Posts Tagged: "Antitrust"

This is Part II of a two-part article discussing FRAND (fair, reasonable, and non-discriminatory) licensing developments taking place in the United States in 2021. Read Part I here. After a slow summer on the FRAND licensing front, the Court of Appeals for the Fifth Circuit’s ruling in the matter of HTC v. Ericsson came in the dog days of August. As we wrote about here, the August 31 ruling dealt with, amongst other things, an appeal challenging the district court’s instructions to the jury regarding whether or not the license terms offered by Ericsson were FRAND and, more specifically, with respect to the issue of apportionment. Beyond finding that the failure to give instructions on an undisputed issue did not impair HTC’s ability to present its claims, the majority found that HTC’s proposed instructions “were not ‘substantially correct’ statements of law”.

On September 20, 2021, Judge John Robert Blakey in the Northern District of Illinois issued an opinion in a Walker Process patent fraud antitrust case denying defendants’ motion for summary judgment on their statute of limitations defense. TCS John Huxley America, Inc. v. Scientific Games Corp., No. 1:19-cv-1846, 2021 WL 4264403 (N.D. Ill. Sept. 20, 2021). The opinion established important principles regarding application of the statute of limitations to the “discovery rule” in a Walker Process antitrust case. The author’s firm, Freeborn & Peters, was one of the firms representing the plaintiffs. The plaintiffs had sued Scientific Games Corp. alleging a violation of Section 2 of the Sherman Act. The complaint alleged that Scientific Games, through its acquired entity, SHFL Entertainment, brought patent infringement litigation in 2009 and 2012 based on fraudulently obtained patents for automatic card shufflers used in licensed casinos.

Have you ever shopped for something dangerous? Back in the 1950s, my mother wanted to buy a pressure cooker to make dinner faster (and use cheaper cuts of meat). That wasn’t an easy decision, because the early models had a reputation for occasionally exploding (there was no Consumer Product Safety Commission then). My father, a self-taught steam engineer, was skeptical that a kitchen appliance could safely contain double the normal atmospheric pressure. But Mom did her homework, researching what the problems were (usually a single pressure valve prone to clogging) and finding cookers with redundant pressure relief systems. It worked for years, and no one went to the hospital. Companies shopping to buy other companies, or to acquire a license to their technology, also entertain risk. That’s because in the process of interviewing potential targets they can become exposed to highly valuable trade secrets. If any particular transaction doesn’t go forward, but the shopper implements similar technology, the disappointed seller may file a lawsuit claiming misappropriation.

The intersection of intellectual property (IP) and antitrust law is again a hot debate after a recent speech by the U.S. Department of Justice Antitrust Division’s (“DOJ” or “Division”) Economics Director of Enforcement, Jeffrey Wilder, titled Leveling the Playing Field in the Standards Ecosystem: Principles for a Balanced Antitrust Enforcement Approach to Standards-Essential Patents. Before we dive in on the key takeaways from the speech, and our thoughts on potential ramifications, it bears briefly mentioning how we got here.

On July 20, President Joe Biden nominated Jonathan Kanter as Assistant Attorney General, a position that would place him at the head of the Antitrust Division at the Department of Justice. Kanter is an antitrust lawyer with over 20 years of experience. He is currently a partner at The Kanter Law Group LLP, which is a boutique antitrust law firm that advocates in favor of federal and state antitrust law enforcement. Prior to founding the The Kanter Law Group, he was Co-Chair of the antitrust practice at Paul, Weiss, Rifkind, Wharton, and Garrison LLP. Kanter also served as an attorney for the U.S. Federal Trade Commission’s Bureau of Competition. 

On October 5, the Senate Judiciary Committee considered the nomination of Judge Lucy Koh, currently of the U.S. Federal District for the Northern District of California, to an appointment by President Biden to the United States Court of Appeals for the Ninth Circuit. After that hearing, several Senators submitted written questions, which Judge Koh responded to last week. There is no indication that Judge Koh’s nomination to the Ninth Circuit is in jeopardy, but it is noteworthy, and at least somewhat unusual, numerous Senators asked Judge Koh virtually the same questions regarding her decision in FTC v. Qualcomm. This level of overlapping interest by multiple members of the Senate Judiciary Committee, which IPWatchdog.com has learned was not coordinated and developed organically, is normally reserved for nominees to the Supreme Court, and even then, typically reserved to social or constitutional issues. So, even though it is believed Judge Koh can and will easily receive a favorable confirmation vote, the questions relating to the intersection of antitrust and patent law demonstrate a keen awareness and interest in these issues on the Senate Judiciary Committee.

The Senate Judiciary Committee’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights held a hearing yesterday titled “Big Data, Big Questions: Implications for Competition and Consumers,” in which both Republican and Democratic senators pushed representatives of Facebook and Google to answer difficult questions about their platforms’ impact on everything from competitive marketplaces to teenagers’ body image. The hearing is one in a series that aims to conduct a bipartisan review of America’s competition issues, according to Subcommittee Chair, Amy Klobuchar (D-MN).

