Posts in Antitrust

Late last week, the Federal Trade Commission (FTC) announced that the agency was acceding to decisions by U.S. regional circuit courts vacating the agency’s Biden Administration-era rule banning noncompete clauses from U.S. employment contracts and preventing their enforcement. While some lawmakers have decried the decision to end this rule, the FTC also issued a request for information (RFI) as the Trump Administration seeks to develop a case-by-case enforcement approach for cracking down on noncompete abuses.

A Virginia judge today found Google liable under Sections 1 and 2 of the Sherman Act for anticompetitive behavior and monopolization of the publisher ad server and ad exchange markets for open-web display advertising. However, the court dismissed a claim that Google monopolizes the advertiser ad network market. Like the D.C. court that found Google liable under Section 2 of the Sherman Act for monopolization of search services in August 2024, Judge Leonie Brinkema of the U.S. District Court for the Eastern District of Virginia also declined to sanction Google “at this juncture” despite the company’s “systemic disregard of the evidentiary rules regarding spoliation of evidence and its misuse of the attorney-client privilege,” which Brinkema said “may well be sanctionable.”

A 2024 Republican election victory marks the end of the four-year Neo-Brandeisian antitrust experiment at the Federal Trade Commission (FTC) and Department Of Justice (DOJ). Spearheaded by FTC chair Lina Khan and DOJ attorney general for antitrust Jonathan Kanter, their movement sought to upend antitrust’s longstanding bipartisan consumer welfare-focused consensus. Instead, they focused on punishing businesses for bigness; opposing mergers and other business practices based on speculative rather than probable theories that of competitive harm; and orienting antitrust toward policy considerations outside economic competition, such as income redistribution, labor, and environmentalism.

Last week President-elect Trump announced that he would nominate Gail Slater as Assistant Attorney General for the Antitrust Division of the Department of Justice. Meanwhile, people with knowledge of the Trump Transition tell IPWatchdog that the front runner to be named Director of the United States Patent and Trademark Office (USPTO) continues to be Vishal Amin, Intel’s head of IP policy. While it is true that Amin served as the Intellectual Property Enforcement Coordinator during President Trump’s first term, the appointment of Amin to head the USPTO would be an extraordinary head-scratcher, if that in fact does come to pass.

In the immediate wake of such an historic election, it is far too early to know what the intellectual property landscape will really be like under a second Trump Administration. However, IPWatchdog reached out to IP stakeholders for some initial comments, and their educated predictions and insights are included in full below.

On October 8, the U.S. Department of Justice (DOJ) and attorneys general (AGs) from every U.S. state as well as the District of Columbia, Guam and Puerto Rico filed a proposed remedy framework in the federal antitrust lawsuit against Internet services giant Google currently ongoing in the U.S. District Court for the District of Columbia. While the proposed remedies could change with further discovery, the framework includes several measures that would prohibit Google’s self-preferencing its search engine platform on its products and certain contractual behaviors that undermine competition from rival search engines.

On the heels of a judgment from the U.S. District Court for the District of Columbia earlier this month that found that “Google is a monopolist,” Yelp, Inc. has brought a lawsuit against Google in the Northern District of California under Section 2 of the Sherman Act, 15 U.S.C. § 2, and California’s Unfair Competition Law. The suit alleges that Google is “engaging in various anticompetitive practices designed to monopolize the markets for local search services and local search advertising.”

In a case Judge Amit Mehta of the U.S. District Court for the District of Columbia dubbed “remarkable,” the court ruled Monday that “Google is a monopolist” and that the search engine has violated Section 2 of the Sherman Act. The U.S. Department of Justice and 11 states first sued Google on October 20, 2020, alleging Sherman Act violations via Google’s practice of entering into agreements to secure distribution in “nearly all desktop and mobile devices in the United States.” In December of 2020, 38 states filed suit, adopting and supplementing the claims made in the first suit, and the cases were consolidated. The proceedings concluded in March 2023 and featured “[m]illions of pages” exchanging hands, “petabytes of data” from Google, and the deposition of “dozens of witnesses,” according to the opinion.

The Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo, No. 22-1219, 2024 WL 3208360 (U.S. June 28, 2024) overturned the Chevron doctrine, under which courts generally deferred to agency interpretations of their rulemaking authority. Some may have viewed that decision as the death-knell for the Federal Trade Commission’s (FTC’s) attempt to ban non-competes earlier this year. Indeed, Loper was cited to in the recent Ryan LLC decision, where a federal court in Texas enjoined the enforcement of the FTC ban. But just days ago, another federal court in Pennsylvania, while adhering to Loper, reached the opposite conclusion and declined to enjoin the ban.

On July 23, U.S. District Judge Kelley B. Hodge of the Eastern District of Pennsylvania published a memorandum denying a preliminary injunction requested by ATS Tree Services, which sought to prevent enforcement of the Federal Trade Commission’s (FTC) recent rule banning non-compete clauses from U.S. employment contracts. The ruling comes a few weeks after injunctive relief was granted to another plaintiff by the Northern District of Texas, setting up a potential split among regional circuit courts over the FTC’s authority to target non-competes as a form of unfair competition.

The Federal Trade Commission (FTC) screwed up. At least that’s how it explains what it calls the “lock[ed] in exploitative business models and monopoly power” of today’s internet giants. It blames “delayed government action.” But the agency says it won’t allow the same thing to happen with artificial intelligence (AI). With AI, the FTC “plan[s] on using the full scope of [its] authority to make sure that history does not repeat itself.”       

Despite the basic principles that a patent does not presume market power and does establish plenary legality within its issued scope, as we learned in Part I of this two-part series, the Federal Trade Commission can and has used threats of antitrust inquiries to coerce patent owners to voluntarily forego some activities within the scope of a patent’s right to exclude.  

The simple answer is “no”; a patent protecting a new and nonobvious invention is not an antitrust monopoly. The reason is also quite simple; an antitrust monopoly requires the unlawful capture or maintenance of market power by withdrawing products or services from the public domain, thus injuring competition in market transactions. See, e.g., Standard Oil v. U.S., 221 U.S. 1 (1910). In general terms, an antitrust monopoly requires: (1) market power (sufficient control of a market to set prices or restrain competition, but not market dominance achieved with a superior product or business acumen); (2) restricting the public domain to injure competition; and (3) illegal anticompetitive conduct to achieve these market distortions. A patent, standing alone, does not meet any of these requirements.

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.