Jonathan H. Hatch, Counsel

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”).

Public discourse about antitrust law has been expanded to include a wider range of ideas about the purpose of antitrust law.  “New Brandeisians” believe that the consumer welfare standard, which prioritizes end-user prices over most other considerations, does not account for all the harms caused by a lack of competitive markets.  They contend that this standard is particularly ill-suited for policing the large technology companies that dominate their markets.  As previously discussed here and here and here, certain American regulators, legislators, and presidential candidates appear to be listening.

As we discussed in a previous post, a new school of thought about antitrust law (or, rather, a new application of old antitrust principles) has received increasing attention in recent months.  The so-called “New Brandeis” approach seeks to shift the focus of antitrust law from consumer welfare alone to include the competitive structure of markets.  Recent attention to these arguments is often traced to the publication of Lina Khan’s Yale Law Journal article "Amazon's Antitrust Paradox."  (Khan, who previously served as an advisor to FTC Commissioner Rohit Chopra, was just hired as counsel for the House Judiciary Committee’s Subcommittee on Antitrust, Commercial and Administrative Law.)  Indeed, as we discussed last week, the Senate Judiciary Committee held hearings focusing on potential changes to the consumer welfare standard currently used by federal courts in evaluating antitrust claims.

For the past several decades, antitrust law has been focused primarily on consumer harm—a given policy is unlikely to be considered anticompetitive if it results in lower prices for consumers.  A student note in a January 2017 edition of the Yale Law Journal titled “Amazon’s Antitrust Paradox,” argues that this focus is too narrow, and that antitrust policy and regulators should be focused on broader measures of competition. Using Amazon as a case study, the author, Lina M. Khan, argues that Amazon should be subject to increasing antitrust scrutiny despite its substantial track record of providing low prices to consumers for a variety of products.

We wrote before about a decision by an Alabama federal district court to analyze claims in the Blue Cross Blue Shield multi-district litigation under a per se standard.  The court found that a licensing rule allegedly requiring member plans to derive at least two-thirds of their revenue from Blue-branded plans was effectively an “output restriction” which, especially combined with the designation of exclusive service areas among the member plans, constituted a per se Sherman Act violation.

On April 9, 2018, the producer of  the Soul’d Out music festival in Portland, Oregon, sued the owners and producers of the Coachella music festival in California for what it alleges are anticompetitive contract terms that prevent performers from playing in its much smaller festival.  As alleged in the compliant, to perform at the massive Coachella festival, performers must agree not to perform at any “Festival or Themed Event” in California, Nevada, Oregon, Washington or Arizona between December 15, 2017 and May 7, 2018—a contract term that the complaint refers to as the “Radius Clause.”  Coachella is scheduled to take place this year in April 2018, so the clause restricts performers for roughly four months before and one month after the festival. 

In a case of first impression, the Third Circuit recently held in In re Processed Egg Products Antitrust Litigation, No. 16-3795, 2018 U.S. App. LEXIS 2698 (3d Cir. Jan. 22, 2018), that a direct purchaser of a product, comprised partly (but not all) of price-fixed materials, has antitrust standing to pursue a claim against the product’s seller where the seller is a participant in the alleged price-fixing conspiracy, even if the product also includes some material supplied by a third-party non-conspirator.

On November 15, 2017, the United States Senate passed the Criminal Antitrust Anti-Retaliation Act of 2017 (“CAARA”). This Act would amend the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (“ACPERA”), and would provide a civil remedy to persons fired or otherwise discriminated against for reporting potential criminal violations of the antitrust laws.

The Third Circuit recently affirmed the grant of summary judgment to GlaxoSmithKline (“GSK”) in the nearly 10-year-old Wellbutrin XL Antitrust Litigation, which challenged the lawfulness of settlement agreements resolving patent disputes over Wellbutrin XL.  In determining that GSK had not violated the Sherman Act, the court determined that GSK’s settlement of patent infringement lawsuits did not reflect that GSK had engaged in sham litigation, or that GSK made unlawful “reverse payments” to settle that litigation.  To reach these conclusions, the court carefully picked apart years of evidence

As we noted last month, the FTC has recently been voicing concerns about potentially anticompetitive actions of state professional licensing boards.  Our post also discussed the scope of such boards’ immunity from antitrust liability under the Supreme Court’s caselaw.

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.

A new book was recently released about the events surrounding the alleged LIBOR fixing conspiracy.  Authored by Wall Street Journal reporter David Enrich, The Spider Network: The Wild Story of a Math Genius, a Gang of Backstabbing Bankers, and One of the Greatest Scams in Financial History tackles the issues from a unique perspective, focusing on one of the main bankers involved, Tom Hayes.  Hayes, formerly a trader at UBS and Citigroup, was prosecuted by the U.K. Serious Fraud Office in 2015.  He was convicted of conspiracy to defraud for his role in fixing LIBOR and is serving an 11-year prison sentence.

