There have been several developments since we last wrote about Intel and Apple’s suit against Fortress and several of its so-called “patent assertion entities” (collectively, “Fortress”) based on the allegedly anticompetitive practice of patent “aggregation.” Recall that the plaintiffs’ first amended complaint was dismissed without prejudice in January 2021 because Judge Chen of the U.S. District Court for the Northern District of California found that certain of the alleged product markets were too broad and that the complaint lacked adequate allegations of Fortress’s market power in any of those markets. The court held that plaintiffs did not sufficiently allege that Fortress was charging supracompetitive prices to license its patents, or that there were no substitute patents that could be licensed instead of Fortress’s patents.
Intel and Apple’s challenge to Fortress’s allegedly anticompetitive practice of patent “aggregation,” which we discussed previously on this blog, suffered another setback earlier this month. The Northern District of California dismissed the plaintiffs’ first amended complaint, although it granted them leave to amend again.
For years, antitrust commentators have warned of threats to innovation and competition posed by “thickets” of patents—the “dense web[s] of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology.” See Carl Shapiro, “Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting” (March 2001), available at https://www.nber.org/chapters/c10778.pdf. At least one judge on the Federal Circuit has also noted concern about this issue. E.g. Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1328-29 (Fed. Cir. 2016) (Mayer, J., concurring) (calling for elimination of “generically-implemented software patents” to “clear the patent thicket”).
AAG Delrahim on the Intersection of Antitrust and Intellectual Property Law: Strong Patent Rights Spur – Not Suppress – Competition
On March 16, 2018, Assistant Attorney General for the Antitrust Division Makan Delrahim gave a speech at the University of Pennsylvania Law School titled “The ‘New Madison’ Approach to Antitrust and Intellectual Property Law.” The speech provided insight concerning his views on the role of antitrust law in the field of intellectual property, and the Antitrust Division’s priorities under his leadership. AAG Delrahim explained four basic premises that govern how he believes antitrust enforcement should impact intellectual property law; in short, his view is that patent rights are a boon to consumers and competition and antitrust law should not stand in the way of patent-holders exercising their rights.
Last Monday, the court denied Qualcomm, Inc.’s motion to dismiss the Federal Trade Commission’s suit against it for allegedly using anticompetitive tactics to maintain a monopoly in baseband modem chips for cell phones. The FTC contends that Qualcomm is using its standard-essential patents (SEPs) to extract monopoly prices from cell phone and other cellular device manufacturers in violation of its commitment to license its patents on a “fair, reasonable, and non-discriminatory” (FRAND) basis.
Last week, the FTC filed a complaint against Qualcomm, a manufacturer of baseband processors, which are chips included in cell phones and other products with cellular connectivity that allow the devices to connect to cell networks. Qualcomm holds patents to technologies incorporated in the standards that allow all cell phones to communicate with one another, referred to as standard-essential patents or SEPs. Qualcomm’s patents mostly relate to older, 3G-CDMA cellular technologies, which are still necessary for modern cell phones to work as consumers expect. As a condition of declaring its patents standard-essential, Qualcomm committed to the telecommunications industry’s standard-setting organizations that it would license its patents on a “fair, reasonable, and non-discriminatory” (FRAND) basis.
In another development in the ongoing cathode ray tube (CRT) multidistrict litigation, Judge Tigar of the Northern District of California ruled that Costco could not recover any damages it sustained as an indirect purchaser of price-fixed CRTs. Costco attempted to bring state law antitrust claims against the conspirators under California law, which allows indirect purchasers to recover damages. However, applying Washington choice-of-law principles (where Costco originally filed suit before the case was transferred to the MDL court), the court held that Washington law, which does not allow for recovery by indirect purchasers, governed Costco’s claims.
The District Court for the Northern District of California granted defendant SanDisk’s motion for summary judgment yesterday in Giuliano, et al v. SanDisk Corp., et al, 4:10-cv-02787 (N.D. Cal. June 25, 2010).
The Department of Justice ("DOJ") announced this week that Hitachi Chemical Co. will plead guilty to a criminal charge for conspiring with competitors to fix the prices of electrolytic capacitors sold in the United States and elsewhere. The Tokyo-based company will pay an undisclosed fine and has agreed to cooperate with the DOJ's investigation.
