Vote For Orrick’s Jurata and Patel for a Concurrences Antitrust Writing Award

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!

DOJ’s Approval of Revisions to IEEE’s Standard-Setting Policies Provides Guidance for SSOs, Patent Holders, Licensees and Courts

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

China and U.S. Issue Joint Fact Sheet Addressing China’s Enforcement of the Anti-Monopoly Law and Intellectual Property Rights

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

U.S. Supreme Court Clarifies Application of Final Judgment Rule in Multidistrict Antitrust Case

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

9th and 7th Circuits Issue Amended Opinions Suggesting Narrowing of Differences in Application of the “Domestic Effects” Test Under the FTAIA

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

5th Circuit Rejects Claim That Horse Association Violated Sherman Act by Voting to Block Registration of Horses Created Through Cloning

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

1st Circuit Clarifies Class Composition Rules for Reverse Payment Pharmaceutical Actions

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

5th Circuit Affirms Dismissal of Monopolization Claim Against General Motors

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

Settlement Reached in High-Tech Employees Non-Solicitation Cases

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

9th Circuit Applies Antitrust Exemption in San Jose MLB Team Relocation Case

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

Massachusetts State Court Deals Significant Blow to Partners Healthcare Hospital Mergers

On Jan. 29, 2015, Massachusetts Superior Court Judge Janet Sanders rejected a proposed consent judgment that would have allowed Partners Healthcare—a 10-hospital and 6,000-physician system (and the largest health system and private employer in Massachusetts)—to acquire three of its direct-competitor hospitals just north and south of Boston, while adding hundreds of doctors to the Partners network. Commonwealth v. Partners Healthcare Sys., Inc., No. SUCV2014-02033-BLS2, 2015 Mass. Super. LEXIS 4 (Mass. Super. Court, Suffolk County, Jan. 29, 2015). Read More

FTC Releases Annual Threshold Updates for Premerger Notification Filings and Interlocking Directorates

The U.S. Federal Trade Commission announced its annually revised filing thresholds on Jan. 15, 2015. The size-of-transaction threshold for reporting proposed mergers and acquisitions subject to antitrust enforcement under the Hart-Scott-Rodino Antitrust Improvements Act will increase from $75.9 million to $76.3 million.

The FTC also revised the thresholds that trigger prohibitions on certain interlocking directorates under Section 8 of the Clayton Act. The new 2015 thresholds for the Act’s prohibition on interlocking directorates are $31,084,000 for Section 8(a)(l) and $3,108,400 for Section 8(a)(2)(A).

A full listing of current thresholds can be found on the FTC’s website, which will be updated once the revised thresholds go into effect on Feb. 20.

Clarity And Confusion: FTAIA Developments In 2014

This article originally appeared in Law360 on Jan. 16, 2015. A pdf version is available here

The Foreign Trade Antitrust Improvements Act[1] has confounded practitioners and courts alike for years. This past year brought long-anticipated decisions from the Second (Lotes),[2] Seventh (Motorola Mobility II)[3] and Ninth (Hsiung)[4] Circuits regarding four important issues: (1) whether the FTAIA is substantive or jurisdictional; (2) the scope of the exclusion for conduct affecting “import commerce”; (3) the appropriate standard for the “domestic effects” test; and (4) the increasing importance of the “gives rise to a claim” test. This article summarizes these recent circuit court opinions and offers some thoughts about issues to watch going forward.

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7th Circuit Decision in Motorola Mobility Holds That the FTAIA Bars a U.S. Parent’s Damages Claims Based on Its Overseas Affiliates’ Purchases of Price-fixed Products, But Does Not Bar Criminal Enforcement of the Sherman Act

​The Foreign Trade Antitrust Improvements Act, 15 U.S.C. § 6a (FTAIA), enacted in 1982, has provided ambiguous direction to courts and practitioners regarding the applicability of U.S. antitrust laws to conduct occurring wholly or partially in other countries. In Motorola Mobility LLC v. AU Optronics Corp. et al., No. 14-8003 (7th Cir. Nov. 26, 2014) (Motorola Mobility II), the 7th U.S. Circuit Court of Appeals became the latest appellate court to weigh in on the meaning of this opaque statute, holding that purchases by a U.S. parent company’s foreign affiliate of price-fixed goods that were incorporated into products subsequently shipped to the U.S. parent did not give rise to damages claims under Section 1 of the Sherman Act. At the same time, however, and in an apparent reversal of direction by the same panel, the Court made clear that its decision does not preclude efforts by the U.S. Department of Justice to pursue criminal charges against foreign defendants for cartel activity relating to components of finished products sold in the United States. Read More

