Patent Infringement Can't Give Rise to Antitrust Liability, 5th Cir. Rules - U.S. Fifth Circuit
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Patent Infringement Can't Give Rise to Antitrust Liability, 5th Cir. Rules

The Fifth Circuit Court of Appeals let the air out of a $340 million verdict against a syringe manufacturer, sending the case back to the trial court for a recalculation of damages.

The court reversed the anti-trust portion of the verdict, but upheld a false advertising claim. As a result, the trial judge will have to undo damages that were awarded under the Sherman Anti-trust Act and determine any potential damages under the Lanham Act. Becton Dickinson & Co., the largest manufacturer of syringes in the country, still faces substantial liability for falsely advertising that it had the "the world's sharpest needle" and that it had "the lowest waste space."

"First, patent infringement, which operates to increase competition, is not anticompetitive conduct," the appeals court said in reversing the anti-trust decision. Second, the justices said, the false advertising claim was nonexistent for an anti-trust claim.

Damages TBD for BD

The court upheld the conclusion that Becton Dickinson (BD) falsely advertised the syringes at issue in the case but not the damages calculation. The jury said Retractable Technologies, Inc., (RTI) a major competitor in the market, suffered "deception damages" exceeding $113,500,000, and found liability on all the misrepresentations under the anti-trust law.

The parties had fought legal battles over the business in the past. They settled a similar anti-trust and disparagement suit in 2004, with BD paying RTI $100 million then. The parties executed a mutual release of claims "which accrued on or at any time prior" to the agreement.

A Mere $7.2 Million Admission

Three years later, RTI filed its anti-trust and false advertising case against BD. Antitrust damages were submitted on two bases--"anticompetitive contracting damages" (for each of three products) and "deception damages." The appellate court threw out the anti-competition claims, leaving the trial court to split the award for the "waste space" advertisements.

The trial judge will need more than a calculator to sort out the damages. "In particular ... the district court should bear in mind that speculative and attenuated evidence of diversion of sales will not suffice," the court said.

BD submitted evidence at trial that may help settle the issue. The company's expert witness opined that $7.2 million in profits -- netting to $560,000 after deductions for costs and expenses -- could be attributable to the waste space advertisements.

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