We will soon know whether the Supreme Court will grant Apple’s cert petition asking the Court to review and reverse its antitrust violation for conspiring with publishers to fix the prices of e-books. The Court will consider the petition at its next conference on February 19. As we previously reported here and here, a divided Second Circuit panel affirmed the district court’s findings that the per se rule applied to Apple’s conduct and that Apple violated Section 1 of the Sherman Act.
Defendants Summary Judgment Motion in In re Cathode Ray Tube Antitrust Litigation May Illuminate Policy Justifications Behind Ownership or Control Exception
Earlier this month, defendants in the In re Cathode Ray Tube Antitrust Litigation moved to challenge the standing of major retailers to pursue damages claims under the Supreme Court’s 1977 Illinois Brick decision.
In re Capacitors Antitrust Class Action Update: Claims Slightly Narrowed, Parties Continue Discovery
When we last wrote in June 2015 about In re Capacitors Antitrust Litig., No. 14-03264-JD, consolidated putative class actions pending before Judge James Donato in the Northern District of California, the plaintiffs had just largely survived a motion to dismiss. That blog post, which describes the background of the case and the first round of motions to dismiss, is available here. Recently, on December 30, 2015, the court ruled on several additional motions to dismiss based on plaintiffs’ amended complaints.
On December 14, 2015 Judge Yvonne Gonzalez Rogers heard oral argument on a motion to dismiss filed by Apple in an antitrust action brought against the company in connection with its 2007 deal to sell iPhones exclusively to AT&T Mobility. The next day, Judge Rogers denied Apple’s motion. The lawsuit, one of several arising from the Apple-AT&T agreement, raises interesting questions about how to define a relevant product market using an “aftermarket” theory.
Our Antitrust practice group recently co-authored a series of articles in Inside Counsel discussing major antitrust issues facing in-house counsel today. Our articles expand on topics that we have covered in this blog, including the Actavis litigation, the change in the competition landscape across the globe and antitrust reforms in Europe and Asia, antitrust enforcement in e-commerce, the implications of the Supreme Court’s decision in North Carolina State Board of Dental Examiners on antitrust liability for professional boards, and the Department of Justice’s recent guidance on antitrust compliance programs.
We have previously posted about United States v. Apple, Inc., a blockbuster trial that ended with Judge Denise Cote of the Southern District of New York concluding that Apple had conspired with five publishing companies to raise the price of e-books. At oral argument before the Second Circuit, the panel hearing Apple’s appeal seemed particularly interested in whether the district court had erred in applying the relatively lenient per se standard rather than the rule of reason, under which the plaintiffs would have had to prove that the anti-competitive injury caused by Apple outweighed any pro-competitive benefits of its conduct.
AlarMax Distributors Inc. may pursue price discrimination claims under the Robinson-Patman Act (RPA) against Honeywell International Inc., a federal judge in Pennsylvania ruled last week. Fire and security product distributor AlarMax alleges that Honeywell violated a decade-old settlement and supply agreement by engaging in unlawful pricing activity.
Today the United States Supreme Court denied certiorari in two cases, Motorola Mobility LLC v. AU Optronics et al. and Hsiung and AU Optronics Corp. America Inc. v. United States, declining to resolve a closely watched circuit split on the applicability of the Foreign Trade Antitrust Improvements Act (“FTAIA”) in regulating foreign conduct.
The Supreme Court has been urged to resolve a circuit split concerning the reach of the Foreign Trade Antitrust Improvements Act (FTAIA) to foreign conduct that may affect U.S. commerce. Motorola this week filed a petition for certiorari in a Seventh Circuit case interpreting the FTAIA as barring Sherman Act claims arising out of the foreign conduct of an alleged liquid crystal display (LCD) panel cartel.
On December 1, 2014, we wrote about the Seventh Circuit’s decision in Motorola Mobility LLC v. AU Optronics Corp., which affirmed dismissal of the vast majority of Motorola’s claims regarding LCD panels.
