Princo Corp. v. International Trade Commission

Opinion for the court filed by Circuit Judge BRYSON, in which Chief Judge RADER and Circuit Judges NEWMAN, LOURIE, LINN, and MOORE join.

Concurring opinion filed by Circuit Judge PROST, in which Circuit Judge MAYER joins.

Dissenting opinion filed by Circuit Judge DYK, in which Circuit Judge GAJARSA joins.

This case requires us to consider the scope of the doctrine of patent misuse. Patent misuse developed as a nonstatutory defense to claims of patent infringement. In the licensing context, the doctrine limits a patentee’s right to impose conditions on a licensee that exceed the scope of the patent right. Because patent misuse is a judge-made doctrine that is in derogation of statutory patent rights against infringement, this court has not applied the doctrine of patent misuse expansively. In this case, we adhere to that approach, and we sustain the decision of the International *1322Trade Commission that the doctrine of patent misuse does not bar the intervenor, U.S. Philips Corporation, from enforcing its patent rights against the appellants Princo Corporation and Princo America Corporation (collectively, “Princo”).

I

A

This case has a lengthy history, which we will recite only in pertinent part. The technology at issue concerns two types of digital storage devices — recordable compact discs (“CD-Rs”) and rewritable compact discs (“CD-RWs”). Those devices were developed in the 1980s and 1990s. The companies that developed the CDR/RW technology generated technical standards to ensure that discs made by different manufacturers would be compatible and playable on machines that were designed to read the earlier generation compact discs (“CDs”) and “read-only” compact discs (“CD-ROMs”). The standards that were generated for CD-Rs and CD-RWs were collected in a publication entitled “Recordable CD Standard,” informally known as the “Orange Book.” The CD-R/RW technology was developed principally by Philips and Sony Corporation, working in collaboration. Philips and Sony also jointly developed the Orange Book standards.

One aspect of the CD-R/RW technology — and the corresponding Orange Book standards — is at issue in this case. In the course of their work, the Sony and Philips engineers had to address the problem of how to encode position information in the disc so that a consumer’s CD reader/writer could maintain proper positioning while writing data to the disc. Philips and Sony proposed different solutions to that problem. Philips’s solution was to use an analog method of modulating the frequency of the “groove” on the disc so as to add location codes to the disc. One of Sony’s proposed solutions was to use a digital method to encode location codes into the disc groove. Philips’s approach was later set forth in two of the patents at issue in this case, referred to as the “Raaymakers patents.” Sony’s approach was set forth in one of its own patents, referred to as the “Lagadec patent.”

After reviewing the competing solutions, the Sony and Philips engineers agreed that they would use the Raaymakers approach to solving the problem, not the Lagadec approach. The engineers from both companies agreed that the Raaymakers approach “was simple and ... worked very well.” By contrast, as the Commission found in the course of this litigation, the Lagadec approach was “prone to error” and would have been “very difficult” to implement. Philips and Sony therefore incorporated the Raaymakers approach in the Orange Book as the standard for manufacturing CD-R/RW discs.

Philips and Sony sought to commercialize their technology by offering licenses to the patents that were required to manufacture CD-R/RW discs in accordance with the Orange Book standards. Administering the licensing program, Philips offered several different “package” licenses to the Philips and Sony patents (and those of several other patent holders). Philips included in the patent packages those patents that it regarded as potentially necessary to make Orange-Book-compliant CD-R or CD-RW discs, including the Raaymakers and Lagadec patents. The package licenses contained a “field of use” restriction, limiting the licensees to using the licensed patents to produce discs according to the Orange Book standards. After 2001, Philips offered additional package options, grouping the patents into two categories, denominated “essential” and “nonessential,” for producing compact *1323discs that complied with the technology standards set forth in the Orange Book.

