USM Corp. v. SPS Technologies, Inc.

After SPS (defendant) sued USM (plaintiff) for patent infringement and a court found USM lacked the license it claimed, the parties settled with USM agreeing to acknowledge the patent's validity and pay royalties under a licensing agreement charging USM a 25 percent baseline royalty on sublicenses, rising to 75 percent if USM sublicensed to any of four specific prior SPS licensees. Three years later, USM sued again, alleging that varying royalty structure constituted patent misuse and that the underlying patent was invalid; the district court found the patent invalid as of the second suit and allowed USM to recoup only royalties paid after that suit was filed, finding no patent misuse in the license itself.