Federal Circuit Clarifies The Scope Of Its Jurisdiction Over Walker Process Antitrust Claims In Chandler. v. Phoenix Services LLC

• Published date: 19 August 2021
• Subject Matter: Anti-trust/Competition Law, Intellectual Property, Antitrust, EU Competition , Patent
• Law Firm: Haug Partners
• Author: Mr David Shotlander and Tiffany Jang

On June 10, 2021, the Federal Circuit issued a precedential order in Chandler v. Phx. Servs. LLC, No. 2020-1848 (Fed. Cir. Jun. 10, 2021) that clarified the scope of its jurisdiction over Walker Process¹ claims of monopolization brought under ' 2 of the Sherman Act. Walker Process holds that a party that knowingly asserts a fraudulently procured patent in an effort to monopolize a market may be liable for an antitrust violation. To prevail in a Walker Process action, a claimant must prove (i) that a patentee secured its patent through knowing and willful fraud upon the PTO, then maintained and enforced the patent despite knowledge of the fraud, and (ii) all other elements required to prove a monopolization or attempted monopolization claim under the Sherman Act.² Because Walker Process claims typically arise as counterclaims in patent litigation, the Federal Circuit often hears appeals on Walker Process claims as a matter of course.³ However, a Walker Process claim may be brought as a "standalone claim" (i.e. outside of patent litigation), and the Federal Circuit's decision in Chandler sought to clarify when the court has jurisdiction over such claims.

Heat On-The-Fly's U.S. Patent No. 8,171,993 (the '993 patent) is directed to methods of using a fracking technology.⁴ During prosecution, the sole inventor and Heat On-The-Fly owner, Mark Hefley, failed to disclose 61 prior public uses of the claimed invention that occurred more than a year before the patent application was filed.⁵ Plaintiffs Ronald Chandler, Chandler Manufacturing, LLC, Newco Enterprises, LLC, and Supertherm Heating Services, LLC (Chandler) alleged that Heat On-The-Fly asserted the '993 patent, and further that this enforcement "continued in various forms" following Defendants Phoenix Services, LLC and Mark Fisher's (Phoenix) acquisition of Heat On-The-Fly and the '993 patent.⁶ In an unrelated suit in 2018,⁷ the Federal Circuit declared the '993 patent unenforceable on account of the knowing failure to disclose prior uses during prosecution.⁸ Thereafter, in the present case, Chandler brought a Walker Process antitrust claim against Phoenix over continued assertion of the '993 patent. The question the Federal Circuit faced was whether it has jurisdiction over an appeal to a standalone Walker Process antitrust claim that involves ancillary patent law issues. The court concluded that it did not.

The statutory source of the Federal Circuit's jurisdiction is 28 U.S.C. ' 1295(a)(1), which states that the court's jurisdiction extends to appeals from the district courts "in any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress...