Document: 547 U.S. 28 (2006) ILLINOIS TOOL WORKS INC. ET AL. v. INDEPENDENT INK, No. 04-1329. Supreme Court of United States. Argued November 29, 2005. Decided March 1, 2006. *29 Andrew J. Pincus argued the cause for petitioners. With him on briefs were Richard Favretto, Christopher Kelly, Nickolai G. Levin, and Stewart S. Hudnut. *30 Deputy Solicitor General Hungar States as amicus curiae urging reversal. brief Clement, Acting Assistant Attorney Barnett, Jeffrey P. Minear, Catherine O'Sullivan, Steven Mintz, Frances Marshall, John M. Whealan, Cynthia C. Lynch, Thomas Krause. Kathleen Sullivan respondent. her Daniel H. Bromberg, Margret Caruso, Elizabeth B. Wydra, Edward F. O'Connor.[*] *31 JUSTICE STEVENS delivered opinion Court. In Jefferson Parish Hospital Dist. 2 Hyde, 466 (1984), we repeated well-settled proposition that "if Government has granted seller a patent or similar monopoly over product, it is fair to presume inability buy product elsewhere gives market power." Id., at 16. This presumption power, applicable in antitrust context when conditions its sale patented (the "tying" product) purchase second "tied" product), foundation judicially created misuse doctrine. See Loew's Inc., 371 38, 46 (1962). 1988, Congress substantially undermined foundation, amending Patent Act eliminate power cases. 102 Stat. 4676, codified 35 § 271(d). The question presented us today whether should survive matter law despite demise law. We conclude mere fact tying does not support such presumption. I Petitioners, Trident, parent, Illinois Tool Works manufacture printing systems include three relevant components: (1) piezoelectric impulse ink jet printhead; (2) container, consisting bottle valved cap, which attaches (3) specially designed, but unpatented, ink. *32 Petitioners sell their original equipment manufacturers (OEMs) who are licensed incorporate printheads containers into printers turn sold companies use barcodes cartons packaging materials. OEMs agree they will exclusively from petitioners, neither nor customers refill with any kind. Respondent, Independent Ink, developed an same chemical composition by After infringement action brought Trident against was dismissed lack personal jurisdiction, filed suit seeking judgment noninfringement invalidity Trident's patents.[1] amended complaint, alleged petitioners engaged illegal monopolization violation §§ 1 Sherman Act. 15 2. discovery, District petitioners' motion summary claims. Inc. 210 Supp. 2d 1155, 1177 (CD Cal. 2002). It rejected respondent's submission "necessarily have solely virtue printhead system, thereby rendering [the] arrangements per se violations laws." 1159. Finding respondent had submitted no affirmative evidence defining establishing within it, court concluded could prevail either claim. 1167, 1173, 1177. parties settled other claims, appealed. careful review "long history consideration legality arrangements," 396 F.3d 1342, 1346 (2005), Appeals *33 Federal Circuit reversed Court's decision claim, id., 1354. Placing special reliance our decisions International Salt Co. States, 332 392 (1947), Loew's, well dictum, after taking note academic criticism those cases, "fundamental error" disregard "the duty appeals follow precedents until itself chooses expressly overrule them." F.3d, 1351. certiorari undertake fresh examination both judicial legislative appraisals arrangements. 545 1127 (2005). Our informed extensive scholarly comment change position administrative agencies charged enforcement laws. II American courts first encountered course litigation. See, e. g., Heaton-Peninsular Button-Fastener Eureka Specialty Co., 77 288 (CA6 1896). Such case came before this Henry A. Dick 224 (1912), which, decide today, unpatented through licensing agreement. Without commenting arrangement, held competitor's condition agreementthat rotary mimeograph "`may be used only stencil, paper, supplies made Co.'"constituted machine. 25-26. Chief Justice White dissented, explaining his disagreement approval practice he regarded "attempt increase scope ... tend[s] burden public exercise common rights." 70. Two years later, *34 endorsed White's disapproval arrangements, enacting 3 Clayton 38 731 (applying "patented unpatented" products); see also Motion Picture Patents Universal Film Mfg. 243 502, 517-518 (1917) (explaining that, light Act, "must overruled"). And subsequent cases reviewing we, too, embraced Standard Oil 337 293, 305-306 (1949); Mercoid Corp. Mid-Continent Investment 320 661, 664-665 (1944). since Dick, four different rules supported challenges They been condemned improper extensions under doctrine, unfair methods competition 5 Trade Commission 45, contracts tending create 14, restraint trade Act.