Patent and antitrust law are awkward bedfellows. Antitrust law is all about encouraging competition by limiting the the use of market power, while patent law aims to encourage innovation by eliminating competition. The counterclaim writes itself.
Judge Burke had a decision the other day dealing with an aspect of antitrust law that appears to be a first in Delaware.
The plaintiffs in 10x Genomics, Inc. v. Curio Biosciences, Inc., C.A. No. 23-1375-MN, were the patentee and exclusive licensee. They had apparently been on a bit of a litigation spree of late, and the defendant was the latest in a series of suits. The defendant counterclaimed under section 2 of the Sherman act, arguing that the plaintiffs had conspired to monopolize the relevant market by bringing these suits.
Plaintiffs moved to dismiss arguing that they couldn't really conspire because they didn't have distinct interests in the patents. The patentee was just a necessary party in any infringement suit and thus they couldn't really conspire as that term is used in the Sherman Act.
Writing on what seems to be a blank slate in Delaware, Judge Burke agreed and granted the motion. In doing so, however, he noted that it would not always be the case that a patentee and exclusive licensee were incapable of conspiting:
Now, just because two alleged conspirators are a patentee and an exclusive licensee, respectively, that does not mean that they are always viewed as a “single economic entity” for purposes of a Sherman Act conspiracy claim. But a number of courts have concluded that there are some circumstances in which a patent holder and an exclusive licensee cannot be viewed as anything other than a single economic entity for such purposes . . . .
On the other hand, courts have found that a patentee and exclusive licensee allegedly engaging in sham patent litigation can amount to two separate economic actors pursuing separate economic interests—so long as there are at least some allegations explaining why this is so. For example, an antitrust claimant has been able to withstand a motion to dismiss in this circumstance where its pleading articulated why the patentee and exclusive licensee had “independent motivations” to unlawfully expand the market power conferred by the patents or how allegations regarding the two parties’ different economic roles (e.g., one as a competitor in the market for products incorporating the patented technology, the other as a pure licensor) helped show why they had “separate [or different] economic interests” in the outcome of the conspiracy
Id. at 7-9 (cleaned up)
Here, the Court found that the defendant had failed to allege what the patentee's separate economic interest was, and in particular noted that they had filed to cite anything in particular in their briefing on the issue:
Perhaps most telling, in its answering brief, when it came time to sum up and explain how it had sufficiently alleged a conspiracy in this regard, Defendant seemingly had little to say. In its concluding paragraph, after having acknowledged the relevant caselaw on this question, Defendant only baldly asserted that it had “alleged sufficient facts that Plaintiffs, as independent decision-makers, conspired to initiate sham litigation in order to obtain a monopoly and profit from it.” But in support of that assertion (i.e., of how it had pleaded facts specifically showing how 10x and Prognosys are “independent decision[m]akers”), Defendant cited to nothing—that is, not to one paragraph of its Answer. This only underscored for the Court that its conclusion here (regarding the insufficient pleading of an actionable conspiracy) is the correct one.
Id. at 10-11 (cleaned up).
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