Illinois Tool Works Inc. v. Independent Ink, Inc.

(Slip Opinion) OCTOBER TERM, 2005 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader.

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

ILLINOIS TOOL WORKS INC. ET AL. v. INDEPENDENT

INK, INC.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE FEDERAL CIRCUIT

No. 04–1329. Argued November 29, 2005—Decided March 1, 2006

Petitioners manufacture and market printing systems that include a

patented printhead and ink container and unpatented ink, which

they sell to original equipment manufacturers who agree that they

will purchase ink exclusively from petitioners and that neither they

nor their customers will refill the patented containers with ink of any

kind. Respondent developed ink with the same chemical composition

as petitioners’ ink. After petitioner Trident’s infringement action

was dismissed, respondent filed suit seeking a judgment of nonin-

fringement and invalidity of Trident’s patents on the ground that pe-

titioners are engaged in illegal “tying” and monopolization in viola-

tion of §§1 and 2 of the Sherman Act. Granting petitioners summary

judgment, the District Court rejected respondent’s argument that pe-

titioners necessarily have market power as a matter of law by virtue

of the patent on their printhead system, thereby rendering the tying

arrangements per se violations of the antitrust laws. After carefully

reviewing this Court’s tying-arrangements decisions, the Federal Cir-

cuit reversed as to the §1 claim, concluding that it had to follow this

Court’s precedents until overruled by this Court.

Held: Because a patent does not necessarily confer market power upon

the patentee, in all cases involving a tying arrangement, the plaintiff

must prove that the defendant has market power in the tying prod-

uct. Pp. 3–17.

(a) Over the years, this Court’s strong disapproval of tying ar-

rangements has substantially diminished, as the Court has moved

from relying on assumptions to requiring a showing of market power

in the tying product. The assumption in earlier decisions that such

“arrangements serve hardly any purpose beyond the suppression of

2 ILLINOIS TOOL WORKS INC. v. INDEPENDENT INK, INC.

Syllabus

competition,” Standard Oil Co. of Cal. v. United States, 337 U. S. 293,

305–306, was rejected in United States Steel Corp. v. Fortner Enter-

prises, Inc., 429 U. S. 610, 622 (Fortner II), and again in Jefferson

Parish Hospital Dist. No. 2 v. Hyde, 466 U. S. 2, both of which in-

volved unpatented tying products. Nothing in Jefferson Parish sug-

gested a rebuttable presumption of market power applicable to tying

arrangements involving a patent on the tying good. Pp. 3–8.

(b) The presumption that a patent confers market power arose out-

side the antitrust context as part of the patent misuse doctrine, and

migrated to antitrust law in International Salt Co. v. United States,

332 U. S. 392. See also Morton Salt Co. v. G. S. Suppiger Co., 314

U. S. 488; United States v. Loew’s Inc., 371 U. S. 38. Pp. 8–10.

(c) When Congress codified the patent laws for the first time, it ini-

tiated the untwining of the patent misuse doctrine and antitrust ju-

risprudence. At the same time that this Court’s antitrust jurispru-

dence continued to rely on the assumption that tying arrangements

generally serve no legitimate business purpose, Congress began chip-

ping away at that assumption in the patent misuse context from

whence it came. Then, four years after Jefferson Parish repeated the

presumption that patents confer market power, Congress amended

the Patent Code to eliminate it in the patent misuse context. While

that amendment does not expressly refer to the antitrust laws, it in-

vites reappraisal of International Salt’s per se rule. After considering

the congressional judgment reflected in the amendment, this Court

concludes that tying arrangements involving patented products

should be evaluated under the standards of cases like Fortner II and

Jefferson Parish rather than the per se rule in Morton Salt and

Loew’s. Any conclusion that an arrangement is unlawful must be

supported by proof of power in the relevant market rather than by a

mere presumption thereof. Pp. 11–13.

(d) Respondent’s alternatives to retention of the per se rule—that

the Court endorse a rebuttable presumption that patentees possess

market power when they condition the purchase of the patented

product on an agreement to buy unpatented goods exclusively from

the patentee, or differentiate between tying arrangements involving

requirements ties and other types of tying arrangements—are re-

jected. Pp. 14–16.

(e) Because respondent reasonably relied on this Court’s prior opin-

ions in moving for summary judgment without offering evidence of

the relevant market or proving petitioners’ power within that mar-

ket, respondent should be given a fair opportunity to develop and in-

troduce evidence on that issue, as well as other relevant issues, when

the case returns to the District Court. P. 17.

396 F. 3d 1342, vacated and remanded.

Cite as: 547 U. S. ____ (2006) 3

Syllabus

STEVENS, J., delivered the opinion of the Court, in which all other

Members joined, except ALITO, J., who took no part in the consideration

or decision of the case.

Cite as: 547 U. S. ____ (2006) 1

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Wash-

ington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

_________________

No. 04–1329

_________________

ILLINOIS TOOL WORKS INC., ET AL., PETITIONERS v.

INDEPENDENT INK, INC.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE FEDERAL CIRCUIT

[March 1, 2006]

JUSTICE STEVENS delivered the opinion of the Court.

In Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466

U. S. 2 (1984), we repeated the well-settled proposition

that “if the Government has granted the seller a patent or

similar monopoly over a product, it is fair to presume that

the inability to buy the product elsewhere gives the seller

market power.” Id., at 16. This presumption of market

power, applicable in the antitrust context when a seller

conditions its sale of a patented product (the “tying” prod-

uct) on the purchase of a second product (the “tied” prod-

uct), has its foundation in the judicially created patent

misuse doctrine. See United States v. Loew’s Inc., 371

U. S. 38, 46 (1962). In 1988, Congress substantially un-

dermined that foundation, amending the Patent Act to

eliminate the market power presumption in patent misuse

cases. See 102 Stat. 4674, codified at 35 U. S. C. §271(d).

The question presented to us today is whether the pre-

sumption of market power in a patented product should

survive as a matter of antitrust law despite its demise in

patent law. We conclude that the mere fact that a tying

product is patented does not support such a presumption.

2 ILLINOIS TOOL WORKS INC. v. INDEPENDENT INK, INC.

Opinion of the Court

I

Petitioners, Trident, Inc., and its parent, Illinois Tool

Works Inc., manufacture and market printing systems

that include three relevant components: (1) a patented

piezoelectric impulse ink jet printhead; (2) a patented ink

container, consisting of a bottle and valved cap, which

attaches to the printhead; and (3) specially designed, but

unpatented, ink. Petitioners sell their systems to original

equipment manufacturers (OEMs) who are licensed to

incorporate the printheads and containers into printers

that are in turn sold to companies for use in printing

barcodes on cartons and packaging materials. The OEMs

agree that they will purchase their ink exclusively from

petitioners, and that neither they nor their customers will

refill the patented containers with ink of any kind.

Respondent, Independent Ink, Inc., has developed an

ink with the same chemical composition as the ink sold by

petitioners. After an infringement action brought by

Trident against Independent was dismissed for lack of

personal jurisdiction, Independent filed suit against Tri-

dent seeking a judgment of noninfringement and invalid-

ity of Trident’s patents.1 In an amended complaint, it

alleged that petitioners are engaged in illegal tying and

monopolization in violation of §§1 and 2 of the Sherman

Act. 15 U. S. C. §§1, 2.

After discovery, the District Court granted petitioners’

motion for summary judgment on the Sherman Act claims.

Independent Ink, Inc. v. Trident, Inc., 210 F. Supp. 2d

1155, 1177 (CD Cal. 2002). It rejected respondent’s sub-

mission that petitioners “necessarily have market power

in the market for the tying product as a matter of law

solely by virtue of the patent on their printhead system,

thereby rendering [the] tying arrangements per se viola-

——————

1 Illinois Tool did not acquire Trident until February 19, 1999, ap-

proximately six months after this action commenced.

Cite as: 547 U. S. ____ (2006) 3

Opinion of the Court

tions of the antitrust laws.” Id., at 1159. Finding that

respondent had submitted no affirmative evidence defin-

ing the relevant market or establishing petitioners’ power

within it, the court concluded that respondent could not

prevail on either antitrust claim. Id., at 1167, 1173, 1177.

The parties settled their other claims, and respondent

appealed.

After a careful review of the “long history of Supreme

Court consideration of the legality of tying arrangements,”

396 F. 3d 1342, 1346 (2005), the Court of Appeals for the

Federal Circuit reversed the District Court’s decision as to

respondent’s §1 claim, id., at 1354. Placing special reli-

ance on our decisions in International Salt Co. v. United

States, 332 U. S. 392 (1947), and Loew’s, 371 U. S. 38, as

well as our Jefferson Parish dictum, and after taking note

of the academic criticism of those cases, it concluded that

the “fundamental error” in petitioners’ submission was its

disregard of “the duty of a court of appeals to follow the

precedents of the Supreme Court until the Court itself

chooses to expressly overrule them.” 396 F. 3d, at 1351.

We granted certiorari to undertake a fresh examination of

the history of both the judicial and legislative appraisals of

tying arrangements. 545 U. S. __ (2005). Our review is

informed by extensive scholarly comment and a change in

position by the administrative agencies charged with

enforcement of the antitrust laws.

II

American courts first encountered tying arrangements

in the course of patent infringement litigation. See, e.g.,

Heaton-Peninsular Button-Fastening Co. v. Eureka Spe-

cialty Co., 77 F. 288 (CA6 1896). Such a case came before

this Court in Henry v. A. B. Dick Co., 224 U. S. 1 (1912), in

which, as in the case we decide today, unpatented ink was

the product that was “tied” to the use of a patented product

through the use of a licensing agreement. Without com-

4 ILLINOIS TOOL WORKS INC. v. INDEPENDENT INK, INC.

Opinion of the Court

menting on the tying arrangement, the Court held that use

of a competitor’s ink in violation of a condition of the agree-

ment—that the rotary mimeograph “ ‘may be used only

with the stencil, paper, ink and other supplies made by A.

B. Dick Co.’ ”—constituted infringement of the patent on the

machine. Id., at 25–26. Chief Justice White dissented,

explaining his disagreement with the Court’s approval of a

practice that he regarded as an “attempt to increase the

scope of the monopoly granted by a patent . . . which tend[s]

to increase monopoly and to burden the public in the exer-

cise of their common rights.” Id., at 70. Two years later,

Congress endorsed Chief Justice White’s disapproval of

tying arrangements, enacting §3 of the Clayton Act. See 38

Stat. 731 (applying to “patented or unpatented” products);

see also Motion Picture Patents Co. v. Universal Film Mfg.

Co., 243 U. S. 502, 517–518 (1917) (explaining that, in light

of §3 of the Clayton Act, A. B. Dick “must be regarded as

overruled”). And in this Court’s subsequent cases reviewing

the legality of tying arrangements we, too, embraced Chief

Justice White’s disapproval of those arrangements. See,

e.g., Standard Oil Co. of Cal. v. United States, 337 U. S. 293,

305–306 (1949); Mercoid Corp. v. Mid-Continent Investment

Co., 320 U. S. 661, 664–665 (1944).

In the years since A. B. Dick, four different rules of law

have supported challenges to tying arrangements. They

have been condemned as improper extensions of the pat-

ent monopoly under the patent misuse doctrine, as unfair

methods of competition under §5 of the Federal Trade

Commission Act, 15 U. S. C. §45, as contracts tending to

create a monopoly under §3 of the Clayton Act, 15 U. S. C.

§13a, and as contracts in restraint of trade under §1 of the

Sherman Act.2 In all of those instances, the justification

——————

2 See, e.g., Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466 U. S. 2, 9

(1984) (Sherman Act); Times-Picayune Publishing Co. v. United States,

345 U. S. 594, 609 (1953) (Federal Trade Commission Act); Interna-

Cite as: 547 U. S. ____ (2006) 5

Opinion of the Court

for the challenge rested on either an assumption or a

showing that the defendant’s position of power in the

market for the tying product was being used to restrain

competition in the market for the tied product. As we

explained in Jefferson Parish, 466 U. S., at 12, “[o]ur cases

have concluded that the essential characteristic of an

invalid tying arrangement lies in the seller’s exploitation

of its control over the tying product to force the buyer into

the purchase of a tied product that the buyer either did

not want at all, or might have preferred to purchase else-

where on different terms.”

Over the years, however, this Court’s strong disapproval

of tying arrangements has substantially diminished.

Rather than relying on assumptions, in its more recent

opinions the Court has required a showing of market

power in the tying product. Our early opinions consis-

tently assumed that “[t]ying arrangements serve hardly

any purpose beyond the suppression of competition.”