In the late 1990s, Princo sought to manufacture discs and import them into this country, and it entered into a package license agreement with Philips. Soon after entering the agreement, however, Princo stopped paying the licensing fees required by the agreement. Philips then filed a complaint with the International Trade Commission, alleging that Princo (along with several other parties) was violating section 337(a)(1)(B) of the Tariff Act of 1930, 19 U.S.C. § 1337(a)(1)(B), by importing CD-Rs and CD-RWs that infringed Philips’s patents.

B

In the course of proceedings before an administrative law judge, Princo raised the affirmative defense of patent misuse. Among other arguments, Princo contended that Philips had improperly forced Princo and other licensees, as a condition of licensing patents that were necessary to manufacture CD-Rs or CD-RWs, to take licenses to other patents that were not necessary to manufacture those products.

The administrative law judge agreed with Philips that Princo had infringed various claims of the six asserted Philips patents and that the patents were not invalid. However, the administrative law judge denied relief to Philips on the ground that the Philips patents were unenforceable because of patent misuse. The administrative law judge found, inter alia, that the package licensing agreements offered by Philips constituted impermissible tying arrangements because they forced manufacturers to license extraneous patents in addition to the patents that the manufacturers wanted to license. That tying arrangement, according to the administrative law judge, rendered all of Philips’s patents in suit unenforceable. The administrative law judge also held Philips’s patents unenforceable based on price fixing, price discrimination, and restraint of trade.

On Philips’s petition for review, the Commission affirmed the administrative law judge’s ruling that Philips’s package licensing practice constituted patent misuse for unlawfully tying patents that were essential for the Orange Book standard to licenses for other patents that were not essential. That practice was improper, according to the Commission, because it forced licensees to purchase licenses to patents that they did not want or need, and it did not allow them the option of licensing individual patents. The Commission did not address the administrative judge’s ruling that the patent pooling arrangements between Philips and its colicensors, including Sony, constituted price fixing and price discrimination, or the administrative judge’s ruling that the royalty structure of the patent pools resulted in an unreasonable restraint of trade.

Philips appealed to this court, and we reversed. U.S. Philips Corp. v. Int’l Trade Comm’n (Philips I), 424 F.3d 1179 (Fed.Cir.2005). We rejected the Commission’s theory that Philips’s package licensing practice constituted patent misuse by improperly tying nonessential patents to essential ones. We explained that Philips gave its licensees the option of using any of the patents in the package at the licensee’s option, and that Philips charged a uniform fee to permit the manufacture of discs covered by the patented technology regardless of which patents the licensee used in its manufacturing process. Philips did not require the licensee to use any particular technology in any of the patents, including the patents that Princo complained were “nonessential.” In effect, we concluded, Philips was simply charging a fixed licensing fee for licensees to manufacture discs under the Orange Book stan*1324dard. We noted that including additional patents in the package was the functional equivalent of promising not to sue licensees on any of the patents in the group, which had the advantages of minimizing transaction costs and ensuring against the risk of post-agreement disputes as to whether those additional patents were required to practice the patented technology.

We also reversed the Commission’s ruling that Philips had engaged in patent misuse under the rule of reason. As to that issue, we held that the Commission’s conclusion that Philips’s patent package licensing program was anticompetitive was predicated on legal errors and on factual findings that were not supported by substantial evidence. We remanded the case to the Commission for further proceedings because the Commission had not addressed all the grounds on which the administrative law judge had based his ruling.

C

On remand, the Commission rejected Princo’s remaining theories of patent misuse. The Commission first rejected Princo’s argument that Philips committed patent misuse by combining with its horizontal competitors to fix the price of patent licenses in the relevant market, i.e., the market for licensing CD-R/RW patents. The Commission found that there was no evidence in the record that the patents in the joint package licenses covered technologies that were close substitutes, or that the pool licensors would have competed in the technology licensing market absent the pooling arrangements. Consequently, the Commission found that the joint package licenses had not been shown to constitute horizontal price fixing.

