  United States Court of Appeals
      for the Federal Circuit
              __________________________

           RITZ CAMERA & IMAGE, LLC,
                 Plaintiff-Appellee,

                           v.
             SANDISK CORPORATION,
                Defendant-Appellant.
              __________________________

                      2012-1183
              __________________________

   Appeal from the United States District Court for the
Northern District of California in Case No. 10-CV-2787,
Judge Jeremy Fogel.
             ___________________________

              Decided: November 20, 2012
              ___________________________

    JOSEPH S. HALL, Kellogg, Huber, Hansen, Todd, Ev-
ans & Figel, P.L.L.C., of Washington, DC, argued for
plaintiff-appellee. With him on the brief were STEVEN F.
BENZ, WILLIAM J. RINNER, and ALEXANDER S. EDELSON. Of
counsel on the brief was R. STEPHEN BERRY, Berry Law
PLLC, of Washington, DC.

   RAOUL D. KENNEDY, Skadden, Arps, Slate, Meagher &
Flom LLP, of Palo Alto, California, argued for defendant-
appellant. With him on the brief were DAVID W. HANSEN,
RITZ CAMERA   v. SANDISK CORP                           2


JAMES P. SCHAEFER, TRAVIS M. JENSEN, and JOSHUA M.
TEMPLET.

    KRISTEN C. LIMARZI, Attorney, Antitrust Division,
United States Department of Justice, of Washington, DC,
argued for amici curiae United States, et al. With her on
the brief were JOSEPH F. WAYLAND, Acting Assistant
Attorney General, and CATHERINE G. O’SULLIVAN, Attor-
ney. Of counsel on the brief were WILLARD K. TOM, Gen-
eral Counsel, and JOHN F. DALY, Deputy General Counsel,
Federal Trade Commission, of Washington, DC.

   J. DOUGLAS RICHARDS, Cohen Milstein Sellers & Toll
PLLC, of New York, New York, for amici curiae American
Antitrust Institute, et al. With him on the brief was
MICHAEL B. EISENKRAFT.

    LESLIE B. DUBECK, Assistant Solicitor General, State
of New York, of New York, New York, for amici curiae
State of New York, et al. With her on the brief were ERIC
T. SCHNEIDERMAN, Attorney General, BARBARA D.
UNDERWOOD, Solicitor General, C. SCOTT HEMPHILL,
Chief, Antitrust Bureau, STEVEN C. WU, Assistant Solici-
tor General, and SAAMI ZAIN, Assistant Attorney General
of Counsel.

    MICHAEL A. CARRIER, Rutgers School of Law–Camden,
of Camden, New Jersey, for amici curiae 27 U.S. Anti-
trust, Intellectual Property, and Innovation Professors.
                __________________________

    Before BRYSON, DYK, and MOORE, Circuit Judges.
BRYSON, Circuit Judge.

    This case comes to us on an interlocutory appeal from
the United States District Court for the Northern District
3                                RITZ CAMERA   v. SANDISK CORP


of California. The certified question concerns the limits
on standing to bring so-called Walker Process antitrust
claims. The Supreme Court in Walker Process Equip-
ment, Inc. v. Food Machinery & Chemical Corp., 382 U.S.
172 (1965), held that antitrust liability may attach when
a party uses a patent to obtain or preserve a monopoly if
the patent was procured through intentional fraud on the
Patent and Trademark Office (“PTO”). The question in
this case is whether an antitrust action against the owner
of a patent, based on the Walker Process theory of liabil-
ity, can be brought by a direct purchaser of goods that are
protected by the patent, even if the purchaser faces no
threat of an action for patent infringement and has no
other basis to seek a declaratory judgment holding the
patent invalid or unenforceable. We hold that the district
court was correct to rule that a direct purchaser is not
categorically precluded from bringing a Walker Process
antitrust claim, even if it would not be entitled to seek
declaratory relief against the patentee under the patent
laws.