Standard Oil Co., 337 U. S., at 305–306. In 1962, in Loew’s,

371 U. S., at 47–48, the Court relied on this assumption

despite evidence of significant competition in the market for

the tying product. And as recently as 1969, Justice Black,

writing for the majority, relied on the assumption as sup-

port for the proposition “that, at least when certain prereq-

uisites are met, arrangements of this kind are illegal in and

of themselves, and no specific showing of unreasonable

competitive effect is required.” Fortner Enterprises, Inc. v.

United States Steel Corp., 394 U. S. 495, 498–499 (Fortner

I). Explaining the Court’s decision to allow the suit to pro-

ceed to trial, he stated that “decisions rejecting the need for

proof of truly dominant power over the tying product have

——————

tional Salt Co. v. United States, 332 U. S. 392, 395–396 (1947) (Clayton

Act and Sherman Act); Morton Salt Co. v. G. S. Suppiger Co., 314 U. S.

488, 494 (1942) (patent misuse); Motion Picture Patents Co. v. Universal

Film Mfg. Co., 243 U. S. 502, 516 (1917) (same).

6 ILLINOIS TOOL WORKS INC. v. INDEPENDENT INK, INC.

Opinion of the Court

all been based on a recognition that because tying arrange-

ments generally serve no legitimate business purpose that

cannot be achieved in some less restrictive way, the pres-

ence of any appreciable restraint on competition provides a

sufficient reason for invalidating the tie.” Id., at 503.

Reflecting a changing view of tying arrangements, four

Justices dissented in Fortner I, arguing that the chal-

lenged “tie”—the extension of a $2 million line of credit on

condition that the borrower purchase prefabricated houses

from the defendant—might well have served a legitimate

purpose. Id., at 510 (opinion of White, J.); id., at 520

(opinion of Fortas, J.). In his opinion, Justice White noted

that promotional tie-ins may provide “uniquely advanta-

geous deals” to purchasers. Id., at 519. And Justice For-

tas concluded that the arrangement was best character-

ized as “a sale of a single product with the incidental

provision of financing.” Id., at 522.

The dissenters’ view that tying arrangements may well

be procompetitive ultimately prevailed; indeed, it did so in

the very same lawsuit. After the Court remanded the suit

in Fortner I, a bench trial resulted in judgment for the

plaintiff, and the case eventually made its way back to

this Court. Upon return, we unanimously held that the

plaintiff’s failure of proof on the issue of market power was

fatal to its case—the plaintiff had proved “nothing more

than a willingness to provide cheap financing in order to

sell expensive houses.” United States Steel Corp. v.

Fortner Enterprises, Inc., 429 U. S. 610, 622 (1977)

(Fortner II).

The assumption that “[t]ying arrangements serve hardly

any purpose beyond the suppression of competition,”

rejected in Fortner II, has not been endorsed in any opin-

ion since. Instead, it was again rejected just seven years

later in Jefferson Parish, where, as in Fortner II, we

unanimously reversed a Court of Appeals judgment hold-

ing that an alleged tying arrangement constituted a per se

Cite as: 547 U. S. ____ (2006) 7

Opinion of the Court

violation of §1 of the Sherman Act. 466 U. S., at 5. Like the

product at issue in the Fortner cases, the tying product in

Jefferson Parish—hospital services—was unpatented, and

our holding again rested on the conclusion that the plaintiff

had failed to prove sufficient power in the tying product

market to restrain competition in the market for the tied

product—services of anesthesiologists. 466 U. S., at 28–29.

In rejecting the application of a per se rule that all tying

arrangements constitute antitrust violations, we

explained:

“[W]e have condemned tying arrangements when the

seller has some special ability—usually called ‘market

power’—to force a purchaser to do something that he

would not do in a competitive market. . . .

. . . . .

“Per se condemnation—condemnation without in-

quiry into actual market conditions—is only appropri-

ate if the existence of forcing is probable. Thus, appli-

cation of the per se rule focuses on the probability of

anticompetitive consequences. . . .

“For example, if the Government has granted the

seller a patent or similar monopoly over a product, it

is fair to presume that the inability to buy the product

elsewhere gives the seller market power. United

States v. Loew’s Inc., 371 U. S., at 45–47. Any effort

to enlarge the scope of the patent monopoly by using

the market power it confers to restrain competition in

the market for a second product will undermine com-

petition on the merits in that second market. Thus,

the sale or lease of a patented item on condition that

the buyer make all his purchases of a separate tied

product from the patentee is unlawful.” Id., at 13–16

(footnote omitted).

