Antitrust Effect of Patent on Tying Product: Illinois Tool Works Inc. v. Independent Ink, Inc.

RS22421 -- Antitrust Effect of Patent on Tying Product: Illinois Tool Works Inc. v. Independent Ink, Inc.

April 13, 2006

Summary

Antitrust law generally disfavors tying arrangements--those in which a vendor conditions the sale of a desired product on the purchase of another (possibly not-so-desired) product. Not only have tying arrangements been considered unlawful as violations of Section 1 of the Sherman Act (15 U.S.C. § 1), they were determined to be per se (automatically) unlawful. It was assumed, until at least the late-1970s, first, that such arrangements were only possible because the seller possessed sufficient market power in the tying product to allow him to create the tie; and second, that they served no purpose other than the suppression of competition in the market for the tied (unwanted) product. Then, in U.S. Steel Corp. v. Fortner Enterprises, Inc. (429 U.S. 610 (1977), Fortner II), the Supreme Court recognized that there might be a reason other than a seller's ability to "force" a buyer to accept the tie, i.e., that the fact of buyer acceptance was not necessarily an indication that the seller possessed market power in the tying product. However, it has continued to be assumed, since the doctrine of patent misuse was imported into antitrust jurisprudence in International Salt Co. v. U.S. (332 U.S. 392 (1947)), that because a patent gives the owner a monopoly on the commercial exploitation of the patented product, it also creates the presumption of sufficient market power to allow the owner to force a tie between the patented product and some, unpatented product. Congress eliminated that presumption in the patent area when it amended the Patent Act in 1988; in Illinois Tool Works Inc. v. Independent Ink, Inc. (547 U.S. ____, No. 04-1329, decided March 1, 2006), the Court eliminated the presumption in antitrust law: "Today ... we hold that, in all cases involving a tying arrangement, the plaintiff must prove that the defendant has market power in the tying product." (Slip opinion at 16, emphasis added.)