope of the 1952 amendment of the patent laws that resurrected the contributory infringement doctrine in the wake of the Mercoid cases. (Mercoid I), and (Mercoid II). The Mercoid cases and a few predecessor cases had denied relief against patent infringement to patentees who were deriving revenue from the sale of unpatented products used as supplies for patented combinations or as components of patented combinations, even when the unpatented products were specially adapted for use with the patented combinations and even when they lacked any utility other than that use. The patentees used contributory infringement suits or threats of such suits to enforce their business model, which the Mercoid cases outlawed.
In the Mercoid cases the Court had stated: "The result of this decision, together with those which have preceded it, is to limit substantially the doctrine of contributory infringement. What residuum may be left we need not stop to consider."See Mercoid I, 320 U.S. at 669. This caused "some consternation among patent lawyers," and some "segments of the patent bar eventually decided to ask Congress for corrective legislation that would restore some scope to the contributory infringement doctrine. With great perseverance, they advanced their proposal in three successive Congresses before it eventually was enacted in 1952."Dawson, 448 U.S. at 199-200. Dawson interpreted the 1952 amendments to re-establish contributory infringement as a possible claim for relief and held that supplying an unpatented product especially adapted for use in practicing a patented process and without any substantial non-infringing use was unlawful contributory infringement.
Background
Factual setting
This case is part of the aftermath of Monsanto Co. v. Rohm & Haas Co., in which Rohm & Haas succeeded in invalidating Monsanto's patent on propanil, a selective herbicide, by showing that Monsanto deceived the Patent Office in procuring the patent. Propanil thus became an unpatented product.After the courts found that Monsanto had committed fraudulent procurement of the patent, Monsanto dedicated the patent to the public. 448 U.S. at 182. With an estimated use of about 8 million pounds in 2001,U.S. Environmental Protection Agency, 2000-2001 Pesticide Market Estimates . propanil was one of the more widely used herbicides in the United States.If applied in the proper quantities, propanil kills weeds normally found in rice crops without adversely affecting the crops themselves. It thus permits spraying of general areas where the crops are already growing, and eliminates the necessity for hand weeding or flooding of the rice fields. 448 U.S. at 181.
Although Monsanto had obtained the product patent on propanil on the basis of its selective herbicidal property, Rohm & Haas was able in 1974 to obtain U.S, Patent No. 3,816,092 (the Wilson patent) on a process for applying propanil to inhibit the growth of undesirable plants in areas containing established crops. Claims 1 and 2 are illustrative for purposes of this case:
1. A method for selectively inhibiting growth of undesirable plants in an area containing growing undesirable plants in an established crop, which comprises applying to said area [propanil] at a rate of application which inhibits growth of said undesirable plants and which does not adversely affect the growth of said established crop. 2. The method according to claim 1 wherein the [propanil] is applied in a composition comprising [propanil] and an inert dilutent therefor at a rate of between 0.5 and 6 pounds of [propanil] per acre.
The claims describe the only substantial use for propanil.
Rohm & Haas exploits the process patent by manufacturing propanil and selling it to farmers. Rohm & Haas does not license the patent to the farmers but they acquire an implied license to practice the process by operation of law when they buy propanil from Rohm & Haas, the owner of the process patent. Rohm & Haas does not license the patent to other manufacturers of agricultural chemicals, such as Dawson, which had been making and selling propanil for herbicidal use before Rohm & Haas received its patent. Dawson did not stop engaging in this business after the patent issued, and it sold propanil in packages labeled with instructions to use it as described in the patent. Accordingly, Rohm & Haas sued Dawson for contributory infringement and active inducement of infringement under 35 U.S.C. § 271(c)–(d). Dawson then requested a patent license but Rohm & Haas refused.448 U.S. at 183.
Proceedings in district court
When Rohm & Haas refused to grant it a license, Dawson raised a defense of patent misuse and counterclaimed for alleged antitrust violations. The parties stipulated the facts and Dawson moved for summary judgment of patent misuse, on the grounds that Rohm & Haas misused its patent by allowing the use of the patented method only to purchasers of its own propanil. The district court agreed and dismissed the complaint. In concluding that patent misuse occurred the district court stressed several points. First, Rohm & Haas refused to grant licenses when requested, which Mercoid had offered to do in the Mercoid cases. Therefore, Rohm & Haas "by seeking to monopolize the sale of an unpatented component of its protected method without even attempting to license other manufacturers, is exploiting its patent in a manner which is less legitimate than the exploitation condemned by the Supreme Court in Mercoid."1976 U.S. Dist. LEXIS 13707, at *19. Further, the court pointed to the court of appeals opinion in B.B. Chemical Co. v. Ellis, in which the misuse was based on the patentee's selling "unpatented component products specially made for use in a patented process for reinforcing shoe insoles; [and] the component had no other substantial commercial use."1976 U.S. Dist. LEXIS 13707, at *12. Finally, the facts of Mercoid involved a non-staple switch specially designed for use to practice the patent. The court concluded that the enactment of § 271(d) was intended to overrule the dicta in Mercoid against there being any residuum of contributory infringement but was not intended to overturn the ruling as to the specific facts, which the court considered equivalent to those of the case before it.1976 U.S. Dist. LEXIS 13707, at *28-29.
