Enforcement of Invalid Intellectual Property Rights (§ 6)

• Pages: 155-170

155

CHAPTER VIII

ENFORCEMENT OF INVALID INTELLECTUAL

PROPERTY RIGHTS (§ 6)

The Guidelines set forth the circumstances under which the antitrust

agencies consider challenging the assertion of invalid intellectual

property rights by a private litigant. Citing Walker Process Equipment,

Inc. v. Food Machinery & Chemical Corp.,

1

the agencies advise that

“[e]nforcement or attempted enforcement of a patent obtained by fraud

on the Patent and Trademark Office or the Copyright Office may violate

Section 2 of the Sherman Act . . . or Section 5 of the Federal Trade

Commission Act.”

2

The agencies are careful to point out t hat inequitable

conduct before the Patent and Trademark Office not rising to the level of

fraud will not be the basis of a Section 2 claim.

3

A sentence added to the

final Guidelines after the August 8 draft noted, however, that such

conduct may form the basis of a claim by the Federal T rade Commission

under Section 5 of the FTC Act.

4

A Walker Process claim requires proof

1. 382 U.S. 172 (1965).

2. U.S. Dep’t of Justice & Fed. Trade Comm’n, Antitrus t Guidelines for the

Licensing of Intellectual Property § 6 (1995) [her einafter INTE LLECTUAL

PROPERTY GUIDELINES or GUIDELINES], reprinted in 4 Trade Reg. Rep.

(CCH) ¶ 13,132 and Appendix A to this book.

3. The requirement of actual fraud, as opposed to inequitable co nduct, to

support a Walker Process claim is consistent with co urt dec isions. See

E.I. duPont de Nemours & Co. v. Berkley & Co., 6 20 F.2d 1247, 1273-74

(8th Cir. 1980) (inequitable conduct makes patent unen forceab le but does

not support § 2 claim); Beckman Instruments v. Chemtron ics, Inc., 328 F.

Supp. 1132, 1138 (W.D. Tex. 1971) (insufficient basis for § 2 clai m

without evidence of fraudulent intent).

4. The FTC staff has recommended that the Commission “ta ke a closer look

at the problem of sham litigation.” 1996 FTC STAFF REP., Ch. 8, at 10.

Even when inequitable conduct is not involved, the FT C has re quested

Patent Trademark Office re-examination of patent claims when anti trust

investigations led it to believe that the claims might be in valid or overly

broad. See Mary L. Azcuenaga, Comm’r, FTC, In tellectual Property and

Antitrust: A Perspective from the FTC, Remarks befo re Amer ican Law

Institute-American Bar Association, at 13-14, 21, 22 (199 5), availa ble at

156 Intellectual Property Guidelines Origins and Ap plications

of the other elements of a Section 2 violation, including market power in

a monopolization case and specific intent to monopolize, plus a

dangerous probability of success in an attempted monopolization case.

5

The Guidelines are generally consistent with the manner in which

Walker Process claims are handled in the federal courts. For example, in

Nobelpharma AB v. Implant Innovations, Inc.,

6

the Federal Circuit

upheld a finding of a Section 2 violation where the evidence showed that

the patent was procured through the fraudulent withholding of a material

piece of prior art written by the inventor and where the other elements of

a Section 2 claim were met.

7

The agencies also note that “[o]bjectively baseless litigation to

enforce invalid intellectual property rights may also constitute an

element of a violation of the Sherman Act.”

8

The “objectively baseless”

requirement has been interpreted to bar sham litigation claims based on

the mere filing of patent infringement action suits,

9

at least where the

patent owner had prevailed in the underlying infringement action, where

a government agency had determined that there was probable cause to

investigate allegations of infringement,

10

or where the alleged infringer’s

witnesses failed to deny infringement.

11

For many years, courts avoided deciding whether the “objectively

baseless” requirement of Professional Real Estate Investors v. Columbia

Pictures Industries

12

(PRE) applied to Walker Process claims. Two

arguments surfaced for dispensing with the requirement. The first was

http://www.ftc.gov/speeches/ azcuenaga/ali-aba.htm; Ord er of Re-

examination of U.S. Patent No. 4,503,035 (Pestka, e t al.) (Nov. 20, 1992).

5. See Walker Process Equip., 382 U.S. at 177-78 (monopo lization);

Spectrum Sports v. McQuillan, 506 U.S. 447, 454-60 (1993) (attempt to

monopolize).

6. 141 F.3d 1059 (Fed. Cir. 1998).

7. Id. at 1070.

8. INTELLECTUAL PROPERTY GUIDELINES § 6.0 (citing PRE, 508 U.S. at 60-

61).

9. United States Philips Corp. v. Sears Roebuck & Co. , 55 F.3d 592, 597

(Fed. Cir. 1995).

10. See Bio-Technology Gen. Corp. v. Genentech, Inc., 8 86 F. Supp. 377,

381-82 (S.D.N.Y.), appeal dismissed, 66 F.3d 344 (Fed. Cir. 1995); Novo

Nordisk of N. Am. v. Genentech, Inc., 885 F. Supp . 522, 526 (S.D.N.Y.

1995).

11. Glaverbel Societe Anonyme v. Northlake Mktg. & S uppl y, 45 F.3 d 1550,

1559 (Fed. Cir. 1995).

12. 508 U.S. 49, 64 (1993).