USM Corp. v. SPS Technologies, Inc.
United States Court of Appeals for the Seventh Circuit
694 F.2d 505, 216 U.S.P.Q. 959 (1982)
USM (plaintiff) sued SPS (defendant), seeking to invalidate SPS’s patent and reclaim royalties USM had paid to SPS. In a previous suit, SPS had sued USM for infringement of its patent, and USM argued that it had a license through a “grant back clause” in an unrelated patent licensing agreement. After trial, the court held that USM did not in fact have a license, which spurred a settlement agreement. In the settlement, USM agreed to acknowledge the validity of the patent and pay royalties to SPS. Three years later, before the district court, USM alleged that the license that was a part of the earlier settlement agreement constituted patent misuse, and further argued that the patent was invalid. The license agreement included a varying royalty percentage USM owed to SPS, depending on the identity of USM’s sublicensee. Under that varying royalty rate, USM owed SPS a base of 25% royalties on sublicenses. However, if USM sublicensed to any of four prior SPS licensees, then USM owed a 75% royalty on the sublicense. The district court ruled that the patent was invalid, as of the date of the second lawsuit. The district court further held that USM was permitted to recoup royalties it had paid after the second suit was filed, but, because the license agreement did not constitute patent misuse, USM could not recoup royalties paid on that agreement prior to the second suit. Both parties appealed.
Rule of Law
Holding and Reasoning (Posner, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 705,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 705,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,400 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.