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.
The Deal Looks Different in the Rearview Mirror
The record in CareFirst brings that problem into focus. Johnson & Johnson acquired Momenta Pharmaceuticals in 2020 in a deal that included more than 500 patents. According to the district court, J&J’s board materials attributed 95% of the transaction’s value to nipocalimab, a clinical-stage drug unrelated to Stelara, also known as ustekinumab. Four Momenta patents covered cell-culture media, the nutrient mixtures used to grow cells that produce biologic drugs. Nothing in the deal valuation, as described in the briefs, assigned value to Stelara, ustekinumab, or those four patents.
More than two years later, Amgen announced plans to launch an ustekinumab biosimilar. J&J then added the four Momenta patents to infringement litigation. CareFirst alleges that the resulting settlements delayed biosimilar entry and raised its drug costs. Those alleged effects matter. But CareFirst does not challenge the settlements themselves as unlawful. Its Section 2 theory instead identifies the 2020 acquisition as the exclusionary act.
That choice of timing matters. Under Grinnell, Section 2 distinguishes the willful acquisition or maintenance of monopoly power from growth resulting from a superior product, business acumen, or historic accident. Aspen Skiing Co. v. Aspen Highlands Skiing Corp. likewise asks whether the challenged conduct qualifies as exclusionary rather than competition on the merits. Both decisions call for an objective assessment of the conduct. Evidence of subjective purpose may help explain what a company did, but purpose alone does not establish a violation.
That approach also accords with the D.C. Circuit’s influential framework in United States v. Microsoft Corp.. Microsoft focuses on competitive effects and procompetitive justifications, not on psychoanalyzing corporate managers. Even an effects-based framework, though, requires a court to identify the act under review. Causation cannot do all the work. If later market effects can automatically transform an earlier acquisition into exclusionary conduct, Section 2’s conduct requirement shrinks to deliberate ownership plus hindsight.
J&J undoubtedly intended to buy Momenta. That does not mean it intended to exclude a competitor in the antitrust sense. Every buyer intends to acquire the assets listed in the merger agreement. The relevant question is whether those assets, viewed objectively when the deal closed, could reasonably contribute to monopoly power in the market at issue—either as an actual or potential competitive threat or as a tool for suppressing one. That is not a test of corporate state of mind. It is a test of conduct.
When Antitrust Mistakes Winning for Cheating
That boundary around exclusionary conduct is not mere formalism. It responds to one of antitrust law’s central difficulties. Courts must distinguish conduct that harms competition from conduct that harms rivals because it is efficient, innovative, or simply aggressive.
Judge Frank Easterbrook framed the problem in his classic 1984 article, “The Limits of Antitrust.” He urged courts to consider “error costs,” the harm caused by getting a case wrong. Those costs include false negatives, in which anticompetitive conduct escapes condemnation, and false positives, in which courts condemn or deter procompetitive conduct. They also include the cost of administering the system itself. Easterbrook argued that false positives often deserve special concern because a mistaken legal rule can suppress beneficial conduct across an entire market, while competition may eventually erode some harms left by a false negative.
The Supreme Court has built that concern into Section 2 doctrine. In Verizon Communications Inc. v. Law Offices of Curtis V. Trinko LLP, the Court warned that the risk of false positives counsels against expanding monopolization liability too far. Dominant firms receive no special indulgence under this principle. Their conduct is simply hard to classify. Price cuts, product improvements, acquisitions, exclusive investments, redesigns, and vertical integration—combining with suppliers or distributors—can all hurt rivals. Often, that is precisely how competition helps consumers.
Easterbrook made a related point in A.A. Poultry Farms Inc. v. Rose Acre Farms Inc.. Evidence of intent does little to distinguish hard competition from attempted monopolization and may invite juries to punish aggressive rivalry. That warning carries particular force in innovation-intensive markets, where vigorous competition routinely destroys the value of rivals’ assets and acquisitions often evolve in unexpected ways. A firm that acquires complementary technology may redirect resources, abandon duplicative projects, combine research teams, or discover applications that neither party anticipated when signing the deal. With enough hindsight, courts can recast any of these developments as exclusionary, even when the transaction promoted competition at the time.