In particular, the Commission rejected Princo’s argument that Sony’s Lagadec patent should not have been included in the patent packages. The Commission noted Philips’s contention that claim 6 of the Lagadec patent covered a portion of the Orange Book standard and therefore was technically a “blocking patent.” The Commission explained that if Philips was correct that Lagadec was a necessary part of the Orange Book patent package, then “no misuse flows from including the [Lagadec] patent in the joint licenses.” Even if a license to the Lagadec patent was not necessary to manufacture Orange-Book-compliant discs, the Commission stated, there was no merit to Princo’s theories of patent misuse based on the Lagadec patent, because “there has been no showing that the Lagadec ... patent competes with another patent in the pool, no showing that the pool licensors would have competed in the technology licensing market absent the pooling arrangement, and no showing of the anticompetitive effect required under a rule of reason analysis.”

After an extensive analysis of the evidence presented to the administrative law judge, the Commission concluded that the record “does not support a finding that the Lagadec '565 patent competes with the [Raaymakers] patents,” and that Princo “failed to identify evidence demonstrating that, absent the pooling arrangements, the pool licensors would have competed in the technology licensing market.” The Commission noted that the administrative law judge had found that testimony at the hearing indicated that the Lagadec patent “constitutes completely different technology that does not work well according to the Orange Book standards” and that Lagadec was therefore “extraneous to the Orange Book.” In particular, the administrative law judge had found that Lagadec constituted “at best, a substitute technology” that could not be used to manufacture Orange-Book-compliant discs, and “at worst, an extraneous, nonworking add-on to the patent pool.” Under those circum*1325stances, the Commission explained, licensees who wished to make Orange-Book-compliant discs were, at most, required to accept something they did not want and would not otherwise have sought to obtain from other sellers.

With respect to the contention that including the Lagadec patent in the license packages enabled Philips to secure Sony’s adherence to the Orange Book standards and thereby foreclose competition, the Commission found that theory speculative and unsupported by the evidence in the record. Because there was no evidence that Sony would have entered the CDR/RW market with a system based on the Lagadec technology and no evidence that such a system would have become a significant competitive force in that market, the Commission held that theory insufficient to support a finding of patent misuse.

D

On Princo’s appeal, a divided panel of this court ruled against the Commission and Philips. Princo Corp. v. Int’l Trade Comm’n, 563 F.3d 1301 (Fed.Cir.2009). Although the panel rejected several of Princo’s arguments, it vacated the Commission’s remedial orders and remanded the case for further proceedings on one issue.

At the outset, the panel unanimously rejected Princo’s argument that Philips had engaged in patent misuse through improper “tying” by including the Lagadec patent in the Orange Book license packages. The court noted that while grouping patents together in package licenses has anticompetitive potential, it “also has potential to create substantial procompetitive efficiencies” such as clearing possible blocking patents, integrating complementary technology, and avoiding litigation. 563 F.3d at 1308. The court explained that the inclusion in a package license of the patents that are necessary to enable the practice of the particular technology “is not tying of the type that patent misuse doctrine seeks to prevent.” Id. Because the court concluded that it would have been reasonable for a manufacturer to believe that a license under the Lagadec patent was necessary to practice the Orange Book technology, and because “one of the major potential efficiencies of package licensing in the context of innovative technology is the avoidance of ‘uncertainty that could only be resolved through expensive litigation,’ ” the court ruled that the “inclusion of the Lagadec patent in the patent pool did not give rise to an illegal tying arrangement.” Id. at 1310-11.

The panel also unanimously rejected Princo’s argument that Philips had violated the principle of Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 135, 89 S.Ct. 1562, 23 L.Ed.2d 129 (1969), that “conditioning the grant of a patent license upon payment of royalties on products which do not use the teaching of the patent [is] misuse.” Because, at the time the package licenses were executed, “it appeared that Lagadec reasonably might be necessary to manufacture Orange Book compact discs,” the panel concluded that “it cannot fairly be said on these facts that a royalty is paid on products which do not use the teaching of the Lagadec patent.” Princo, 563 F.3d at 1312-13.

