John Minor Wisdom U. S. Court of Appeals for the Fifth Circuit building, New Orleans, LA. (Photo: Rick Kopstein/ALM)
An appellate court has shot down the idea that patent infringement can give rise to antitrust liability, and with it a $340 million jury verdict.
Friday’s ruling from the U.S. Court of Appeals for the Fifth Circuit hands a big win to Becton Dickinson & Co. in its 15-year legal dispute with Retractable Technologies Inc. over safety syringes. Safety syringes are designed to prevent the transmission of blood-borne diseases such as AIDS via accidental needle prick.
Retractable Technologies won a $5 million patent infringement verdict against Becton Dickinson in 2010. It subsequently persuaded an Eastern District of Texas jury that the infringement was part of an attempted monopolization campaign that also included false advertising and a predatory scheme to taint the market for certain syringes. The jury awarded $113.5 million, which then-Chief Judge Leonard Davis trebled.
But Fifth Circuit Judge Edith Jones concluded for a unanimous panel that while patent infringement may be a form of unfair competition, it cannot be labeled anti-competitive.
“This court long ago held that a defendant’s patent infringement cannot serve as a basis for imposing antitrust liability because the patent laws and antitrust laws serve two different and incongruent purposes that ‘to an extent … conflict,’” Jones wrote, citing the court’s 1954 decision in Kinnear-Weed Corp. v. Humble Oil & Refining Co.
Judges Jacques Wiener and Stephen Higginson concurred.
Retractable Technologies v. Becton Dickinson is a big win for Paul, Weiss, Rifkind, Wharton & Garrison partner Robert Atkins, who argued the appeal for Becton Dickinson. There was one small silver lining for Retractable Technologies and Locke Lord partner Roy Hardin: The Fifth Circuit left open the door on remand for some damages based on false advertising.
Little Elm, Texas-based Retractable Technologies has been slugging it out in federal courts with New Jersey’s Becton Dickinson since 2001. Retractable founder Thomas Shaw developed and patented a syringe, marketed as the VanishPoint, in which the needle automatically retracts after an injection. Becton Dickinson paid $100 million to settle antitrust and product disparagement claims in 2004.
Three years later Retractable sued again. Davis tried the patent infringement claims first, leading to the $5 million award. The U.S. Court of Appeals for the Federal Circuit affirmed in 2011.
Retractable then won its 2013 antitrust verdict based on the patent infringement; Becton Dickinson marketing pitches that its needles were the “world’s sharpest” and most efficient; and Becton Dickinson’s alleged attempt to taint the entire market until Retractable’s patents expired.
Jones wrote that while the false advertising was undisputed on appeal, it too is an unlikely candidate for supporting an antitrust claim. She emphasized the difference between “business torts, which harm competitors, and truly anti-competitive activities, which harm the market.” Retractable “may have lost some sales or market share because of [Becton Dickinson]’s false advertising, but it remains a vigorous competitor,” she wrote.
She ridiculed the claim that Becton Dickinson had deliberately sabotaged the market, calling it “illogical” and “incoherent.”
Jones had put Hardin on notice at oral argument in February. “It’s hard to resist asking whether your client has made more out of the lawsuits than they ever could have made from more sales of the syringes,” she had said.
“The money from those lawsuits is the only reason I’m standing here, your honor,” Hardin had replied. “Without that money they’d have been driven out of business.”
The case will now return to U.S. District Judge Amos Mazzant. Retractable can ask him to determine “whether and how much” disgorgement of profits should be ordered based strictly on the false advertising, Jones wrote.