The International Center for Law & Economics (ICLE) has repeatedly emphasized this institutional problem. Its work on “Innovation and the Limits of Antitrust” and its more recent comments on single-firm conduct explain that error-cost analysis is not an excuse for nonenforcement. It is a way to design workable legal rules under uncertainty. If firms cannot tell whether courts will later condemn ordinary competitive conduct, the deterrent effect extends far beyond the defendant in one case. It changes how every similarly situated firm behaves before acting.
That risk matters especially in monopolization law because dominant firms are still supposed to compete. Section 2 protects the competitive process. It does not require firms to preserve rivals, freeze their business models, or avoid innovations that make existing products less valuable. As the boundary between beneficial and harmful conduct becomes harder to discern, courts have greater reason to apply clear legal tests based on facts firms could observe when they made their decisions.
Due Diligence Without a Time Machine
CareFirst’s theory also threatens to erase a basic statutory distinction. Section 7 of the Clayton Act looks forward. It asks whether an acquisition may substantially lessen competition or tend to create a monopoly. Section 2 of the Sherman Act asks a different question. It condemns the willful acquisition or maintenance of monopoly power, a standard that has long required more than market power followed by a bad outcome.
If deliberately acquiring assets satisfies Section 2 whenever later events reveal an exclusionary use, every acquisition by a firm with monopoly power remains legally unsettled after closing. The decisive facts might not emerge for years. They could arise through product development, patent litigation, technological change, or a rival’s business decisions. General counsel could not assess a deal using the information available when the parties signed it because the assets’ future uses would determine whether the acquisition had been exclusionary all along. Due diligence does not come with a time machine.
That rule would create particular problems for diversified firms built around research and development. Large transactions often transfer thousands of patents, contracts, data sets, employees, partly developed technologies, and specialized expertise. Some assets will prove more valuable than expected. Others will lead nowhere. That uncertainty is not a defect in innovation markets. It is one of their defining features.
Treating unforeseen usefulness as proof of an exclusionary acquisition would impose an “option tax” on mergers—a penalty on discovering valuable new uses for acquired assets. The more successfully an acquirer develops those assets, the greater its potential antitrust exposure. That incentive points in precisely the wrong direction. Firms might conduct wasteful diligence into every imaginable future use, surrender assets with no demonstrated competitive significance to secure a deal, or abandon transactions whose value depends on experimentation and combining technologies in new ways.
Limiting that risk to monopolists does not solve the problem. Firms with scale, related technologies, established distribution networks, regulatory expertise, and the resources to commercialize inventions often drive important innovations. Section 2 should encourage those firms to compete vigorously while condemning genuinely exclusionary conduct. A lawful position of market strength should not make every ordinary acquisition presumptively suspect.
Merger Review Is Not a Lifetime Warranty
Recent merger scholarship reinforces this point. Daniel Spulber and I argue in our 2024 article, “Antitrust Merger Policy and Innovation Competition,” that merger analysis should not assume consolidation harms innovation. Horizontal mergers between competitors can increase the resources and incentives available for research. Vertical mergers between firms at different levels of the supply chain can help bring inventions to market. Acquisitions of new entrants can also encourage entrepreneurship by giving founders a path to sell their firms and pairing inventive assets with the capabilities needed to develop them.
None of this means every acquisition promotes innovation. It means the effects depend on evidence and context. A sound legal rule should not give great weight to speculative future harms while discounting or ignoring potential benefits merely because they are also uncertain.
Louis Kaplow makes a complementary point about efficiencies in his 2026 Antitrust Law Journal article, “Out of Market, Out of Mind.” Kaplow criticizes approaches that disregard real benefits simply because they occur outside the market where a harm appears. His broader insight applies here. A dynamic economy constantly shifts resources among uses, firms, products, and markets. Antitrust rules that isolate one pocket of harm while ignoring broader benefits can prevent resources from moving toward more productive uses.
David Teece likewise argues in his 2025 Antitrust Law Journal article, “Understanding Dynamic Competition,” that antitrust analysis should pay greater attention to innovation, potential competition, and firms’ practical capabilities. Static measures such as current market shares and overlapping products reveal only part of the picture.
