IP Alerts
IP Alert: Walker Process Claim as Basis for Federal Jurisdiction
November 20, 2012
Today, in Ritz Camera and Image, LLC v. SanDisk Corp., the Court of Appeals for the Federal Circuit held that a direct purchaser of goods covered by a patent may bring a Walker Process antitrust action against the patentee, even if the purchaser has no basis to bring a declaratory judgment action under the patent laws. In 1965, the U.S. Supreme Court 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 Patent Office (now the United States Patent and Trademark Office). This Supreme Court case, known as the Walker Process case, has long been recognized as allowing a defendant in a patent infringement action to bring an antitrust counterclaim against the patentee.
In today’s Ritz Camera case, the plaintiff, Ritz Camera, sought to bring a Walker Process action against SanDisk, a supplier of NAND flash memory products. Ritz Camera, a purchaser of flash memory, was not itself facing a threat of patent infringement from SanDisk, and thus lacked standing to bring a declaratory judgment action under the patent laws. Instead, Ritz Camera brought an antitrust action under a Walker Process theory of liability. The district court held that Ritz Camera was able to bring such an action and had standing under the antitrust laws to bring the Walker Process action. The court allowed SanDisk to bring an interlocutory appeal.
On appeal, the Federal Circuit affirmed. The court observed that the antitrust laws, specifically the Sherman Act, had its own standing requirements and that Walker Process antitrust liability was itself a species of Sherman Act liability. The court held that “[n]othing in Walker Process supports SanDisk’s argument that the rules governing standing to bring patent validity challenges should be imported into an antitrust case simply because one element of the antitrust cause of action requires proof of improper procurement of a patent.” In its opinion, the court dismissed SanDisk’s assertion that the case holding would lead to a flood of litigation, observing that the Walker Process case dealt with “a special class of patents, i.e., those procured by intentional fraud.”
The Ritz Camera case provides an interesting clarification of the interplay between antitrust and patent laws. For more information on this case, please contact Fitch Even partner Allen E. Hoover.
In today’s Ritz Camera case, the plaintiff, Ritz Camera, sought to bring a Walker Process action against SanDisk, a supplier of NAND flash memory products. Ritz Camera, a purchaser of flash memory, was not itself facing a threat of patent infringement from SanDisk, and thus lacked standing to bring a declaratory judgment action under the patent laws. Instead, Ritz Camera brought an antitrust action under a Walker Process theory of liability. The district court held that Ritz Camera was able to bring such an action and had standing under the antitrust laws to bring the Walker Process action. The court allowed SanDisk to bring an interlocutory appeal.
On appeal, the Federal Circuit affirmed. The court observed that the antitrust laws, specifically the Sherman Act, had its own standing requirements and that Walker Process antitrust liability was itself a species of Sherman Act liability. The court held that “[n]othing in Walker Process supports SanDisk’s argument that the rules governing standing to bring patent validity challenges should be imported into an antitrust case simply because one element of the antitrust cause of action requires proof of improper procurement of a patent.” In its opinion, the court dismissed SanDisk’s assertion that the case holding would lead to a flood of litigation, observing that the Walker Process case dealt with “a special class of patents, i.e., those procured by intentional fraud.”
The Ritz Camera case provides an interesting clarification of the interplay between antitrust and patent laws. For more information on this case, please contact Fitch Even partner Allen E. Hoover.
