Seventh Circuit: Noncompete provision in license agreement reasonable, not patent misuse

In what the court described as "one of those non-patent patent cases," the Seventh Circuit yesterday affirmed a grant of summary judgment to a patentee who, in its license agreement, included a noncompete provision.  The licensee had terminated the license, and argued the noncompete constituted patent misuse, and was therefore void.

The court rejected this argument.  Applying rule of reason analysis, the court found that the noncompete provision was reasonable, as there was no evidence that the patentee had market power or that there were anticompetitive effects.  The noncompete was only for 18 months, was limited to the geographic scope of the original license (a portion of Wisconsin), and permitted the sale of two competing products.  Accordingly, the court held there were no anticompetitive effects, and therefore there was no patent misuse.  Similar claims that the provision violated state law were also rejected.  As a result, the court affirmed the district court's grant of summary judgment.

More detail of County Materials Corp. v. Allan Block Corp. after the jump.

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