Appeals Court Reminds Everyone: Patent Infringement Is Good For Competition

from the so-why-isn't-it-encouraged-more? dept

Mon, Dec 5th 2016 1:06pm — Mike Masnick

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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Filed Under: 5th circuit, antitrust, infringement, patents, safety syringes

29 Comments

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kallethen, 5 Dec 2016 @ 1:13pm

So who has a patent on having your cake and eating it too? I think RTI just tried to infringe it.
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Anonymous Coward, 5 Dec 2016 @ 1:27pm

Wow, Mike. A whole post to highlight this one point? Care to take it one more step and tell us whether you personally believe that there should be no patents and everyone should be able to use inventions however they please? Of course not. You just give us the one point and leave the rest to the reader. By the way, did you know pick-pockets and bank-robbers are good for competition too? I can't wait for your post celebrating them.
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Roger Strong (profile), 5 Dec 2016 @ 1:42pm

Re:
Reflex Testing: Excellent knee-jerk reaction time.

By the way, did you know pick-pockets and bank-robbers are good for competition too?

If you say so. Mike's article didn't imply anything that would lead to that being an intelligent comparison.
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Anonymous Coward, 5 Dec 2016 @ 1:43pm

Re:
You are rather uninformed for your pointed remark. You can review all the past articles on patents to get an extremely informed, well documented and insightful view into patents. It basically answers all the questions that you have wrongly answered yourself.
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killthelawyers (profile), 5 Dec 2016 @ 1:44pm

Patent infringement *could* be a part of an antitrust case, such as a situation where a large company infringes on a smaller competitors patents to freeze the competitor out of the market with lower prices and superior marketing. Of course, the patent infringement in that example is not the primary anti-competitive act, which I think is your point, but it nonetheless is possible.
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Ryunosuke (profile), 5 Dec 2016 @ 1:54pm

Re: Re:
that would require reading, which he has obviously failed to do. I's not *our* fault he doesn't have a fifth grade education.
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Anonymous Coward, 5 Dec 2016 @ 1:55pm

Re:
He points this stuff out because more and more it seems that the public and much of the courts seem to have forgotten the point of patents and the way in which they operate. Some seem to take intellectual property to be a carte blanche to tell anyone who competes with them or gets in their way to sit down, shut up, and give me all your money. But that's not how it works and that's not what it's supposed to be for.

And neither the judge nor Mike said that infringing on patents was "good for competition", they said it increases competition. The bank-robbers analogy isn't comparable. It's more like one company who makes hammers and has a piece of paper from the government saying they're the only one allowed to make hammers and some other company and just starts making hammers anyway. They've not stolen any hammers from the first company, they're just not respecting the government granted monopoly.
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PRMan, 5 Dec 2016 @ 2:03pm

Original idea of patents
The reason this is confused at all is because we have gotten so far away from the original idea of patents.

Patents advance the sciences because anyone can copy the published instructions and compete and the courts can force a fair licensing settlement. That was the original idea.

Now, courts charge treble damages for looking at patents, trying to somehow treat them as a sort of public trade secret, which is an oxymoron.

So, of course patents are good for competition, that's why they were originally designed that way before ignorant judges wrecked them.
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Seegras (profile), 5 Dec 2016 @ 2:41pm

money forgery and other competition
Bank-Robbers? Difficult to tell. Since the only successful bank-robberies ever were done by banks, it actually decreased competition. Sometimes state-monopolies were transferred to private monopolies with these robberies, such as the robbery of the federal reserve, which was robbed from the public by a consortium of banks. While bank-robbery is probably competition-wise a zero-sum game, we could of course increase competition by getting rid of the monopoly to print money.

For pickpockets its easier to tell, on the condition that not just money is being stolen. Because if goods, like handkerchiefs or purses, or more modern, phones, are getting stolen, chances are they get re-sold. In which case, yes, pick-pockets are good for competition.

The same, by the way, goes for wanton destruction, which increases competition for goods and buildings, because there is now a new market for them, that was initially shut off by the competition by the already existing goods or buildings. Ideally, you want to destroy whatever the customer bought from you immediately, because the goods he already bought are now in competition with the goods you are selling.
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Lawrence D’Oliveiro, 5 Dec 2016 @ 3:03pm

Re: By the way, did you know pick-pockets and bank-robbers are good for competition too?
The trouble with arguing or implying that A is as bad as B, is the flipside of that is you are also saying that B is no worse than A.

If you are trying to imply that patent infringement is as bad as criminal acts, that you are also saying that criminal acts are no worse than patent infringement.
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Anonymous Coward, 5 Dec 2016 @ 3:04pm

Re: Original idea of patents
Also remember to translate into modern language. Patents were designed to advance the sciences and the useful arts -- science being knowledge and understanding, useful arts being scientific methods.

So any patent on something that doesn't advance knowledge, understanding or a novel scientific method of accomplishing something is bogus by the original standards.
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Lawrence D’Oliveiro, 5 Dec 2016 @ 3:07pm

Re: Original idea of patents
No, the original idea of “letters patent” was a monopoly, pure and simple. The idea of “inventiveness” was stuck on later.
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Seegras (profile), 5 Dec 2016 @ 3:43pm

Re: Re: By the way, did you know pick-pockets and bank-robbers are good for competition too?
*If you are trying to imply that patent infringement is as bad as criminal acts, that you are also saying that criminal acts are no worse than patent infringement.*

Yes, and please note that "patent infringement" is not a criminal act. This is, just as with copyright infringement, a civil matter.

On the other hand, criminal acts are criminal acts because some body (sic) made them criminal. Like enacting a monopoly on printing money and then outlawing replicating it. Not all of these "criminal acts" have an inherent victim, some are more concerned with giving somebody monopolies, producing income for the state, ensure safety, or achieving moral goals.
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stephen.hutcheson@gmail.com, 5 Dec 2016 @ 4:03pm

>No, the original idea of “letters patent” was a monopoly, pure and simple.

