Last week, in In re Cipro Cases I & II, Case No. S198616, the Supreme Court of California adopted the United States Supreme Court’s application of the Rule of Reason to the antitrust analysis of so-called “reverse payment” patent settlements (and rejected plaintiffs’ arguments that settlement payments exceeding the costs of litigation or other services are per se unlawful), but also set forth a specific “structured” Rule of Reason analysis to be applied in analyzing such settlements. A copy of the decision can be found here.
On Feb. 25, 2015, the U.S. Supreme Court held, in a 6-3 decision, that a state board with a controlling number of decision-makers, who are active market participants in the occupation the board regulates, does not enjoy state action immunity from federal antitrust laws unless “the State has articulated a clear policy to allow the anticompetitive conduct, and, the State provides active supervision of [the] anticompetitive conduct.” N.C. State Bd. of Dental Exam’rs v. F.T.C., 135 S. Ct. 1101, 1112 (2015). (Click here for a copy of the opinion.)
On Apr. 15, 2015, the 11th Circuit affirmed a Federal Trade Commission ruling that McWane, Inc., the dominant producer of domestic pipe fittings, violated Section 5 of the FTC Act when it informed its distributors that unless they bought all of their domestic fittings from McWane, they would lose rebates and be cut off from purchases for 12 weeks. McWane, Inc. v. FTC, No. 14-11363 (11th Cir. Apr. 15, 2015).
The U.S. Court of Appeals for the 9th Circuit issued a landmark ruling on February 20, 2015, affirming a district court’s order blocking a merger between the St. Luke’s Health System (“St. Luke’s”) and the Saltzer Medical Group (“Saltzer”)—the largest independent multi-specialty physician group, including adult primary care, in Nampa, Idaho. See generally St. Alphonsus Med. Ctr.-Nampa Inc. v. St. Luke’s Health Sys., Ltd., 778 F.3d 775 (9th Cir. 2015). Of note, the 9th Circuit rejected using quality care improvements standing alone to defend a merger, reaffirmed the use of the Herfindahl-Hirschman Index (“HHI”) when assessing health care market concentration, and established a challenging standard for defending future clinical provider ventures.
On Mar. 17, 2015, the U.S. Supreme Court was provided an opportunity to review two decisions involving different applications of the Foreign Trade Antitrust Improvements Act (“FTAIA”) to Sherman Act claims based on a price-fixing conspiracy involving TFT-LCD panels. In a petition for certiorari filed that day, Motorola Mobility urged the U.S. Supreme Court to review a 7th Circuit ruling that the FTAIA blocked the majority of Motorola’s civil price-fixing claims against multiple manufacturers of TFT-LCD panels. At the same time, AU Optronics (a manufacturer of TFT-LCD panels) and two of its executives filed a certiorari petition requesting review of a 9th Circuit ruling that arguably diverged from the 7th Circuit opinion, holding that the FTAIA did not bar criminal antitrust claims against them. The Supreme Court now has an opportunity to clarify the meaning of the FTAIA and to resolve the arguably inconsistent circuit interpretations.
On Feb. 27, 2015, in In re Online DVD-Rental Antitrust Litig., 779 F.3d 914 (9th Cir. 2015), the U.S. Court of Appeals for the 9th Circuit affirmed a summary judgment for Netflix in an action alleging that Netflix conspired with Walmart to monopolize the online DVD rental market. The court found that the class of consumer plaintiffs had failed to establish antitrust injury.
On Mar. 25, 2015, the U.S. Circuit Court of Appeals for the 6th Circuit upheld a preliminary injunction against Eastman Kodak Company’s pricing policy for Versamark printer ink, finding that the plaintiff, Collins Inkjet Corporation, was likely to succeed on the merits of its claim that the pricing policy constitutes unlawful tying. Collins Inkjet Corp. v. Eastman Kodak Co., Case No. 14-3306, 2015 WL 1320675 (6th Cir. Mar. 25, 2015).
On Apr. 8, 2015, the U.S. Court of Appeals for the 3d Circuit vacated a district court order that had certified a class of direct purchasers of traditional blood reagents who asserted price-fixing claims under Section 1 of the Sherman Act. In re: Blood Reagents Antitrust Litig., No. 12-4067, 2015 WL 1543101 at *1 (3d Cir. Apr. 8, 2015).