On one issue, however, the panel majority ruled against Philips. The panel noted that Philips I did not consider whether Philips and Sony agreed to suppress the Lagadec technology and “whether an agreement that would prevent the development of alternatives [to the licensed technology] would constitute misuse under a theory of elimination of competition or price fixing.” 563 F.3d at 1314. The panel then stated that, in contrast to package licenses, “there are no benefits to be obtained from an agreement between patent *1326holders to forego separate licensing of competing technologies,” and that such agreements are “not within the rights granted to a patent holder” and can constitute an antitrust violation. Id. at 1315-16. The panel recognized that “the burden of proving misuse, and the corresponding risk of having made an insufficient record, lies with Princo.” Id. at 1321. Nonetheless, the panel directed the Commission to reexamine the record to determine whether “Philips and Sony agreed not to license Lagadec in a way that would allow a competitor ‘to develop, use or license the [Lagadec] technology to create a competing product,’ ” i.e., a product that would compete with the technology of the Raaymakers patents, id. at 1313, and whether, if there was such an agreement, the suppressed technology “could not have been viable,” which would “negate a charge of misuse,” id. at 1318-19.

The dissenting judge would have affirmed the Commission. With respect to the suggestion that Sony and Philips had suppressed Lagadec as a platform for manufacturing discs that would compete with Orange-Book-compliant discs, the dissenting judge would have rejected that theory of patent misuse as a factual matter based on the Commission’s findings that the Lagadec technology did not work well and would not have competed with the Orange Book technology.

Philips, Princo, and the Commission all filed petitions for rehearing en banc. The court granted the petitions filed by Philips and the Commission, but denied the petition filed by Princo. Although Philips and the Commission have raised a number of issues in their petitions and in their briefs on rehearing en banc, we address only one — Philips’s argument that regardless of whether Philips and Sony agreed to suppress the technology embodied in Sony’s Lagadec patent, such an agreement would not constitute patent misuse and would not be a defense to Philips’s claim of infringement against Princo. For the reasons set forth below, we conclude that the conduct alleged in this ease is not the type of conduct that could give rise to the defense of patent misuse and we therefore affirm the Commission’s orders granting relief against Princo.1

II

A

The doctrine of patent misuse has its origins in a series of Supreme Court cases, beginning with the 1917 decision in Motion Picture Patents Co. v. Universal Film Manufacturing Co., 243 U.S. 502, 37 S.Ct. 416, 61 L.Ed. 871 (1917). In that case, which involved a patent on a motion picture projector, the Court addressed whether a patentee could require that the projector be used only with certain films, by “prescribing] by notice attached to a patented machine the conditions of its use and the supplies which must be used in the operation of it, under pain of infringement of the patent.” Id. at 509, 37 S.Ct. 416. The Court concluded that such a restriction imposed on the purchasers of the patented projectors was invalid because

a film is obviously not any part of the invention of the patent in suit; because it is an attempt, without statutory warrant, to continue the patent monopoly in this particular character of film after it has expired, and because to enforce it would be to create a monopoly in the manufacture and use of moving picture films, wholly outside of the patent in suit and of the patent law as we have interpreted it.

*1327Id. at 518, 37 S.Ct. 416. Since the Court regarded the requirement to use particular films as beyond the legitimate scope of the patent, it held that the patent could not be enforced against a purchaser who used the patented projector with unsanctioned films.

