It’s a dangerous world for patentees and all the more important to proceed diligently at the PTO. Any impropriety in obtaining a patent may further expose the patentee to antitrust liability, including a whole new realm of possible litigants as well as treble damages. The two conditions for antitrust liability based on the fraudulent procurement of a patent are: (1) the plaintiff must show that the defendant procured the relevant patent by knowing and willful fraud on the PTO or (in the case of an assignee) that the defendant maintained and enforced the patent with knowledge of the fraudulent manner in which it was obtained; and (2) the plaintiff must prove all the elements otherwise necessary to establish a Sherman Act monopolization charge.
Background / Facts: The Supreme Court in Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965), held that antitrust liability may attach when a party uses a patent to obtain or preserve a monopoly if the patent was procured through intentional fraud on the PTO. This case here is an interlocutory appeal concerning the limits on standing to bring so-called Walker Process antitrust claims. The plaintiff Ritz Camera is a direct purchaser of flash memory products from SanDisk and its licensees, not a competitor who would otherwise have standing to bring a declaratory judgment action to seek invalidity of SanDisk’s patents. Ritz contends that SanDisk fraudulently procured those patents “by failing to disclose known prior art and making affirmative misrepresentations to the PTO,” and that such actions have caused direct purchasers to pay inflated, supracompetitive prices for NAND flash memory products.
Issue(s): Whether direct purchasers who cannot challenge a patent’s validity or enforceability through a declaratory judgment action (and have not been sued for infringement, and so cannot assert invalidity or unenforceability as a defense in the infringement action) may nevertheless bring a Walker Process antitrust claim that includes as one of its elements the need to show that the patent was procured through fraud.
Holding(s): Yes. “[T]he gist of [the antitrust] claim is that since [the defendant] obtained its patent by fraud it cannot enjoy the limited exception to the prohibitions of § 2 of the Sherman Act, but must answer under that section and § 4 of the Clayton Act in treble damages to those injured by any monopolistic action taken under the fraudulent patent claim.” There is no requirement that the class of “those injured by any monopolistic action” should be limited to those within that class who would have standing to bring an independent challenge to the patents at issue.