Thursday, March 02, 2006

Supreme Court: no presumption of market power with patent

As discussed on IPBiz on November 30 the Supreme Court did in fact eliminate the presumption of market power described in the International Salt case. Not a big surprise that the vote was 8-0 (Justice Alito not voting). All that was at stake was who had to prove that the patentee had market power: was market power presumed or did the challenger of the tying arrangement have to prove it. The ruling establishes that market power is not presumed.

The Supreme Court, in its opinion, said Independent Ink should be "given a fair opportunity to develop and introduce evidence" to prove Trident had market power.

What was not at stake at the Supreme Court: whether it was legal for it to require customers purchasing its commercial print heads to use its ink for refills. Independent Ink wants to sell its own refills for those print heads.

The U.S. Supreme Court on March 1, in a significant change in antitrust legal precedent, made it easier for companies to defend themselves against antitrust charges when they tie the sale of one product to another, shifting the burden to a competing ink producer to prove an Illinois Tool Works Inc. (ITW) unit has market power in a product tied to the sale of another.

Legal Times:
In a case at the intersection of patent and antitrust law, the Supreme Court on March 1 issued a ruling that makes it harder for upstart companies and generic manufacturers to challenge patent holders' power in the marketplace. The 8-0 decision said that a patent on a product does not automatically mean that the patent holder has market power of the type that would trigger an antitrust "tying" violation. Critics say the decision will put many patent-related tying arrangements beyond legal challenge.

Everybody expected this result.

"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."


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