Posts in Antitrust

FTC Approves Final Rule to Ban All New Non-Compete Agreements in 3-2 Vote

The U.S. Federal Trade Commission today voted in a Special Open Commission Meeting to publish and approve a final version of the January 2023 proposed rule that would ban employers from using clauses for their employees. Today’s rule allows existing non-competes to remain in force for senior executives but bans new non-competes for all workers and makes existing non-competes for all other workers unenforceable after the effective date, which is 120 days after publication in the Federal Register.

FTC Sets Meeting to Vote on Final Noncompete Rule

Federal Trade Commission (FTC)  Chair Lina Khan announced yesterday that there will be a Special Open Commission Meeting held on April 23 to vote on whether to issue a final version of the January 2023 proposed rule that would ban employers from using noncompete clauses for their employees. “The proposed final rule being considered would generally prevent most employers from using noncompete clauses,” said the Open Commission Meeting’s event description. “As the Notice of Proposed Rulemaking explained, noncompetes are a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.”

Consumers Target Apple Following DOJ Antitrust Suit

A number of individual consumers have filed suit against Apple, Inc. in California and New Jersey courts, piggybacking on the U.S. Department of Justice’s (DOJ’s) March 21 complaint accusing Apple of “broad-based, exclusionary conduct” amounting to monopolization of the smartphone market. The DOJ’s sweeping complaint included a number of U.S. states as plaintiffs and charged Apple with “thwart[ing] innovation” and throttle[ing] competitive alternatives via its practices around the iPhone platform.

DMA Impact Remains Unclear on Deadline for ‘Gatekeeper’ Compliance

As of today, the world’s major platforms—Apple, Alphabet, Meta, Amazon, Microsoft and ByteDance—must be in full compliance with the European Union’s Digital Markets Act (DMA), an EU regulation intended to level the playing field in the digital marketplace. Signed into law in September 2022, the DMA imposed a complex regulatory framework upon the major Internet services platforms that are deemed to be “gatekeepers” (i.e. have a market capitalization of at least €75 billion [$83 billion USD]) due to their dominant market position. These gatekeepers each market at least one “core platform service” (CPS) that connects large numbers of users and business interests.

Apple’s 1.8 Billion EU Fine Foreshadows Increased Regulatory Activity Under Digital Markets Act

On March 4, the European Commission announced that it had levied a fine of more than €1.8 billion ($1.95 billion USD) against American consumer tech giant Apple over app restrictions employed by Apple’s App Store. The massive fine, which the Commission increased to ensure it was sufficiently deterrent to Apple’s anti-competitive practices, is the latest in a series of legal actions within the European Union (EU) to target dominant Internet platforms under competition law.

The Top U.S. FRAND / RAND Licensing Developments of 2023 Part II: Ghosts of Christmas Past and Christmas Future

In Part I of our year end summary of key developments regarding patents subject to a commitment to license on a Fair Reasonable and Non-Discriminatory (FRAND) or Reasonable and Non-Discriminatory (RAND) basis, we looked at various developments involving patent pools and reviewed some interesting damages awards and interlocutory decisions. In this installment, we consider a pair of antitrust cases dismissed in 2023 and explore what may come next on the policy front.

Greater DOJ Action Needed to Stop Corporate IP Theft

In a laudable effort to curtail rampant corporate IP theft, a bipartisan group of U.S. Senators has called on a hesitant Department of Justice (DOJ) to step up its enforcement. As reported in Forbes, Senators Thom Tillis (R-NC), Chris Coons (D-DE), and Marsha Blackburn (R-TN) recently issued a letter to the DOJ identifying the core gap in its prosecution habits. Their primary complaint was “the DOJ’s focus on individual, as opposed to corporate, offenders.” This is an oversight that must be corrected. 

As American as Apple Pie: In Defense of Bundled Rebates

Just about everyone bundles. It’s about as American as apple pie: if you buy more, you get a better price. Most of the time, that’s a good thing. Consumers benefit from lower prices. The question is, can bundling violate the antitrust laws? It can. So, the real question is, how do we determine when a generally good thing – bundling – should be condemned under the sledgehammer that is antitrust? In cases where usually beneficial conduct is challenged as anticompetitive, clear standards and tests are critically important so that a good thing is not stifled by uncertainty.

