## Facts

- SCM Corporation sued Xerox Corporation in a private antitrust action alleging exclusion from effective competition in the plain-paper xerographic copier market.
- Xerox held key patents covering xerographic technology and maintained a dominant position in plain-paper copying.
- SCM alleged Xerox unlawfully acquired and accumulated xerographic patents and then refused to license them (or licensed selectively), violating Sherman Act §§ 1–2 and Clayton Act § 7.
- SCM also challenged Xerox marketing programs as exclusionary conduct under Sherman Act § 2 and tying/exclusive dealing under Clayton Act § 3.
- A jury awarded SCM substantial damages on the patent-based exclusionary theory; after trebling, the award totaled $111.3 million.
- The district court set aside the damages verdict on the patent-based claim, reasoning that monetary liability could not rest on a patentee’s refusal to license, while leaving open possible equitable relief.
- The district court also dismissed SCM’s damages claim based on marketing programs because the record did not provide a rational basis to approximate damages.
- The district court certified its order for interlocutory appeal under 28 U.S.C. § 1292(b), and the Second Circuit accepted review.

## Issues

1. Whether Xerox’s patent acquisitions and subsequent refusal to license could support antitrust monetary damages under the Sherman and Clayton Acts consistent with patent law.
2. Whether SCM could recover damages based on Xerox marketing programs where the proof did not provide a rational basis for calculating damages.

## Decision

- The Second Circuit affirmed the denial of monetary damages on SCM’s patent-related exclusionary claim.
- The court held that none of Xerox’s patent-related conduct alleged to have harmed SCM contributed to an antitrust violation.
- The Second Circuit affirmed dismissal of SCM’s marketing-programs damages claim because the jury lacked a rational evidentiary basis to approximate damages.
- The court did not resolve the availability or scope of equitable relief on the patent-based theory.

## Legal Principles

- A patentee’s lawful right to exclude, including a refusal to license, generally cannot alone serve as the predicate for antitrust monetary damages absent independently unlawful conduct that constitutes an antitrust violation.
- Patent acquisitions that were not unlawful when made are not rendered unlawful solely because the acquirer later attains market dominance and exercises patent rights.
- Antitrust remedies require proof of causation and damages with a rational basis; a damages award cannot stand where the factfinder is not given a non-speculative method to approximate injury.

## Conclusion

The Second Circuit held that SCM could not obtain antitrust damages based on Xerox’s acquisition and exercise of patent rights, including refusal to license, because the challenged patent-related conduct did not contribute to an antitrust violation, and it separately affirmed dismissal of marketing-practices damages for failure to provide a rational basis for quantifying loss.


SCM Corp. v. Xerox Corp., 645 F.2d 1195 (2d Cir. 1981)