Nobelpharma AB v. Implant Innovations, Inc.
1998 WL 122399, 141 F.3d 1059 (1998)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A patentee may be stripped of its immunity from antitrust laws and held liable for enforcing a patent that was procured through knowing and willful fraud on the Patent and Trademark Office (PTO). This 'Walker Process' fraud is a more serious offense than inequitable conduct and provides an independent basis for antitrust liability, separate from whether the enforcement suit was also an objectively baseless 'sham' litigation.
Facts:
- Drs. Branemark and af Ekenstam invented a dental implant with a surface containing specifically sized 'micropits' for improved integration with bone.
- In 1977, three years before the U.S. patent application was filed, Branemark co-authored a book ('the 1977 Book') that contained micrographs showing titanium implants with micropits within the size range later claimed in the patent.
- A draft of the patent application prepared by co-inventor af Ekenstam and submitted to their Swedish patent agent, Mr. Barnieske, explicitly referenced the 1977 Book as showing the invention's utility.
- Barnieske deleted all references to the 1977 Book from the final patent application filed in Sweden and the subsequent U.S. application.
- In a separate deposition, Branemark admitted that he considered the procedure for creating the micropitted surface a trade secret and that important details for making it were not disclosed in the patent.
- Branemark entered into an exclusive license agreement with Nobelpharma AB (NP) for the technology and later served on NP's Board of Directors.
- Before NP sued Implant Innovations, Inc. (3I), NP's officers received a legal opinion from their attorney indicating that the 1977 Book was disqualifying prior art that would likely invalidate the patent and that its non-disclosure could be considered fraud.
Procedural Posture:
- Nobelpharma AB (NP) sued Implant Innovations, Inc. (3I) in the U.S. District Court for the Northern District of Illinois for patent infringement.
- 3I filed defenses of invalidity and unenforceability, and also filed an antitrust counterclaim against NP.
- At the close of NP's case-in-chief, the trial court granted 3I's motion for Judgment as a Matter of Law (JMOL), holding the patent invalid for failure to disclose the best mode.
- The antitrust counterclaim proceeded to trial, where a jury returned a verdict in favor of 3I, finding that the patent was obtained through fraud and that NP knew of the fraud when it filed the lawsuit.
- The jury awarded 3I $3.3 million in damages, which the district court trebled under antitrust law.
- NP filed a renewed motion for JMOL or for a new trial on the antitrust counterclaim, which the district court denied.
- NP (appellant) appealed the grant of JMOL on invalidity and the denial of its post-verdict motion to the U.S. Court of Appeals for the Federal Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a patent holder face antitrust liability for enforcing a patent that was knowingly procured by making a fraudulent omission of material prior art to the PTO, even if the enforcement lawsuit is not separately proven to be 'objectively baseless'?
Opinions:
Majority - Lourie
Yes. A patentee who brings an infringement suit on a patent obtained through knowing and willful fraud may be subject to antitrust liability, providing an alternative legal ground to the 'sham litigation' doctrine. Here, there was substantial evidence for a jury to find that the inventors fraudulently withheld material prior art (the 1977 Book) from the PTO with an intent to deceive, that the patent would not have issued but for this omission, and that Nobelpharma was aware of this fraud when it initiated its infringement suit. This conduct, known as 'Walker Process' fraud, is a more serious offense than inequitable conduct and strips the patentee of its immunity from antitrust laws without requiring an additional finding that the lawsuit was objectively baseless. The court also held that Federal Circuit law, not regional circuit law, governs the determination of whether conduct in procuring or enforcing a patent is sufficient to create antitrust liability. Finally, the patent was correctly held invalid for failure to disclose the 'best mode' of practicing the invention, based on the inventor's own admissions that critical details of the manufacturing process were withheld.
Analysis:
This landmark decision clarifies the landscape at the intersection of patent and antitrust law by establishing two distinct paths to stripping a patentee of immunity: 'Walker Process' fraud and 'PRE' sham litigation. By holding that these are alternative theories, the court made it possible to impose antitrust liability for enforcing a fraudulently-procured patent even if the suit itself is not 'objectively baseless.' Furthermore, by asserting its own exclusive jurisdiction over this issue, the Federal Circuit created a uniform national standard, preventing divergent interpretations among regional circuits. This holding reinforces the high bar for proving fraud, requiring clear evidence of intent to deceive and but-for materiality, thereby distinguishing it from the lower threshold for the equitable defense of inequitable conduct.