FTC’s Khan Pressed by House GOP on Noncompete Proposal, Meta and Twitter Actions

The U.S. House of Representatives’ Committee on the Judiciary yesterday held a hearing featuring Federal Trade Commission (FTC) Chair Lina Khan, who has recently come under fire from the Republican-led House leadership. Judiciary Committee Chair Jim Jordan (R-OH) repeatedly grilled Khan about testimony from the independent assessor for Twitter, Ernst & Young, in the Commission’s recent investigation into the social media platform, which Jordan characterized as “targeted harrassment.”

The Use of Third-Party Surveys in Litigation

Surveys conducted independent of litigation have had mixed success in court. These surveys have been offered as evidence of customer confusion in false advertising cases, intellectual property value in patent cases, consumer behavior in antitrust cases, and plaintiff identification in class actions. In some cases, non-litigation surveys have been admitted as useful evidence on important questions for which data are scarce; in others, they have been excluded as irrelevant or unreliable.

Class Action Suit Against OpenAI Underscores Valuable Property Right Consumers Hold in Their Personal Data

On June 28, a group of 16 individuals filed a class action complaint in the Northern District of California against generative artificial intelligence (GAI) developer OpenAI on several alleged violations of federal and state law on privacy, unfair business practices and computer fraud. The class action lawsuit’s discussion on property interests in consumer data underscores the intellectual property issues that have arisen since the advent of generative AI platforms like ChatGPT, which scrapes personal data and IP-protected material to train its GAI systems.

House Oversight Committee to Investigate FTC Chair Khan Over Wilson Allegations

The Chairman of the House of Representatives’ Committee on Oversight and Accountability, James Comer (R-KY), announced an investigation this week into accusations raised by former Federal Trade Commission (FTC) Commissioner Christine Wilson in her resignation against the conduct of FTC Chair Lina Khan. Wilson sent a letter to President Joe Biden in March claiming that his appointment of Khan as Chair brought “an abrupt halt” to Biden’s promised “return to normalcy” for the agency. She said that Khan “scorned and sidelined” knowledgeable career staff, in part by imposing a gag order on staff “that prevented them from engaging in consumer and business education — a vote of no confidence in our staff and a disservice to those we serve.”

Painting with a Broad Brush: The European Commission’s Failure to Distinguish Seeking Damages for Past Infringement from Seeking an Injunction

Previously, we wrote about how alleged concerns of “hold-up” and a lack of “transparency”, two non-legal terms without accepted definitions, are being used to advocate for special rules applicable to patents subject to declarations regarding Fair, Reasonable and Non-Discriminatory (FRAND) licensing. These vague concepts are specifically chosen to obfuscate the real issues impacting FRAND licensing and used in an effort to shift traditional burdens of proof, regulate behavior previously found not to violate antitrust / competition law, and rewrite the express language of the commitment made by patent owners to the European Telecommunications Standards Institute (ETSI). The European Commission (EC) is the latest bull to enter the FRAND licensing China shop.

Lock Patent Owner Strikes Out at CAFC in Suit Against Intel

The U.S. Court of Appeals for the Federal Circuit (CAFC) on Friday affirmed a district court’s ruling dismissing antitrust and patent infringement claims brought by a pro se patent owner against Intel. Larry Golden owns a family of patents that cover a system for locking, unlocking or disabling locks on vehicles upon detection of chemical or biological hazards. Golden has also unsuccessfully sued Apple and the U.S. Government for infringement of the patents.

U.S. Chamber Tells FTC it Should Withdraw Its Proposal on Noncompetes

In January of this year, the Federal Trade Commission (FTC) proposed a new rule that would ban employers from using noncompete clauses for their employees. In an announcement, the FTC said that the use of noncompete clauses is “a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses.” The agency estimated the new rule could increase wages by $300 billion a year, as firms would be encouraged to do more to keep their workers. The proposed rule change was opened for public comment in January, and the deadline for submissions was extended from March 20 to April 19 in early March. As of April 18, the website indicated that 24,259 comments had been received and 14,946 posted. With the comment period coming to a close this week, the U.S. Chamber of Commerce has weighed in, urging April Tabor, FTC Secretary to withdraw the proposed rule.