Notably, nothing in our opinion suggested a rebuttable

presumption of market power applicable to tying ar-

8 ILLINOIS TOOL WORKS INC. v. INDEPENDENT INK, INC.

Opinion of the Court

rangements involving a patent on the tying good. See

infra, at 14; cf. 396 F. 3d, at 1352. Instead, it described the

rule that a contract to sell a patented product on condition

that the purchaser buy unpatented goods exclusively from

the patentee is a per se violation of §1 of the Sherman Act.

Justice O’Connor wrote separately in Jefferson Parish,

concurring in the judgment on the ground that the case did

not involve a true tying arrangement because, in her view,

surgical services and anesthesia were not separate prod-

ucts. 466 U. S., at 43. In her opinion, she questioned not

only the propriety of treating any tying arrangement as a

per se violation of the Sherman Act, id., at 35, but also the

validity of the presumption that a patent always gives the

patentee significant market power, observing that the

presumption was actually a product of our patent misuse

cases rather than our antitrust jurisprudence, id., at 37–

38, n. 7. It is that presumption, a vestige of the Court’s

historical distrust of tying arrangements, that we address

squarely today.

III

Justice O’Connor was, of course, correct in her assertion

that the presumption that a patent confers market power

arose outside the antitrust context as part of the patent

misuse doctrine. That doctrine had its origins in Motion

Picture Patents Co. v. Universal Film Mfg. Co., 243 U. S.

502 (1917), which found no support in the patent laws for

the proposition that a patentee may “prescribe by notice

attached to a patented machine the conditions of its use

and the supplies which must be used in the operation of it,

under pain of infringement of the patent,” id., at 509.

Although Motion Picture Patents Co. simply narrowed the

scope of possible patent infringement claims, it formed the

basis for the Court’s subsequent decisions creating a pat-

ent misuse defense to infringement claims when a pat-

entee uses its patent “as the effective means of restraining

Cite as: 547 U. S. ____ (2006) 9

Opinion of the Court

competition with its sale of an unpatented article.” Mor-

ton Salt Co. v. G. S. Suppiger Co., 314 U. S. 488, 490

(1942); see also, e.g., Carbice Corp. of America v. American

Patents Development Corp., 283 U. S. 27, 31 (1931).

Without any analysis of actual market conditions, these

patent misuse decisions assumed that, by tying the pur-

chase of unpatented goods to the sale of the patented good,

the patentee was “restraining competition,” Morton Salt,

314 U. S., at 490, or “secur[ing] a limited monopoly of an

unpatented material,” Mercoid, 320 U. S., at 664; see also

Carbice, 283 U. S., at 31–32. In other words, these deci-

sions presumed “[t]he requisite economic power” over the

tying product such that the patentee could “extend [its]

economic control to unpatented products.” Loew’s, 371

U. S., at 45–46.

The presumption that a patent confers market power

migrated from patent law to antitrust law in International

Salt Co. v. United States, 332 U. S. 392 (1947). In that

case, we affirmed a District Court decision holding that

leases of patented machines requiring the lessees to use

the defendant’s unpatented salt products violated §1 of the

Sherman Act and §3 of the Clayton Act as a matter of law.

Id., at 396. Although the Court’s opinion does not discuss

market power or the patent misuse doctrine, it assumes

that “[t]he volume of business affected by these contracts

cannot be said to be insignificant or insubstantial and the

tendency of the arrangement to accomplishment of mo-

nopoly seems obvious.” Ibid.

The assumption that tying contracts “ten[d] . . . to ac-

complishment of monopoly” can be traced to the Govern-

ment’s brief in International Salt, which relied heavily on

our earlier patent misuse decision in Morton Salt. The

Government described Morton Salt as “present[ing] a

factual situation almost identical with the instant case,”

and it asserted that “although the Court in that case did

not find it necessary to decide whether the antitrust laws

10 ILLINOIS TOOL WORKS INC. v. INDEPENDENT INK, INC.

Opinion of the Court

were violated, its language, its reasoning, and its citations

indicate that the policy underlying the decision was the

same as that of the Sherman Act.” Brief for United States

in International Salt Co. v. United States, O. T. 1947, No.

46, p. 19 (United States Brief). Building on its assertion

that International Salt was logically indistinguishable

from Morton Salt, the Government argued that this Court

should place tying arrangements involving patented prod-

ucts in the category of per se violations of the Sherman

Act. United States Brief 26–33.

