ESS Tech., Inc. v. PC-Tel, Inc.

ESS Tech., Inc. v. PC-Tel, Inc., No. C-99-20292 (N.D. Cal. Nov. 2, 1999 and N.D. Cal. July 3, 2000 ) 

Plaintiff alleged that it cannot produce modems that comply with International Telecommunication Union ("ITU") standards without infringing defendant’s patents, and that defendant refuses to license its patents on fair and reasonable terms.  Plaintiff alleged that defendant refused to license its patents on fair and reasonable terms after representing to a standard-setting organization that it would do so. 

Court dismissed the plaintiff’s Sherman Act §2 claim and related state unfair competition claim for failure to allege antitrust injury.  

Plaintiff also asserted a claim for specific performance, arguing that it was a third-party beneficiary to defendant’s agreement with ITU to license on fair and reasonable terms. 

Defendant argued that a patent holder may unilaterally refuse to license its patents without being subject to antitrust liability. Court rejected defendant’s argument that its agreement with the standard-setting organization was too vague to support a claim for specific performance. 

Court denied defendant’s motion to dismiss plaintiff’s antitrust, patent misuse, and state unfair competition claims, stating that defendant’s "alleged acts amount to more than just legitimately exercising a right to refuse to license patented technology."