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Appeals Court Reminds Everyone: Patent Infringement Is Good For Competition

A legal dispute that goes back in some form or another to at least 2001 has resulted in the 5th Circuit Appeals court thankfully reminding people that patent infringement is actually good for competition. To say that the details and background of this case are confusing and convoluted would be… quite an understatement. If you want to read the background in the full ruling, go ahead, but I’d recommend bringing along a white board, a compass and a large Thermos of coffee. Let’s just say that two companies that make different versions of retractable syringes, RTI and BD, have been less than happy with each other for many years, and there have been some lawsuits covering a variety of different theories for why RTI doesn’t want BD selling safety syringes (or, if not stopping the company from doing that, compelling it to fork over lots of money to RTI). There have been patent claims, antitrust claims, unfair competition, false advertising and some more. It’s… convoluted. While the court’s background explanation is convoluted as anything, where things came down recently was that RTI argued that BD’s patent infringement (which had already been ruled on by the court earlier in this neverending saga) was also a form of an antitrust violation. Even this part is confusing, because RTI has a few different reasons for why it argues BD is violating antitrust law, with only one of them being its infringement of RTI patents.

Of course, if you’re playing along with the home game, you should already be scratching your head. After all, patents themselves are monopolies. So, if anything, you’d think that any antitrust argument would be focused on the patent holder rather than the patent infringer. But, here, RTI is arguing that the patent infringement itself is a form of an antitrust violation, as it’s part of BD’s effort to foreclose competition. But… again, that makes no sense, and the appeals court rightly calls this out and notes that patent infringement doesn’t block competition — it actually increases competition:

Patent laws are designed to secure for patent holders a time-limited exclusive right to exploit their discoveries, but this is “not the kind of public purpose protected by the antitrust laws,” which seek to “protect the free flow of interstate commerce.”… That a patentee may anticompetitively extend its market power to products other than those covered by a patent, and thus violate the antitrust laws, is well settled… RTI, however, cites no case holding the converse: that antitrust liability may be founded in whole or in part upon patent infringement. By definition, patent infringement invades the patentee’s monopoly rights, causes competing products to enter the market, and thereby increases competition. RTI, in fact, persuaded another jury of exactly this procompetitive result when it proved patent infringement by BD’s 1mL Integra safety syringe. The judgment against BD, which was then forced to remove the competing product from the market, diminished competition but enforced RTI’s patent rights.

Of course, this doesn’t mean that patent infringement is legal — it’s not. But at the very least, the court is shutting down the positively nutty argument that patent infringement might also be an antitrust issue, even though it increases competition rather than decreases it.

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