Our opinion in International Salt clearly shows that we

accepted the Government’s invitation to import the pre-

sumption of market power in a patented product into our

antitrust jurisprudence. While we cited Morton Salt only

for the narrower proposition that the defendant’s patents

did not confer any right to restrain competition in unpat-

ented salt or afford the defendant any immunity from the

antitrust laws, International Salt, 332 U. S., at 395–396,

given the fact that the defendant was selling its unpat-

ented salt at competitive prices, id., at 396–397, the rule

adopted in International Salt necessarily accepted the

Government’s submission that the earlier patent misuse

cases supported the broader proposition “that this type of

restraint is unlawful on its face under the Sherman Act,”

United States Brief 12.

Indeed, later in the same Term we cited International

Salt for the proposition that the license of “a patented

device on condition that unpatented materials be em-

ployed in conjunction with the patented device” is an

example of a restraint that is “illegal per se.” United

States v. Columbia Steel Co., 334 U. S. 495, 522–523, and n.

22 (1948). And in subsequent cases we have repeatedly

grounded the presumption of market power over a patented

device in International Salt. See, e.g., Loew’s, 371 U. S., at

45–46; Times-Picayune Publishing Co. v. United States,

345 U. S. 594, 608 (1953); Standard Oil Co., 337 U. S., at

304.

Cite as: 547 U. S. ____ (2006)

11

Opinion of the Court

IV

Although the patent misuse doctrine and our antitrust

jurisprudence became intertwined in International Salt,

subsequent events initiated their untwining. This process

has ultimately led to today’s reexamination of the pre-

sumption of per se illegality of a tying arrangement involv-

ing a patented product, the first case since 1947 in which

we have granted review to consider the presumption’s

continuing validity.

Three years before we decided International Salt, this

Court had expanded the scope of the patent misuse doc-

trine to include not only supplies or materials used by a

patented device, but also tying arrangements involving a

combination patent and “unpatented material or [a] device

[that] is itself an integral part of the structure embodying

the patent.” Mercoid, 320 U. S., at 665; see also Dawson

Chemical Co. v. Rohm & Haas Co., 448 U. S. 176, 188–198

(1980) (describing in detail Mercoid and the cases leading

up to it). In reaching this conclusion, the Court explained

that it could see “no difference in principle” between cases

involving elements essential to the inventive character of

the patent and elements peripheral to it; both, in the

Court’s view, were attempts to “expan[d] the patent be-

yond the legitimate scope of its monopoly.” Mercoid, 320

U. S., at 665.

Shortly thereafter, Congress codified the patent laws for

the first time. See 66 Stat. 792, codified as 35 U. S. C. §1

et seq. (2000 ed. and Supp. III). At least partly in response

to our Mercoid decision, Congress included a provision in

its codification that excluded some conduct, such as a

tying arrangement involving the sale of a patented prod-

uct tied to an “essential” or “nonstaple” product that has

no use except as part of the patented product or method,

from the scope of the patent misuse doctrine. §271(d); see

also Dawson, 448 U. S., at 214. Thus, at the same time

that our antitrust jurisprudence continued to rely on the

12 ILLINOIS TOOL WORKS INC. v. INDEPENDENT INK, INC.

Opinion of the Court

assumption that “tying arrangements generally serve no

legitimate business purpose,” Fortner I, 394 U. S., at 503,

Congress began chipping away at the assumption in the

patent misuse context from whence it came.

It is Congress’ most recent narrowing of the patent

misuse defense, however, that is directly relevant to this

case. Four years after our decision in Jefferson Parish

repeated the patent–equals–market–power presumption,

466 U. S., at 16, Congress amended the Patent Code to

eliminate that presumption in the patent misuse context,

102 Stat. 4674. The relevant provision reads:

“(d) No patent owner otherwise entitled to relief for in-

fringement or contributory infringement of a patent

shall be denied relief or deemed guilty of misuse or il-

legal extension of the patent right by reason of his

having done one or more of the following: . . . (5) con-

ditioned the license of any rights to the patent or the

sale of the patented product on the acquisition of a li-

cense to rights in another patent or purchase of a

separate product, unless, in view of the circumstances,

the patent owner has market power in the relevant

market for the patent or patented product on which the

license or sale is conditioned.” 35 U. S. C. §271(d)(5)

(emphasis added).

