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Evidence Supporting Walker Process Claim Has No “Meat”

July 12, 2004

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Last Month at the Federal Circuit - August 2004

Judges: Gajarsa (author), Schall, and Linn

In Unitherm Food Systems, Inc. v. Swift- Eckrich, Inc., No. 03-1472 (Fed. Cir. July 12, 2004), the Federal Circuit affirmed judgments of invalidity and tortious interference, but reversed a finding of attempted monopolization based on enforcement of a fraudulently obtained patent.

Swift-Eckrich, Inc. d/b/a ConAgra Refrigerated Foods (“ConAgra”) owns U.S. Patent No. 5,952,027 (“the ‘027 patent”), which is directed to a process for browning precooked meat. Jennie-O Foods, Inc. (“Jennie-O”), a direct competitor of ConAgra in the precooked meat business, uses a process for browning precooked meat developed by Unitherm Food Systems, Inc. (“Unitherm”), which is the same process as that claimed in the ’027 patent. After ConAgra sent a letter to Jennie-O, as well as several other companies, attaching its ‘027 patent and offering that patent for license, Jennie-O and Unitherm brought an action seeking a DJ of invalidity and unenforceability of the ‘027 patent, and asserted a claim of tortious interference with Unitherm’s prospective economic relationships and a Walker Process antitrust claim. ConAgra counterclaimed that Jennie-O infringed. The district court granted partial SJ against ConAgra on the issues of invalidity and infringement, and a jury verdict was rendered against ConAgra on the tortious interference and antitrust claims. ConAgra appealed the decisions relating to invalidity, tortious interference, and antitrust violation.

ConAgra had disputed only one claim term, “golden-brown color,” which the district court construed. The Federal Circuit found that it was proper for the district court to construe only this term in the claim and to give the remaining claim terms the meaning Unitherm proffered. The Federal Circuit rejected ConAgra’s position that the term should be given a technical definition based on examples provided in the specification that used a particular meter’s measurement of color. The Court found that to construe the term based on the specification examples would be to improperly read a limitation of an embodiment into the claim. Thus, the district court’s reliance on dictionary meanings was appropriate.

The Federal Circuit upheld the district court’s finding of invalidity of the ‘027 patent based on prior use and sale by Unitherm. On this issue, ConAgra did not dispute the evidence regarding prior use and sale, but instead argued the existence of material factual disputes regarding the identity of the patented and Unitherm’s processes. The Federal Circuit found that none of ConAgra’s arguments created an issue of material fact and, thus, upheld the district court’s partial SJ of invalidity based on prior use and sale.

The Federal Circuit remanded the jury verdict against ConAgra for violating antitrust laws based on a Walker Process claim. Applying common-law fraud elements, the Federal Circuit concluded that ConAgra’s employee, and thus ConAgra, committed fraud on the PTO in obtaining a patent on an invention that the employee knew he did not first invent based on his knowledge of prior uses and sales of Unitherm’s process. Although ConAgra presented competing evidence that the ConAgra employee did not know of the invention, the Federal Circuit nonetheless found that the jury could have reached its conclusion on the basis that it disbelieved all of ConAgra’s competing evidence, while believing all of that presented by Unitherm.

Finding that ConAgra was properly stripped of its antitrust immunity, the Federal Circuit applied Tenth Circuit antitrust standing law and found that Unitherm sustained antitrust injury and, thus, had standing to bring the antitrust claim against ConAgra. However, the Federal Circuit found that Unitherm did not provide sufficient evidence regarding the relevant antitrust market definition. Specifically, the Federal Circuit found that Unitherm’s expert’s definition of the relevant market as one and the same as the patented subject matter was improper because it accounted only for technological, and not economic, substitutability. The Federal Circuit thus vacated the portion of the jury’s verdict finding ConAgra liable for antitrust violations. The Federal Circuit vacated this portion of the verdict, as opposed to reversing, because ConAgra failed to move postverdict for a JMOL.

Applying Oklahoma state law to the tortious interference claim, the Federal Circuit found that the jury could have concluded that Unitherm possessed a valid business expectancy and that ConAgra intentionally interfered with that expectation so as to cause damage to Unitherm. In particular, the Federal Circuit concluded that the proffered evidence regarding ConAgra’s knowledge that Unitherm sold browning processes to precooked meat producers could have led a reasonable jury to conclude that Unitherm possessed a valid business expectancy. Further, the jury could have concluded that ConAgra’s attempts to enforce its fraudulently obtained patent amounted to an intentional interference with Unitherm’s business relationship with Jennie-O. The Federal Circuit thus affirmed the verdict against ConAgra for tortious interference and the consequent damages award.