True, as was the original Stationers' Guild "copyright" notion--just more goodies for the Absolute Monarch to hand out to his BFF's. It was the Constitution of the United States that first permitted both, for a limited term, as an award for advancing the "arts", which would primarily have meant technology and engineering--although the "fine arts", in the form of music publishers, were early beneficiaries of the repurposed acts. (I have U.S. books old enough that the "copyright" notice is actually called a "patent.")
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Anonymous Coward, 5 Dec 2016 @ 4:20pm

Re: Re: By the way, did you know pick-pockets and bank-robbers are good for competition too?
What do you expect from the sort of intellectual font who has no qualms equating downloading a song to raping a puppy and eating a baby?
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Anonymous Coward, 5 Dec 2016 @ 6:48pm

Isn't that the point of patents?
The whole purpose of patents is to be anticompetitive.
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Eldakka (profile), 5 Dec 2016 @ 7:10pm

Re:

freeze the competitor out of the market with lower prices and superior marketing

In itself is not an anti-trust violation. For it to be an anti-trust violation you'd have to be accomplishing those ends via illegal means, e.g. false advertising, illegal tie-in contracts/cartels (e.g. Apple and it's attempt to corner the e-book market), and so on.

If you can make the same product cheaper because you have better manufacturing, then it is not an anti-trust violation to sell it cheaper, still making a profit, even to the point of forcing your competitor out of business.

And that's what I take to be the point of the article, that using a patent you are not entitled to (patent infringement) is not an anti-trust violation, because the source of the information for your product isn't a component of anti-trust violations.
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Anonymous Coward, 5 Dec 2016 @ 7:19pm

Re: money forgery and other competition
So what you are saying is "War is good for business".

Got it.
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Anonymous Coward, 5 Dec 2016 @ 11:10pm

why exactly are they still under patant?
wikipedia:
The first piston syringes were used in Roman times. During the 1st century AD Aulus Cornelius Celsus mentions the use of them to treat medical complications in his De Medicina.

I can't recall syringes changing much over my lifetime... maybe my earliest doc had a glass one when I was a babe, but it pretty much worked the same way.

what's the innovation here? how can there possibly still be a patent on this?
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Ninja (profile), 6 Dec 2016 @ 5:57am

Remember that in the past the US thrived thanks to IP infringement. Unless you want to rewrite history and pretend we were all acultured apes before copyright came.
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Anonymous Coward, 6 Dec 2016 @ 7:29am

Re: why exactly are they still under patant?
Clearly, you don't understand how difficult it was to come up with and how technologically backwards our nation would be if people didn't have a monopolistic incentive to invent rounded corners.
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Jeremy Lyman (profile), 6 Dec 2016 @ 10:30am

Confusion
I don't think it's that infringement is good for competition, but rather patents are bad for competition. By design. Period.

So all the analogies approaching the issue backwards are ill-fitting. Bank robbers aren't good for competition, just as banks aren't bad for competition. If the banking system was so screwed up as to make robbery the most prevalent method for getting money, it wouldn't legitimize robbery, but we sure better figure out a way to fix the system that normalizes it.
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Dingledore the Mildly Uncomfortable When Seated, 6 Dec 2016 @ 10:54am

Re: Re: money forgery and other competition
"War is good for business"
Yes. Pretty certain that's already a recognised truth.
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Dingledore the Mildly Uncomfortable When Seated, 6 Dec 2016 @ 10:57am

Re: Re: Re: By the way, did you know pick-pockets and bank-robbers are good for competition too?
"raping a puppy and eating a baby"

Simultaneously?
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Wendy Cockcroft, 7 Dec 2016 @ 2:30am

Re: Re: Re: money forgery and other competition
The clue is in the name "Military INDUSTRIAL complex."
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Wendy Cockcroft, 7 Dec 2016 @ 2:33am

Re:
I'm starting to think that there's a conspiracy afoot to encourage all the other countries to adopt a maximalist IPR position to cripple their own innovation. When that kicks in, the US can then go back to rampant infringement, and what are the others going to do about it, eh?

Crazy? You decide.
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Anonymous Coward, 7 Dec 2016 @ 5:01am

Re:
Whoa there... So patent infringement is now equal to pick-pocketing and bank robbery ? And pick-pockets are basically bank robbers ? Or is it the other way around !?

Oh, I'm so confused... :)

Also if a patent is indeed infringed that will be settled in a court of law - even if it does take 20 years :).

If A makes a widget and B also starts making a similar widget, sure B MIGHT be infringing A's patent but that's for a judge & jury to decide.
In fact B could have very well arrived at a similar widget in a different way.
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Anonymous Coward, 7 Dec 2016 @ 5:07am

Re: Re: Re: By the way, did you know pick-pockets and bank-robbers are good for competition too?
Unfortunately copyright infringement CAN SOMETIMES be a crime, depending on the circumstances of the infringement.
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The Wanderer (profile), 8 Dec 2016 @ 4:25am

Re:
I had a similar thought; I can envision a scenario in which the argument as summarized could have some foundation. (I haven't taken the time to read the background documents.)

Something like "We're the little guy, trying to make our way in the market. They're the big guy, trying to make sure no one else can get a meaningful toehold in the market. By infringing on our patents and introducing a copy of our product, they are using illegal means to prevent us from being able to effectively compete. If we can't compete with them, we go out of business, and they remain the sole significant competitor in this market. That makes this an antitrust issue."

Presumably either this scenario does not apply, or the court has considered and rejected it. If neither of those things is true, however, this ruling might not be as good a thing as it looks like.
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