Antitrust Law Daily Wrap Up, ANTITRUST—D.N.J.: 3M engaged in Walker Process fraud in patent application, (Apr 22, 2014)

By Jody Coultas, J.D.

A jury verdict finding that 3M Innovative Properties Company engaged in Walker Process fraud before the U.S. Patent and Trademark Office was supported by sufficient evidence, the federal district court in Newark, New Jersey has held (TransWeb, LLC v. 3M Innovative Properties Company, April 21, 2014, Hochberg, F.).

Both 3M and TransWeb, LLC developed filtration webs for use in respirators approved by the National Institute for Occupational Safety and Health, a division of the Centers for Disease Control. After the parties entered into a patent infringement suit, TransWeb amended the suit to include antitrust claims against 3M.

A jury found that 3M did not commit an antitrust violation by engaging in sham litigation in pursuing its claims against TransWeb, but did engage in Walker Process fraud by misleading a U.S. Patent and Trademark Office examiner during the patent application process and when asserting its patents.

To state a Walker Process fraud claim, the alleged infringer must show that the patent holder procured the patent by knowing and willful fraud on the USPTO, and establish a Sherman Act monopolization claim. A claim under Sections 1 and 2 of the Sherman Act must allege a relevant geographic and product market in which trade was unreasonably restrained or monopolized. A relevant geographic market is the area in which a potential buyer may rationally look for the goods or services sought. The relevant product market must include all products that are roughly equivalent to one another. Walker Process fraud claims for attempted monopolization does not require actual disruption, but rather a showing that the fraud “threaten[s] to produce the type of market damage contemplated in the antitrust laws.”

There was sufficient evidence to support the jury’s finding that 3M’s employees engaged in Walker Process fraud by intentionally misleading the examiner about a material issue, according to the court. The geographic market was the United States for the downstream market in NIOSH-certified respirators as customers would reasonably seek out such products in the U.S. TransWeb proved that fluorinated polymeric material for respirators was a distinct market from other types of filtration material. 3M’s potential monopoly power over the upstream market was not in dispute, because TransWeb was the only other supplier. 3M also held a very large market share for the respirators and had large profit margins on its respirator products. Finally, TransWeb presented sufficient evidence of its antitrust claims to support the jury’s verdict because attorneys’ fees can be the damages that flow from the antitrust injury.

The case is No. 10-4413(FSH) (JBC).

Attorneys: Christine Intromasso Gannon (Connell Foley, LLP) for Transweb, LLC. Mayra Velez Tarantino (Lite DePalma Greenberg, LLC) for 3M Innovative Properties Co. and 3M Co.

Companies: TransWeb, LLC; 3M Innovative Properties Company

Cases: Antitrust NewJerseyNews