[2] all instances, justification challenge rested assumption showing defendant's being restrain tied product. As explained Parish, U. S., 12, "[o]ur essential characteristic invalid arrangement lies seller's exploitation control force buyer *35 did want all, might preferred terms." Over years, however, strong diminished. Rather than relying assumptions, more recent opinions required early consistently assumed "[t]ying serve hardly purpose beyond suppression competition." 305-306. 1962, 47-48, relied significant recently 1969, Black, writing majority, "that, least certain prerequisites met, kind themselves, specific unreasonable competitive effect required." Fortner Enterprises, Steel Corp., 394 495, 498-499 (Fortner I). Explaining allow proceed trial, stated "decisions rejecting need proof truly dominant based recognition because generally legitimate business cannot achieved some less restrictive way, presence appreciable provides sufficient reason invalidating tie." 503. Reflecting changing view Justices dissented I, arguing challenged "tie"the extension $2 million line credit borrower prefabricated houses defendantmight served purpose. 510 (opinion White, J.); 520 Fortas, J.). opinion, noted promotional tie-ins may provide "uniquely advantageous deals" purchasers. 519. Fortas *36 best characterized "a single incidental provision financing." 522. dissenters' procompetitive ultimately prevailed; indeed, so very lawsuit. remanded bench trial resulted plaintiff, eventually way back Upon return, unanimously plaintiff's failure issue fatal case plaintiff proved "nothing willingness cheap financing order expensive houses." 429 610, 622 (1977) II). competition," II, since. Instead, again just seven later where, holding constituted U.S., 5. Like Parishhospital serviceswas conclusion failed prove productservices anesthesiologists. 28-29. application rule constitute violations, explained: "[W]e abilityusually called `market power'to purchaser do something would market.... . *37 "Per condemnationcondemnation without inquiry actual conditionsis appropriate if existence forcing probable. Thus, focuses probability anticompetitive consequences.... "For example, power. 45-47. Any effort enlarge using confers undermine merits market. lease item make purchases separate patentee unlawful." 13-16 (footnote omitted). Notably, nothing suggested rebuttable involving good. infra, 44; cf. 1352. described contract goods O'Connor wrote separately concurring ground involve true because, view, surgical services anesthesia products. 43. she questioned propriety treating 35, validity always observing actually rather *38 jurisprudence, 37-38, n. 7. presumption, vestige historical distrust address squarely today. III was, course, correct assertion arose outside part That doctrine origins 502 (1917), found laws "prescribe notice attached machine must operation pain patent," 509. Although simply narrowed possible formed basis creating defense claims uses "as effective means restraining article." Morton Suppiger 314 488, 490 (1942); also, Carbice America Development 283 27, 31 (1931). analysis conditions, these good, "restraining Salt, 490, "secur[ing] limited material," Mercoid, 664; Carbice, 31-32. words, presumed "[t]he requisite economic power" "extend [its] products." 45-46. migrated *39 (1947). case, affirmed leases machines requiring lessees salt products violated 396. discuss assumes volume affected said insignificant insubstantial tendency accomplishment seems obvious." Ibid. "ten[d] monopoly" can traced Government's heavily earlier Salt. "present[ing] factual situation almost identical instant case," asserted "although find necessary violated, language, reasoning, citations indicate policy underlying Act." Brief O. T. 1947, 46, p. 19 (United Brief). Building logically indistinguishable place category 26-33. clearly shows accepted invitation import jurisprudence. While cited narrower patents confer right afford defendant immunity laws, 395-396, given *40 selling prices, 396-397, adopted necessarily broader "that type unlawful face Act," 12. Indeed, Term license device materials employed conjunction device" example "illegal se." Columbia 334 522-523, 22 (1948). repeatedly grounded 45-46; Times-Picayune Publishing 345 594, 608 (1953); 304. IV jurisprudence became intertwined events initiated untwining. process led today's reexamination illegality 1947 consider presumption's continuing validity. Three decided expanded device, combination "unpatented material [a] [that] integral structure embodying patent." 665; Dawson Chemical Rohm & Haas 448 176, 188-198 (1980) (describing detail leading up it). reaching conclusion, "no *41 difference principle" between elements inventive character peripheral it; both, attempts "expan[d] monopoly." 665. Shortly thereafter, time. 66 792, et seq. (2000 ed. III). At partly response decision, included codification excluded conduct, "essential" "nonstaple" except method, 271(d); Dawson, 214. time continued rely "tying purpose," 503, began chipping away whence came. Congress' most narrowing defense, directly case. Four patent-equals-market-power 16, Code context, 4676. reads: "(d) No owner otherwise entitled relief contributory shall denied deemed guilty having done one following: (5) conditioned rights acquisition another unless, circumstances, *42 conditioned." 