                             I

    Defendant SanDisk allegedly controls about three-
quarters of the market for NAND flash memory. Flash
memory is a computer chip that can be erased and repro-
grammed; NAND is a particular type of flash memory.
The capacity of NAND flash memory to store large
amounts of data and to rewrite the contents of that data
has led to its widespread use in consumer products such
as digital cameras, mobile phones, and USB drives.
SanDisk holds patent rights needed to make NAND
products. With those patents, SanDisk manufactures and
sells flash memory products and also licenses the technol-
ogy to other manufacturers. Retailers such as plaintiff
RITZ CAMERA   v. SANDISK CORP                            4


Ritz Camera & Image, LLC, purchase flash memory
products from SanDisk and its licensees.

    In June 2010, Ritz filed suit on behalf of itself and a
class of direct purchasers of NAND flash memory, alleg-
ing that SanDisk had violated Section 2 of the Sherman
Act, 15 U.S.C. § 2. The complaint alleged that SanDisk
had fraudulently procured two patents central to its flash
memory business—U.S. Patent Nos. 5,172,338 and
5,991,517 (“the ’338 and ’517 patents”)—by failing to
disclose known prior art and making affirmative misrep-
resentations to the PTO. Ritz further alleged that San-
Disk established its monopoly position by enforcing those
patents against its competitors and by threatening the
competitors’ customers. Ritz contends that those actions
have caused direct purchasers to pay inflated, supra-
competitive prices for NAND flash memory products.

    SanDisk moved to dismiss the complaint. Among its
arguments, SanDisk asserted that Ritz lacked standing to
bring a Walker Process antitrust claim based on the
invalidity or unenforceability of SanDisk’s patents, be-
cause Ritz faced no threat of an infringement action and
had no other basis to bring a declaratory judgment action
challenging the patents.1


   1    The Supreme Court in Medimmune, Inc. v. Genen-
tech, Inc., 549 U.S. 118, 127 (2007), rejected our “reason-
able apprehension of suit” test for declaratory judgment
standing and held that the proper test is whether “there
is a substantial controversy, between parties having
adverse legal interests, of sufficient immediacy and
reality to warrant the issuance of a declaratory judg-
ment.” See SanDisk Corp. v. STMicroelectronics, Inc., 480
F.3d 1372, 1380 (Fed. Cir. 2007). Ritz does not claim that
it could have brought a declaratory judgment action
against SanDisk seeking relief under the patent laws.
5                                 RITZ CAMERA   v. SANDISK CORP


    The district court rejected SanDisk’s argument. Ritz
Camera & Image, LLC v. SanDisk Corp., 772 F. Supp. 2d
1100, 1103-05 (N.D. Cal. 2011). The court acknowledged
that Walker Process claims normally are brought by
competitors of the patentee as counterclaims in patent
infringement actions. However, the court noted that the
Supreme Court’s decision in Walker Process “places no
limitation on the class of plaintiffs eligible to bring [such
claims].” Id. at 1105. Moreover, the court was not per-
suaded by SanDisk’s contention that expressly authoriz-
ing direct purchasers to bring Walker Process claims
“could result in an avalanche of patent challenges” be-
cause such claims are “rare” and because the Supreme
Court rejected the same argument in Walker Process. Id.
In the course of its opinion, the court pointed out that
allegations of fraud relating to the ’338 and ’517 patents
had survived a motion for summary judgment in a differ-
ent litigation, which “raise[s] at least some question as to
the validity of the subject patent[s].” Id.

     SanDisk petitioned for interlocutory review of the dis-
trict court’s ruling pursuant to 28 U.S.C. § 1292(b) and
(c). The district court and this court granted SanDisk’s
request.

                             II

    SanDisk’s appeal is limited to a single question:
Whether direct purchasers who cannot challenge a pat-
ent’s validity or enforceability through a declaratory
judgment action (and have not been sued for infringe-
ment, and so cannot assert invalidity or unenforceability
as a defense in the infringement action) may nevertheless
bring a Walker Process antitrust claim that includes as
one of its elements the need to show that the patent was
procured through fraud. SanDisk contends that allowing
RITZ CAMERA   v. SANDISK CORP                               6


parties such as Ritz to use a Walker Process antitrust
lawsuit to challenge patents would represent an unjusti-
fiable expansion of the Walker Process doctrine and would
undermine well-recognized limitations on standing to
bring a declaratory judgment action challenging a patent.
We disagree.