The italicized clause makes it clear that Congress did not

intend the mere existence of a patent to constitute the

requisite “market power.” Indeed, fairly read, it provides

that without proof that Trident had market power in the

relevant market, its conduct at issue in this case was nei-

ther “misuse” nor an “illegal extension of the patent right.”

While the 1988 amendment does not expressly refer to

the antitrust laws, it certainly invites a reappraisal of the

per se rule announced in International Salt.3 A rule deny-

——————

3 While our opinions have made clear that such an invitation is not

Cite as: 547 U. S. ____ (2006) 13

Opinion of the Court

ing a patentee the right to enjoin an infringer is signifi-

cantly less severe than a rule that makes the conduct at

issue a federal crime punishable by up to 10 years in

prison. See 15 U. S. C. §1. It would be absurd to assume

that Congress intended to provide that the use of a patent

that merited punishment as a felony would not constitute

“misuse.” Moreover, given the fact that the patent misuse

doctrine provided the basis for the market power pre-

sumption, it would be anomalous to preserve the presump-

tion in antitrust after Congress has eliminated its founda-

tion. Cf. 10 P. Areeda, H. Hovenkamp, & E. Elhauge,

Antitrust Law ¶1737c (2d ed. 2004) (hereinafter Areeda).

After considering the congressional judgment reflected

in the 1988 amendment, we conclude that tying arrange-

ments involving patented products should be evaluated

under the standards applied in cases like Fortner II and

Jefferson Parish rather than under the per se rule applied

in Morton Salt and Loew’s. While some such arrange-

ments are still unlawful, such as those that are the prod-

uct of a true monopoly or a marketwide conspiracy, see,

e.g., United States v. Paramount Pictures, Inc., 334 U. S.

131, 145–146 (1948), that conclusion must be supported by

proof of power in the relevant market rather than by a

mere presumption thereof.4

——————

necessary with respect to cases arising under the Sherman Act, see

State Oil Co. v. Khan, 522 U. S. 3, 20 (1997), it is certainly sufficient to

warrant reevaluation of our precedent, id., at 21 (“[T]his Court has

reconsidered its decisions construing the Sherman Act when the

theoretical underpinnings of those decisions are called into serious

question”).

4 Our imposition of this requirement accords with the vast majority of

academic literature on the subject. See, e.g., 10 Areeda ¶1737a

(“[T]here is no economic basis for inferring any amount of market power

from the mere fact that the defendant holds a valid patent”); Burchfiel,

Patent Misuse and Antitrust Reform: “Blessed be the Tie?” 4 Harv. J. L.

& Tech. 1, 57, and n. 340 (noting that the market power presumption

has been extensively criticized and citing sources); 1 H. Hovenkamp, M.

14 ILLINOIS TOOL WORKS INC. v. INDEPENDENT INK, INC.

Opinion of the Court

V

Rather than arguing that we should retain the rule of

per se illegality, respondent contends that we should en-

dorse a rebuttable presumption that patentees possess

market power when they condition the purchase of the

patented product on an agreement to buy unpatented

goods exclusively from the patentee. Cf. supra, at 7–8.

Respondent recognizes that a large number of valid pat-

ents have little, if any, commercial significance, but sub-

mits that those that are used to impose tying arrange-

ments on unwilling purchasers likely do exert significant

market power. Hence, in respondent’s view, the presump-

tion would have no impact on patents of only slight value

and would be justified, subject to being rebutted by evi-

dence offered by the patentee, in cases in which the patent

has sufficient value to enable the patentee to insist on

acceptance of the tie.

Respondent also offers a narrower alternative, suggest-

ing that we differentiate between tying arrangements

involving the simultaneous purchase of two products that

are arguably two components of a single product—such as

the provision of surgical services and anesthesiology in the

same operation, Jefferson Parish, 466 U. S., at 43

(O’Connor, J., concurring in judgment), or the licensing of

one copyrighted film on condition that the licensee take a

package of several films in the same transaction, Loew’s,

371 U. S. 38—and a tying arrangement involving the

purchase of unpatented goods over a period of time, a so-

called “requirements tie.” See also Brief for Barry Nale-

buff et al. as Amici Curiae. According to respondent, we

should recognize a presumption of market power when

——————

Janis, & M. Lemley, IP and Antitrust §4.2a (2005 Supp.) (“[C]overage of

one’s prodcut with an intellectual property right does not confer a

monopoly”); W. Landes & R. Posner, The Economic Structure of Intel-

lectual Property Law 374 (2003) (hereinafter Landes & Posner).