This week, the Second Circuit affirmed the approval of a $50 million agreement settling price-fixing claims brought by a class of farmers against a dairy cooperative and a dairy marketing company.  The settlement in Allen et al. v. Dairy Farmers of America et al. was notable for at least two reasons that were seemingly at odds: First, the unusually high number of claims filed; and second, the vociferous advocacy of two named plaintiffs who objected to the settlement.  The objectors argued that class counsel colluded with defendants’ to reach a settlement agreement, and coerced class members to support the settlement.

We have not previously reported on an antitrust litigation that is enveloping the mixed martial arts (“MMA”) world.  Six current and former MMA fighters have filed a class action lawsuit against the company that owns the UFC, Zuffa, LLC, for violations of the Sherman Act.  A review of the docket indicates that the UFC will have to go a few more rounds before it has another opportunity for a knockout.

What does to take to state a claim under Section 2 of the Sherman Act for refusal to deal?  Last week’s decision in Viamedia, Inc. v. Comcast Corp. and Comcast Spotlight, LP, a case out of the Northern District of Illinois, highlights the difficulty of plausibly alleging a negative:  that a defendant monopolist’s exclusionary conduct lacks any procompetitive purpose.

President Donald Trump last week designated Maureen K. Ohlhausen as acting chair of the U.S. Federal Trade Commission (“FTC”). Ohlhausen is a vocal critic of government involvement in the market, suggesting the FTC under her leadership will employ a lighter touch with regard to enforcement and regulatory actions.

In a recent decision denying the defendant’s motion to dismiss, Judge Mitchell Goldberg of the Eastern District of Pennsylvania allowed the manufacturer of a generic version of Suboxone to proceed upon an interesting theory of attempted monopolization by the brand-name manufacturer Indivior (formerly, Reckitt).  Amneal, the generic manufacturer, alleges that Indivior purposefully delayed what was supposed to be a joint effort to develop a combined risk management strategy for all versions of Suboxone.

In a December 2, 2016 decision, Retractable Technologies, Inc. v. Becton Dickinson & Company, the Fifth Circuit opined on when false advertising can lead to liability under the Sherman Act. The Fifth Circuit’s answer: Very rarely.

PinnacleHealth System and Penn State Hershey Medical Center have abandoned their merger plans following a Third Circuit defeat last month.  The announcement underscores the uncertainty faced by hospitals considering consolidation as a way to keep costs down and promote a value-based system of payment.

Antitrust standing is one of the most beguiling concepts in antitrust law, but it is a hurdle that a plaintiff must negotiate if its claim can proceed.  This week, the Second Circuit provided some clarity to the doctrine when it affirmed a district court decision dismissing the antitrust claims of end users of aluminum for lack of antitrust standing in In re Aluminum Warehousing Antitrust Litigation.

On July 5, 2016, investors filed a federal class action [add link to pdf] in the Southern District of New York alleging defendant banks had manipulated the Singapore Interbank Offered Rate (SIBOR) “and/or” Singapore Swap Offer Rate (SOR) market, forcing investors to pay artificial prices for financial derivative transactions based on these benchmarks. This lawsuit follows on the heels of the Second Circuit’s decision in In re: LIBOR-Based Financial Instruments Antitrust Litigation, which allowed the case to proceed.  

A recent decision of the European Court of Justice (“ECJ”) regarding the sale of tobacco products highlights a long-standing tension between two sets of laws: antitrust/competition laws, which seek to keep products affordable and accessible to consumers, and consumer protection and public health laws, which can seek to steer consumers away from products that pose a risk to public health by making them less accessible.

Minnesota Timberwolves season ticket holders unhappy with the team’s 20-45 record and hoping to resell their tickets have filed a putative class-action lawsuit over the team’s “draconian” ticketing policy.

We’ve previously written about litigation involving the scope of Major League Baseball’s long-standing antitrust exemption.  Earlier this week, on the eve of trial, MLB settled Garber v. Office of the Commissioner of Baseball, a class action lawsuit challenging its territorial broadcasting policy.  The lead plaintiff Marc Lerner is a Mississippi resident and New York Yankee fan who was allegedly charged supracompetitive prices to watch the Yankees due to MLB’s territorial broadcast policies.  Under MLB’s policy of territorially restricting television broadcasts, consumers could only watch “out-of-market” games subject to certain limitations, including a requirement to purchase every out-of-market game, even if the consumer was only interested in following a single team.  By avoiding the bench trial, MLB avoided having to further litigate the scope of its unique “antitrust exemption” in front of Judge Scheindlin of the U.S. District Court for the Southern District of New York, who had previously expressed skepticism about the continuing viability of the exemption.