Fourteen years later, in Carbice Corp. of America v. American Patents Development Corp., 283 U.S. 27, 51 S.Ct. 334, 75 L.Ed. 819 (1931), the Court held that it was improper for the owner of a patent on “refrigerating transportation packages” for transporting and storing dry ice to insist that licensees of that patent purchase their dry ice from the patent owner or its affiliates. The Court stated that the patentee “may not exact as the condition of a license that unpatented materials used in connection with the invention shall be purchased only from the licensor.” 283 U.S. at 31, 51 S.Ct. 334. The seller of dry ice, the Court stated, “has no right to be free from competition in the sale of solid carbon dioxide. Control over the supply of such unpatented material is beyond the scope of the patentee’s monopoly.” Id. at 33, 51 S.Ct. 334. Accordingly, the Court ruled that the party that had supplied dry ice to one of the patentee’s licensees could not be held liable for contributory infringement of the patent.

In a third case, Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363 (1942), the patentee owned a patent on a machine used to add salt to canned foods. The patented machines were leased to canners on the condition that the canners would use salt tablets purchased from the patentee. When one of the patentee’s lessees used the machine with its own salt tablets, the patentee sued for infringement. The Supreme Court held that the patent was unenforceable on the ground that the patentee had unlawfully used the patent “to secure an exclusive right or limited monopoly not granted by the Patent Office and which it is contrary to public policy to grant.” Id. at 492, 62 S.Ct. 402.

In those cases, and several others in the same line of authority, the Supreme Court established the basic rule of patent misuse: that the patentee may exploit his patent but may not “use it to acquire a monopoly not embraced in the patent.” Transparent-Wrap Mach. Corp. v. Stokes & Smith Co., 329 U.S. 637, 643, 67 S.Ct. 610, 91 L.Ed. 563 (1947). As for the most common form of patent misuse — requiring the purchase of an unpatented product as a condition for obtaining a license to the patent, the Court observed, “He who uses his patent to obtain protection from competition in the sale of unpatented materials extends by contract his patent monopoly to articles as respects which the law sanctions neither monopolies nor restraints of trade.” Id. at 644, 67 S.Ct. 610.

The Court applied the same reasoning to licenses requiring the payment of licensing fees after the expiration of the licensed patent and thus having the effect of extending the life of the patent beyond the statutory period. In Brulotte v. Thys Co., 379 U.S. 29, 85 S.Ct. 176, 13 L.Ed.2d 99 (1964), the Court explained that a patent “empowers the owner to exact royalties as high as he can negotiate with the leverage of that monopoly. But to use that leverage to project those royalty payments beyond the life of the patent is analogous to an effort to enlarge the monopoly of the patent by tieing the sale or use of the patented article to the purchase or use of unpatented ones.” Id. at 33, 85 S.Ct. 176.

As applied to patent licensing agreements, the Supreme Court put the matter succinctly in Zenith, 395 U.S. at 136, 89 S.Ct. 1562:

[Tjhere are established limits which the patentee must not exceed in employing the leverage of his patent to control or limit the operations of the licensee. *1328Among other restrictions upon him, he may not condition the right to use his patent on the licensee’s agreement to purchase, use, or sell, or not to purchase, use, or sell, another article of commerce not within the scope of his patent monopoly.

In our cases applying the Supreme Court’s patent misuse decisions, we have characterized patent misuse as the patentee’s act of “impermissibly broaden[ing] the ‘physical or temporal scope’ of the patent grant with anticompetitive effect.” Windsurfing Int’l, Inc. v. AMF, Inc., 782 F.2d 995, 1001 (Fed.Cir.1986). When the patentee has used restrictive conditions on licenses or sales to broaden the scope of the patent grant, we have held that an accused infringer may invoke the doctrine of patent misuse to defeat the patentee’s claim. See Monsanto Co. v. McFarling, 363 F.3d 1336, 1341 (Fed.Cir.2004); Va. Panel Corp. v. MAC Panel Co., 133 F.3d 860, 870 (Fed.Cir.1997); Senza-Gel Corp. v. Seiffhart, 803 F.2d 661 (Fed.Cir.1986).

