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The Supreme Court on Tuesday seemed ready to hand a victory to patent holders in a closely watched antitrust case that could have a broad impact on intellectual property law. Though justices seemed divided at oral argument in the case Illinois Tool Works v. Independent Ink, they seemed untroubled by the prospect of tossing aside a 58-year-old precedent that puts patent holders at a disadvantage when competitors sue them for antitrust violations. Under the 1947 International Salt v. United Statescase and other decisions following it, if a product has a patent, it is presumed to have the requisite “market power” that makes it illegal to “tie” the sale of the patented product to another product. That presumption puts the burden in court on a patent holder to disprove that it has unfair market power. The intellectual property bar, which attended the argument in full force, claims that in the modern marketplace, a patent does not automatically give the owner the kind of clout that would warrant such a presumption. Patent holders also assert that the presumption amounts to an open invitation for competitors to sue patent holders with relatively little risk. The outcome of the case could affect the huge “aftermarket” industry � composed of makers of everything from razors to auto parts � as well as pharmaceutical and even movie companies that try to bundle sales of patented or copyrighted products with other products.
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The arguments Tuesday were the first in what is turning out to be a significant series of patent cases the Court has agreed to hear this term. It will also consider LabCorp v. Metabolite, on the patentability of medical processes, next year, and on Monday it granted review in eBay v. MercExchange, involving the standards for permanent injunctions in patent infringement cases. In the case before the Court on Tuesday, Independent Ink, a California firm, claimed that Illinois Tool Works’ Trident division was engaged in illegal “tying” by demanding that customers who buy its patented printheads also buy its unpatented ink � thereby shrinking the market for Independent Ink’s identical but cheaper ink. (The printheads are used to stamp product codes on cartons.) A judge in the Central District of California ruled that Independent Ink had to prove that Trident had excessive market power, but the U.S. Court of Appeals for the Federal Circuit reversed. The federal circuit, which handles patent appeals, said it was bound by Supreme Court precedent that created a presumption that Trident’s patent gave it market power, without any need for Independent Ink to prove it. But the federal circuit described the precedents as “wobbly and moth-eaten,” virtually inviting the Supreme Court to reverse them. Lawyers for both Illinois Tool Works and the Justice Department went before the high court Tuesday to nudge the justices further in that direction, and they appeared to make some headway. Some justices even seemed to question the underlying doctrine that tying is per se illegal. “There is no logic underlying this presumption,” said Andrew Pincus, a partner at Mayer, Brown, Rowe & Maw who argued against the presumption on behalf of Illinois Tool. He added that if a competitor wants to “put some cost” on a patent holder to try to damage its market share, an antitrust lawsuit is an easy way to do it. Deputy Solicitor General Thomas Hungar described the presumption as a “litigation tax on owners of intellectual property.” He also said the presumption is “out of step” with recent antitrust doctrine and modern economic thinking. The fact that a defendant in an antitrust case has a patent “may be extremely incidental,” Hungar said. Under questioning, Hungar also acknowledged that the outcome of the case could affect copyright as well as patent law. Former Stanford Law School Dean Kathleen Sullivan, representing Independent Ink, repeatedly reminded the Court of the long-standing nature of its precedent in favor of the presumption. During that time, she also noted, the presumption has not triggered crippling litigation or had “the slightest effect” on technological innovation. She said it was up to Congress, not the Court, to alter antitrust law if it saw fit � and it has repeatedly declined to do so. “It makes good economic sense and good litigation sense,” said Sullivan, of counsel at Quinn Emanuel Urquhart Oliver & Hedges in Silicon Valley. But Chief Justice John Roberts Jr. said the presumption puts the “heavy lifting” in litigation on the patent holder. And Justice Ruth Bader Ginsburg, noting that the presumption was a creation of the Supreme Court in the first place, asked, “Why isn’t it the Court’s role to fix it up?” Justice Stephen Breyer also expressed concern that without the presumption, “everything gets mixed up in the war of experts.”


Tony Mauro can be contacted at [email protected] .
READER COMMENTS
• I feel that patent holders should not be at a disadvantage when competitors sue. If anything they should be on an equal footing. — L. Lloyd, DeLand, Florida

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