Supreme Court Grants Certiorari in Patent Tying Antitrust Case

June 20, 2005. The Supreme Court granted certiorari in Illinois Tool Works v. Independent Ink, a patent tying antitrust case. See, Order List [13 pages in PDF] at page 3.

Trident, Inc., a subsidiary of Illinois Tool Works, holds U.S. Patent No. 5,343,226, which pertains to ink jet printer technology. Trident also makes ink. Moreover, its standard form licensing agreement allowing the OEMs to use its patented product requires the OEMs to purchase their ink for Trident systems exclusively from Trident.

Independent Ink also makes ink, and competes with Trident.

Independent Ink filed a complaint in U.S. District Court (CDCal) against Trident and Illinois Tool Works. It sought a declaratory judgment of non-infringement and invalidity against Trident’s patents. It also alleged Trident was engaged in illegal tying and monopolization in violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. § 1 et seq.

The District Court granted summary judgment in favor of Trident on both claims. The District Court held that for patent tying to constitute a violation of the antitrust laws, the plaintiff must affirmatively prove market power.

The U.S. Court of Appeals (FedCir) issued its opinion [PDF] on January 25, 2005. It held that "a rebuttable presumption of market power arises from the possession of a patent over a tying product". It further wrote that "Because no rebuttal evidence was submitted by the patent holder, we reverse the grant of summary judgment on the Sherman Act section 1 claim and remand for further proceedings. As to Independent’s Sherman Act section 2 claim, we affirm the district court’s grant of summary judgment."

And now, the Supreme Court has agreed to hear the case.

The Office of the Solicitor General (OSG) wrote a brief in another case, Homan McFarling v. Monsanto, No. 04-31, that "The question whether market power in the tying product can be presumed based on the existence of a patent on that product is currently pending before this Court. See Illinois Tool Works Inc. v. Independent Ink, Inc., petition for cert. pending, No. 04-1329 (filed Apr. 4, 2005). The Department of Justice and the Federal Trade Commission "will not presume that a patent * * * necessarily confers market power upon its owner," because "there will often be sufficient actual or potential close substitutes for such product * * * to prevent the exercise of market power." U.S. Dep't of Justice & Federal Trade Commission, Antitrust Guidelines for the Licensing of Intellectual Property § 2.2, at 4 (Apr. 6, 1995)."

The OSG also wrote that one of the issues in the Monsanto case is "Whether a patentee engages in tying, in violation of Section 1 of the Sherman Act, 15 U.S.C. 1, when it allows the licensee to plant seeds embodying patented technology only for the purpose of growing crops for resale as a commodity, and not to save any new seeds (also embodying the patented technology) for replanting." The Supreme Court has yet to rule on the petition for writ of certiorari in the Monsanto case.

The Intellectual Property Owners Association (IPO) filed an amicus brief [PDF] in which it wrote that "The fact that the two principal federal antitrust enforcement agencies decline as part of their prosecutorial discretion to “presume” market power when evaluating a patent tie-in case lends strong support that it is the appropriate time to overturn the market power presumption originating under International Salt, a case that was decided in the economic climate that followed in on the heels of the Great Depression and the Second World War in the first half of the last century."

The American Intellectual Property Law Association (AIPLA) filed an amicus brief [PDF] arguing that "The Court should grant that review to clarify that tying arrangements involving patent and other intellectual property rights are assessed under the Rule of Reason without any presumption of market power in a relevant market arising merely from the issuance of a patent."

The American Bar Association filed an amicus brief [PDF] urging the Supreme Court to grant certiorari, and reverse the Court of Appeals.

This case is Illinois Tool Work, Inc. v. Independent Ink, Inc., Sup. Ct. No. 04-1329.