In B. Braun Medical, Inc. v. Abbott Laboratories, 124 F.3d 1419 (Fed.Cir.1997), and Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed.Cir.1992), we explained the rationale underlying the doctrine. As a general matter, the unconditional sale of a patented device exhausts the patentee’s right to control the purchaser’s use of the device thereafter, on the theory that the patentee has bargained for, and received, the full value of the goods. That “exhaustion” doctrine does not apply, however, to a conditional sale or license, where it is more reasonable to infer that a negotiated price reflects only the value of the “use” rights conferred by the patentee. Thus, express conditions accompanying the sale or license of a patented product, such as field of use limitations, are generally upheld. See Gen. Talking Pictures Corp. v. W. Elec. Co., 304 U.S. 175, 181, 58 S.Ct. 849, 82 L.Ed. 1273 (1938) (“Patent owners may grant licenses extending to all uses or limited to use in a defined field.”). When those contractual conditions violate public policy, however, as in the case of price-fixing conditions and tying restraints, the underlying patents become unenforceable, and the patentee loses its right to sue for infringement or breach of contract. B. Braun, 124 F.3d at 1426; Mallinckrodt, 976 F.2d at 706.

The doctrine of patent misuse is thus grounded in the policy-based desire to “prevent a patentee from using the patent to obtain market benefit beyond that which inheres in the statutory patent right.” Mallinckrodt, 976 F.2d at 704. It follows that the key inquiry under the patent misuse doctrine is whether, by imposing the condition in question, the patentee has impermissibly broadened the physical or temporal scope of the patent grant and has done so in a manner that has anticompetitive effects. B. Braun, 124 F.3d at 1426. Where the patentee has not leveraged its patent beyond the scope of rights granted by the Patent Act, misuse has not been found. See Monsanto, 363 F.3d at 1341 (“In the cases in which the restriction is reasonably within the patent grant, the patent misuse defense can never succeed.”); Virginia Panel, 133 F.3d at 869 (particular practices by the patentee “did not constitute patent misuse because they did not broaden the scope of its patent, either in terms of covered subject matter or temporally”).

In determining whether a particular licensing condition has the effect of impermissibly broadening the patent grant, courts have noted that the patentee begins with substantial rights under the patent grant — “includ[ing] the right to suppress the invention while continuing to prevent all others from using it, to license others, or to refuse to license, ... to charge such royalty as the leverage of the patent monopoly permits,” and to limit the scope of *1329the license to a particular “field of use.” United States v. Studiengesellschaft Kohle, m.b.H., 670 F.2d 1122, 1127, 1133 (D.C.Cir.1981). Given that the patent grant entitles the patentee to impose a broad range of conditions in licensing the right to practice the patent, the doctrine of patent misuse “has largely been confined to a handful of specific practices by which the patentee seemed to be trying to ‘extend’ his patent grant beyond its statutory limits.” USM Corp. v. SPS Techs., Inc., 694 F.2d 505, 510 (7th Cir.1982).

Recognizing the narrow scope of the doctrine, we have emphasized that the defense of patent misuse is not available to a presumptive infringer simply because a patentee engages in some kind of wrongful commercial conduct, even conduct that may have anticompetitive effects. See C.R. Bard, Inc. v. M3 Sys., Inc., 157 F.3d 1340, 1373 (Fed.Cir.1998) (“Although the defense of patent misuse ... evolved to protect against ‘wrongful’ use of patents, the catalog of practices labeled ‘patent misuse’ does not include a general notion of ‘wrongful’ use.”). Other courts have expressed the same view. See Kolene Corp. v. Motor City Metal Treating, Inc., 440 F.2d 77, 84-85 (6th Cir.1971) (There is no such thing as “misuse in the air. The misuse must be of the patent in suit. An antitrust offense does not necessarily amount to misuse merely because it involves patented products or products which are the subject of a patented process.” (citations omitted)); McCullough Tool Co. v. Well Surveys, Inc., 395 F.2d 230, 238-39 (10th Cir.1968) (the defense of patent misuse has been allowed “only where there had been a misuse of the patent in suit”). While proof of an antitrust violation shows that the patentee has committed wrongful conduct having anti-competitive effects, that does not establish misuse of the patent in suit unless the conduct in question restricts the use of that patent and does so in one of the specific ways that have been held to be outside the otherwise broad scope of the patent grant.2