    Walker Process set forth two conditions for antitrust
liability based on the fraudulent procurement of a patent.
First, the plaintiff must show that the defendant procured
the relevant patent by knowing and willful fraud on the
PTO or (in the case of an assignee) that the defendant
maintained and enforced the patent with knowledge of
the fraudulent manner in which it was obtained. Second,
the plaintiff must prove all the elements otherwise neces-
sary to establish a Sherman Act monopolization charge.
Walker Process, 382 U.S. at 174, 176-77; see also id. at
179 (Harlan, J., concurring). With the first condition, the
Court made clear that the invalidity of the patent was not
sufficient; a showing of intentional fraud in its procure-
ment was required. Id. at 176-77; id. at 179 (Harlan, J.,
concurring). With the second condition, the Court incor-
porated the rules of antitrust law generally. As Justice
Harlan stated in his concurring opinion, “as to this class
of improper patent monopolies, antitrust remedies should
be allowed room for full play.” Id. at 180 (Harlan, J.,
concurring). The “full play” of antitrust remedies encom-
passes the standing requirements that apply in the anti-
trust setting, see, e.g., Associated Gen. Contractors of Cal.,
Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 537-
46 (1983); In re DDAVP Direct Purchaser Antitrust Litig.,
585 F.3d 677, 688 (2d Cir. 2009), including the recognition
that direct purchasers are not only eligible to sue under
the antitrust laws, but have been characterized as “pre-
ferred” antitrust plaintiffs, e.g., Big Bear Lodging Ass’n v.
7                               RITZ CAMERA   v. SANDISK CORP


Snow Summit, Inc., 182 F.3d 1096, 1102 n.4 (9th Cir.
1999).

     Nothing in Walker Process supports SanDisk’s argu-
ment that the rules governing standing to bring patent
validity challenges should be imported into an antitrust
case simply because one element of the antitrust cause of
action requires proof of improper procurement of a patent.
In fact, the Supreme Court in Walker Process rejected an
argument closely analogous to SanDisk’s argument here.
The Court stated that it found no merit in the proposition
that rules defining who may bring suit “to cancel or annul
a patent” should also dictate the boundaries of antitrust
standing. Walker Process, 382 U.S. at 175-76. Notwith-
standing the fact that “one of its elements is the fraudu-
lent procurement of a patent,” the Court explained, an
antitrust claim under the Clayton Act is not a claim
under the patent laws. Id. at 176. Rather, “the gist of
[the antitrust] claim is that since [the defendant] obtained
its patent by fraud it cannot enjoy the limited exception to
the prohibitions of § 2 of the Sherman Act, but must
answer under that section and § 4 of the Clayton Act in
treble damages to those injured by any monopolistic
action taken under the fraudulent patent claim.” Id. The
Court did not suggest that the class of “those injured by
any monopolistic action” should be limited to those within
that class who would have standing to bring an independ-
ent challenge to the patents at issue.

    In arguing that the right to bring a Walker Process
claim should be governed by the standing requirements of
the Declaratory Judgment Act rather than traditional
antitrust standing requirements, SanDisk relies on the
Court’s statement in Walker Process that permitting a
plaintiff to bring an antitrust claim based on a fraudu-
lently procured patent “accords with . . . long-recognized
RITZ CAMERA   v. SANDISK CORP                               8


procedures.” 382 U.S. at 176-77. Because that statement
follows a brief survey of cases concerning patent validity
disputes, SanDisk argues that it evinces the Court’s
intent to limit the class of potential antitrust plaintiffs to
those who could contest a patent’s validity directly. The
quoted sentence, however, does not say what SanDisk
claims. The context makes clear that the sentence in
question simply explains that recognizing a cause of
action for an antitrust claim based on a fraudulently
procured patent is not inconsistent with patent law rules
permitting challenges to patently validity or patent
misuse. Nothing in that sentence, or elsewhere in the
Court’s opinion, suggests that the standing limitations on
direct actions to challenge patent validity should be
imported into antitrust actions predicated on fraudulently
procured patents.

