What does to take to state a claim under Section 2 of the Sherman Act for refusal to deal? Last week’s decision in Viamedia, Inc. v. Comcast Corp. and Comcast Spotlight, LP, a case out of the Northern District of Illinois, highlights the difficulty of plausibly alleging a negative: that a defendant monopolist’s exclusionary conduct lacks any procompetitive purpose.
Last week, the FTC filed a complaint against Qualcomm, a manufacturer of baseband processors, which are chips included in cell phones and other products with cellular connectivity that allow the devices to connect to cell networks. Qualcomm holds patents to technologies incorporated in the standards that allow all cell phones to communicate with one another, referred to as standard-essential patents or SEPs. Qualcomm’s patents mostly relate to older, 3G-CDMA cellular technologies, which are still necessary for modern cell phones to work as consumers expect. As a condition of declaring its patents standard-essential, Qualcomm committed to the telecommunications industry’s standard-setting organizations that it would license its patents on a “fair, reasonable, and non-discriminatory” (FRAND) basis.
On December 14, 2015 Judge Yvonne Gonzalez Rogers heard oral argument on a motion to dismiss filed by Apple in an antitrust action brought against the company in connection with its 2007 deal to sell iPhones exclusively to AT&T Mobility. The next day, Judge Rogers denied Apple’s motion. The lawsuit, one of several arising from the Apple-AT&T agreement, raises interesting questions about how to define a relevant product market using an “aftermarket” theory.
As we previously reported (click here, to read more), last month, a jury returned a $6 million verdict for a class plaintiff in a suit alleging that Cox Communications had illegally tied its premium cable services to rentals of its set-top boxes. Yesterday, the court granted Cox’s renewed motion for judgment as a matter of law, overturned the jury’s verdict, and entered judgment for Cox.
We reported earlier today that the jury began deliberations this past Monday in the antitrust class action lawsuit against Cox Communications brought by its premium services subscribers. The jury returned its verdict today in favor of the plaintiffs and found that Cox had violated the Sherman Act by illegally tying its premium cable services to rentals of its set-top boxes. The jury awarded the plaintiffs $6.31 million in damages, which will be trebled to $19 million. The jury awarded damages based on one aspect of the plaintiffs’ claims for fees from set-top box rentals but declined to award damages based on the plaintiffs’ DVR fees. Thus, the damages award came back much lower than the $49 million figure the plaintiffs were seeking.
After a near two-week trial in the consumer class action lawsuit against Cox Communications, the jury began deliberations this past Monday to decide whether Cox’s alleged practice of tying premium cable services to rentals of its cable boxes violated the Sherman Act by harming competition in the set-top box market.
Ties that Bind: Trial Date Nears for Cox Communications on the Legality of Linking Access to Premium Cable Services and Proprietary Set-Top Boxes
Trial is set for October 13th on an antitrust class action lawsuit alleging that Cox Communications used its monopoly power over premium cable services in Oklahoma City to force consumers to rent its set-top box. The trial will be conducted before Judge Robin J. Cauthron of the Western District of Oklahoma. The plaintiff, Richard Healy, is seeking nearly $49 million in damages on behalf of Oklahoma City cable subscribers who paid Cox to rent a set-top box from February 1, 2005 through January 9, 2014.
On July 16, the European Court of Justice issued a decision stating that standard essential patent (“SEP”) owners that seek injunctions against companies willing to license intellectual property on fair and reasonable terms may be illegally abusing their dominance. The dispute between Huawei Technologies Co. Ltd. (“Huawei”) and ZTE Corp. (“ZTE”) arises from Huawei’s patent on Long Term Evolution (“LTE”), a technology that is used in mobile phones and was developed by the European Telecommunications Standards Institute (“ETSI”).
Motorola Oral Arguments Today – Will the Seventh Circuit Revise Its Interpretation of the FTAIA, and If so, How?
Today the Seventh Circuit Court of Appeals hears oral argument from the parties and amicus curiae the United States concerning the reach of the Foreign Trade Antitrust Improvements Act (“FTAIA”), 15 U.S.C. § 6a, in Motorola Mobility LLC v. AU Optronics. Last March, as we’ve written previously, the court ruled against Motorola in an interlocutory appeal concerning the FTAIA’s application to offshore components manufacturers. The court subsequently withdrew its opinion, denied a petition for en banc review, and ordered oral argument.
