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The Supreme Court on Monday agreed to consider overturning a 43-year-old precedent that has been interpreted to make it easy for competitors to sue patent holders for antitrust violations. In agreeing to hear the case of Illinois Tool Works v. Independent Ink in the fall, the Court was responding to pleas by major patent holders as well as the American Intellectual Property Law Association and the American Bar Association on behalf of its 9,000 antitrust lawyer members and its 19,000 intellectual property members. The Bush administration has not weighed in yet, but in a recent speech, Assistant Attorney General for Antitrust R. Hewitt Pate said the case provided a “good opportunity” to resolve an important antitrust issue. Andrew Pincus of Mayer, Brown, Rowe & Maw, lawyer for Illinois Tool, informed the Court of Pate’s June 3 speech. “This is an important case at the intersection of patent and antitrust law,” Pincus said on Monday. “It is increasingly significant as our economy is driven more and more by intellectual property.” Under the 1962 ruling United States v. Loew’s Inc., the fact that a defendant holds a patent on a product creates a presumption that it exerts enough power over the marketplace to be guilty of illegal “tying” under the Sherman Act. Illegal tying occurs when a company requires customers who want one of its products to buy another one. The presumption makes it easier to make tying claims and get them to trial when the target of the claim is a patent holder. In the case before the Court, Illinois Tool Works is accused of requiring customers to buy its ink when they buy its patented “printheads,” which are used to apply bar codes onto packaging. Independent Ink, which markets compatible inks, made a Sherman Act tying claim against Illinois Tool, invoking the Loew’s precedent. A judge in the U.S. District Court for the Central District of California sided with Illinois Tool, but the U.S. Court of Appeals for the Federal Circuit reversed. In the circuit ruling, Judge Timothy Dyk said that even if the Loew’s decision rested on “wobbly, moth-eaten foundations” that have been overtaken by market realities, his court is still bound by the Supreme Court precedent that created the presumption. Dyk added that it is up to the Supreme Court, not lower courts, to overturn one of its precedents, and up to Congress to change the law if it wants to. In his brief for the American Intellectual Property Law Association, Patrick Coyne of Finnegan, Henderson, Farabow, Garrett & Dunner says the Federal Circuit ruling conflicts with decisions by the 6th and 7th circuits, a conflict that reflects growing disagreement over the basis of the presumption. “The mere issuance of a patent does not convey market power in a relevant market, except in very rare cases,” Coyne wrote. In other types of tying claims, plaintiffs have a heavy burden to establish that the defendant has sufficient marketplace power to force customers to buy their products in violation of antitrust laws. “There is no reason why the Court’s approach to tying should be different where patent licensing is involved,” Coyne said. Tony Mauro can be contacted at [email protected].

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