Cite as: 547 U. S. ____ (2006) 15

Opinion of the Court

faced with the latter type of arrangements because they

provide a means for charging large volume purchasers a

higher royalty for use of the patent than small purchasers

must pay, a form of discrimination that “is strong evidence

of market power.” Brief for Respondent 27; see generally

Jefferson Parish, 466 U. S., at 15, n. 23 (discussing price

discrimination of this sort and citing sources).

The opinion that imported the “patent equals market

power” presumption into our antitrust jurisprudence,

however, provides no support for respondent’s proposed

alternative. In International Salt, it was the existence of

the patent on the tying product, rather than the use of a

requirements tie, that led the Court to presume market

power. 332 U. S., at 395 (“The appellant’s patents confer a

limited monopoly of the invention they reward”). More-

over, the requirements tie in that case did not involve any

price discrimination between large volume and small

volume purchasers or evidence of noncompetitive pricing.

Instead, the leases at issue provided that if any competitor

offered salt, the tied product, at a lower price, “the lessee

should be free to buy in the open market, unless appellant

would furnish the salt at an equal price.” Id., at 396.

As we have already noted, the vast majority of academic

literature recognizes that a patent does not necessarily

confer market power. See n. 4, supra. Similarly, while

price discrimination may provide evidence of market

power, particularly if buttressed by evidence that the

patentee has charged an above-market price for the tied

package, see, e.g., 10 Areeda ¶1769c, it is generally recog-

nized that it also occurs in fully competitive markets, see,

e.g., Baumol & Swanson, The New Economy and Ubiqui-

tous Competitive Price Discrimination: Identifying Defen-

sible Criteria of Market Power, 70 Antitrust L. J. 661, 666

(2003); 9 Areeda ¶1711; Landes & Posner 374–375. We

are not persuaded that the combination of these two fac-

tors should give rise to a presumption of market power

16 ILLINOIS TOOL WORKS INC. v. INDEPENDENT INK, INC.

Opinion of the Court

when neither is sufficient to do so standing alone. Rather,

the lesson to be learned from International Salt and the

academic commentary is the same: Many tying arrange-

ments, even those involving patents and requirements

ties, are fully consistent with a free, competitive market.

For this reason, we reject both respondent’s proposed

rebuttable presumption and their narrower alternative.

It is no doubt the virtual consensus among economists

that has persuaded the enforcement agencies to reject the

position that the Government took when it supported the

per se rule that the Court adopted in the 1940’s. See

supra, at 8. In antitrust guidelines issued jointly by the

Department of Justice and the Federal Trade Commission

in 1995, the enforcement agencies stated that in the exer-

cise of their prosecutorial discretion they “will not pre-

sume that a patent, copyright, or trade secret necessarily

confers market power upon its owner.” U. S. Dept. of

Justice and FTC, Antitrust Guidelines for the Licensing of

Intellectual Property §2.2 (Apr. 6, 1995), available at

http://www.usdoj.gov/atr/public/guidelines/0558.pdf (as

visited Feb. 24, 2006, and available in Clerk of Court’s

case file). While that choice is not binding on the Court, it

would be unusual for the Judiciary to replace the normal

rule of lenity that is applied in criminal cases with a rule

of severity for a special category of antitrust cases.

Congress, the antitrust enforcement agencies, and most

economists have all reached the conclusion that a patent

does not necessarily confer market power upon the pat-

entee. Today, we reach the same conclusion, and therefore

hold that, in all cases involving a tying arrangement, the

plaintiff must prove that the defendant has market power

in the tying product.

VI

In this case, respondent reasonably relied on our prior

opinions in moving for summary judgment without offer-

Cite as: 547 U. S. ____ (2006) 17

Opinion of the Court

ing evidence defining the relevant market or proving that

petitioners possess power within it. When the case re-

turns to the District Court, respondent should therefore be

given a fair opportunity to develop and introduce evidence

on that issue, as well as any other issues that are relevant

to its remaining §1 claims. Accordingly, the judgment of

the Court of Appeals is vacated, and the case is remanded

for further proceedings consistent with this opinion.

It is so ordered.

JUSTICE ALITO took no part in the consideration or

decision of this case.