Antitrust Law Daily Wrap Up, ANTITRUST—SDNY: Antitrust Counterclaim Fails in Clothes Hanger Patent Litigation, (Jan 25, 2013)

By Tobias J. Gillett, J.D., LLM.

In litigation over a patent for a clothes hanger, defendants Bed Bath and Beyond, Inc. and Cohesion Products, Inc. could not state a counterclaim contending that the plaintiff, Worldwide Home Products, Inc., had attempted to obtain a monopoly on the hanger type in the patent through misuse of the patent, the federal district court in New York has ruled (Worldwide Home Products, Inc. v. Bed Bath and Beyond, Inc., January 22, 2013, Swain, L.). The defendants had not shown that Worldwide had a “dangerous probability of achieving monopoly power” through filing lawsuits seeking to enforce its patent.

Worldwide Home Products owned a patent, U.S. Patent No. 7,938,300 (“the ’300 patent”), on “a hanger supporting means in the form of a cascade hook for supporting additional hangers therefrom.” Worldwide filed suit against Bed Bath and Beyond and Cohesion Products, alleging that their “Real Simple Slimline Hanger” infringed the ’300 patent.

The defendants filed several counterclaims, including one alleging that Worldwide had “purposefully and intentionally attempted to obtain a monopoly in violation of Section 2 of the Sherman Act” through misusing its patent by filing lawsuits to enforce it.

The court explained that a Section 2 claim required a plaintiff to allege “(1) that the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power,” including a showing that the defendant had sufficient market share.

The court concluded that the defendants had not alleged facts that would satisfy the third part of the claim, the “dangerous probability of achieving monopoly power.” Although the defendants claimed that “no other clothes hanger products” could reasonably substitute “for cascading hangers,” that contention “directly contradict[ed]” the defendants’ prior argument that another hanger available on the market was prior art. Moreover, the defendants had not attempted to demonstrate the respective market shares of that hanger or the ones within the scope of the ‘300 patent.

The defendants had not pled facts that would support their conclusion that the present lawsuit raised “the specter of a dangerous probability of success in driving out competing suppliers, distributors, and sellers.” Therefore, the court dismissed the defendants’ counterclaim.

The case is No. 11 Civ. 03633 (LTS)(MHD).

Attorneys: Jeffrey Sonnabend (Sonnabendlaw) for Worldwide Home Products, Inc. Edward F. O'Connor (The Eclipse Group LLP) for Bed Bath and Beyond, Inc.

Companies: Worldwide Home Products, Inc.; Bed Bath and Beyond, Inc.; Cohesion Products, Inc.

Cases: Antitrust NewYorkNews