On Tues., Nov. 20, 2012, in Ritz Camera & Image, LLC v. SanDisk Corp., No. 2012-1183, the Federal Circuit (Bryson, Dyk, and Moore) broadened the ability of direct purchasers of patented products to bring claims of antitrust violations under the Walker Process theory of liability (as set forth in the Supreme Court’s opinion inWalker Process Equipment, Inc. v. Food Machinery & Chem. Corp., 382 U.S. 172 (1965)). The Court found that a direct purchaser of patented goods has antitrust standing and is therefore not categorically precluded from bringing aWalker Process antitrust claim against the patent owner, even when the direct purchaser would not have standing to bring a declaratory judgment claim against the patent owner under the patent laws.
To succeed on a Walker Process claim, a plaintiff must prove (1) that the patent owner procured the patent by committing an intentional fraud on the PTO (or enforced the patent with knowledge of the fraud); and (2) all elements of a monopolization charge under Section 2 of the Sherman Act (15 U.S.C. § 2). While Walker Processclaims are typically brought as counterclaims in patent infringement actions, that was not the case here – Ritz was a direct purchaser of SanDisk’s patented NAND flash memory. Ritz brought a Walker Process claim against SanDisk, alleging that SanDisk procured two patents through fraud on the PTO and violated the Sherman Act by improperly exploiting its monopoly position in the NAND flash memory market by charging a supracompetitive price for its products. SanDisk moved to dismiss the complaint, claiming that Ritz lacked standing because Ritz was a direct purchaser of the patented NAND flash memory and therefore faced no threat of a patent infringement action from SanDisk.
But even though Ritz lacked standing to bring a declaratory judgment action for infringement or invalidity of SanDisk’s patents, the Federal Circuit held that Ritz nonetheless had standing to bring Walker Process claims against SanDisk. The Court distinguished between standing under the patent laws and antitrust standing, noting that nothing in the Supreme Court’s Walker Process opinion changed this paradigm. The Court also dismissed SanDisk’s arguments that its ruling would open a floodgate of litigation as litigants attempt to do an end-run around the patent laws, explaining that Walker Process claims are unique and different from traditional claims arising under the patent laws.