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February 2013

Ritz Camera v. SanDisk and Its Impact on Potential Litigants in Walker Process Claims

Since the Supreme Court’s decision in Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965), defendants in a patent infringement lawsuit had the ability to assert an antitrust liability claim against the plaintiff for monopolization if the plaintiff intentionally and fraudulently procured its patent from the U.S. Patent and Trademark Office. Thus, Walker Process claims were primarily asserted by those already embroiled in patent litigation.

The Federal Circuit’s decision in 5itz Camera & Image, LLC v. SanDisk Corporation, 700 F.3d 503 (Fed.Cir. 2012) may now change all that, or in other words, may now change the litigants bringing Walker Process claims. In Ritz Camera, the U.S. Court of Appeals for the Federal Circuit addressed the issue of whether a Walker Process antitrust lawsuit can be brought by a direct purchaser of goods that are protected by patent, even if the purchaser faces no threat of an action for patent infringement and has no basis to seek a declaratory judgment holding the patent invalid. The court held that plaintiff, as a direct purchaser, had standing to pursue its Walker Process claim even if it could not have sought a declaratory judgment of patent invalidity or unenforceability.

In this case, the court of appeals rejected defendants arguments that the rules governing standing to bring a patent validity challenge 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. Likewise, the court rejected defendants arguments that Walker Process intended to limit the class of potential antitrust plaintiff’s to those who could contest a patent’s validity directly. Instead, the court noted that the Federal Circuit and other circuits have refused to import the standing requirements for declaratory judgment actions challenging a patent’s validity to Walker Process Rlaims. Ritz Camera, 700 at 507-508.

Though Ritz Camera specifically addressed the question of whether “direct purchasers” ha'YH standing to bring a Walker Process claim, it did not foreclose the possibility of indirect purchasers bringing a Walker Process claim. While direct consumers and competitors are most likely to suffer antitrust injury, there are situations in which other market participants can suffer antitrust injury. See American Ad Mgmt Inc. v. General Tel. Co., 190 F.3d 1051, 1057 (9th Cir. 2003) (analyzing possible antitrust injury of indirect purchasers, potential entrants, suppliers, dealers and others). Since Ritz Camera states that defendants “cannot enjoy the limited exception to the prohibition 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,” it appears likely that those with antitrust injury in addition to direct purchasers may bring Walker Process claims in the future.

Intellectual Property

Intellectual Property