The Supreme Court held that when the makers of two-thirds of the print paper of the country are licensees of the patent holder this constitutes weighty evidence of the validity of the patent. Courts have found that licenses do not provide enough evidence of nonobviousness when the royalty rate is low when compared to the cost of litigation, the percentage of the relevant market controlled by the licensees is low, when the license represents a mutually beneficial arrangement, or when the nexus between the license and the claimed invention is not shown. The courts are in agreement that if the royalty rate of a license is low in comparison to the cost of a litigation defense, the licensee s motivation for obtaining a license is more likely to avoid litigation rather than a belief that the patent was valid. This is a particularly strong motivation when the licensee is a small business having limited resources. The Supreme Court notes that when a license has a low royalty rate the purchase of peace may be the motivation for a small business and therefore the license is of limited value as evidence of patent validity.
Courts also look to the market share and size of the licensees.
The court noted that the none of the major companies in the market obtained a license, the total market share of the eleven licensees was low and that it was possible that the licensees found acquiescence less burdensome and costly than the expense and problems of litigation. The courts indicate that another motivation for entering a license agreement is that a license may be mutually beneficial to both the licensee and the licensor. When a license is mutually beneficial the evidentiary value of the license as a secondary consideration is limited. For example, an exclusive license may be mutually beneficial since the licensee will have exclusive rights to make, use, offer to sell, and sell the invention. When attempting to overcome an obviousness argument the patent practitioner should identify licenses and other evidence that demonstrates the commercial success of a claimed invention and then clearly explain the nexus between the evidence and the claimed invention in order to maximize its evidentiary value.