Illinois Tool Works: Patents and Unlawful Tying

IllinoisToolIllinois Tool Works v. Independent Ink (Supreme Court 2005). 

On appeal to the Supreme Court is the question of whether market power must be proven in a Section 1 Sherman Act case that alleges the tying of a non-patented product to the sale of a patented product.  In its opinion in the case, Court of Appeals for the Federal Circuit determined that a rebuttable presumption of market power sufficient to restrain trade under antitrust law arises from the patentee’s possession of a patent used in an explicit tying agreement.  Oral arguments are scheduled for Tuesday, November 29, 2005.

Briefing is ongoing, but a number of parties have filed as amici. 

  • In Support of Petitioner
  • In Support of Respondent
    • (Not yet due).


    Amicus Brief of the U.S Government:

    The government makes the powerful argument that there is “no economic basis” for inferring market power from the “mere fact” that the defendant holds a patent.  The relevant market would rarely have the same boundaries as the legal scope of the patent — as such, the per se approach is not warranted.  Both the DOJ and FTC have a policy against applying a presumption of market power based on the existence of a patent. Download the U.S. Government Brief.

    Brief of the IPO:

    The Intellectual Property Owners Association agreed with the Government Brief that there was a lack of economic rational for a per se presumption of market power.  In addition, the IPO argued that the presumption makes it too easy for defendants in patent infringement suits to file baseless antitrust counterclaims.  Notably, the IPO questions the basic premise that tying is competitive by citing a number of academic articles (Bakos) that provide evidence of the pro-consumer effects of tying agreements. File Attachment: IPOTyingBrief.pdf (1099 KB).

    Amicus Brief of the MPAA

    The Motion Picture Association of America and several other organizations filed a joint brief in support of the petitioner.  The MPAA makes the argument that Loew’s does not set a rule of “presuming antitrust market power from intellectual property ownership.”  The MPAA is a heavy copyright holder, but certainly realizes that the Supreme Court often generalizes across traditional IP categories with its analysis. File Attachment: Illinois Tool MPAA Amicus Brief.pdf (345 KB).

    Brief of the NYIPLA:

    In its support of the petitioner, the NY IP Law Association (David Ryan, et al.) took the novel position that Section 271(d)(5) of the Patent Act exempts tying. Section 271–(d)(5) provides that:

    No patent owner . . . shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having . . . (5) conditioned the license of any rights to the patent or the sale of the patented product on the acquisition of a license to rights in another patent or purchase of a separate product, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned.

    The NYIPLA thus argues that the plain language of the statute encompasses tying and requires a specific showing of market power — thus eliminating the per se approach.  File Attachment: NYIPLABrf.pdf (318 KB).

    Amicus Brief of the IPLAC:

    The Intellectual Property Law Association of Chicago analyzed the parallels between this case and Jefferson Parish — making the argument that the only notable difference between the two cases being the fact that a portion of the tying product is patented. File Attachment: IPLACbrf.pdf (132 KB).