Teece and Magdalena Kuyterink develop that idea in “Recognizing What’s Around the Corner.” Their approach asks what firms can realistically build, adapt, and bring to market. Teece and Gönenç Gürkaynak identify a related imbalance in “Integrating Innovation Concepts Into the Merger Control Context.” Competition authorities may credit speculative claims that a merger will harm innovation while demanding much stronger evidence that the same merger will promote it.
Together, this scholarship counsels institutional caution. An acquisition may combine complementary research, manufacturing, regulatory, and commercialization capabilities in ways that no static snapshot can capture. Patents often serve as transactional assets that allow one firm to specialize in invention while another develops and markets the resulting technology. ICLE-affiliated scholarship on “Intellectual Property and Transactional Choice” explains how those arrangements can promote specialization and commercialization.
If an unforeseen later use of an acquired patent can trigger Section 2 liability, firms may avoid the very transactions that assemble scattered technologies and capabilities into useful products. That is why CareFirst carries real implications for merger policy even though it is formally a monopolization case. Section 7 already provides a forward-looking system for reviewing acquisitions that may threaten competition. Turning Section 2 into retrospective merger review would add uncertainty without improving ex ante screening. Merger law should not get a do-over whenever an acquired asset later proves useful.
Set the Antitrust Clock at Closing
The 4th Circuit need not choose between probing executives’ minds and allowing later effects to define earlier conduct without limit. An objective, time-bound test offers a better path. What could the acquired asset reasonably do when the transaction closed?
A plaintiff would not need a confession in an email. A court could examine the transaction documents, the parties’ valuation of the assets, the patents’ stated scope, the target’s products and technologies, and the information publicly available at the time. It could then ask whether the acquired assets could realistically block or weaken competition in the relevant market. If a monopolist buys a young firm poised to become a competitor or a patent that blocks a known path to market entry, the buyer cannot escape liability by claiming ignorance. The asset’s competitive significance does not depend on what executives say they knew.
That discipline must also constrain plaintiffs. General usefulness is not enough. A patent that applies broadly to biologic manufacturing does not necessarily threaten competition in the ustekinumab market when acquired. Later enforcement may show that the patent could exclude a rival when asserted. It may also help establish what the buyer could reasonably have foreseen at closing. By itself, though, it cannot prove that the earlier acquisition was exclusionary.
This standard would leave ample room for other antitrust and patent claims. A plaintiff could still challenge patent enforcement as a sham, allege that the patent was obtained through fraud, or identify later conduct that independently violates Section 2. Each theory has its own requirements and limits. Focusing the acquisition inquiry on the facts at closing would not shield later misconduct. It would simply require plaintiffs to prove that the acquisition itself was exclusionary before using it as the basis for liability.
That approach sensibly allocates the risk of error. It preserves enforcement when objective evidence connects an acquisition to the acquisition or maintenance of monopoly power. At the same time, it reduces the danger that judges and juries will turn an ex post narrative into a legal rule that firms could not have followed ex ante.
Hindsight Is Not a Cause of Action
The 4th Circuit should reject the false choice between requiring proof of subjective intent and allowing later effects to define earlier conduct. The central question is whether Section 2 retains a meaningful boundary between exclusion and ordinary commerce, one that tells firms what the law requires when they act.
Both kinds of error carry costs. A monopolization rule that is too permissive may tolerate durable exclusion and harm consumers. An overbroad rule may deter price cuts, product improvements, integration, acquisitions, and risky innovation because courts could reinterpret those acts years later. Such false positives do not end with one defendant. They reshape investment incentives across the economy.
CareFirst gives the court an opportunity to reaffirm a modest but important principle. Courts should ask whether the challenged conduct was objectively exclusionary based on the circumstances when it occurred. That approach would preserve challenges to acquisitions that remove actual or emerging competitive threats, as well as claims against later conduct that independently violates the law. It would also keep Section 2 from becoming a retrospective penalty on asset ownership.
That boundary matters in an economy that depends on experimentation, new combinations of technology, and the ability to bring ideas to scale. Dominant firms must remain subject to antitrust law. They must also remain free—and encouraged—to compete, invest, acquire complementary assets, and innovate on the merits. Courts should condemn exclusion when the evidence identifies it, not merely when an acquired asset later proves useful.
Section 2 should condemn exclusion when it happens, not backdate it to closing.