A Year Later: Comcast’s Impact On Antitrust Class Actions

This article originally appeared in Law360 on March 26, 2014.

On March 27, 2013, the U.S. Supreme Court issued its decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), overturning an order certifying an antitrust class action under Federal Rule of Civil Procedure 23(b)(3), which requires that questions of law or fact common to class members predominate over questions affecting only individual members.

The Supreme Court held that the plaintiffs’ expert’s damages model was unable to measure classwide damages attributable to the only theory of antitrust impact found viable by the district court. Because of this flaw in the damages model, individual damages calculations would overwhelm questions common to the class, and the class therefore could not be certified under Rule 23(b)(3).1

On remand, plaintiffs filed a new motion for class certification, slicing several years off the class period and limiting the geographic market to only five of the 18 counties in the Philadelphia area for which they originally sought certification.2 The defendants opposed the motion and filed a new motion to exclude the opinions of plaintiffs’ expert. The court then granted plaintiffs’ unopposed request to stay the case while the parties conduct settlement discussions. Plaintiffs and Comcast recently agreed to de-certify the Chicago-area class based on the Supreme Court’s decision, and plaintiffs filed an amended complaint limited to the five Philadelphia-area markets.3

It was not unexpected that class counsel in Comcast would narrow the class for which they sought certification, or that settlement discussions might take place after the Supreme Court’s decision. But what effect is Comcast having on class certification in other antitrust cases? Read More

U.S. Supreme Court Establishes Uniform Test for Standing to Bring False Advertising Claims Under Section 43(a) of the Lanham Act

On March 25, 2014, a unanimous U.S. Supreme Court established a uniform test to determine whether a plaintiff has standing to bring a false advertising claim under section 43(a) of the Lanham Act, 15 U.S.C. §1125(a). Lexmark International, Inc. v. Static Control Components, Inc., No. 12-873 (U.S. March 25, 2014). Now, to bring a claim under section 43(a), the plaintiff must demonstrate (1) that its injury falls within the “zone of interests” protected by the Lanham Act, and (2) that its injury was proximately caused by the defendant’s misrepresentations.

Before the Supreme Court’s decision, there was a three-way split among the U.S. Circuit Courts of Appeals as to the appropriate test for standing under section 43(a). The 7th, 9th and 10th Circuits had limited section 43(a) standing to actual competitors of the defendant; the 3rd, 5th, 8th and 11th Circuits had relied on antitrust standing principles or the factors outlined in Associated General Contractors v. Carpenters, 459 U.S. 519 (1983); and the 2nd Circuit had applied a “’reasonable interest’ approach.” The Court rejected all three of these tests. Read More

U.S. Supreme Court to Decide When Professional Licensing Bodies Enjoy Antitrust Immunity

The state action immunity doctrine shields private actors from antitrust liability if their activities are “actively supervised” by a state. However, arms of the state itself generally do not have to satisfy the “actively supervised” requirement to enjoy the immunity. On March 3, 2014, the U.S. Supreme Court accepted for review North Carolina State Board of Dental Examiners v. Federal Trade Commission, Case No. 13-534, where it will decide whether a state agency that consists of professionals who regulate their own profession qualifies as an arm of the state, or whether it is more akin to a private actor that must meet the “actively supervised” requirement to enjoy antitrust immunity.

The North Carolina Board of Dental Examiners had engaged in efforts to block non-dentists from offering tooth-whitening services. The 4th U.S. Circuit Court of Appeals agreed with the FTC that a North Carolina agency made up almost entirely of practicing dentists must satisfy the actively supervised requirement for the immunity to attach. See 717 F.3d 359 (4th Cir. 2013). “[W]hen a state agency is operated by market participants who are elected by other market participants, it is a ‘private’ actor.” Id. at 370. The Supreme Court will now review that determination. Although the issue of the regulation of dentists may be a narrow one, the case has broader implications for the regulation by states and state boards of many other professions and industries.

