Wading into the merging streams of antitrust and patents, the US Court of Appeals for the Ninth Circuit upheld dismissal of an antitrust suit where a jury verdict in a parallel case found no patent infringement. Cascades Computer Innovation, LLC v. RPX Corp. and Samsung Electronics Co. Ltd., Case No. 16-15782 (9th Cir., Dec. 11, 2017) (Clifton, J) (Friedland, J, concurring) (Sessions, J, concurring).
Cascades owns 38 patents (collectively known as the Elbrus portfolio) allegedly used to optimize Android devices. Cascades intended to license these patents to numerous companies, including Motorola, HTC, Samsung, LG Electronics, Dell and RPX (a defensive patent aggregator that purchases patents on behalf of subscriber organizations using membership fees). After being unable to reach an agreement to license the Elbrus portfolio, Cascades filed lawsuits in Illinois against Samsung, Motorola, HTC and others, alleging infringement of one of the patents in the Elbrus portfolio. At trial, a jury found no infringement of the patent.
Cascades also filed an antitrust action in California alleging that it could not reach a licensing deal with the defendants because there was a conspiracy between the defendants, using RPX, to not seek licenses for use of the Elbrus portfolio. Cascades alleged that this conspiracy was a violation of antitrust law. The defendants moved to dismiss, and the court granted the motion. The district court noted that “[o]nly those who possess antitrust standing by virtue of having suffered antitrust injury may bring a private action for damages for violation of the antitrust laws” before ruling for the defendants on a motion for judgment on the pleadings. The district court reasoned that in order to show antitrust injury, there must be harm to competition, not any particular competitor. The court reasoned that a “failure to license a non-infringed patent typically cannot serve as the basis for a cognizable antitrust injury.” Because of the jury verdict in Illinois that the defendants did not infringe the patent, the court concluded that Cascades did not suffer a cognizable antitrust injury and therefore dismissed the complaint. Cascades appealed.
In a non-precedential opinion, the Ninth Circuit affirmed, finding that the district court “properly recognized the preclusive effect of [the Illinois decision] and correctly reasoned that because the defendants did not infringe the patent, Cascades’ failure to license the patent was not a cognizable antitrust injury.” The Court further explained that the failure to license had no effect on price or quantity of any consumer goods.
Practice Note: Although seeking an antitrust remedy where no patent infringement is found represents a relatively novel tactic, alleging an injury without an infringement doesn’t appear to be a winning strategy in private causes of action.