Ruling of Fifth Circuit
Rohm & Haas appealed to the Fifth Circuit, which reversed. It concluded that § 271(d) was intended to "provide for a patentee's right to exclude others and reserve to itself, if it chooses, the right to sell nonstaples used substantially only in its invention."448 U.S. at 185.
Ruling of Supreme Court
Justice Harry Blackmun delivered the opinion of a 5-4 Court in which Chief Justice Warren Burger and Justices Potter Stewart, Lewis Powell, and William Rehnquist joined. Justice Byron R. White filed a dissenting opinion in which Justices William J. Brennan, Thurgood Marshall, and John Paul Stevens joined. Justice Stevens also filed a separate dissent.
Majority opinion
Importance of case
Justice Blackmun began by describing the case and its importance:
[This case] presents an important question of statutory interpretation arising under the patent laws. The issue before us is whether the owner of a patent on a chemical process is guilty of patent misuse, and therefore is barred from seeking relief against contributory infringement of its patent rights, if it exploits the patent only in conjunction with the sale of an unpatented article that constitutes a material part of the invention and is not suited for commercial use outside the scope of the patent claims.
The answer will determine whether respondent, the owner of a process patent on a chemical herbicide, may maintain an action for contributory infringement against other manufacturers of the chemical used in the process.
To resolve this issue, we must construe the various provisions of 35 U.S.C. § 271, which Congress enacted in 1952 to codify certain aspects of the doctrines of contributory infringement and patent misuse that previously had been developed by the judiciary.448 U.S. at 179
Contributory infringement versus patent misuse
The Court traced the doctrines of contributory infringement and patent misuse back respectively to Wallace v. Holmes,29 F. Cas. 74 (No. 17,100) (C.C.D. Conn. 1871). and Motion Picture Patents Co. v. Universal Film Mfg. Co.. "Both doctrines originally were developed by the courts" and "both concern the relationship between a patented invention and unpatented articles or elements that are needed for the invention to be practiced." But since 1952 when Congress enacted 35 U.S.C. § 271, they are governed by statute rather than judge-made rules.Dawson, 448 U.S. at 179-80.
"Of particular import to the present controversy are subsections (c) and (d). The former defines conduct that constitutes contributory infringement; the latter specifies conduct of the patentee that is not to be deemed misuse."448 U.S. at 181. They provide:
The Court explained the reason for the doctrine of contributory infringement:
It exists to protect patent rights from subversion by those who, without directly infringing the patent themselves, engage in acts designed to facilitate infringement by others. This protection is of particular importance in situations . . . where enforcement against direct infringers would be difficult, and where the technicalities of patent law make it relatively easy to profit from another's invention without risking a charge of direct infringement.448 U.S. at 189.
But the doctrine has encountered difficulties because of "concern for potential anticompetitive tendencies inherent in actions for contributory infringement." Thus, the "judicial history of contributory infringement thus may be said to be marked by a period of ascendancy, in which the doctrine was expanded to the point where it became subject to abuse, followed by a somewhat longer period of decline, in which the concept of patent misuse was developed as an increasingly stringent antidote to the perceived excesses of the earlier period."
An example of ascendency was the decision in Leeds & Catlin Co. v. Victor Talking Machine Co.,. in which the Court upheld an injunction against contributory infringement by a manufacturer of phonograph discs specially designed for use in a patented disc-and-stylus phonograph-player combination. Although the disc itself was not patented, the Court noted that it was essential to the functioning of the patented combination, and that its method of interaction with the stylus was what "mark[ed] the advance upon the prior art."Leeds & Catlin, 213 U.S. at 330. Also, the disc was useful only when used with the stylus of the patent. The contributory infringement doctrine then "achieved its high-water mark with the decision in Henry v. A.B. Dick Co.. In that case, a divided Court extended contributory infringement principles to permit a post-sale restriction by which a manufacturer of a patented mimeograph machine required purchasers to buy from the patentee all supplies used in connection with the patented machine (for example, such staple items as paper and ink). The Court reasoned that the market for these supplies was created by the invention, and that sale of a license to use them could be therefore properly be limited by whatever conditions the patent owner wished to impose.See 224 U.S. at 31-32. The A.B. Dick decision and its progeny in the lower courts led to a vast expansion in tie-in conditions in the licensing of patented goods and processes, and control of markets for staple and nonstaple goods alike.Dawson, 448 U.S. at 190-91.