Last year, the Supreme Court decided FTC v. Phoebe Putney Health System, Inc., 133 S. Ct. 1003 (2013), another immunity case, where the Court further defined another requirement of the state action immunity doctrine—that the state policy authorizing anticompetitive activity must be “clearly articulated.”

7th Circuit Holds That the FTAIA Bars a U.S. Manufacturer’s Price-Fixing Claims Based on Its Foreign Affiliates’ Purchases of Price-Fixed Goods From a Foreign Manufacturer

On March 27, 2014, the 7th U.S. Circuit Court of Appeals affirmed a district court decision that Motorola’s price-fixing claims based on purchases that its non-U.S. affiliates made from non-U.S. defendants were barred under the Foreign Trade Antitrust Improvement Act. Motorola Mobility LLC v. AU Optronics Corp. et al., No. 09 C 6610 (7th Cir. March 27, 2014).

As explained in the February 2014 issue of Orrick’s Antitrust and Competition Newsletter, in multi-district litigation in the Northern District of California, Illinois-based Motorola asserted price-fixing claims against manufacturers of liquid crystal display (LCD) panels used in mobile phones. Its claims fell into three groups: (1) purchases of LCD panels by Motorola that were delivered directly to Motorola facilities in the United States (Category I); (2) purchases of LCD panels by Motorola’s foreign affiliates that were delivered to the foreign affiliates’ manufacturing facilities abroad, where they were incorporated into mobile phones that later were sold in the United States (Category II); and (3) purchases of LCD panels by Motorola’s foreign affiliates that were delivered to the foreign affiliates’ manufacturing facilities abroad and incorporated into mobile phones sold outside the United States (Category III). Read More

9th Circuit Dismisses LSI’s Appeal of Injunction That Kept LSI From Enforcing Import Ban Against Realtek

On March 20, 2014, the 9th U.S. Circuit Court of Appeals in an unpublished memorandum opinion dismissed LSI Corp.’s appeal of a preliminary injunction that blocked it from enforcing a potential import ban against Realtek Semiconductor Corp. Realtek Semiconductor Corp. v. LSI Corp., No. 13-16070 (9th Cir. Mar. 20, 2014). Earlier in the month, the International Trade Commission found that Realtek did not infringe LSI patents for wireless networking products. In the wake of that decision, and despite requests from both parties to hear the appeal in case LSI prevailed on appeal of the infringement ruling, the 9th Circuit held that LSI’s appeal was moot. Judge Ronald M. Whyte of the Northern District of California had issued the injunction after finding that LSI had improperly filed its ITC complaint to pressure Realtek in royalty negotiations, without first making a FRAND offer to license the patents. Realtek Semiconductor Corp. v. LSI Corp., Case No. C-12-3451 (N.D. Cal.).

The 9th Circuit and ITC rulings followed a jury decision in February setting the FRAND rate for LSI’s patents at 0.12 percent and 0.07 percent. That was the first time a jury had been tasked with determining the FRAND rate for standard-essential patents. LSI’s initial offer had been for a royalty based on the value of the end products in which Realtek’s allegedly infringing chips were used. However, the jury’s significantly lower rate was based on the value of the chips. This followed the standard in In re Innovatio IP Ventures LLC Patent Litig., MDL 2303, Case No. 11 C 9308 (N.D. Ill. Sept. 27, 2013), where the court applied royalty rates to wireless chips rather than to laptops, scanners and other devices that used them. In that context, the jury’s decision is the latest signal that Judge James Robart’s modified Georgia-Pacific analysis in Microsoft Corp. v. Motorola, Inc., No. C10-1823 (W.D. Wash. Apr. 25, 2013), continues to influence how fact-finders evaluate FRAND royalties for standard-essential patents.

The 9th Circuit’s unpublished memorandum is available here.

