U.S. Court Upholds Antitrust Action Against Patent Troll
e-Competitions Bulletin, No. 73428, May 2015
5 Pages Posted: 13 Jun 2015
Date Written: 2015
On March 2, 2015, Judge Paul W. Grimm of the U.S. District Court for the District of Maryland offered a wide-ranging analysis of antitrust claims against the conduct of famous “patent troll” Intellectual Ventures (IV). IV sued Capital One for patent infringement, Capital One sought to amend its Answer and Counterclaims to add antitrust counterclaims, and, in this opinion, Judge Grimm allowed this amendment. The opinion in Intellectual Ventures v. Capital One is important for three primary reasons.
The first involves market definition. The court defined the relevant market narrowly to cover only IV’s patent portfolio. In moving “upstream” to patents, such a maneuver is not constrained by the limits of customer demand and whether products can be substituted in a “downstream” product market.
The second development centers on predatory monopolization conduct. The court plowed new ground in finding monopolization based on the acquisition of a patent portfolio. It distinguished between a “bona fide” patent acquisition and IV’s process of working backwards from product to patent, locating companies with sunk product investments and then suing them for patent infringement.
Third, the court resuscitated the oft-criticized Brown Shoe case and its incipiency standard. The court offered just such a framework in asserting that “it may be that Plaintiffs’ first 10, or 100, or 1,000 patent acquisitions did not violate § 7,” but that “at some point, the acquisitions...created a monopoly and crossed the line to actionable under § 7.”
In short, the decision in Intellectual Ventures v. Capital One offers an aggressive roadmap for the antitrust analysis of patent trolls. This court can provide more guidance as the case goes forward, as the framework promises to have a significant effect on patent trolls, particularly in their acquisition and use of patent portfolios.
Keywords: patent assertion entity (PAE), nonpracticing entity (NPE), patent troll, antitrust, Intellectual Ventures, Capital One
JEL Classification: K21, L40, L41, L63, O31, O34
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