271(d)(5) (emphasis added). italicized clause makes clear intend "market fairly read, market, conduct "misuse" right." 1988 amendment refer certainly invites reappraisal announced Salt.[3] A denying enjoin infringer significantly severe federal crime punishable 10 prison. 1. absurd assume intended merited punishment felony "misuse." Moreover, provided anomalous preserve eliminated foundation. Cf. Areeda, Hovenkamp, E. Elhauge, Antitrust Law ¶ 1737c (2d 2004) (hereinafter Areeda). considering congressional reflected amendment, evaluated standards applied like Loew's. still unlawful, *43 marketwide conspiracy, see, Paramount Pictures, 131, 145-146 (1948), thereof.[4] V retain illegality, contends endorse patentees possess agreement patentee. supra, 37-38. Respondent recognizes large number valid little, any, commercial significance, submits impose unwilling purchasers likely exert Hence, impact slight value justified, subject rebutted offered patentee, enable insist acceptance tie. offers alternative, suggesting differentiate simultaneous two arguably components productsuch *44 anesthesiology operation, 43 (O'Connor, J., judgment), copyrighted film licensee take package several films transaction, 38and period time, so-called "requirements Barry Nalebuff al. Amici Curiae. According respondent, recognize faced latter charging higher royalty small pay, form discrimination "is 27; 15, 23 (discussing price sort citing sources). imported "patent equals proposed alternative. requirements tie, 395 ("The appellant's invention reward"). tie noncompetitive pricing. competitor salt, lower price, lessee free open unless appellant furnish equal price." already noted, vast majority literature 4, supra. Similarly, while particularly buttressed *45 above-market package, Areeda 1769c, recognized occurs fully markets, Baumol Swanson, New Economy Ubiquitous Competitive Price Discrimination: Identifying Defensible Criteria Market Power, 70 L. 666 (2003); 9 1711; Landes Posner 374-375. persuaded factors give rise standing alone. Rather, lesson learned commentary same: Many even ties, consistent free, For reason, reject doubt virtual consensus among economists took 1940's. 39. guidelines issued jointly Department 1995, prosecutorial discretion "will patent, copyright, secret upon owner." Dept. FTC, Guidelines Licensing Intellectual Property 2.2 (Apr. 6, 1995), http://www.usdoj.gov/atr/public/guidelines/0558.pdf (as visited Feb. 24, 2006, available Clerk file). choice binding Court, unusual Judiciary replace normal lenity criminal severity Congress, agencies, reached *46 Today, reach therefore hold VI reasonably prior moving offering proving it. When returns opportunity develop introduce issue, issues remaining Accordingly, vacated, further proceedings opinion. ordered. ALITO NOTES [*] Briefs amici reversal Bar Association Robert Grey, Jr., Wallis, Kevin D. McDonald; Houston Kenneth Kuffner; Chicago Manzo, Bradford Lyerla, Glen Belvis; Owners Gary Hoffman, W. Brothers, Douglas K. Norman; America, Julian Poon, Robbins, Victor Perlman; York David Ryan; Patent, Trademark Copyright Section Long, Blair Taylor, Lynn Eccleston; Pfizer Stephen Stack, George Gordon, Rebecca Kent Bernard; Verizon Communications Taranto, Aaron Panner, Thorne; Washington Legal Foundation William MacLeod, Popeo, Price. affirmance Spagnoletti, Columbia, Schwab, General, Don Resnikoff, Senior Anika Cooper, Bill Lockyer, California, Frank, Tom Greene, Foote, Ann Marie Marciarille, Attorneys respective follows: Terry Goddard Arizona, Charles Crist, Florida, Miller Iowa, Foti, Louisiana, Joseph Curran, Maryland, Reilly Massachusetts, Jeremiah (Jay) Nixon Missouri, Jim Petro Ohio, Paul Summers Tennessee, Mark Shurtleff Utah, Darrell V. McGraw, West Virginia, Patrick Crank Wyoming; AARP Barbara Jones, Bruce Vignery, Michael Schuster; Institute Jonathan Rubin; Imaging Technology Council Patricia Judge; National Theatre Owners, Mitchell; Alan I. Horowitz; Scherer Parker Folse Justin Nelson. Coyne, Frankel, Rooklidge Association. [1] acquire February 19, 1999, approximately six months commenced. [2] 2, (1984) (Sherman Act); 609 (1953) (Federal 392, 395-396 (1947) (Clayton 494 (1942) (patent misuse); 516 (same). [3] respect arising State Khan, 522 3, 20 (1997), warrant reevaluation precedent, 21 ("[T]his reconsidered construing theoretical underpinnings serious question"). [4] imposition requirement accords subject. 1737a ("[T]here inferring amount holds patent"); Burchfiel, Misuse Reform: "Blessed Tie?" 4 Harv. Tech. 57, 340 (1991) (noting extensively criticized sources); Janis, Lemley, IP 4.2a (2005 Supp.) ("[C]overage one's intellectual property monopoly"); R. Posner, Economic Structure 374 (2003) Posner).

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