United States: Federal Circuit Clarifies Choice Of Law For Patent Antitrust Counterclaims

For antitrust counterclaims in patent cases, the Federal Circuit held that its own law should be applied to analyzing issues relating to alleged abuses of the patent right, but that regional circuit law governs the remainder of the antitrust analysis. Unitherm Food Systems, Inc. v. Swift-Eckrich, Case Nos. 03-1472, -1473 (Fed. Cir. July 12, 2004) (Gajarsa, J.).

Unitherm sued Swift-Eckrich, Inc. (doing business as ConAgra) for a declaratory judgment of patent invalidity and non-infringement, and for attempted monopolization. The case involved a patent issued to ConAgra for a method for browning precooked meat and ConAgra’s subsequent threats to enforce the patent against Unitherm and others. According to district court, in applying for the patent, ConAgra neglected to tell the U.S. Patent and Trademark Office that Unitherm had approached it several years before the critical date (and, indeed, before ConAgra’s date of purported invention), and offered to sell it the process in question (and machinery to practice the process). Having found those facts, the district court held the ConAgra patent both invalid and unenforceable. The Federal Circuit affirmed.

As to the choice of law, citing its 1998 en banc decision in Nobelpharma v. Implant Innovations, the Federal Circuit affirmed that its law must be applied to portions of the antitrust counterclaim analysis premised on an abuse of the patent right (for example, Unitherm’s Walker Process claim). As to the remainder of the analysis, taking its lead from the recent Supreme Court decision in Holmes Group v. Vornado Air Circulation, the Court confirmed that regional circuit antitrust laws apply.

In this case, the Court applied its own law to find evidence of a Walker Process-type fraud sufficient to strip ConAgra of patent immunity. But then, applying Tenth Circuit law, the Federal Circuit found that there was not sufficient evidence of ConAgra’s market power to sustain antitrust liability and "Unitherm failed to present any economic evidence capable of sustaining its asserted relevant antitrust market, and little to support any other aspect of its Section 2 claim."

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