Well Surveys, Inc. v. Perfo-Log, Inc.

Well Surveys, Inc. (Well) (plaintiff) had two patents relating to measuring radiation in the ground surrounding water wells. The first patent was set to expire in 1968 and the second in 1978. Perfo-Log, Inc. (defendant) agreed to license both patents as part of a single licensing arrangement, known as a patent package. The licensing agreement required Perfo-Log to pay Well a royalty of 5 percent on each radioactivity survey Perfo-Log performed on a water well that would, if unlicensed, infringe on one of Well’s patents. Well sued Perfo-Log for patent infringement, and Perfo-Log asserted the patent-misuse doctrine as a defense, claiming that the parties’ licensing agreement improperly extended Well’s patent monopoly after the expiration of Well’s first patent by maintaining a 5 percent royalty, even for Perfo-Log’s surveys done after 1968, when only one of Well’s patents was still in force. Well countered that it had offered Perfo-Log the ability to license its patents individually rather than as part of a package. Well also noted that the terms of the licensing agreement limited royalty payments to Perfo-Log’s surveys that would otherwise infringe on active patents and therefore did not require Perfo-Log to make royalty payments on surveys implicating the first patent after it expired in 1968. The trial court granted Perfo-Log’s motion for summary judgment relating to its patent-misuse defense.