Ohio District Court Certifies Price Discrimination Class Under Robinson-Patman Act

In Williams v. Duke Energy Corp., Case No. 1:08-cv-46 (S.D. Ohio March 13, 2014), the U.S. District Court for the Southern District of Ohio certified a class of direct purchasers of electricity. The class alleged that a power company settled objections of certain large customers to a rate-stabilization plan in return for unlawful and substantial rebates to those customers. Plaintiffs brought fraud and related claims on behalf of all electricity purchasers who did not receive the rebates, and brought Robinson-Patman Act price discrimination claims on behalf of competitors of the favored businesses. In certifying the Robinson-Patman competitor subclass, the Court noted that although Robinson-Patman Act claims are generally not susceptible to class treatment because of the individualized proof required to establish damages, the plaintiffs in the case were seeking only injunctive and declaratory relief under the Act, so competitive injury need not be demonstrated. Accordingly, the competitor subclass satisfied Federal Rule of Civil Procedure 23(a)(2)’s commonality requirement.

A copy of the decision is available here.

McWane Dismissal Breaks FTC’s “Winning Streak,” But Enforcement Implications Are Unclear

On Feb. 6, 2014, the Federal Trade Commission dismissed six of the seven unfair competition claims it brought under Section 5 of the Federal Trade Commission Act against McWane, Inc., the leading domestic producer of iron pipe fittings in the United States. In its January 2012 complaint, the FTC alleged that McWane conspired with its two primary competitors to fix prices for certain small- and medium-diameter iron pipe fittings (three counts), and that it unlawfully maintained its monopoly power by trying to keep a competitor out of a narrower market for domestically produced fittings (four counts). FTC Administrative Law Judge D. Michael Chappell initially dismissed the FTC’s collusion claims after finding no evidence of price fixing, but ruled in the FTC’s favor with respect to its monopolization claims. Both parties appealed the ALJ’s decision to the full Commission. Despite harsh criticism from certain commissioners that the ALJ’s findings as to price fixing were “incredible” and ignored certain evidence, the Commission ultimately issued an opinion dismissing only six of the seven claims against McWane. With respect to the remaining claim, the Commission held that McWane maintained its monopoly power in the domestic fittings market through an exclusionary distribution policy that violated Section 5 of the FTC Act. Read More

Federal Court Dismisses Antitrust Action Against U.S. Hotel Companies and Online Travel Companies

On Feb. 18, 2014, the U.S. District Court for the Northern District of Texas dismissed an antitrust lawsuit that accused U.S. hotel companies and online travel agencies (OTAs) of conspiring to fix the online prices of hotel rooms. In re Online Travel Company Hotel Booking Antitrust Litig., No. 3:12-cv-3515-B (N.D. Texas Feb. 18, 2014). The plaintiffs alleged that the OTAs and hotels conspired to eliminate price competition by imposing “rate parity” across OTA websites, such that a room at a given hotel would be offered at the same price regardless of whether a consumer purchased it from an OTA site or from the hotel website itself. The court dismissed the claims because the complaint described only the suppression of intrabrand competition—the competition among each hotel’s online distribution channels—and did not allege the elimination of competition between the different hotel brands. The court acknowledged that antitrust laws permit hotels to control the prices at which their rooms are sold online, as well as permit OTAs to enter into most-favored-nation agreements ensuring their competitors can’t offer a lower price than the published rate. The court also dismissed plaintiffs’ state law consumer protection claims, finding that plaintiffs did not adequately allege how they were injured by defendants’ “best price” guarantees. Plaintiffs have the opportunity to amend their complaint.

A copy of the decision is available here.

DOJ Announces Streamlined Procedures to Modify or Terminate Old Settlements and Litigation

On March 28, 2014, the U.S. Department of Justice’s Antitrust Division announced that it has updated procedures for parties seeking to modify or terminate perpetual decrees—settlements and litigated judgments—entered prior to 1980. Perpetual decrees entered into before 1980 cannot be terminated or modified except by court order. Going forward, the department will advise courts that pre-1980 “legacy” decrees, except in limited circumstances, are presumptively no longer in the public interest. According to the DOJ’s press release:

“The updated procedure differs from the present procedure in two important ways. First, the party seeking termination or modification will no longer be subject to the extensive discovery that was required by the 1999 protocol. This should result in a substantial reduction in the cost of seeking decree termination. Second, when responding to a request to terminate or modify qualifying legacy decrees, the department will no longer conduct an in-depth investigation into the relevant markets due to the significant changes that have taken place.”

