PRINCO CORPORATION AND PRINCO AMERICA CORPORATION V. INTERNATIONAL TRADE COMMISSION

In affirming the ITC’s holding as to Princo’s first tying claim, the court found that a reasonably broad reading of the Lagadec patent (Sony’s digital method) would support a finding of infringement where anyone practiced the Phillips analog method, currently used as the industry standard.  Under the broad construction, since neither patent could be practiced without infringing the other, the court found the Lagadec patent to be essential to the patent pool.  However, the Federal Circuit vacated and remanded Princo’s claim of patent misuse.  The court found persuasive Princo’s argument that Phillips and Sony violated anti-trust law by agreeing not to compete, and remanded the issue to the ITC to determine whether  there was in fact such an agreement and whether the Lagadec method could realistically compete with the Orange Book standard.

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