Federal Circuit Provides Important Guidance in RAND Disputes

On Dec. 4, 2014, the Federal Circuit issued a much-anticipated opinion in Ericsson, Inc. v. D-Link Sys., Inc., Nos. 2013-1625, -1631, -1632, -1633 (Fed. Cir. Dec. 4, 2014). The panel—consisting of Judges Kathleen O’Malley, Richard Taranto and Todd Hughes—ruled on several issues, the most significant of which is the proper methodology for calculating “reasonable and non-discriminatory” (RAND) royalty rates for RAND-encumbered “standard essential patents” (SEPs). The opinion, authored by Judge O’Malley, represents the first guidance from an appellate court on how to calculate a RAND royalty. Read More

FTC Settles Its First Action Against a Patent Assertion Entity

On Nov. 6, 2014, the U.S. Federal Trade Commission settled its first action against a patent assertion entity. The FTC alleged that MPHJ Technology Investments LLC and its law firm had sent more than 16,000 letters to small businesses throughout the United States asserting that they were infringing its patents for scanning documents to email and that MPHJ would institute litigation unless the letter recipients agreed to pay MPHJ a royalty. The FTC alleged that the mass letters were misleading and therefore actionable under Section 5 of the FTC Act, because, among other things, MPHJ did not have an intention of actually filing patent infringement suits. MPHJ maintains that it always intended to bring suits, but only decided not to after the validity of its patents was challenged in America Invents Act proceedings. Under the settlement, MPHJ agreed to refrain from making certain deceptive representations when asserting its patent rights. A copy of the agreement containing consent order is available here.

FTC Reaches Consent Agreements with Blue Rhino and AmeriGas to Settle Charges of Restraining Competition

The two leading suppliers of pre-filled propane exchange tanks, commonly used in barbecue grills and outdoor heaters, have reached an agreement with the U.S. Federal Trade Commission to settle charges that the companies illegally agreed not to deviate from their plan to reduce the volume of propane sold to Walmart and other key customers. The companies had previously settled private multi-district litigation based on the same conduct.

The administrative complaint, issued on March 27, 2014, alleged that Blue Rhino and AmeriGas—which together account for around 80 percent of the market—each decided in 2008 to reduce the fill of their propane tanks from 17 to 15 pounds without a corresponding price decrease, effectively increasing by 13 percent the per-unit price of the propane. This initial reduction was not alleged to be an unlawful agreement. However, in the face of resistance from Walmart, Blue Rhino and AmeriGas allegedly agreed that each company would stand firm in its reduction and not give in to Walmart’s pressure. Among the evidence supporting these allegations were telephone and email conversations in which the companies’ executives discussed the reduction and urged each other to “hang in there” when insisting on the 15-pound tank. The complaint alleged that the conduct was a per se unlawful price-fixing agreement. Read More

Price-Fixing MDL Against Online Travel Booking Companies Dismissed With Prejudice

On Oct. 27, 2014, the U.S. District Court for the Northern District of Texas dismissed with prejudice a complaint accusing a group of online travel booking companies of colluding to set hotel room rates. The putative customer class had alleged that the online travel companies, including Orbitz, Expedia, Travelocity and Priceline, colluded with hotels like Marriott and Hilton to fix room prices, thereby engaging in a resale price maintenance conspiracy. The complaint alleged that the companies struck agreements with hotels that ensured that online retailers didn’t discount room reservation rates. The hotels allegedly refused to let competing online retailers sell room reservations if they wouldn’t fix and maintain prices.

In dismissing the complaint with prejudice, the court noted that plaintiffs described the alleged conspiracy in vague terms and used a vague and contradictory timeline of events, leaving open the possibility that the companies’ actions were legitimate and could be explained by common economic experience. The court had previously dismissed a prior complaint on similar grounds. Though plaintiffs’ amended complaint provided new allegations and dropped a group of hotel chains from the suit, the court ultimately found the changes insufficient to suggest a conspiracy had actually formed.

Court Approves Settlement of Narrowed Class Following Supreme Court’s Denial of Class Certification in Comcast v. Behrend

On Dec. 12, 2014, a District Court judge granted preliminary approval of the settlement submitted by the plaintiff class in Glaberson. v. Comcast Corp., No. 2:03-cv-06604 (E.D. Pa.). Judge John R. Padova issued the order in the case, a decade-old class action in which the U.S. Supreme Court had reversed a 3rd U.S. Circuit Court of Appeals order affirming class certification in the closely followed case captioned Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013). The proposed settlement fund is $50 million, consisting of $16.7 million in cash and services valued at $33.3 million. For background on the case and the Supreme Court’s decision, click here.

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U.S. Ramps Up Criticism of China’s Enforcement of Its Antitrust Laws Against Foreign Companies

I.  Introduction

For some time, many in the antitrust community have expressed concerns about how China is enforcing its antitrust laws against foreign companies. The past several months have seen a steady stream of criticism from the United States that in certain areas—notably, dominant firm conduct, intellectual property rights and mergers—China is selectively enforcing its antitrust laws outside of international norms in order to protect domestic industries. The criticism includes pointed complaints, comments and recommendations from the U.S. enforcement agencies, U.S. business groups and antitrust practitioners. This article provides a brief overview of some of the comments and recommendations being offered to the Chinese government. Read More