• Northern District of Illinois Holds that Sherman Act Does Not Limit Patent Holder's Refusal to License, Sell, or Price Product Within Patent Claims in Any Market
  • December 21, 2005
  • Law Firm: Orrick, Herrington & Sutcliffe LLP - San Francisco Office
  • Occasionally a patent owner's patented product may be used in combination with other manufacturers' products. If the patent owner raises its prices, making the combination products more expensive, can it be sued for monopoly leveraging under Section 2 of the Sherman Act?

    In a recent case, the Northern District of Illinois concluded that the answer is "no." Abbott Laboratories manufactures Norvir, a stand-alone protease inhibitor ("PI") used in the treatment of AIDS. Plaintiff alleged that Norvir has a 100% market share. Plaintiff also alleged that Norvir is often used in combination with other drugs, one of which (Kaletra) is also manufactured by Abbott. Norvir allegedly "boosts" the effectiveness of the other drugs. According to Plaintiff, after Kaletra's market share dropped, Abbott raised the price of Norvir by more than 400%, but did not pass this price increase on to Kaletra. Plaintiff alleged that Abbott had unlawfully engaged in monopoly leveraging by extending its Norvir monopoly into the Norvir-boosted drug market.

    The court acknowledged a split between the Ninth Circuit and the Federal Circuit regarding whether a patent holder may be liable under the monopoly leveraging theory, but found the Federal Circuit's approach in In re Independent Service Organizations Antitrust Litigation CSU, L.L.C. v. Xerox, 203 F.3d 1322 (Fed. Cir. 2000), to be more persuasive. According to the Northern District of Illinois, a patentee's exercise of its statutorily-granted market power does not constitute a Sherman Act violation, even if such conduct affects a second market. If the product is encompassed within the patent claims, the Sherman Act does not limit the patent holder's refusal to license or sell that item, or limit the patent holder's right to charge a higher price, in any market. The court concluded that a defendant may not be held liable for a violation of Section 2 of the Sherman Act for increasing the price of its patented product, even though that price increase may affect competition in a second market.

    Schor v. Abbott Laboratories, 2005 WL 1653606, ___ F. Supp. 2d ___ (N.D. Ill. July 12, 2005).