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The U.S. Supreme Court’s 2005-2006 term begins on Oct. 3. While a lot of people are focused on who will be on the Court, they’re ignoring what cases the justices will decide. Technology lawyers should keep an eye on two cases in particular: one is a patent antitrust case involving presumed market power, Illinois Tool Works Inc., et al. v. Independent Ink Inc., and the other is a choice-of-law issue that pits Federal Circuit rules against those of its sister circuits, Unitherm Food Service Inc. v. Swift Eckrich Inc. Here’s the background on Illinois Tool. On Jan. 25, the Federal U.S. Circuit Court of Appeals decided that, in certain situations, courts will presume that patent and copyright holders possess market power. Market power, a concept crucial to antitrust liability, is simply the ability to raise prices above competitive levels without losing market share or profits. Under 1 of the Sherman Antitrust Act, concerted anti-competitive action between entities that possess market power when they combine constitutes an antitrust violation. Section 2 bars entities that possess monopolistic market power on their own from utilizing that power in an anti-competitive manner. The Supreme Court granted the petition for certiorari, which sought review of the presumption that copyright or patent holders possess market power. The justices need to eliminate this presumption. The intellectual property rights provided by patent and copyright do provide the owner with a monopoly. But such a monopoly doesn’t necessarily mean that the defendant has monopolistic power in the market. After all, having the monopoly on a bad product gives a defendant no market power whatsoever. The Federal Circuit felt precedent dictated its decision. Since the 1962 U.S. Supreme Court decision in United States v. Loews, which the high court affirmed in 1984′s Jefferson Parish v. Hyde, courts presume that an entity acting under its copyright or patent is exercising market power. But various members of the current Supreme Court have repeatedly criticized Jefferson Parish, although the court has never overruled it. The facts of Illinois Tool, as laid out in the Federal Circuit decision and briefs to the Supreme Court, are fairly straightforward. Illinois Tool holds a patent on an industrial bar code printer. As part of its licensing process, it requires its licensee to buy printer ink from Trident. Independent Ink, which makes ink that could be used instead of Trident ink, sued for violation of 1 (concerted action between Illinois Tool and Trident) and 2 (monopolistic power because of the patent). The trial court flatly rejected Independent Ink’s claim that courts should presume market power and monopoly power. The Federal Circuit reversed, with strong language indicating that it was bound by precedent to uphold the presumption, even though Loews contained “many infirmities” and the presumption rests upon a “wobbly moth-eaten foundation.” But other than that, the justices liked it. The Supreme Court will decide whether the presumption of market power is still good law, and it may decide whether the presumption is rebuttable in 1 and 2 cases. There is some palace intrigue here. As the Federal Circuit pointed out in Illinois Tool, a majority of the current Supreme Court justices have criticized the notion of presuming market power based on a patent or copyright. One of those critics is soon-to-be-former Justice Sandra Day O’Connor. She wrote the concurring opinion in Jefferson Parish, which then-Chief Justice Warren Burger, Justice Lewis Powell and then-Justice William H. Rehnquist joined. In her concurrence, O’Connor stated that it is a “common misconception � that a patent or copyright � suffices to demonstrate market power.” Her statement seems to indicate that she would find that the Federal Circuit went too far in its application of Jefferson Parish to Illinois Tool; since the votes in her concurrence were necessary to the majority holding in Jefferson Parish, her comments were important dicta. But now that she’s on her way out, that dicta might not provide such useful guidance. Whoever replaces O’Connor could be the swing vote in Illinois Tool. During the confirmation process, lawyers should find questions concerning high court nominee John G. Roberts Jr.’s antitrust views much more relevant to their practices than his positions on various social issues. WHOSE RULES? The other interesting intellectual property case coming up during the U.S. Supreme Court’s 2005-2006 term is Unitherm Food Service. Here’s how the Federal Circuit’s opinion lays out the facts and procedural posture: Swift holds a patent on a method of browning precooked, whole muscle meat products by coating them with a liquid pyrolysis product — makes you hungry, doesn’t it? Swift wrote to several companies that sell equipment for preparing and browning precooked meat. The letters attached a copy of the patent and warned the equipment sellers that “others may approach you regarding this patent, and we would appreciate it if you would inform them that we intend to aggressively protect all of our rights under this patent.” Unitherm sued, making state tortious interference claims and federal antitrust claims alleging Swift violated the Sherman Act by attempting to monopolize the precooked meat market. After trial, but before the jury rendered its verdict, Swift filed a motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(a), based on insufficiency of the evidence. The U.S. District Court for the Western District of Oklahoma denied the motion and submitted all issues to the jury. The jury found against Swift on all claims. Swift’s attorney did not move for judgment as a matter of law after the verdict or move for a new trial. Individual circuits have slightly different requirements for what steps a trial lawyer must take to protect the right to appeal. However, a motion for judgment as a matter of law after the verdict or motion for a new trial is a procedural requirement in the Federal Circuit for review of the evidence on appeal. The Federal Circuit affirmed the jury on the state law claims but reversed the jury’s decision on the antitrust claims, because there was a total absence of evidence of antitrust market power or damages. Such an evidentiary review, in the absence of a motion for a directed verdict, is highly unusual. Swift claimed it was appealing the denial of its 50(a) motion and that a renewal of that motion or a motion for new trial was not necessary. Under the law of the 10th U.S. Circuit Court of Appeals, where the Western District of Oklahoma is located, Swift is unquestionably correct. However, Federal Circuit law concerning patents is directly against Swift. The Federal Circuit determined that, since the substantive issue was not patent law, the procedural law of the Federal Circuit also did not apply. Thus, the issue for Supreme Court review is this: When antitrust claims arising from the assertion of patent rights are appealed, do the procedural rules of the Federal Circuit or the various regional circuits apply? Expect the various regional circuits to win this one. The concentration of patent power in the Federal Circuit is based upon the need for uniformity. There seems to be little reason for Federal Circuit pre-eminence in this area. Those are two cases in which tech lawyers have a stake. And you thought the confirmation hearings were all about abortion and the interstate commerce clause. Bruce Packard is a shareholder in Davis Munck, a Dallas boutique firm. He exclusively practices complex business litigation throughout the United States and has done so for 20 years.

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