On Mar. 3, 2015, U.S. District Judge Lucy Koh granted preliminary approval to a proposed $415 million settlement of a class action concerning alleged anti-solicitation agreements among certain Silicon Valley high-tech companies. In re High-Tech Emps. Antitrust Litig., No. 5:11-cv-2509-LHK (N.D. Cal. Mar. 3, 2015), Dkt. No. 1054. Orrick’s previous coverage of the case, in which Judge Koh declined to approve the original settlement totaling $324.5 million, is available here. Class members have until May 21, 2015, to opt out or object to the proposed settlement. Judge Koh will hold a final approval hearing on July 9, 2015.
Judge Koh’s Order is available here.
Orrick Antitrust partner Jay Jurata and Managing Associate Amisha Patel have been nominated for a Concurrences Antitrust Writing Award for their article, “Taming the Trolls: Why Antitrust Is Not a Viable Solution for Stopping Patent Assertion Entities,” which appeared in the George Mason Law Review.
Concurrences picks its Antitrust Writing Award winners by vote, so we encourage you to cast yours! Please click here to do so by Friday, Feb. 27!
On Feb. 2, 2015, the U.S. Department of Justice (DOJ) issued a business review letter that effectively approved a proposal by the Institute of Electrical and Electronic Engineers (IEEE) to update the IEEE Standard Association’s Patent Policy (Policy) regarding standard-essential patents (SEPs) (the Update). The DOJ’s approval of IEEE’s Update is an important step in the development of policies that standard-setting organizations can adopt with respect to SEPs while reducing the risk of an enforcement action by the DOJ. Read More
On Dec. 29, 2014, the U.S. Department of Commerce posted a fact sheet on the 25th U.S.-China Joint Commission on Commerce and Trade. Portions of the fact sheet—which was jointly issued by the U.S. and Chinese governments—address competition issues and intellectual property rights, following substantial criticism of what many considered to be uneven enforcement of China’s Anti-Monopoly Law (AML) against non-Chinese companies. We described the nature of that criticism in October 2014. The main complaint has been that China undertakes selective enforcement of the AML with the goal of promoting Chinese companies or industries, and does the same with enforcement proceedings relating to intellectual property rights. The fact sheet states the following with respect to competition: Read More
On Jan. 21, 2015, the U.S. Supreme Court issued a unanimous decision clarifying the appealability of a ruling in a case that has been consolidated for pretrial purposes with others in a multidistrict litigation (MDL) proceeding. Gelboim v. Bank of Am. Corp., 135 S.Ct. 8971174 (2015).
Plaintiff Ellen Gelboim filed a class action alleging that the defendant banks violated federal antitrust law by conspiring to fix a measure of interest rates. The case was consolidated with 60 others for pretrial purposes. Although some of the other cases also contained additional claims, Gelboim’s complaint raised only the single antitrust claim. The defendant banks moved to dismiss Gelboim’s complaint on the ground that the plaintiffs had suffered no antitrust injury. The district court granted the motion, dismissing Gelboim’s case in its entirety while those cases in the MDL presenting additional claims remained before the court. When Gelboim appealed, the 2nd U.S. Circuit Court of Appeals, acting on its own motion, dismissed the appeal for want of appellate jurisdiction. Because the MDL was ongoing, the court ruled, there was no “final decision of the district court” as required for appellate jurisdiction under 28 U.S.C. § 1291. Read More
The past year has seen somewhat conflicting decisions from 7th Circuit (Motorola Mobility) and 9th Circuit (Hsiung) regarding the scope and application of the U.S. Foreign Trade Antitrust Improvements Act, 15 U.S.C. § 6a to preclude Sherman Act liability for conduct that takes place outside the United States. Specifically, the 7th and 9th Circuits have disagreed regarding the meaning of the statutory “domestic effects” test used to determine whether Sherman Act claims would be blocked by the FTAIA. However, in January 2015, both Circuits issued amended opinions in cases stemming from the TFT-LCD price-fixing case—after reviewing each other’s original opinion and a lot of commentary and criticism by outsiders—suggesting that they be moving closer in how their different formulations of the test apply to foreign anticompetitive conduct that has an effect in the United States. Read More
On Jan. 14, 2015, the 5th U.S. Circuit Court of Appeals reversed a district court’s order rejecting the American Quarter Horse Association’s (AQHA) motion for judgment as a matter of law after a jury found that it violated the Sherman Act by adopting new rules the block the registration of horses created through cloning. Abraham & Veneklasen Joint Venture v. Am. Quarter Horse Assoc., No. 13-11043, 2015 U.S. App. LEXIS 582 (5th Cir. Jan. 14, 2015). While the court assumed that the association could be liable for violating Section 1 under the U.S. Supreme Court’s joint venture decision in American Needle, Inc. v. NFL, 560 U.S. 183 (2010), it found that there was insufficient evidence to permit an inference of a conspiracy . The Court also rejected plaintiffs Section 2 claim that the association had monopolized an alleged market for “elite Quarter Horses.” Read More
On Jan. 21, 2015, a split 1st U.S. Circuit Court of Appeals panel upheld a district court order certifying a class of payors, union health and welfare funds, and individual consumers, in a reverse payment pharmaceutical class action, even though the class, when certified, contained more than a small number of uninjured class members. AstraZeneca AB v. UFCW (In re Nexium Antitrust Litig.), Nos. 14-1521, 14-1522, 2015 U.S. App. LEXIS 968 (1st Cir. Jan. 21, 2015).
