Friday, January 17, 2014

Walker Process Equipment Inc. v. Food Machinery & Chemical Corp. case brief summary

Walker Process Equipment Inc. v. Food Machinery & Chemical Corp. case brief summary
Walker Process Equipment, Inc. v. Food Machinery & Chemical - ‎Supreme Court 
Defendant in a suit for patent infringement (Walker) counterclaims for violation of § 2 of the Sherman Act and § 4 of the Clayton Act by using a patent obtained through intentional fraud to exclude it from the market.

The Court holds that Walker's counterclaim is valid, but needs to actually prove all elements of a § 2 claim in addition to knowingly and willfully misrepresent facts (good faith of Food Machinery would be complete defense) to the U.S.P.T.O.

  • Patent is for "knee-action swing diffusers used aeration equipment for sewage treatment systems" which was alleged in use for more than a year prior to the patent application was filed by Food Machinery (and Δ was using it, so it must have known).
  • These cases (exclusion through invalid patents) are never brought by DOJ, but almost always raised in defense of patent infringement claims.
  • Walker Process is likely limited to patents obtained via fraud because otherwise it provides a disincentive to acquire patents and an incentive to use other methods of protecting intellectual property—e.g. trade secrets—which are less transparent and less desired.

Patents are extremely powerful—even without the litigation, patents are often used effectively—yet there is extremely limited examination of the patent application by the USPTO.

Counterclaim Process/Test

        1. Π shows prima facie case that patent was obtained fraudulently
        2. Δ has good faith defense.
        3. Π must prove monopolization under Sherman § 2.
          1. Prove monopoly power in a relevant market—and a patent may not give monopoly power by default if there are acceptable substitutes in the market, e.g. alternative pharmaceuticals.
          2. Prove a bad act—sham litigation is sufficient but is simply showing the patent and requesting that the other party desist a bad act? The presumption that a patent monopolizes trade within the meaning of § 2 was dismissed by the Court in Ill. Tool Works v. Independent Ink (1965) at 1195.

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