The Statutory Presumption of Patent Validity in Antitrust Cases

By Vardner, Joseph | Harvard Journal of Law & Technology, Fall 2011 | Go to article overview

The Statutory Presumption of Patent Validity in Antitrust Cases


Vardner, Joseph, Harvard Journal of Law & Technology


TABLE OF CONTENTS

I. INTRODUCTION
II. ANTITRUST COURTS' AVOIDANCE OF EXAMINING
   PATENTS
III. REVERSING PRESUMPTIONS
  A. The Presumption of Validity Is Misplaced in Antitrust
       Cases
  B. Changes in Patent Law Suggest That Less Deference
       Should Be Given to the Incontestability of Patent
       Rights
  C. Courts Should Examine a Patent's Validity When an
       Antitrust Plaintiff Raises the Issue
IV. CONCLUSION

I. INTRODUCTION

"To promote the Progress of Science and useful Arts," the U.S. Constitution authorizes Congress to grant inventors the right to exclusive use and control of their inventions. (1) However, inventors only have the right to exclude others from using a patented invention--and then only when the patent is valid. unfortunately, many recently challenged patents were found to be enforced beyond their bounds by eager patentees, and a significant number did not hold up under close scrutiny and were declared invalid. (2) While defendants faced with an infringement action can contest the scope and validity of the asserted patent, third parties lack standing to challenge the patent's validity, even though in many cases third parties bear some costs if the litigation settles. (3) one example is reverse settlements in pharmaceutical patent litigation, (4) where third parties, such as insurance companies and state medical programs, have a strong interest in preventing coordination between drug companies. (5) Without standing to challenge the patent directly, affected third parties often must resort to the antitrust laws to prevent collusion between settling parties.

When third parties bring antitrust suits challenging competitors' patent agreements, courts grapple with the fact that antitrust and patent laws often conflict. U.S antitrust laws promote competition by declaring illegal " [e]very contract, combination ... or conspiracy, in restraint of trade" and by expressly prohibiting unlawful monopolies. (6) At the same time, Congress grants inventors exclusive use and control of their inventions pursuant to its constitutional authority. (7) The competitive costs of granting temporary exclusive use and control to patent holders are outweighed in the long run by the cumulative innovation incentive that results from granting patents; the incentives created by the reward of patents to inventors spur the invention of technology that might not exist otherwise. Nevertheless, the grant of exclusive use and control does not render patent holders completely immune from the antitrust laws. (8) While in early cases patents provided a complete shield from the antitrust laws, (9) now "[t]he patent laws ... are in pari materia with the antitrust laws and modify them pro tanto." (10) Thus, when the government issues a patent, the resulting monopoly over the technology does not violate the antitrust laws--nor does any related anti-competitive activity--so long as the patentee's activity falls within the confines of the patent. (11) Determining the confines of a patent--its scope--is therefore an important inquiry in an antitrust case that centers on the use of that patent. But recently, courts have refused to even consider the issue, instead relying on a patent's presumption of validity to avoid this central question. (12)

Relying upon this historic presumption, several circuit courts--including the Federal Circuit--have held that an antitrust case is not an appropriate venue for contesting a patent's validity. (13) However, some plaintiffs that would have standing in an antitrust case do not have standing in an action challenging patent validity, thus putting these antitrust plaintiffs in the impossible situation of having potential harm without any prospect of relief. This Note asserts that such an application of the presumption of patent validity is erroneous and contrary to the intent underlying the presumption. This incorrect application in antitrust cases can lead courts to uphold agreements that are likely anticompetitive, barring legitimate antitrust victims from seeking the relief to which they are entitled. …

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