Handgards, Inc., a Corporation v. Ethicon, Inc., a Corporation

KENNEDY, Circuit Judge,

concurring:

I concur in the result of Judge Sneed’s opinion, and think it inappropriate to address the question whether or not Ethicon could rely on an immunity granted to antitrust defendants under the principles set forth in Franchise Realty Interstate Corp. v. San Francisco Local Joint Executive Board of Culinary Workers, 542 F.2d 1076 (9th Cir. 1976), cert. denied, 430 U.S. 940 , 97 S.Ct. 1571 , 51 L.Ed.2d 787 (1977). The matter was not raised by Ethicon at any stage of these proceedings. Since a new trial is required in this case, because of the erroneous jury instructions noted by the majority, the district court in the first instance should determine whether Ethicon may raise the question on retrial.

In Franchise Realty we held that an antitrust plaintiff must plead that the litigation or petitions which allegedly caused competi-five injury were sham proceedings, the showing required by a line of Supreme Court decisions, see Eastern Railroad Presidents Conference v. Noerr Motor Freight, 365 U.S. 127 , 81 S.Ct. 523 , 5 L.Ed.2d 464 (1961); United Mine Workers v. Pennington, 381 U.S. 657 , 85 S.Ct. 1585 , 14 L.Ed.2d 626 (1965); California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508 , 92 S.Ct. 609 , 30 L.Ed.2d 642 (1972); Otter Tail Power Co. v. United States, 410 U.S. 366 , 93 S.Ct. 1022 , 35 L.Ed.2d 359 (1973); Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623 , 97 S.Ct. 2881 , 53 L.Ed.2d 1009 (1977). Franchise Realty might be interpreted to require dismissal of antitrust claims unless the plaintiff can show that the defendant’s conduct was designed to cause competitive injury by exacting such extraordinary costs that meaningful use of an agency or tribunal was barred, see 542 F.2d at 1080 -81 & n. 4, and perhaps to require further that the defendant must have engaged in conduct other than instigation and maintenance of the proceedings, see id. See also Wilmorite, Inc. v. Eagan Real Estate, Inc., 454 F.Supp. 1124 (N.D.N.Y.1977); Ernest W. Hahn, Inc. v. Codding, 423 F.Supp. 913 (N.D.Cal.1976). Whether this is a correct interpretation of Franchise Realty or the Sherman Act, cf. P. Areeda & D. Turner, Antitrust Law § 201-204, 203c n.9 at 44-45 (1978), and whether Ethicon’s conduct was actionable under such standards are important questions, but the issues are not presented for consideration here.

The majority opinion seems to suggest that a showing of sham proceedings under Franchise Realty is not required where the claimed antitrust injury flows from patent litigation, but it does not indicate the respects in which patent litigation somehow presents a greater threat to interests protected by the Sherman Act than other types *999 of suits governed by California Motor and Franchise Realty. It is irrelevant that a successful plaintiff in a patent action is enforcing a lawful monopoly. Very costly “sham” unfair competition or tort suits, for example, may produce more anticompetitive injury than less costly but successful infringement actions. Moreover, it is difficult to argue that a successful plaintiff has engaged in sham' litigation. But to the extent that the patent plaintiff is unsuccessful, I see little reason to distinguish patent litigation from other kinds of litigation. If attempted enforcement of a patent known to be invalid is the special circumstance which justifies a special rule, the court’s opinion states no reason to depart from the requirement that a plaintiff prove knowing, intentional fraudulent procurement as stated in Walker Process. To the extent that abuse of the judicial process by bad faith prosecution of a claim known to be without merit is the essence of the antitrust violation, the court’s opinion states no reason for departing from the circuit’s precedents, see Franchise Realty, governing this type of antitrust violation. Further, a more lenient rule for patent litigation appears at odds with the principal holding that a special burden of proof is required before an antitrust plaintiff may prevail on the claim of injury from a previous patent litigation, our purpose being to avoid undue discouragement to the adjudication of patent infringement claims. In my view, however, whether and why the kind of antitrust litigation permitted in Walker Process is distinguishable in meaningful ways from that discussed in California Motor, the relationship between the different standards applied in those cases, and the applicability of Franchise Realty to this case, are best left for a later decision when the point has been specifically raised by the parties. 1

Finally, the majority states that in proving injury “flowing from” an antitrust violation, “To be one of several causes is not enough.” To the extent this language suggests a change in the normal standards regarding causation in antitrust cases, the statement is unexplained. There is no need in this case to reexamine the rule that “proximate cause” in antitrust cases is defined in terms of “a substantial cause.” See Mulvey v. Samuel Goldwyn Productions, 433 F.2d 1073 , 1075 n.3 (9th Cir. 1970); Hecht v. Pro-Football, Inc., D.C.Cir., 187 U.S.App.D.C. 73 , 570 F.2d 982, 996 (1977); Billy Baxter, Inc. v. Coca-Cola Co., 431 F.2d 183, 187 (2d Cir. 1970); E. Devitt & C. Blackmar, Federal Jury Practice and Instructions §§ 90.31, 80.18 (1977) (“proximate cause” in antitrust cases defined in terms of “substantial factor”). To the extent the language applies only to antitrust claims based on prior patent infringement actions, the majority similarly does not explain why a different causation rule is appropriate in this kind of case. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 , 97 S.Ct. 690 , 50 L.Ed.2d 701 (1977), is squarely in point for our holding that the injury must result from a competitive wrong prohibited by the antitrust laws, but in my view it should not be interpreted to introduce a new standard for proving causation either in antitrust cases generally or antitrust claims based on prior patent litigation. I am not as sure as Judge Sneed that part of Handgards’ damages claim was for lost profits resulting from the entry of an additional competitor, but I agree that the effect of the Orsini patent on plaintiff’s claim of injury creates an issue which the district court should decide.

*1000 With the above observations, I concur in the opinion of the majority.

. Defendant’s position on this appeal was that antitrust claims based on the prior bringing of infringement actions differ from other kinds of antitrust suits based on alleged abuse of the judicial system. It expressly declined to rely on California Motor, stating in its brief: “The only relevance of California Motor Transport, which had nothing to do with patents, is its explicit reaffirmation by the Supreme Court of Walker Process as the applicable standard of fraud in connection with a § 2 case charging enforcement of invalid patents.” Appellant’s Brief at 27. Instead, defendants argued that this case was governed by Walker Process. They claimed plaintiff should have been required to prove common law intentional fraud, not merely bad faith, and that the standard of proof should have been clear and convincing instead of a preponderance of the evidence. Their second argument is adopted in Judge Sneed’s opinion.