On August 15, the NAM filed an amicus brief in the U.S. District Court for the Eastern District of Virginia urging the court to reject a novel theory of antitrust liability that would expose manufacturers to broad liability upon the acquisition of new patents. In Carefirst of Md., Inc. v. Johnson & Johnson, the putative class plaintiffs argue that a company’s incidental acquisition of a patent owned by another company is a “willful” acquisition for purposes of a Section 2 monopolization claim. Under this theory, a corporate acquisition encompassing the entire patent portfolio of the acquired company is sufficient to establish willful intent by the acquirer to foreclose competition within the relevant market in violation of the Sherman Act. In this case, the portfolio of the acquired company includes over 500 patents.
The NAM’s brief underscores why this theory is untenable on multiple grounds: (1) the willfulness standard of the Sherman Act requires that plaintiffs show intentional use of market power to stifle competition—innocent accumulation of market power cannot be grounds for liability; (2) parties to corporate transactions cannot reasonably be expected to conduct due diligence investigations on every patent and patent application being acquired nor speculate on their potential future competitive impacts; and (3) imposing liability for anticompetitive effects that were unknown at the time of a lawful patent acquisition would stymie innovation, research, and development, undermining a competitive U.S. economy.