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The Supreme Court has agreed to consider overturning a 43-year-old precedent that makes it easier for competitors to sue patent holders for antitrust violations. In taking the case of Illinois Tool Works Inc. v. Independent Ink Inc. on June 20, the Court was responding to pleas by major patent holders as well as the American Intellectual Property Law Association and the American Bar Association. Recently, R. Hewitt Pate, then the assistant attorney general for antitrust, said the case provided a “good opportunity” to resolve an important antitrust issue. Andrew Pincus of the D.C. office of Mayer, Brown, Rowe & Maw, who represents Illinois Tool, informed the Court of Pate’s June 3 speech. “This is an important case at the intersection of patent and antitrust law,” says Pincus. “It is increasingly significant as our economy is driven more and more by intellectual property.” Under the Supreme Court’s 1962 ruling in 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 a highly desired product to buy another, less-desired product as well. The presumption makes it easier to bring tying claims when the defendant holds a patent on the first product. 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, brought a tying claim, 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. Appeals Judge Timothy Dyk wrote that even if Loew’s rests on “wobbly, moth-eaten foundations” that have been overtaken by market realities, the Federal Circuit is still bound by the precedent. Dyk added that it is up to the Supreme Court to overturn one of its precedents, and up to Congress to change the law if it wants to. In his brief for the AIPLA, Patrick Coyne of D.C.’s Finnegan, Henderson, Farabow, Garrett & Dunner said 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.
Tony Mauro is the Supreme Court correspondent for Legal Times , an ALM publication.

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