Friday, March 3, 2006
On Feb 28, the Supreme Court ruled in favor of Texaco and Shell Oil in Texaco v. Dagher. Argued in early January, the Dagher case involved a challenge to the pricing practices of Equilon, a joint venture of Texaco and Shell Oil for the production and distribution of oil in the Western US. The district court ruled in favor of Texaco and Shell Oil, concluding that the pricing practices resulted from the unilateral decision of Equilon rather than the collusive efforts of Texaco and Shell Oil. The Ninth Circuit reversed, holding that Equilon's pricing was collusive under the ancillary effects doctrine. The Supreme Court, in an 8-0 opinion downloadable below, reversed the Ninth Circuit, following the reasoning of the district court. While not expressly creating an exemption for joint ventures from Section One claims (as Texaco and Shell Oil had urged), the Court concluded that when competitors pool resources and risk by creating a joint venture in a market where they no longer operate, pricing decisions are unilateral and not collusive.
Thursday, March 2, 2006
The Supreme Court handed down its much anticipated decision in Illinois, overturning the Federal Circuit and overruling the presumption of market power in antitrust tying arrangements involving patents. In an 8-0 opinion, authored by Justice Stevens with Justice Alito not participating, the Supreme Court held that the ownership of a patent in a tying arrangement does not create a presumption of market power, contra dicta in its 1984 Jefferson Parish decision. In a short, too the point opinion, the Court pointed out that presumption arose out of its patent misuse jurisprudence and that Congress had overruled this presumption for patent misuse in its 1988 amendments to the Patent Act. In Illinois Tool, downloadable below, the Court removes the presumption of market power in the antitrust context, creating parity with the market power issue in the patent misuse context.