The updated procedure can be found in the Division Manual on the Antitrust Division’s website.

DOJ Launches New Criminal Antitrust Section

The U.S. Department of Justice has opened a new section focused on criminal antitrust enforcement to address the division’s workload. The current criminal antitrust office in Washington, D.C. has been renamed Washington Criminal I, and the new division will be called Washington Criminal II. The new section will first focus on domestic criminal enforcement and will later broaden to include international cases. It is already operational and eventually will have 10 to 15 prosecutors on staff.

The DOJ press release can be found here.

U.S. Supreme Court Holds That Parens Patriae Suits Are Not Removable to Federal Court as “Mass Actions” Under the Class Action Fairness Act

On Jan. 14, 2014, the U.S. Supreme Court, in an opinion by Justice Sonia Sotomayor for a unanimous Court, held that a parens patriae antitrust suit filed in state court by Mississippi’s Attorney General seeking damages on behalf of the citizens of Mississippi was not removable to federal court under the Class Action Fairness Act of 2005 (CAFA). Mississippi ex rel. Hood, Attorney General v. AU Optronics Corp., et al., No. 12-1036, (U.S. Jan. 14, 2014) .

The Attorney General of Mississippi sued AU Optronics and other manufacturers of liquid crystal display (LCD) panels in state court, alleging claims under the Mississippi Antitrust Act, Miss. Code Ann. § 75-21-1 et seq. and the Mississippi Consumer Protection Act, § 75-24-1 et seq. The AG alleged that the defendants operated an international cartel to restrict competition and raise prices for LCD products, and sought, among other things, restitution for purchases of LCD products by Mississippi and its citizens. AUO and the other defendants removed the case to federal court under CAFA’s provision that a “mass action” includes “any civil action … in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact.” 28 U.S.C. § 1332(d)(11)(B)(i). The Court held that a suit filed by a state as the sole plaintiff does not qualify as a “mass action” under CAFA where it includes a claim for restitution based on injuries suffered by the state’s citizens. Read More

2nd Circuit Rejects DOJ’s “Continuing Conspiracy” Theory in Overturning Criminal Convictions Under the Sherman Act

On Dec. 9, 2013, a 2-1 panel of the 2nd U.S. Circuit Court of Appeals overturned the convictions of three former General Electric Co. officials, and placed a limit on the government’s use of the continuing conspiracy theory to avoid the applicable statute of limitations. United States v. Peter Grimm, et al., Nos. 12-4310-cr, 12-4365-cr, 12-4371-cr (2d Cir. Dec. 9, 2013). The three former GE executives all worked for a unit of the company that acted as a provider for guaranteed investment contracts or “GICs,” which enable municipalities to invest proceeds from municipal bonds pending their use of the funds. The government alleged in a 2010 indictment that the executives paid kickbacks to brokers between 1999 and 2004 as part of a scheme to rig the competitive bidding process for GICs by lowering interest rates on the GICs. The executives were convicted of violating the federal conspiracy statute (18 U.S.C. § 371), and they appealed to the 2nd Circuit, arguing that the indictment was barred by the five-year statute of limitations for general conspiracies. To satisfy the statute of limitations, the government had to establish that the conspirators knowingly committed an overt act in furtherance of the conspiracy during the limitations period. The 2nd Circuit disagreed with the government’s position that each periodic interest payment made to a municipality pursuant to a GIC was an overt act that continually restarted the conspiracy period. Specifically, the court found that the periodic interest payments were not in furtherance of a conspiracy, but the result of a completed conspiracy. Read More

