Tuesday, November 29, 2005
The US Supreme Court heard oral arguments today in Illinois Tool v. Independent Ink, a closely watched case addressing the question of whether the existence of a patent on a tying product in a tying arrangement creates the presumption of market power. The district court said no, and the Federal Circuit reversed citing Supreme Court precedent from 1962 in Loew's (that in turn relied upon dicta from the Supreme Court's 1947 International Salt decision). Some commentators view this case as a harbinger of the Roberts Court's commitment to stare decisis. In my opinion, the Federal Circuit reversed and wrote such a strong pro-antitrust (and anti-patent) decision to provoke the Supreme Court to reverse or at least clarify its patent-antitrust and patent tying jurisprudence. Furthermore, even if the Roberts Court does reverse antitrust precedent, that result may have little bearing on how it would deal with larger constitutional precedents, such as Roe. After all, precedent based on interpretation of statutes are different from precedent based on interpretation of the Constitution. The former, I would argue, are more malleable than the latter.
My prediction? The Court will repeat the nostrums from Loew's: patents create a rebuttable presumption of market power. That approach seems more sensible and less intrusive than the largely unstructured, fact intensive inquiry in the presence or absence of actual market power that the district court's opinion seemed to point to. Of course, everyone knows that patents do not create market power by themselves. But the Loew's rule forces the antitrust defendant to show the existence of market substitutes and the inability to affect price. The alternative rule would require the plaintiff to introduce extensive data on markets in fairly complex, and not always well understood, technological settings. If the Loew's rule is correctly applied, the presumption should not matter in cases where defendants can show the inability to control price and should have bite in cases where defendants can.
For more discussion, follow this link to the Medill School of Journalism site at Northwestern.