Although patent misuse has been mainly a judicially created defense, Congress has not been entirely silent about the doctrine. However, instead of saying what patent misuse is, Congress has said what it is not. Thus, section 271(d) of the Patent Act sets forth five types of conduct that may not provide the basis for finding “misuse or illegal extension of the patent right.” The last two of the five, which were added in 1988, are

(4) refusing] to license or use any rights to the patent; or (5) conditioning] the license of any rights to the patent or the sale of the patented product on the acquisition of a license to rights in another patent or purchase of a separate product, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned.

35 U.S.C. § 271(d).

Importantly, Congress enacted section 271(d) not to broaden the doctrine of *1330patent misuse, but to cabin it. See Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 201, 100 S.Ct. 2601, 65 L.Ed.2d 696 (1980) (addressing the role of section 271(d) in narrowing the scope of patent misuse). The 1988 amendment in particular was designed to confine patent misuse, with respect to certain licensing practices, to conduct having anticompetitive effects. See Ill. Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28, 41, 126 S.Ct. 1281, 164 L.Ed.2d 26 (2006); S.Rep. No. 100-492, at 9 (1988) (explaining that purpose of the amendment was to narrow the patent misuse doctrine, which “punish[es] innovators engaged in procompetitive distribution and licensing practices”); id. at 14 (“The lack of clarity and predictability in application of the patent misuse doctrine and that doctrine’s potential for impeding procompetitive arrangements are major causes for concern.”); 134 Cong. Rec. 32,471 (1988) (statement of Sen. Patrick Leahy) (“Reform of patent misuse will ensure that the harsh misuse sanction of unenforceability is imposed only against those engaging in truly anticompetitive conduct.”); id. at 32,-295 (statement of Rep. Robert Kastenmeier) (“[T]he proposed modifications should have a procompetitive effect, insofar as they require some linkage between patent licensing practice and anti-competitive conduct.”).3

The dissent argues that the 1988 amendment to section 271(d) makes it “quite clear that Congress intended that the patent misuse doctrine could extend to a refusal to license patented technologies by parties acting in concert.” That, however, is not how we interpret the statute or its legislative history. The statute itself contains no mention of concerted action. In the legislative history, Representative Kastenmeier described various licensing provisions that had been held to constitute patent misuse, including price fixing, covenants not to compete, resale price maintenance, and grantback licenses. 134 Cong. Rec. 32,295 (1988). The dissent points to the inclusion of “covenants not to compete” in Representative Kastenmeier’s list, and interprets that statement as an endorsement of the proposition that a concerted refusal to license a patent constitutes patent misuse. But Representative Kastenmeier described the listed practices as “patent licensing arrangements.” Id. Moreover, his catalog of unlawful practices corresponded to the list of proscribed practices set forth in the House bill, the “Patent Licensing Reform Act of 1988,” to which he alluded in his remarks. Id. at 32,294. Each of the prohibited practices listed in that bill was a condition on granting licenses, including the imposition of “covenants not to compete.” 134 Cong. Rec. 3261 (1988) (statement of Rep. Robert Kastenmeier); H.R. 4086, 100th Cong. (1988) (“unreasonably imposing as a condition of granting a license for a patent that the licensee may not produce or sell competing goods.”). From the context, it is clear that Representative Kastenmeier’s reference to “covenants not to compete” on which the dissent relies was an allusion to non-compete clauses in patent licenses, not to concerted refusals to license among horizontal competitors. Nor is there anything *1331else in the legislative history that supports the dissent’s interpretation of Congress’s intent.

Section 271(d) is not directly implicated in this case because the conduct here at issue does