    Noting the distinction between patent and antitrust
actions drawn in Walker Process, this court and others
have declined to apply limitations on patent invalidity
suits to Walker Process antitrust actions. In Hydril Co. v.
Grant Prideco LP, 474 F.3d 1344 (Fed. Cir. 2007), this
court refused to apply the standing limitation on declara-
tory judgment actions challenging a patent’s validity to
the context of a Walker Process claim. Id. at 1350. Simi-
larly, the Second Circuit has held that direct purchasers
had standing to pursue their Walker Process claim despite
the fact that, as purchasers, they could not directly chal-
lenge the patent’s validity. DDAVP, 585 F.3d at 689-92.2

    2   The Second Circuit “decline[d] to decide whether
purchaser plaintiffs per se have standing to raise Walker
Process claims,” and held “only that purchaser plaintiffs
have standing to raise Walker Process claims for patents
that are already unenforceable due to inequitable con-
duct.” DDAVP, 585 F.3d at 691-92. The district court in
this case noted that claims of intentional fraud against
9                               RITZ CAMERA   v. SANDISK CORP


The D.C. Circuit has likewise allowed a Walker Process
claim to proceed even though the patentee had disclaimed
the patent and thus the plaintiff faced no risk of an in-
fringement suit. Oetiker v. Jurid Werke, GmbH, 556 F.2d
1 (D.C. Cir. 1977). The rule urged by SanDisk—to limit
Walker Process antitrust claimants to competitors who
could bring a declaratory judgment action attacking a
patent’s validity—would conflict with all of those deci-
sions.

    SanDisk argues that allowing direct purchasers to
bring Walker Process claims would authorize an intoler-
able end-run around the patent laws because parties
unable to pursue invalidity claims could achieve the same
result by way of a Sherman Act claim. We do not share
SanDisk’s concern. A Walker Process antitrust claim is a
separate cause of action from a patent declaratory judg-
ment action. It is governed by principles of antitrust law,
and there is nothing novel about the fact that it includes
as one of its elements the need to prove a violation that is
not independently actionable between the same parties.
Walker Process explained that while one of the elements
of the antitrust claim is the fraudulent procurement of a
patent, the action “does not directly seek the patent’s
annulment.” 382 U.S. at 176. Ritz’s claim likewise seeks
relief under the antitrust laws; it does not directly seek to

the ’338 and ’517 patents had previously survived a
motion for summary judgment in another case. We see no
reason to limit the scope of Walker Process standing to
cases in which the patents have been “tarnished” in
another proceeding. Walker Process contains no such
limitation, and applying such a requirement would have
the undesirable effect of subjecting injured parties’ claims
to the litigation strategies of others. It would also be
likely to generate unproductive wrangling over what
counts as a sufficiently “tarnished” patent to support a
Walker Process claim.
RITZ CAMERA   v. SANDISK CORP                              10


invalidate SanDisk’s patents or render them unenforce-
able, even though that would likely be the practical effect
if Ritz were to prevail on its Walker Process claim.

     Moreover, as to SanDisk’s assertion that granting
standing to direct purchasers would trigger a flood of
litigation and stem innovation, the Supreme Court re-
jected the same argument in Walker Process when it
explained that “the interest in protecting patentees from
‘innumerable vexatious suits’ [cannot] be used to frustrate
the assertion of rights conferred by the antitrust laws.”
382 U.S. at 176. As the Court explained, Walker Process
claims “deal only with a special class of patents, i.e., those
procured by intentional fraud,” id., and “cannot well be
thought to impinge upon the policy of the patent laws to
encourage inventions and their disclosure,” id. at 180
(Harlan, J., concurring). Particularly in light of the
demanding proof requirements of a Walker Process claim,
we are not persuaded by SanDisk’s “flood of litigation”
argument.

    In sum, Walker Process recognizes a clear distinction
between claims that arise under the antitrust laws and
those that arise under the patent laws. Because direct
purchasers are generally permitted to bring antitrust
actions, and because the Walker Process decision did not
preclude purchasers from bringing this particular type of
antitrust claim, we hold that Ritz’s status as a direct
purchaser gives it standing to pursue its Walker Process
claim even if it could not have sought a declaratory judg-
ment of patent invalidity or unenforceability.

                        AFFIRMED