6th Circuit Reverses Order Granting Summary Judgment Against Monopolization Claims, Holding That “Quick Look” Rather Than “Rule of Reason” Applied

On Jan. 3, 2014, the 6th U.S. Circuit Court of Appeals revived a price-fixing suit brought by milk retailers, reversing the district court’s grant of summary judgment in favor of defendants. In Re Southeastern Milk Antitrust Litig., No. 12-5457 (6th Cir. Jan. 3, 2014). The retailers claimed that an agreement among Dean Foods Co., Dairy Farmers of America, and National Dairy Holdings had given Dean Foods a monopoly in the processed milk market and caused prices to rise. Specifically, the retailers alleged that to secure U.S. Department of Justice approval of its merger with Suiza Foods, Dean Foods sold certain factories to National Dairy Holdings, an entity that was supposed to compete with Dean Foods but allegedly was a sham company established by Dairy Farmers of America. The retailers further alleged that Dean Foods and National Dairy Holdings agreed not to compete by reducing capacity and allocating markets for the purpose of raising the price of bottled milk. The district court applied the rule of reason and dismissed the lawsuit because the plaintiffs had failed to establish the relevant geographic market. The 6th Circuit reversed, holding that the appropriate inquiry was the quick look test because the alleged illegal conduct has “obviously adverse [and] anticompetitive effects.” The 6th Circuit further found that the plaintiffs’ allegations survived the quick look test even without establishing the relevant geographic market. The 6th Circuit remanded the case to the district court.

A copy of the decision is available here.

DOJ Prevails in Trial Challenging Bazaarvoice’s Consummated Acquisition of PowerReviews

On Jan. 8, 2014, Judge William Orrick of the U.S. District Court for the Northern District of California, issued an order after a three-week trial ruling that Bazaarvoice, a provider of Ratings and Reviews platforms (R&R) to companies involved in online commerce in the United States, violated Section 7 of the Clayton Act, 15 U.S.C. § 18, when it acquired its primary competitor, PowerReviews. United States v. Bazaarvoice, Inc., No. 13-cv-00133-WHO (N.D. Cal. Jan. 8, 2014). Bazaarvoice acquired PowerReviews on June 12, 2012, for cash and non-cash consideration valued between $150.8 million and $168.2 million. The transaction was not reported to the U.S. Department of Justice or Federal Trade Commission because the amount of the consideration did not exceed the thresholds for reportable transactions under the Hart-Scott-Rodino Act.

Bazaarvoice and PowerReviews both provide R&R platforms to companies involved in e-commerce. These platforms combine software and services to enable manufacturers and retailers, as well as other companies, to collect, organize, and display online consumers’ product reviews and ratings. The goal of R&R platforms is to increase the conversion rate of consumers who see the posted reviews and ratings. The court found that R&R is critical for companies selling products over the Internet, and is a separate product market for antitrust purposes. It also found that the geographic market is the United States because of, among other things, the realities of marketing and servicing R&R platforms locally, cultural differences in moderating user-generated content, and the difficulties of incorporating different SKUs (Stock Keeping Units). Read More

District Court Rules That FTAIA Bars a U.S. Manufacturer’s Price-Fixing Claims Based on Its Foreign Affiliates’ Purchases of Price-Fixed Goods From a Foreign Manufacturer

On Jan. 23, 2014, Judge Joan B. Gottschall of the U.S. District Court for the Northern District of Illinois, ruled that Motorola’s price-fixing claims based on purchases that its non-U.S. affiliates made from non-U.S. defendants were barred under the Foreign Trade Antitrust Improvement Act. Motorola Mobility, Inc. v. AU Optronics Corp. et al., No. 09-c-6610 (N.D. Ill. Jan. 23, 2014).

