Carbice Corp. v. American Patents Corp

In Carbice Corp. v. American Patents Corp., 283 U.S. 27 (1931), the Court denied relief to a patentee who, through its sole licensee, authorized use of a patented design for a refrigeration package only to purchasers from the licensee of solid carbon dioxide ("dry ice"), a refrigerant that the licensee manufactured. The refrigerant was a well-known and widely used staple article of commerce, and the patent in question claimed neither a machine for making it nor a process for using it. Id., at 29. The Court held that the patent holder and its licensee were attempting to exclude competitors in the refrigerant business from a portion of the market, and that this conduct constituted patent misuse. It reasoned: "Control over the supply of such unpatented material is beyond the scope of the patentee's monopoly; and this limitation, inherent in the patent grant, is not dependent upon the peculiar function or character of the unpatented material or on the way in which it is used. Relief is denied because the licensee is attempting, without sanction of law, to employ the patent to secure a limited monopoly of unpatented material used in applying the invention." Id., at 33-34. In Carbice the Court unanimously denied relief for contributory infringement where a patentee required users of its combination patent to purchase from its exclusive licensee unpatented material (dry ice) that was an essential component of the patented combination (a container for transporting frozen goods). The Court acknowledged that the owner of the process patent properly could "prohibit entirely the manufacture, sale, or use of such packages," or "grant licenses upon terms consistent with the limited scope of the patent monopoly" and "charge a royalty or license fee." However, the Court concluded that the patent holder "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; and if it does so, relief against one who supplies such unpatented materials will be denied." Id., at 31. The Court deemed immaterial the fact that "the unpatented refrigerant is one of the necessary elements of the patented product," for the patent holder had "no right to be free from competition in the sale of solid carbon dioxide" (dry ice) and "this limitation, inherent in the patent grant, is not dependent upon the peculiar function or character of the unpatented material or on the way in which it is used." Id., at 33. If the owner of a combination patent were permitted to restrain competition in "unpatented materials used in its manufacture," then "the owner of a patent for a machine might thereby secure a partial monopoly on the unpatented supplies consumed in its operation." Id., at 32.