Four Patents and a Time Machine: CareFirst and the Perils of Backdated Antitrust
Four patents can carry a lot of antitrust baggage—especially when they come tucked inside a portfolio of more than 500. In CareFirst of Maryland v. Johnson & Johnson, health insurer CareFirst alleges that Johnson & Johnson unlawfully acquired and later asserted four patents to delay competition from biosimilars, highly similar alternatives to biologic drugs, for the autoimmune treatment Stelara. J&J acquired the patents as part of a larger portfolio in 2020. The district court granted summary judgment to J&J after reconsidering its earlier ruling, and CareFirst’s appeal is now pending before the 4th U.S. Circuit Court of Appeals.
That dispute may sound narrow. It is not. The 4th Circuit appeal presents a recurring antitrust problem in unusually clean form. How should Section 2 of the Sherman Act, which prohibits monopolization, treat conduct whose competitive significance becomes clear only in hindsight? The answer will shape not only patent acquisitions, but also the broader legal environment for investment, corporate transactions, and innovation by firms that already possess substantial market power.
The temptation is to make the case about intent. CareFirst and several amici argue that the district court’s reconsideration opinion invented a specific-intent requirement for completed monopolization. As the CareFirst opening brief and the Federal Trade Commission’s amicus brief emphasize, a monopolization claim generally does not require proof that corporate executives subjectively wanted to exclude a rival. That proposition, standing alone, should not be controversial.
It also does not answer the harder question. The Supreme Court’s 1966 decision in United States v. Grinnell Corp. requires the willful acquisition or maintenance of monopoly power, a standard that must retain objective content. When the challenged conduct is an acquisition, courts should evaluate it as an acquisition based on the circumstances at the time. A company’s later use of an acquired asset may reveal what the asset could do when the deal closed. It should not replace proof that the acquisition itself was exclusionary when it was made.
That distinction makes economic sense. It gives firms an ex ante rule they can actually follow, preserves a meaningful boundary between Section 2 and the Clayton Act’s merger rules, and reduces the risk that courts will punish efficient transactions because an asset acquired for one purpose later proves useful for another. Most importantly, it keeps monopolization law focused on protecting the dynamic competition and innovation that Section 2 should preserve, not suppress.