Motorola, based in Illinois, manufactures electronic devices, including mobile phones that contain liquid crystal display (LCD) panels. Motorola’s non-U.S. affiliates purchased LCD panels that it alleged were the subject of an international price-fixing conspiracy. The purchases of LCD panels fell into three categories: (1) purchases of LCD panels by Motorola that were delivered directly to Motorola facilities in the United States (Category I); (2) purchases of LCD panels by Motorola’s foreign affiliates that were delivered to the foreign affiliates’ manufacturing facilities abroad, where they were incorporated into mobile phones that later were sold in the United States (Category II); and (3) purchases of LCD panels by Motorola’s foreign affiliates that were delivered to the foreign affiliates’ manufacturing facilities abroad and later were incorporated into mobile phones sold outside the United States (Category III). Motorola had negotiated prices for the LCD panels in part in the United States, and its foreign affiliates assigned their claims to Motorola. Read More

District Court Denies Motion to Dismiss Section 1 and Section 2 Claims Brought by PAE Against Patent Aggregator That Refused to License PAE’s Patents

In one of the latest battles at the nexus between antitrust and patent law, on Dec. 3, 2013, Judge Yvonne Gonzalez Rogers in the U.S. District Court for the Northern District of California allowed antitrust claims by Cascades Computer Innovation LLC to proceed against RPX Corp. and a number of Android device manufacturers. Cascades Computer Innovation LLC v. RPX Corp., No. 12-cv-01143 (N.D. Cal. Dec. 3, 2013). The case has highlighted significant potential implications for the patent aggregation business model, which has been widely adopted in the technology industry as a reaction to increased litigation from patent assertion entities.

Cascades is a “patent assertion entity” or “PAE”—pejoratively but commonly referred to as a “patent troll”—that does not practice patent claims but instead seeks to monetize them through litigation or licensing. Cascades holds a number of patents it claims are infringed by the Android mobile operating system. RPX is a patent aggregator, or “non-practicing entity” (NPE), formed by member manufacturers to aggregate patents and hold them to defend against patent litigation, including claims by PAEs. Cascades brought Section 1 and 2 and California state law claims alleging a hub-and-spoke conspiracy among RPX and its members to restrain trade in, and to monopsonize the market for, Cascades’ patents. According to Cascades, RPX stands at the center of the conspiracy (the hub), with agreements between RPX and the manufacturers (including Samsung, HTC and Motorola—which settled after the decision) forming the spokes and an agreement among the manufacturers as the rim of the conspiracy. According to Cascades, the defendants agreed not to deal with Cascades in its licensing efforts, other than through RPX. Cascades claims the goal and effect of the alleged conspiracy was to drive down the price for the Cascades patents. Read More

FTC Enters Into Proposed Settlements Curbing Anticompetitive Behavior in Two Trade Associations

On Dec. 16, 2013, the U.S. Federal Trade Commission announced that it had reached proposed settlements with two professional associations to eliminate provisions in their codes of ethics that purportedly limited competition among their members.

The FTC’s complaint against the Music Teachers National Association, Inc. (MTNA), which represents over 20,000 music teachers nationwide, alleged that the association and its members restrained competition in violation of Section 5 of the FTC Act through a code of ethics provision that restricted members from soliciting clients from rival music teachers: “The teacher shall respect the integrity of other teachers’ studios and shall not actively recruit students from another studio.” The FTC’s proposed order requires, among other things, that the MTNA stop declaring it unethical for its members to solicit teaching work from other music teachers. Read More

FTC Establishes New Thresholds for Reporting Mergers and Acquisitions Under Hart-Scott-Rodino Act

On Jan. 23, 2014, the U.S. Federal Trade Commission announced new Hart-Scott-Rodino filing thresholds for mergers and acquisitions. The new thresholds will go into effect on Feb. 24, 2014. Transactions that close on or after the effective date will be subject to the revised thresholds. Any acquisition of voting securities and/or assets requires premerger notification to the FTC and the U.S. Department of Justice under the HSR Act and the regulations promulgated thereunder (16 C.F.R. Sections 801–803) if the following tests are satisfied and if no exemption applies (15 U.S.C. Section 18a(a)(2)). Where an HSR notification is required, both parties must file, the acquiring person must pay a filing fee ((i) $45,000 for transactions below $151.7 million, (ii) $125,000 for transactions of $151.7 million or more but below $758.6 million, and (iii) $280,000 for transactions of $758.6 million or more), and the parties must observe a 30 day waiting period prior to closing.

