Posts in Antitrust

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.

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.”

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.

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.

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.

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.

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. 

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.