Developments in the Capacitor Cartel Litigation: Class Counsel Appointed and the Antitrust Division Intervenes
In July, we wrote about two putative class action lawsuits alleging that Panasonic, Samsung, and other electronics manufacturers had formed a cartel to boost prices of certain electronic capacitors. Since then, the cases have been consolidated, interim lead co-counsel have been appointed, the Antitrust Division has confirmed its own investigation, and the court has set a preliminary case schedule.
Our regular readers know that we have been carefully following the developments in Motorola Mobility LLC v. AU Optronics Corp., currently pending in the Seventh Circuit. The case addresses the reach of the Foreign Trade Antitrust Improvements Act (“FTAIA”), and will join recent decisions issued by the Second Circuit and Ninth Circuit earlier this year.
In Motorola Mobility LLC v. AU Optronics Corp. et al., the Seventh Circuit is currently considering the reach of the Sherman Act beyond United States borders and will join the Second and Ninth Circuits in interpreting some key provisions of the Foreign Trade Antitrust Improvements Act (“FTAIA”). In that case, which will be heard by the Seventh Circuit on a motion for rehearing, the parties have advanced vastly different interpretations of the FTAIA and the extent to which defendants’ conduct abroad has impacted the United States market, if at all.
In the seminal decision, Aspen Skiing Co. v. Aspen Highlands Skiing Corp 472 U.S. 585, 611 (1985), the U.S. Supreme Court affirmed a jury verdict for a plaintiff on a Section 2 claim and set forth the standard for unilateral refusal-to-deal claims. More recent U.S. Supreme Court and Second Circuit cases suggest that Aspen Skiing may reflect the “outer boundary” of liability under Section 2. What are the markers of that boundary?
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.
The FTC has submitted an amicus brief in Mylan Pharmaceuticals Inc. v. Celgene Corp., 2:14-CV-2094 (D.N.J.), offering support in favor of Mylan’s claims. Mylan sued Celgene in April 2014, bringing claims related to its attempts to develop generic versions of Revlimid and Thalomid, brand drugs used to treat certain forms of cancer.
Many of you will recall that on March 27, 2014, the Seventh Circuit issued a long-awaited decision concerning the scope of the Foreign Trade Antitrust Improvements Act (“FTAIA”) in Motorola Mobility v. AU Optronics. The Seventh Circuit held that the higher prices for mobile phones Motorola sold in the United States did not “give rise to” its foreign subsidiaries’ antitrust claims, and that Motorola could not show a “direct” effect on U.S. commerce sufficient to satisfy the FTAIA. Just days after this opinion, Motorola asked for a rehearing. After multiple letters back and forth between the Court, the parties, and the Solicitor General’s Office, on July 1, 2014 the Seventh Circuit vacated its prior opinion. Additional briefing is now underway, and is expected to be completed in October.
Last week we posted a discussion concerning effective antitrust corporate compliance programs, and provided some factors that in-house counsel should consider in developing compliance programs governing employees’ communications with competitors and dealings with customers and suppliers. Today we continue that discussion by addressing the relevant factors in compliance programs concerning monopolization and dominance and price discrimination.
With DOJ’s Antitrust Division and the FTC ramping up antitrust enforcement, it is critical for companies to take a hard look at their compliance programs and update them on a regular basis to avoid potential antitrust violations and discover antitrust malfeasance early on so a company can have the option of self-reporting and applying for leniency under DOJ’s leniency program. The United States Sentencing Guidelines provide guidance to companies in the organization of their corporate antitrust compliance programs; Guidelines considerations include establishing standards and procedures to prevent and detect criminal conduct and monitoring, auditing and periodically evaluating compliance with the program, including providing anonymous or confidential means for reporting potential breaches. In addition to these threshold requirements, it is important that any antitrust compliance program provide guidance in a number of areas that present potential pitfalls. Today, we discuss guidance on communications with competitors and dealing with customers and suppliers.
On June 4, 2014, the Second Circuit issued its decision in Lotes Co., Ltd. v. Hon Hai Precision Industry Co., an important ruling on the reach of the U.S. antitrust laws to foreign conduct.