The Federal Trade Commission (FTC) has pledged to use more of its enforcement resources to ensure that consumers are free from manufacturer-imposed restrictions on self-repair or third-party repair, to the maximum extent allowed under the law. The unanswered question is: how far does the law allow the FTC to go? The answer is, quite possibly, not as far as the White House or the new Chair of the FTC, Lina Khan, would like. One problem for the FTC: doubts about the authority granted to the agency under the FTC Act. Another hurdle will be the legal protections granted to manufacturers—both as market participants responding to consumer demand and, in many cases, as the owners of intellectual property rights. This blog has already discussed some of the ways that the “right to repair” movement might conflict with copyright protections. Here, we focus on the limits of the FTC’s authority and antitrust doctrine, as well as conflicts with patent law.

On August 19, the Federal Trade Commission (FTC) filed a first amended complaint for injunctive and other equitable relief in the U.S. District Court for the District of Columbia seeking a judgment that would split Instagram and WhatsApp away from Facebook as punishment for the social media giant’s alleged violations of antitrust law. The complaint, which traces many of the same arguments raised in a previous FTC suit that was dismissed by the District of Columbia this June, is yet another reminder that the current wave of antitrust enforcement against Big Tech has been an inevitable result of abysmal reforms of the U.S. patent system that have taken place since the mid-2000s, especially those reforms creating the Patent Trial and Appeal Board (PTAB) and turning Section 101 subject matter eligibility analysis into “validity goulash.”

On July 20, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a non-precedential decision in Siegler v. Sorrento Therapeutics, Inc. in which the appellate court affirmed a series of rulings on motions in a copyright and trade secret lawsuit filed in the Southern District of California. Although the Federal Circuit panel in the case “[understood] that Siegler feels unfairly treated as a result of the events she outlines, she was treated more than fairly by the district court,” said the CAFC, and the court did not err or abuse its discretion in reaching decisions to deny several motions for default judgment and reconsideration, as well as dismissing a pair of amended complaints filed by Siegler.

Last week, the attorneys general of 36 U.S. states and the District of Columbia filed a lawsuit in the Northern District of California against internet services and mobile operating system (OS) provider Google. The complaint lists various causes of action under the Sherman Antitrust Act and a number of state antitrust laws that have allegedly been violated by Google’s practices in leveraging its monopoly power in the mobile OS sector to maximize its revenues on app purchases through the Google Play Store through suppression of competing app platforms and charging exorbitant fees from app developers.

On June 21, the U.S. Supreme Court issued a unanimous ruling in National Collegiate Athletic Association v. Alston (Alston) in which the nation’s highest court affirmed an injunction entered by the Northern District of California prohibiting the NCAA from restricting education-related benefits that member schools can extend to student-athletes. Consolidated by the Supreme Court last December with related proceedings in American Athletic Conference v. Alston, this decision brings a close to the latest chapter in the ongoing skirmish between NCAA member schools and their student-athletes seeking a larger cut of revenues earned by colleges and NCAA athletic associations.

In “big IP cases that count,” the U.S. Federal Trade Commission (FTC) has had a mixed record lately, going one-for-three – good in baseball but bad in government appellate litigation. (The biggest recent FTC loss that counts, the Supreme Court’s unanimous April 2021 AMG decision (see here), did not involve IP, but had major negative implications for the FTC’s future ability to obtain monetary relief in IP-related prosecutions). In August 2020, the Ninth Circuit vacated a district court “finding that Qualcomm had engaged in unlawful licensing practices, and reversed a permanent, worldwide injunction against several of Qualcomm’s core business practices.” (The full Ninth Circuit subsequently denied the FTC’s request for rehearing en banc, and the FTC threw in the towel in March 2021, electing not to seek Supreme Court review).

On June 10, the U.S. Court of Appeals for the Federal Circuit (CAFC) transferred Ronald Chandler et. al. v. Phoenix Services, LLC to the United States Court of Appeals for the Fifth Circuit due to lack of jurisdiction, since the case did not arise under the patent laws of the United States. The CAFC previously affirmed a holding that U.S. Patent No. 8,171,993 (‘993 patent) was unenforceable due to inequitable conduct because Heat On-The-Fly, the company that filed for the ‘993 patent, knowingly didn’t disclose prior uses of the process. The plaintiffs, Chandler Manufacturing and Supertherm Fluid Heating Services (collectively Chandler), alleged that the defendant, Phoenix Services, continued enforcement of the ‘933 patent on their website and that this conduct constituted an antitrust violation under Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172 (1965), a 1965 Supreme Court decision that held that enforcement of a patent procured by fraud on the United States Patent and Trademark Office (USPTO) can be the basis for an antitrust claim.