Steve Seidenberg wrote in the November print issue of the ABA Journal about the November 29, 2005 Supreme Court Oral arguments in the Illinois Tool Works Inc. v. Independent Ink Inc. case. He writes:
The ruling could change significantly the way many patent and copyright infringement suits are conducted -- making such suits faster, cheaper and easier for intellectual property rights owners to win.
The ruling could also strengthen IP rights owners' business prospects by allowing them to tie the sales of their patented or copyrighted products to the sale of other goods, thus fencing out competition for those goods.
That, Independent Ink says, runs head-on into the Sherman Antitrust Act, placing this case at the intersection of intellectual property and antitrust law.
A unit of Illinois Tool Works makes patented ink-jet printheads that are used to place bar codes on boxes. The company sells these printheads to manufacturers of industrial printing equipment.
However, ITW's license agreement with the equipment manufacturers requires them to buy the ink used in the patented printheads only from ITW. The license allows the manufacturers' customers to buy more ink from ITW, but the customers are forbidden to refill the ITW ink cartridges with ink from third-party ink makers.
That's where Independent Ink comes in. The company has been making specialty inks since 1939 but has garnered few sales to users of ITW's printheads -- even though Independent's ink costs much less than ITW's.
Independent blames its poor sales on ITW's license agreement, which ties the sale of ITW's patented printheads to the sales of ink. Independent will argue that this illegal tying arrangement violates section 1 of the Sherman Act.
But Independent has failed to present evidence of market power, instead relying on the fact that the tying product is covered by a patent. The Supreme Court ruled in 1962 in the United States v. Loew's Inc. case that, "the requisite economic power is presumed when the tying product is patented or copyrighted."
Steve Seidenberg continues:
Most observers expect the court to overturn Loew's and its presumption of market power.
Kevin McDonald, a partner with Jones Day and principal author of the ABA’s amicus briefs in Illinois Tool, provides a detailed discussion of the case here at The Antitrust Source. The Legal Information Institute provides a detailed Bulletin on the case. The Scotus blog from the law firm of Goldstein & Howe also provides a detailed discussion of the case with links to the briefs and the lower court's opinion.
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