On Monday, the United States Court of Appeals for the Second Circuit heard oral argument in Apple’s appeal in the e-book price-fixing lawsuit brought by the Department of Justice. This appeal follows an adverse decision from June 2013, in which the district court determined that Apple had conspired with five book publishers to raise prices on e-books in violation of the antitrust laws.
Seventh Circuit Affirms Dismissal of 99% of Motorola’s Claims in LCD Case Based on Motorola’s Lack of Standing
On the day before Thanksgiving—less than two weeks after oral argument—the Seventh Circuit issued its ruling on Motorola’s interlocutory appeal in Motorola Mobility LLC v. AU Optronics Corp., affirming dismissal of the vast majority of Motorola’s claims regarding LCD panels.
On November 12, 2014, the parties in Motorola Mobility v. AU Optronics reargued their case to a three judge panel of the Seventh Circuit – the same panel that ruled on the case earlier this year. The United States Department of Justice (“DOJ”) also had the opportunity to argue its position in this closely-watched Foreign Trade Antitrust Improvements Act (“FTAIA”) case.
Motorola Oral Arguments Today – Will the Seventh Circuit Revise Its Interpretation of the FTAIA, and If so, How?
Today the Seventh Circuit Court of Appeals hears oral argument from the parties and amicus curiae the United States concerning the reach of the Foreign Trade Antitrust Improvements Act (“FTAIA”), 15 U.S.C. § 6a, in Motorola Mobility LLC v. AU Optronics. Last March, as we’ve written previously, the court ruled against Motorola in an interlocutory appeal concerning the FTAIA’s application to offshore components manufacturers. The court subsequently withdrew its opinion, denied a petition for en banc review, and ordered oral argument.
Last Friday, Magistrate Judge Paul S. Grewal of the Northern District of California denied a motion by Oracle to dismiss three counterclaims based on a tying theory in Oracle America, Inc. v. Terix Computer Co. In doing so, the court followed (if begrudgingly) the Supreme Court’s decision in its seminal tying case, Eastman Kodak Co. v. Image Technical Services, Inc.
Developments in the Capacitor Cartel Litigation: Class Counsel Appointed and the Antitrust Division Intervenes
In July, we wrote about two putative class action lawsuits alleging that Panasonic, Samsung, and other electronics manufacturers had formed a cartel to boost prices of certain electronic capacitors. Since then, the cases have been consolidated, interim lead co-counsel have been appointed, the Antitrust Division has confirmed its own investigation, and the court has set a preliminary case schedule.
Our regular readers know that we have been carefully following the developments in Motorola Mobility LLC v. AU Optronics Corp., currently pending in the Seventh Circuit. The case addresses the reach of the Foreign Trade Antitrust Improvements Act (“FTAIA”), and will join recent decisions issued by the Second Circuit and Ninth Circuit earlier this year.
In Motorola Mobility LLC v. AU Optronics Corp. et al., the Seventh Circuit is currently considering the reach of the Sherman Act beyond United States borders and will join the Second and Ninth Circuits in interpreting some key provisions of the Foreign Trade Antitrust Improvements Act (“FTAIA”). In that case, which will be heard by the Seventh Circuit on a motion for rehearing, the parties have advanced vastly different interpretations of the FTAIA and the extent to which defendants’ conduct abroad has impacted the United States market, if at all.
In the seminal decision, Aspen Skiing Co. v. Aspen Highlands Skiing Corp 472 U.S. 585, 611 (1985), the U.S. Supreme Court affirmed a jury verdict for a plaintiff on a Section 2 claim and set forth the standard for unilateral refusal-to-deal claims. More recent U.S. Supreme Court and Second Circuit cases suggest that Aspen Skiing may reflect the “outer boundary” of liability under Section 2. What are the markers of that boundary?
Many of you will recall that on March 27, 2014, the Seventh Circuit issued a long-awaited decision concerning the scope of the Foreign Trade Antitrust Improvements Act (“FTAIA”) in Motorola Mobility v. AU Optronics. The Seventh Circuit held that the higher prices for mobile phones Motorola sold in the United States did not “give rise to” its foreign subsidiaries’ antitrust claims, and that Motorola could not show a “direct” effect on U.S. commerce sufficient to satisfy the FTAIA. Just days after this opinion, Motorola asked for a rehearing. After multiple letters back and forth between the Court, the parties, and the Solicitor General’s Office, on July 1, 2014 the Seventh Circuit vacated its prior opinion. Additional briefing is now underway, and is expected to be completed in October.
