Patents and Antitrust: Federal Circuit expands ability to bring antitrust claims against patent holders who fraudulently obtained patents

At a high level, patent and antitrust laws may seem to be at odds with each other.  Patent law grants inventors an exclusive right to make, use and sell their inventions.  On the other hand, antitrust law is designed to encourage competition and restrict  monopolies.  This apparent tension is resolved because patents have a limited life (typically no more than 20 years from filing), and are granted as a reward for encouraging inventors to disclose the details about their inventions.

To avoid situations where undeserving “inventors” circumvent antitrust law by obtaining a patent through intentional fraud on the Patent Office, the U.S Supreme Court has long held that a patent holder who enforces a patent obtained through intentional fraud may be subject to antitrust liability.  (see Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965)).

A Walker Process claim is not one to be brought lightly.  First, the challenger must show more than mere invalidity.  Instead, the challenger must show that the patent applicant intentionally defrauded the Patent Office when seeking the patent.  In addition, the challenger must show that all elements otherwise necessary to bring an antitrust claim under the Sherman Act are present.

The Walker Process case made it clear that a party who has been harmed by a patent enforcement action may charge the patent holder with a violation of antitrust laws.  However, a question existed as to whether a direct purchaser of a patented product may bring a Walker Process claim, even if that purchaser has not been charged with infringement.  Last week, in Ritz Camera & Image LLC v. Sandisk Corporation (No. 2012-1183), the Federal Circuit answered “yes” to this question.

In the Ritz Camera decision, the Court said that standing for a Walker Process claim is not limited to those who also have standing to bring a declaratory judgment action under the Patent Act.  Instead the Court said that “those injured by any monopolistic action taken under the fraudulent patent claim” have standing to bring a Walker Process claim.

Thus, parties concerned with a patent’s validity may have an additional tool to challenge the patent.  However, the tool is only available in limited circumstances where facts sufficient to support a Sherman Act claim are also present.  In addition, in recent years the Federal Circuit has raised the bar for finding inequitable conduct in prosecution of a patent application.  Thus, the potential applications of the Ritz Camera decision will be limited, but the case will nonetheless be significant when the facts supporting a claim are available.

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