Patented Grape Varieties Were Not Relevant Markets for Monopoly Suit

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

A claim by table grape producers in California that the state's table grape commission violated federal antitrust law through a scheme involving the bad faith licensing and enforcement of alleged patent rights on grape varieties was properly dismissed for failure to identify a valid relevant product market, the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. has ruled.

Dismissal of the producers’ Sherman Act, Sec. 2 claims (2009-1 Trade Cases ¶76,522) was affirmed.

Relevant Product Market

The producers claimed that the relevant product market consisted of several distinct patented varieties of table grapes and that the existence of the plant patents limited the myriad other varieties of table grapes from being substitutes for the patented varieties in the worldwide markets.

The complaining producers could not rely on the naked assertion that non-infringing grape varieties were not an adequate substitute for a patented product, especially when it was undisputed that other vines possessed at least some of the relevant characteristics that defined that product, the court reasoned.

The grape producers needed—but failed—to make some allegation that, if proved, would define the market or submarket with reference to consumer demand for the product and consumer demand for its reasonable substitutes.

The aspects of an invention that may have led the Patent and Trademark Office to issue a patent were not per se coterminous with the features of the patented product that may lead consumers to select that product over other similar ones, the court concluded.

The decision is Delano Farms Co. v. The California Table Grape Commission, 2011-2 Trade Cases ¶77,578.