Posts in Antitrust

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 day three of IPWatchdog LIVE in Dallas, Texas, former Assistant Attorney General in charge of the Antitrust Division at the U.S. Department of Justice (DOJ), Makan Delrahim, who is now a Member of the Board of the Directors at Osiris Acquisition Corporation and a Lecturer in Law at the University of Pennsylvania, told attendees of the event that it’s unfortunate that antitrust [and its interaction with intellectual property rights] has become a partisan issue when “it doesn’t need to be.” Delrahim recalled during a Luncheon Fireside Chat with IPWatchdog Founder and CEO Gene Quinn that, 20 years ago, when he was detailed to the Office of the U.S. Trade Representative (USTR), “the approach to strong IP was a unifying issue, and something that was not questioned, nor its value.” He added that he has become a bit discouraged by the “echo chamber” that has been created about IP to “devalue its actual impact on economics and on society”—particularly when our trading partners, like China, have realigned to recognize the value.

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.”

Earlier today, the Senate Judiciary Committee held an Executive Business Meeting in which the Committee discussed and favorably reported four bills aimed at reducing prescription drug prices for consumers and curbing perceived abuses of the patent system by brand pharmaceutical companies. The bills would do so by increasing the Federal Trade Commission’s (FTC’s) authority to initiate enforcement actions against drug companies. Senator Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, opened the meeting with an explanation of the need for the bills. He said that nearly 40% of U.S. patients struggle to pay for medication. The world’s best-selling drug, Humira, brought in $16 billion in sales in 2019 and Humira manufacturer, AbbVie, has obtained 130 patents on the drug, with 90% filed after Food and Drug Administration (FDA) approval.

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.

In late June, medical technology firm Masimo Corporation and its consumer device subsidiary Cercacor Laboratories filed a complaint with the U.S. International Trade Commission (ITC) asking the agency to institute a Section 337 investigation into several versions of the Apple Watch. Masimo’s allegations, which also include trade secret litigation ongoing in U.S. district court, follow an increasingly familiar narrative in which a Big Tech player, in this case Apple, engages in licensing negotiations with a small tech developer, only to poach employees and ideas from the smaller firm without paying the original developers.

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.

Historically an esoteric area of law, in recent years, antitrust policy is drawing broader attention as a tool to curb the exercise of monopolistic market power, especially by big tech behemoths. Congressional reports on both Democratic and Republican sides of the aisle, multiple legislative initiatives to reform U.S. antitrust law, and a recent book by Senator Amy Klobuchar (D-MN), Chair of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, are some indicators of this trend. Along these lines, broad outcry broke out against rumored Department of Justice (DOJ) Antitrust Division leadership appointments of candidates representing big tech interests, such as Karen Dunn (Apple, Amazon), Renata Hesse (Google, Amazon), Susan Davies (Facebook), and against Deputy Attorney General Lisa Monaco’s (Apple, Google) involvement in deliberations over the nomination of a DOJ Assistant Attorney General (AAG) for Antitrust.

Yesterday, Representatives Carolyn Maloney (D-NY), Jerrold Nadler (D-NY) and David Cicilline (D-RI) asked Federal Trade Commission (FTC) Acting Chair Rebecca Kelly Slaughter to open a formal inquiry into pharmaceutical company AbbVie’s practices, which the representatives said have worked “to delay U.S. biosimilar entry for [AbbVie’s] blockbuster drug Humira.” The request was prompted by documents uncovered as part of an investigation being conducted by the House Committee on Oversight and Reform into the company. “Based on our review, these documents indicate that AbbVie delayed biosimilar competition for far longer than warranted by its own internal evaluations of the strength of its patent portfolio, which anticipated biosimilar entry no later than 2017,” said the letter.