The new thresholds are as follows: Read More

Another District Court Sets RAND Rates for Standard-Essential Patents

In April 2013, Judge James Robart of the U.S. District Court for the Western District of Washington issued a 200-plus-page opinion determining “reasonable and non-discriminatory” (RAND) royalty rates for standard-essential patents (SEPs) asserted by Motorola against Microsoft—the first such opinion by a district court. (See Microsoft Corp. v. Motorola, Inc., No. C10-1823, 2013 WL 2111217 (W.D. Wash. Apr. 25, 2013).) On Sept. 27, 2013, Judge James Holderman of the Northern District of Illinois issued a lengthy ruling that suggests that Judge Robart’s methodology likely will influence other courts in determining RAND rates. (See In re Innovatio IP Ventures, LLC, MDL No. 2303, Case No. 11 C 9308, Docket No. 975 (N.D. Ill. Oct. 3, 2013) (date of filing public version).) Judge Holderman employed a modified version of Judge Robart’s methodology to determine a RAND rate of 9.56 cents for each WiFi chip sold by several manufacturers. This rate was significantly lower than the royalty Innovatio sought of $4 to $40 dollars based on end products using the chips.

The wide-ranging case involves SEPs asserted by Innovatio, a non-practicing entity, against end-user customers employing WiFi networks—such as coffee shops, hotels, restaurants and transportation companies. Several WiFi equipment manufacturers, including Cisco, Motorola, Netgear, SonicWALL and Hewlett-Packard, sought a declaratory judgment that their products did not infringe Innovatio’s patents, and Innovatio in turn sued them for patent infringement. In July, Judge Holderman ruled that the patents were indeed essential to the WiFi standard and subject to RAND terms based on a commitment to license them on RAND terms made by their previous owner, Broadcom. The parties agreed to a bench trial on the issue of the appropriate RAND rates, and agreed that Judge Robart’s methodology should serve as the model. Read More

AUO Executive Acquitted in LCD Price-Fixing Criminal Prosecution

On Oct. 15, 2013, following a three-week trial in the Northern District of California, a jury found AU Optronics executive Richard Bai not guilty of charges that he engaged in price fixing of Thin Film Transistor-Liquid Crystal Display (LCD) panels. The Department of Justice had contended that Bai, who headed AUO’s notebook sales division and negotiated prices with major U.S. buyers, used the prices set between AUO and other LCD manufacturers to instruct his subordinates what to charge for laptop displays each month. The DOJ also introduced evidence that Bai had attended one of these collusive meetings in person.

Bai’s acquittal is the latest result in the DOJ’s prosecution of individuals following a series of criminal indictments against AUO and a number of its executives for participation in the conspiracy. Earlier, in March 2012, the DOJ secured convictions against AUO and high-level executives Hsuan Bin Chen (AUO’s former vice chairman) and Hui Hsiung (AUO’s former vice president). On Dec. 5, 2013, the 9th Circuit granted Chen and Hsiung’s motion for bail pending appeal, noting that although it was expressing no opinion as to the ultimate merits or outcome of the appeal, “the defendants have raised at least one ‘fairly debatable, or fairly doubtful’ question of law or fact.” U.S.A. v. Hsuing, Case No. 12-10492, Docket No. 84 (9th Cir. Dec. 5, 2013). Steven Leung, who headed AUO’s desktop monitor sales and attended more than a dozen price-fixing meetings, was also convicted in December 2012. At the March 2012 trial, however, the jury acquitted Lai-Juh Chen, AUO’s former President, and Hubert Lee, AUO’s former senior desktop group manager. These acquittals, coupled with Bai’s acquittal, may embolden some targets to resist accepting plea deals and instead have their cases tried to a jury.