Patent fraud – what is a Walker Process antitrust claim?

Patent fraud – what is a Walker Process antitrust claim?

When an inventor is granted a patent on an invention, the inventor is essentially granted a monopoly on the invention for a set period of time.  A patent grants the owner of the patent the exclusive right to make, use, sell and import the patented invention into the country which granted the patent.  In the United States patents are granted by the United States Patent and Trademark Office.  To be granted a patent an inventor must file a patent application with the United States Patent and Trademark Office.  The patent application must demonstrate that the invention is new, useful and not obvious.  If the United States Patent and Trademark Office determines that the invention described in the patent application meets all of the requirements laid out in United States Patent Law, then the inventor will be granted a patent on the invention.

Laws in the United States do not exist in a vacuum.  Patent law is no different.  A patent grants the patent owner the right to exclude others from practicing a patented invention, but a patent does not guarantee that patent owner has the right to practice the invention themselves.  For instance, a new way of producing an illegal drug could be patented or a method of tricking consumers could be patented, but other laws make it a crime to use the patented invention.  Being granted a patent does not guarantee that the inventor can use the patented invention.

Similarly, there are laws outside of patent law which can invalidate a patent.  An example of such a law comes from the Sherman Antitrust Act.  The Sherman Antitrust Act is a law in the United States that makes anti-competitive business practices illegal.  The Sherman Antitrust Act § 2 makes it illegal to create or attempt to create a monopoly.  Monopolization requires (1) monopoly power and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.  Attempted monopolization requires (1) anticompetitive conduct, (2) a specific intent to monopolize, and (3) a dangerous probability of achieving monopoly power. The concept of patents (government granted monopolies) and the Sherman Antitrust Act are fundamentally incompatible but the two laws co-exist.

Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965) is an example of a time when the Sherman Antitrust Act will override that patent laws.  In that case the defendant successfully defended against a patent infringement suit using the Sherman Antitrust Act as a defense.  The defendant claimed that even though the plaintiff had a patent, because the patent was obtained fraudulently the patent was invalid.   The United States Supreme Court held that the enforcement of a patent procured by fraud on the Patent Office may violate § 2 of the Sherman Act, provided all other elements to establish a § 2 monopolization charge are proved.  Proof of intentional fraud in obtaining a patent means that a patent owner looses its exemption from the antitrust laws, while its good faith would furnish a complete defense.

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