WHAT TOOL WORKS TELLS US ABOUT TAILORING PATENT MISUSE REMEDIES[dagger]

Article excerpt

No one was surprised when, in Illinois Tool Works, Inc. v. Independent Ink, Inc.,1 the Supreme Court reversed the rule that a patentee accused of tying in violation of section 1 of the Sherman Act is presumed to have economic power in the product market to which the patent pertains.2 That presumption was contrary to both logic and experience.

The Court's reasoning is interesting, however, because it points the way to tailoring remedies for patent misuse. The default remedy for misuse is that courts refuse to enforce the patent against any defendant, not just against the victim of misuse.3 Tool Works drew on section 271(d)(5) of the Patent Act4 to reform an antitrust liability rule not mentioned in the statute but influenced by the policy choices it reflects. Similarly, though section 271(d)(5) does not mention misuse remedies, the policy choices it reflects undermine the rationale for the default remedy for patent misuse.

I.

Patent misuse is an affirmative defense to an infringement action. A patentee misuses a patent when the patentee takes some action to broaden the scope of patent rights or lengthen their duration.5 Misuse allegations are typically aimed at license terms.6 Most misuse cases involve tying claims, in which an infringement defendant argues that a patentee unlawfully tied the purchase of unpatented goods to the purchase or license of patented ones.7

Tool Works involved a contract term requiring licensees of Tool Works' patented inkjet heads and ink containers to purchase their (unpatented) ink from Tool Works.8 An independent ink seller sued Tool Works under section 1 of the Sherman Act, alleging that the term amounted to an unlawful tie. The Federal Circuit held that, under Supreme Court precedent,9 Tool Works' patent created a presumption that it had market power in the tying product market.10 That presumption eliminated the need for the plaintiff to introduce evidence of such power.11

The Supreme Court reversed. It noted that Sherman Act jurisprudence derived the presumption of market power from patent misuse jurisprudence.12 With regard to misuse claims aimed at tying arrangements, however, Congress eliminated this presumption in 1988, when it added section 271(d)(5) to the Patent Act.13 That section provides that certain tying arrangements are not misuse if the patentee does not have power in the tying product market.14

The market power exception to the protection from misuse claims created by this section would be pointless if all patents conferred such power. Not surprisingly, the Tool Works Court believed that the misuse safe harbor reflected Congress's intention that possession of a patent would not be enough to establish such power. Because the presumption had been eliminated from its field of origin, the Court reasoned, it should be eliminated from the Sherman Act jurisprudence that borrowed from that field.15

II.

As the Tool Works Court pointed out, the Court adopted the market power presumption for Sherman Act cases in International Salt Co. v. United States,16 which relied on a misuse case, Morion Salt Co. v. G.S. Suppiger Co.,17 for the presumption.18 Morion Salt is also the case in which the Court justified the default misuse remedy. The Suppiger Company held a patent on a machine that deposited salt tablets in cans. It sued Morion Salt for infringing its machine patent by manufacturing salt-depositing machines of its own.19

Suppiger licensed its machine subject to the requirement that licensees buy salt tablets from it. That term could have either or both of two effects. First, if salt tablets had to be manufactured to certain specifications for the machine to work properly, the term might ensure that a licensee only used such tablets, thus avoiding the risk that a licensee might blame Suppiger's machine for problems caused by nonconforming tablets. Suppiger offered this defense, but the district court rejected it out of hand. …