Threats Against Customers Lead to Walker Process Antitrust Claim

Oil_pumpHydril v. Grant Prideco (Fed. Cir. 2007).

Grant and Hydril both own patents relating to oil drilling.  Hydril sued Grant for patent infringement and also asserted a Walker Process antitrust claim against Grant. 

Walker Process claims stem from the 1965 Supreme Court case (of the same name) and allow Section 2 Sherman Act antitrust claims for monopolization or attempted monopolization based on enforcement of a fraudulently procured patent.

Here, Grant’s alleged fraud was that it “obtained its patent by knowingly and deliberately concealing from the Patent Office prior art that it knew would have resulted in a denial of its application.” 

At the district court level, Hydril’s complaint was dismissed for failure to state a claim. In particular, the court noted that Hydril had failed to show sufficient enforcement activity. The CAFC disagreed, holding that threatened enforcement against customers could serve as a basis for a Walker Process claim.

Threats of patent litigation against customers, based on a fraudulently-procured patent, with a reasonable likelihood that such threats will cause the customers to cease dealing with their supplier, is the kind of economic coercion that the antitrust laws are intended to prevent. A supplier may be equally injured if it loses its share of the market because its customers stop dealing with it than if its competitor directs its monopolistic endeavors against the supplier itself. Without customers, a supplier has no business.