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IP vs. Antitrust

IP vs. Antitrust,” Mises Economics Blog (Sep. 8, 2005). Archived comments below.

In the September 2005 issue of Corporate Legal Times, the article “High Court Set To Tackle IP Tying In Antitrust Cases” discusses the upcoming Supreme Court case Illinois Tool Works v. Independent Ink, in which the Court will decide whether there should be a presumption of “market power” in antitrust “tying cases” in the case of a patented product.

In this case, Trident holds a patent covering ink jet printer technology and also makes ink. When it licenses its patented ink jet printer it requires its licensee to purchase ink for the system only from Trident–this is known as tying. Trident was sued by Independent Ink, another ink maker and competitor of Trident, alleging that Trident was engaged in illegal tying and monopolization in violation of sections 1 and 2 of the Sherman Act. Normally, for tying to constitute a violation of the antitrust laws, the plaintiff must affirmatively prove market power. Since a patent is a type of monopoly, however, the question is whether the mere existence of a patent on the product in question means the seller can be presumed to have “market power”. The federal appeals ocurt held that “a rebuttable presumption of market power arises from the possession of a patent over a tying product”.

The appellate decision has IP advocates, such as the American Intellecual Property Law Association (AIPLA) and the Intellectual Property Owners Assocation (IPO) up in arms–they don’t want a patent on the product to create a “presumption of market power in a relevant market to prove an antitrust violation under Section 1 of the Sherman Act.” They and others argue that the existence of a patent does not mean there is “market power” for purposes of antitrust law, because while some patents cover “groundbreaking inventions” and therefore “clearly” provide “market power,” other inventions cover only minor improvements and don’t give the owners a “decisive edge” in the marketplace.

I don’t know what is more irrational, arbitrary, and non-objective: patent and IP law, or antitrust law. It’s a close call. I keep vacillating, but I tend to think antitrust law is every-so-slightly worse.

A amusing note: the article first cited above notes that because of recent incoherent amendments to federal law, the patent infringement defense of patent misuse (similar to an anti-trust claim) no longer benefits from the presumption of market power; while an antitrust claim, which may also be used as a defense against patent infringement, currently benefits from the presumption–so that a defendant accused of patent infringement has an easier time proving an antitrust violation by the plaintiff (which has automatic treble damages), than asserting a patent misuse claim. It is just bizarre, since both claims rest on establishing market power: but it is presumed in the former case only.

What I found amusing was the quoted comment by Glen Belvis, a patent litigator at Chicago’s Brinks Hofer Gilson & Lione, in response to this bizarre legal situation: “That seems very unfair.” As if patent and antitrust law could be made fair!

Comments (5)

  • Wolf
  • Speaking of amusing IP ideas-(from http://www.forbes.com/business/2005/08/15/patent-movies-scripts-cz-df_0812script.html)


    “It’s the kind of plot twist that will send some critics screaming into the aisles: Why not let writers patent their screenplay ideas? The U.S. Patent and Trademark Office already approves patents for software, business methods–remember Amazon.com’s patent on “one-click” Internet orders?–even role-playing games. So why not let writers patent the intricate plot of the next cyberthriller?

    That’s the idea of Andrew Knight, a recent Georgetown Law graduate and bona fide rocket scientist (he has two patents on rocket motors) who has submitted several movie plots to the Patent Office for approval. Like countless other would-be screenwriters working as cabbies and plumbers in Southern California, Knight may not yet have his own hit movie, but he worries about providing the bones for somebody else’s Matrix.

    “My hope is that the skeptical public will someday look back and say, ‘I really didn’t think this would have come out at all, if it hadn’t been for a patent system protecting the idea of the creator,’ ” says Knight, who in his day job works as a patent agent helping inventors shepherd their applications through the Patent Office.”

  • Published: September 8, 2005 6:33 PM

  • Andrew McGuinness
  • It is amusing, watching one agency of government applying a system whose entire purpose is the creation of monopolies, and then another agency tasked with preventing monopolies turning up and trying to do something about it.

    The only thing that beats it is government subsidy for tobacco…

  • Published: September 9, 2005 6:35 AM

  • Paul D
  • “My hope is that the skeptical public will someday look back and say, ‘I really didn’t think this would have come out at all, if it hadn’t been for a patent system protecting the idea of the creator,’ ” says Knight.

    That’s a laugh-riot right there. The most likely result of Knight’s efforts is that no more good movies will come out at all (since every plot idea that’s patentable soon would be).

  • Published: September 9, 2005 11:55 AM

  • tz
  • Pity we can’t patent laws or legal methods and prevent the government from implementing them.

    It is hard to even attempt to figure out if or how IP should be recognized given the current state of lawmaking. Though I don’t know if I would even like to see vegetarian sausages being made.

  • Published: September 9, 2005 2:01 PM

  • Wild Pegasus
  • Is this an appeal from the Federal Circuit or one of the numbered Circuits? I ask because I’ve seen tying cases regarding patents in the Federal Circuit, but anti-trust seems to be the question, and that gets taken care of in the general courts.

    – Josh

  • Published: September 9, 2005 3:36 PM


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