Walker Process Equipment, Inc. v. Food MacHinery & Chemical Corp.

Background

Food Machinery & Chemical Corp., a company that owned a patent on knee-action swing diffusers used in sewage treatment equipment, sued Walker Process Equipment for patent infringement. Walker denied infringement and later alleged that Food Machinery had obtained the patent by lying to the Patent Office about prior public use. Walker said the fraudulent patent deprived it of business and sought damages under the antitrust laws after the lower courts dismissed parts of the case.

Reasoning

The Court addressed whether enforcing a patent obtained by knowing fraud can be treated as illegal monopolization under the antitrust laws (laws that forbid unfair monopoly behavior), and whether injured rivals can get three times their damages. The Court held that if a patent was procured by intentional fraud and then used to exclude competition, enforcement may violate the Sherman Act, and treble damages under the Clayton Act may be available. The Court also said a plaintiff must still prove the other elements of a monopolization claim, including proof of the relevant market and the patent’s exclusionary effect; the per se rule was inappropriate on bare pleadings, so the case was sent back for Walker to clarify and prove its claims.

Real world impact

The decision lets companies harmed by deliberately fraudulent patents pursue antitrust treble damages if they can prove both the fraud and the patent’s market effect. It limits relief to patents procured by intentional deceit; honest mistakes or so-called technical errors do not qualify. The ruling does not cancel patents automatically and is not a final finding of liability; the case was remanded so Walker can present market evidence and prove fraud before damages are decided.

Dissents or concurrances

Justice Harlan, concurring, emphasized two conditions for such suits: the patent must be shown to have been procured by knowing, willful fraud (or enforced with knowledge of such fraud), and the plaintiff must prove all elements of a Sherman Act monopolization claim; mere invalidity or lack of defendant knowledge is insufficient.