Supreme Court Decides Important Patent Tying Case
03/01/2006Today, the U.S. Supreme Court issued a very important decision relating to the interface between intellectual property and antitrust. The Court unanimously ruled that companies challenging the sale of a patented product tied to another product must affirmatively show that the defendant has market power in the patented product. In Illinois Tool Works Inc. v. Independent Ink Inc., Trident, a wholly owned subsidiary of Illinois Tool Works, held a patent covering its ink jet printing device. Trident required licensors of its patents who made, used or sold Trident's ink jet printing devices to also purchase ink from Trident for the device's print heads. Independent Ink wanted to sell its own refills for print heads and sued Trident under Sherman Act Section 1, claiming that Trident had unlawfully tied its patented device to its unpatented ink. The Federal Circuit reversed a district court decision, which had dismissed the case on summary judgment, and determined that Trident's patents created a rebuttable presumption that Trident's patents alone constituted sufficient market power to coerce customers to purchase Trident's unpatented ink.
The Supreme Court's decision overturns the Federal Circuit's determination that a patent in the tying product creates a presumption of market power in tying cases. "Congress, the antitrust enforcement agencies and most economists have all reached the conclusion that a patent does not necessarily confer market power upon the patentee," Justice John Paul Stevens wrote. "Today we reach the same conclusion." The Court's decision requires a plaintiff challenging any tying arrangement, including those related to patented products, to prove that the defendant has market power. The Court remanded the case to the district court to allow Independent Ink to develop facts and prove, if it can, that Trident has market power in the market for its print heads.
The decision is very favorable for defendants defending tying claims because claimants can no longer presume market power just because the tying product is patented. As a result of this ruling, claimants challenging any tying arrangement must define a relevant market for both the tying and tied products and allege and prove market power in the tying product market, which will include all reasonable substitutes for the tying product. Defendants can defeat tying claims by showing the presence of alternative and competing technologies and products and that the tying product lacks market power.
