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Joshua Wright, Jan 25, 2007
The contractual arrangement in Independent Ink is a classic example of a metering tie. A subsidiary of Illinois Tool Works, the Trident division, licensed its patented printheads to original equipment manufacturers on the condition that they purchase non-patented ink from Illinois Tool. Independent Ink, Inc., a rival distributor and supplier of ink and ink products, brought suit alleging that Illinois Tool Works engaged in an unlawful tying arrangement in violation of section 1 of the Sherman Act and monopolization contrary to section 2 of the Sherman Act. The district court granted Illinois Tool’s motion for summary judgment on all claims, only to be reversed by the Federal Circuit, which held that “where the tying product is patented or copyrighted, market power may be presumed rather than proven.” The Supreme Court granted certiorari in order to address “whether the presumption of market power in a patented product should survive as a matter of antitrust law despite its demise in patent law.”
Justice Stevens’ opinion is largely devoted to identifying the origins of the presumption of market power in patent misuse doctrine, and the migration of that presumption into antitrust law in International Salt Co. v. United States upon the urging of the United States. Having identified the source of the doctrine and its migration into antitrust jurisprudence, the Court noted that Congress had since eliminated the presumption in the same patent misuse context in 1988 and the Court concluded that “it would be anomalous to preserve the presumption in antitrust after Congress has eliminated its foundation.”
The Court’s rejection of the patent presumption is worthy of praise. Scholarly commentary has nearly universally adopted the view that the patent presumption is both theoretically and empirically misguided. The presumption improperly shifted a substantial burden to antitrust defendants without the power to impact market conditions, thus chilling welfare-enhancing competition. But the manner in which the Court reaches this result is worthy of some critical analysis.