Illinois Tool Works (ITW) manufactured and marketed printing systems that included three relevant components: a patented ink-jet printhead; a patented ink container; and specially designed, but unpatented, ink. ITW sold its systems to original equipment manufacturers (OEMs). The OEMs were licensed to incorporate the printheads and containers into printers that they sell for use in printing bar codes on cartons and packaging materials. The OEMS agreed with ITW that they would purchase ink exclusively from ITW and that neither they nor their customers would refill the patented containers with ink of any kind.
same chemical composition as the ink sold by ITW, was the target of patent infringement allegations by ITW in regard to ITW’s patents on the printhead system and the ink container. Independent responded by suing ITW. Besides seeking a judgment that it was not infringing ITW’s patents and a judgment that the patents were invalid, Independent’s complaint alleged that ITW’s agreements with the OEMs amounted to unlawful tying agreements in violation of Sherman Act § 1. Regarding the § 1 claim, the federal district court concluded that Independent had not proven the necessarymarket power element of a prohibited tying agreement and therefore could not prevail. In so ruling, the district court rejected Independent‘s argument that ITW’s patent on the printhead system gave it the necessary market power. Independent appealed to the U.S. Court of Appeals for the federal Circuit, which reversed the lower court’s decision. The Federal Circuit held that the existence of a patent on the tying product (in this instance, the printhead system) gave rise to a presumption of market power regarding the tying product. Was the Federal Circuit correct in so ruling?
