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Antitrust Update Blog is a source of insights, information and analysis on criminal and civil antitrust and competition-related issues. Patterson Belknap’s antitrust lawyers represent clients in antitrust litigation and counseling matters, including those related to pricing, marketing, distribution, franchising, and joint ventures and other strategic alliances. We have significant experience with government civil and criminal/cartel investigations, providing the unique perspectives of former top U.S. Department of Justice Antitrust Division lawyers from both the civil and criminal sides.
“Free Sherlock” Litigation Raises Specter of Antitrust Liability for Distributors Cooperating With Intellectual Property Owners
Leslie Klinger, noted Sherlock Holmes scholar and lawyer, has waged a nearly all-out legal offensive against the Estate of Arthur Conan Doyle over the Estate’s assertion of a copyright in connection with certain works featuring the iconic Sherlock Holmes. The lawsuit has been a media darling─reports have appeared in outlets such as Businessweek, The Hollywood Reporter, Reuters, and The New York Times─with the press often emphasizing the David-and-Goliath-like aspects of the litigation. A website entitled Free Sherlock has chronicled the ups and downs of the lawsuit (mostly ups for Klinger), and the litigation also inspired its own Twitter hashtag: #freesherlock. Judge Posner of the Seventh Circuit has stirred the copyright pot with an antitrust analysis that could ensnare distributors that refuse to distribute products that allegedly infringe the rights of an intellectual property owner.
China’s antitrust regulators have been on a tear lately. Last year the State Administration for Industry and Commerce (“SAIC”) began its investigation of Qualcomm for allegedly violating China’s 2008 Anti-Monopoly Law. SAIC recently released a statement indicating that this investigation is coming to an end, but Qualcomm may be facing a fine of over $1 billion. Then, in July of this year, SAIC raided offices of Microsoft and its partner Accenture PLC throughout China in connection with an investigation into Microsoft’s alleged anti-competitive bundling of software. And during the last month alone, the National Development and Reform Commission (“NDRC”) accused Chrysler, Mercedes Benz, Volkswagen, and a dozen Japanese auto parts makers of various violations of the Anti-Monopoly law in connection with their pricing of auto parts.
On June 30, 2014, the FTC announced in a series of orders that it would consent to Actavis PLC’s acquisition of Forest Laboratories only under certain conditions. Under a February 2014 Merger Agreement, Actavis plans to acquire Forest for approximately $25 billion. The FTC filed a complaint alleging that the proposed merger would negatively impact the market for four drugs, resulting in violations of Section 7 of the Clayton Act and Section 5 of the FTC Act.
As we noted last month, the DOJ invited public comment last June on whether to modify its consent decrees with the music licensing firms ASCAP and BMI to respond to changes in the digital music business. The DOJ review comes on the heels of decisions issued last year in the Southern District of New York, by Judges Cote and Stanton, holding that the consent decrees did not permit music publishers to partially withhold digital performance rights – which the publishers sold separately, at a premium, to the streaming music service Pandora. The challenge now will likely be convincing the DOJ (and, if necessary, the district court) – that the decrees have already achieved their purposes – or are no longer suited to do so – despite recent finding of coordinated, anticompetitive conduct by some of the key players in the dispute.
Direct Evidence of Patent Holder’s Pricing Power Doesn’t Lead to Summary Judgment on Existence of Monopoly Power
We wrote earlier about the DOJ’s efforts to use direct evidence to show that the rules Amex imposes on merchants harm competition. The district court’s decision denying summary judgment to the plaintiff in Apotex v. Cephalon presents an apparently novel attempt to use direct evidence of market power to prove an antitrust case at the summary judgment stage and avoid tricky issues of market definition.
The Federal Trade Commission has reached a proposed consent agreement with two major propane distributors, Ferrellgas, L.P. (d/b/a Blue Rhino) and AmeriGas Partners, L.P., that would settle an FTC price-fixing investigation into the two companies. The proposed deal was announced by the FTC in an order withdrawing the matter from adjudication so that the proposed agreement could be reviewed.
The intersection of IP and antitrust has always been fraught. The raison-d’être of the Sherman, Clayton, and FTC Acts is to bust trusts and promote competition. Meanwhile, intellectual property laws create lawful exclusionary rights.
This series will explore one particular point of tension: the battle over “reverse payment settlements” pursuant to which the plaintiff in a patent infringement action agrees to “pay” the alleged infringer to keep the infringer’s product off the market for a period of time. In these “pay-for-delay” arrangements, the province of the pharmaceuticals industry, the settling parties are a brand-name drug manufacturer and the maker of a generic equivalent.
The DOJ’s ongoing civil trial challenging American Express’s merchant rules as a violation of Section 1 of the Sherman Antitrust Act may clarify the significance of market share calculations.
At issue in the case are Amex’s rules barring merchants from steering consumers to cards that charge lower merchant processing fees.
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.
We are pleased to announce the launch of Antitrust Update, Patterson Belknap’s new resource for the latest news and happenings in the antitrust and competition law arena.
On June 27, the trial in O’Bannon v. NCAA concluded following 15 days of testimony. Plaintiffs in this case, former college athletes, including former UCLA basketball player Ed O’Bannon, originally filed in the Northern District of California in 2009. They have challenged the NCAA’s longstanding ban on paying licensing fees to college athletes for the use of their names and images in commercial outlets like broadcasts, merchandise, and video games, asserting that this policy constitutes an anti-competitive restraint of trade devoid of any pro-competitive benefits.
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