The opinion of the court was delivered by: William H. Walls, U.S.D.J.
William H. Walls, U.S.D.J.
The court now considers the last of a series of summary judgment motions in this litigation concerning paclitaxel, a naturally-occurring compound used to treat cancer. The underlying facts are fully discussed in the court's earlier opinions, including Bristol-Myers Squibb v. IVAX Corp. et al. (addressing Noerr-Pennington immunity), 2000 WL 4864 (D.N.J. Jan. 4, 2000), and Bristol-Myers Squibb v. Ben Venue et al. (addressing inequitable conduct counterclaims), No. 97-6050, slip op. (D.N.J. March 17, 2000) ("Bristol Motion II").
Plaintiff Bristol-Myers Squibb ("Bristol") moves for summary judgment on the remaining counterclaims of Zenith Goldline, Immunex Corporation, and IVAX Corporation (collectively "IVAX"), Ben Venue, and Mylan Pharmaceuticals. All the counterclaimants assert two remaining causes of action for monopolization and attempted monopolization in violation of Section 2 of the Sherman Act ("the antitrust counterclaims"). Based on the same allegations, the IVAX parties also assert a claim for state law unfair competition. Bristol refers to this motion, which primarily addresses Walker Process-styled counterclaims, as "Bristol Motion I".
The IVAX counterclaimants, with Ben Venue and Mylan, oppose the motion.
Having heard oral argument on February 14, 2000, and for the reasons stated below, the court denies the motion.
1. The Walker Process Counterclaims
The Supreme Court decision of Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965), established that the fraudulent procurement of a patent or the enforcement of a patent knowingly obtained by fraud on the U.S. Patent and Trademark Office (PTO) may be the basis of an action under Section 2 of the Sherman Act, provided that the other elements of a Sherman Act claim are present. 382 U.S. at 177, 177 n.5.
Relying on Walker Process, the counterclaimants accuse Bristol of monopolization and attempted monopolization in violation of Section 2. Such counterclaims are grounded on numerous, alleged misrepresentations and omissions made by Bristol during the prosecution of the patents in suit (the `537 and `803 patents) and a related patent (the non-asserted `001 patent), and on Bristol's efforts to enforce its patents through this litigation. The counterclaimants rely on twin theories of fraudulent procurement and fraudulent enforcement, authorized by the Walker Process decision. For ease of reference, Bristol has culled from pleadings and discovery documents some 66 misstatements and omissions charged by the defendant-counterclaimants. See Bristol Br. Exh. A.
"[A]ntitrust liability under section 2 of the Sherman Act may arise when a patent has been procured by knowing and willful fraud, the patentee has market power in the relevant market, and has used its fraudulently obtained patent to restrain competition." C.R. Bard, Inc. v. M3 Systems, Inc., 157 F.3d 1340, 1367 (Fed. Cir. 1998), cert. denied, 119 S. Ct. 1804 (1999). As noted by Bristol, the counterclaimants must pass a higher standard to survive summary judgment under their Walker Process theory than was relevant to the earlier, inequitable conduct motion. The Federal Circuit explains: "[I]nequitable conduct is a broader, more inclusive concept than the common law fraud needed to support a Walker Process counterclaim. . . . Inequitable conduct in fact is a lesser offense than common law fraud, and includes types of conduct less serious than `knowing and willful' fraud." Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1069 (Fed. Cir. 1998).
Accordingly, to state a Walker Process claim of fraudulent procurement, counterclaimants must evidence that: 1) Bristol knowingly and willfully made a fraudulent omission or misrepresentation; 2) with clear intent to deceive the patent examiner; 3) where the misrepresentation or omission was the "efficient, inducing, and proximate cause, or the determining ground" of the issuance of the patent, i.e., "the patent would not have issued but for the misrepresentation or omission." Id. at 1070-71.
In sum, "[a] finding of Walker Process fraud requires higher threshold showings of both intent and materiality than does a finding of inequitable conduct. Moreover, unlike a finding of inequitable conduct, . . . a finding of Walker Process fraud may not be based upon an equitable balancing of lesser degrees of materiality and intent." Id. This distinction flows from the rationale that while inequitable conduct serves as a shield with which an alleged infringer may defend a patent infringement action by rendering a patent unenforceable, a claim of Walker Process fraud is a sword to impose antitrust liability (and treble damages) upon a patentee. Id. at 1070.
In 1998, the Federal Circuit overruled its earlier precedents to declare that the issue of whether conduct in procuring or enforcing a patent is sufficient to strip a patentee of its immunity from the antitrust laws is now a question of Federal Circuit law. Nobelpharma, 141 F.3d at 1068. However, the Federal Circuit continues to apply the law of the regional circuit to issues not unique to patent law, such as the determinations of relevant market, market power, and damages. Id.
2. Whether the Counterclaimants Have Shown Antitrust Injury
The parties first dispute whether the counterclaimants have suffered cognizable antitrust injury. Section 4 of the Clayton Act, 15 U.S.C. § 15(a), grants standing to bring an antitrust action for treble damages to persons "injured in [their] business or property by reason of anything forbidden in the antitrust laws." And, Section 16 of the Act, 15 U.S.C. § 26, provides that a plaintiff is "entitled to sue for and have injunctive relief . . . against threatened loss or damage by a violation of the antitrust laws." The Supreme Court explains that Sections 4 and 16 provide "complementary remedies for a single set of injuries." Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 113 (1986).
To justify antitrust relief, a private plaintiff must allege injury "of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful. The injury should reflect the anticompetitive effect either of the violation or of anticompetitive acts made possible by the violation." Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). The Federal Circuit has approved the following criteria to determine if a claimant possesses antitrust standing:
1) whether there is a causal connection between an antitrust violation and harm to the plaintiff and the defendants intended to cause that harm;
2) whether the nature of the plaintiff's alleged injury was of the type the antitrust laws ...