See also Ernest B. Lipscomb III, 6 Walker on Patents 3d, § 20:2. The exclusive license, by itself, does not constitute an illegal restraint under the antitrust laws. Rail-Trailer, 358 F.2d at 17.
Here, Shea lawfully conveyed an exclusive license in his three patents to Sterling Imperial, and Sterling Imperial executed a lawful sublicense with ATS. Thus, it strains credibility to argue that Shea and ATS had any independent decisionmaking authority regarding the exploitation of the patent, or that any concerted activity the two defendants might take with regard to the patent would coalesce economic power previously directed at disparate goals. Like the interdependence of the electricity cooperatives in City of Mt. Pleasant, the economic reality here is that Shea and ATS were not independent sources of economic power. Shea, by virtue of the exclusive license, could not compete in the manufacture of the ductwork covered by the patent. Therefore, no agreement between ATS and Shea involving the exploitation of the patent in which they both held an interest can be considered to deprive the marketplace of "independent sources of economic power previously pursuing separate interests." Even if there were no agreements between them at all, there was no opportunity for them to compete. Thus, they could not "conspire" in violation of the antitrust laws. The only reported case that the court is aware of in which this issue was litigated reached exactly the same conclusion. Wahl v. Rexnord, Inc., 481 F. Supp. 573, 588 (DNJ 1979), rev'd on other grounds, 624 F.2d 1169 (3d Cir 1980).
Levi Case seeks to make much of the existence of the covenant not to compete executed by Shea and Sterling Imperial at the time of the sale of ATS. According to Levi Case, this proves that Sterling Imperial believed Shea was a potential competitor. This argument is unconvincing. First, Sterling Imperial's beliefs are irrelevant. Second, the relationship between Shea and Sterling Imperial is not at issue, and Sterling Imperial is neither a defendant nor an alleged conspirator. Finally, the existence of the covenant not to compete in the broad HVAC ductwork market does not alter the fact that Shea and ATS, as patent holder and sublicensee, are legally incapable of entering into an antitrust conspiracy involving the subject patents.
Nor does the second distinct relationship between Shea and ATS create the antitrust conspiracy necessary for Levi Case to defeat Shea's motion for summary judgment. Prior to May 1989, Shea was employee, officer, director and shareholder of ATS. During this period, Shea, in the role of employee and officer of ATS, is most likely incapable of conspiring with ATS. Copperweld, 467 U.S. at 769. Only if the court were to adopt the "acting on his own behalf" exception to the longstanding doctrine that a corporation and its agents cannot conspire in violation of the antitrust laws, and even then only if Levi Case could establish a genuine issue of material fact whether Shea was indeed acting on his own behalf during this period, would summary judgment not be appropriate. Yet the above analysis of the post-May 1989 relationship between Shea and ATS establishes that Shea had no independent interest to act upon with regard to the three patents during his tenure as an officer, director and employee of ATS, by virtue of the exclusive licensing agreement then in force between Shea and ATS.
Accordingly, Shea's motion for partial summary judgment is hereby GRANTED. There is no genuine issue of material fact necessary to resolve the question of whether the amended complaint supports any theory of antitrust conspiracy. Los Angeles Memorial Coliseum Commission v. National Football League, 726 F.2d 1381, 1387 (9th Cir 1984).
IT IS SO ORDERED.
DATED: April 8, 1992
VAUGHN R. WALKER
United States District Judge
© 1992-2004 VersusLaw Inc.