In this Hatch-Waxman case, AstraZeneca—the manufacturer of the gastroesophageal reflux disease drug Nexium—entered into settlement agreements with several generics companies (Ranbaxy, Teva and DRL), after first suing each for patent infringement when the companies sought to market a generic form of Nexium. AstraZeneca agreed to pay each company a significant sum—a combination of cash and debt-forgiveness—in exchange for the company agreeing to 1) not challenge the validity of the Nexium patents, and 2) delay any launch of a competing generic products until the Nexium patents expired in May 2014. Pursuant to the U.S. Supreme Court’s 2013 decision in Federal Trade Commission v. Actavis, 133 S. Ct. 2233 (2013), reverse payment arrangements, when challenged, are properly evaluated under the rule of reason. Read More
On Jan. 27, 2015, the 5th U.S. Circuit Court of Appeals affirmed the dismissal of a lawsuit brought by an auto parts retailer, Felder’s Collision Parts, against General Motors and its distributor, All Star, alleging that GM attempted to monopolize the market for collision parts through an unlawful predatory pricing scheme. Felder’s Collision Parts, Inc. v. All Star Adver. Agency, Inc. et al., Case No. 14-30410, 2015 U.S. App. LEXIS 1253 (5th Cir. Jan. 27, 2015).
The lawsuit challenged GM’s “Bump the Competition” program. Under the program, GM provided rebates to dealers like All Star that sold GM-manufactured parts at a consumer price 33 percent below the prevailing price of equivalent generic parts. This retail price was also below the price All Star and other dealers paid GM for the part. However, the rebates allowed the participating dealers to ultimately make a 14 percent profit on the sale, despite initially selling the part at below cost. Read More
On Jan. 15, 2015, plaintiffs filed a motion for preliminary approval of a $415 million settlement for claims brought by employees of Silicon Valley technology companies alleging that the defendants had entered into agreements not to solicit each other’s employees. In re: High Tech Emp. Antitrust Litig., No. 5:11-cv-02509-LHK (N.D. Cal. Jan. 15, 2015), Dkt No. 1032. The class settlement amount of $415 million is an increase of $90.5 million over the original $324.5 million settlement that Judge Lucy Koh had rejected as being insufficient. In re: High Tech Emp. Antitrust Litig., 2014 U.S. Dist. LEXIS 110064 (N.D. Cal. Aug. 8, 2014).
Plaintiffs filed complaints against certain high-tech companies, and in October 2013 the court granted class certification as to a narrowed class of employees. In March 2014, the court denied the defendants’ summary judgment motion. Shortly before the trial was set to begin, the parties informed the court that they had reached a settlement. Plaintiffs filed a motion for preliminary approval of a settlement totaling $324.5 million, and one class member objected to the settlement. Read More
In City of San Jose v. Office of the Commissioner of Baseball, Case No. 14-15139 (9th Cir. Jan 15, 2015), the 9th U.S. Circuit Court of Appeals applied the judge-made antitrust exemption for baseball to bar a challenge by the City of San Jose, California to a rule adopted by Major League Baseball (MLB) that three-quarters of MLB teams must approve a baseball franchise relocation.
San Jose planned to welcome the Oakland A’s to a new stadium in San Jose, which is within the geographic territory allocated by MLB to the San Francisco Giants. That fact required, under league rules, approval of the relocation by three-quarters of MLB’s members. After MLB―in San Jose’s view―delayed a vote, San Jose sued MLB, arguing, among other things, that the delay was an attempt to stymie the relocation and preserve the Giants’ local monopoly. MLB argued that the baseball exemption barred San Jose’s suit. Read More