Last week we posted a discussion concerning effective antitrust corporate compliance programs, and provided some factors that in-house counsel should consider in developing compliance programs governing employees’ communications with competitors and dealings with customers and suppliers. Today we continue that discussion by addressing the relevant factors in compliance programs concerning monopolization and dominance and price discrimination.
With DOJ’s Antitrust Division and the FTC ramping up antitrust enforcement, it is critical for companies to take a hard look at their compliance programs and update them on a regular basis to avoid potential antitrust violations and discover antitrust malfeasance early on so a company can have the option of self-reporting and applying for leniency under DOJ’s leniency program. The United States Sentencing Guidelines provide guidance to companies in the organization of their corporate antitrust compliance programs; Guidelines considerations include establishing standards and procedures to prevent and detect criminal conduct and monitoring, auditing and periodically evaluating compliance with the program, including providing anonymous or confidential means for reporting potential breaches. In addition to these threshold requirements, it is important that any antitrust compliance program provide guidance in a number of areas that present potential pitfalls. Today, we discuss guidance on communications with competitors and dealing with customers and suppliers.
Over the past ten years, criminal antitrust fines have increased dramatically: they totaled only $107 million in fiscal year (“FY”) 2003, but increased to a high of $1.14 billion in FY-2012 and remained relatively steady at $1.02 billion in FY-2013. As criminal fines increase, companies face increasing exposure for conduct that allegedly runs afoul of the U.S. antitrust laws. What is driving the marked increase in potential penalties?
We're Passing it Along: One Court’s Treatment of the Upstream and Downstream Pass-On in an Indirect Purchaser Case
In summer 2013, Best Buy faced off against Toshiba and HannStar in a price-fixing trial that was part of the multi-district Flat-Panel litigation, TFT-LCD (Flat-Panel) Antitrust Litigation, 07 MD. 01827 (N.D. Cal.). Although there has been a lot of press about Best Buy’s inability to collect its $22 million verdict due to set offs, and the parties’ protracted battle over attorneys’ fees, there has been little to no coverage of the court’s treatment of the passing on of the overcharge under applicable Minnesota law.
Last month, we were excited to publish our article, The Use of Expert Witnesses for Penalty Determinations in Criminal Antitrust Cases: A Study of United States v. AU Optronics, in Antitrust Magazine. The article examines the use of expert testimony during the trial in AU Optronics, No. 09-cr-110 (N.D. Cal), and discusses several strategic issues for practitioners to consider in responding to expert testimony in criminal cartel cases.
As luck would have it, just days after our article was published, the Ninth Circuit issued its long-awaited AU Optronics decision addressing the requirements of the Foreign Trade Antitrust Improvements Act (“FTAIA”).
On August 1, 2014, Judge Cote preliminarily approved a $450 million settlement in the Apple e-books litigation. As many of you will recall, a June 2013 trial resulted in a finding that the various plaintiffs (including numerous states, the United States, and a class action) succeeded in proving that Apple had conspired with five book publishers to raise e-book prices.
A pair of putative class actions has been filed in the past two weeks charging Panasonic, Samsung, and other electronics manufacturers with forming a cartel to boost prices in the sagging market for certain electronics capacitors. The actions follow press reports that officials in the United States and China are investigating the alleged cartel and that at least one manufacturer, who has not yet been identified, has applied for leniency with the Department of Justice.
Amazon and the publisher Hachette are engaged in a fierce dispute over the pricing of e-books sold by Amazon. At issue is how the profits from the sale of e-books should be divided between Amazon and the publisher and who should bear the impact of Amazon’s discounting of e-books.
On June 4, 2014, the Second Circuit issued its decision in Lotes Co., Ltd. v. Hon Hai Precision Industry Co., an important ruling on the reach of the U.S. antitrust laws to foreign conduct.