Posts Tagged: "Antitrust"

The novel coronavirus pandemic has upended our lives, creating a far-from-normal “new normal.” And it has also given rise to countless collaborations between and among universities, hospitals, medical centers, pharma companies and others to pool their talent and resources to discover, test, manufacture and distribute diagnostics, treatments, vaccines, personal protective equipment and other resources needed to fight the pandemic. Antitrust law poses no risk to these collaborations, so long as they remain focused on their core missions. But at the same time, antitrust law recognizes that in cooperating and exchanging information and insights for those missions there is the potential for “spill-over effects” that can create antitrust risk. The trick is to know where that dividing line is and to avoid crossing over it.

The U.S. Court of Appeals for the First Circuit has made brand companies think twice about creating patent thickets in the Orange Book by resuscitating an antitrust suit against Sanofi by direct purchasers of insulin glargine. In re Lantus Direct Purchaser Antitrust Litigation (Feb. 2020). The Sanofi decision provides a possible opportunity to seek antitrust liability against brand companies for abusing Food and Drug Administration (FDA) regulations. The decisions should make branded companies reconsider over-listing patents in the Orange Book, and potentially slowing down generic competition. While this decision sets the stage for further fights over what patents should not be listed as covering approved “drugs,” it also sets a clear test for courts to consider when evaluating other tactics that brands have used to create regulatory delays to stall approval of potential rival products.

On January 26, CBS broadcast the 63rd Annual Grammy Awards, which celebrated America’s finest recording artists and songwriters. Drawing a global audience with performances by super stars such as Aerosmith, Blake Shelton, and Ariana Grande, the event highlighted the music industry’s talents, innovation, and extraordinary financial success. Yet, what keeps the music flowing in a thriving marketplace is the fair operation of the performing rights license marketplace made possible by vigilant antitrust enforcement. The Department of Justice, Antitrust Division (the Department) is currently reviewing the consent decrees between the federal government and two performance rights organization behemoths: ASCAP (American Society of Composers, Authors, and Publishers) and BMI (Broadcast Music, Inc.). While conducting periodic reviews of antitrust law is smart policy, altering or scrapping the music decrees would be a mistake.

The pharmaceutical industry presents some of the most important and challenging issues lying at the intersection of the patent and antitrust laws. On the one hand, patents play a crucial role in the industry, which is unique in the cost and duration of reaching the market. But on the other, a complicated regulatory regime and the event of generic entry (which dramatically lowers price and which the brand firm has interest in delaying) opens the door for potentially anticompetitive behavior. One area where this tension has surfaced in recent years has involved the settlement of patent litigation. In 2013, in FTC v. Actavis, the Supreme Court held that agreements by which brand-name drug companies pay generics to settle patent litigation and delay entering the market could have “significant anticompetitive effects” and violate the antitrust laws.

The House Subcommittee on Antitrust, Commercial, and Administrative Law yesterday heard from Joseph Simons, Chairman of the Federal Trade Commission, and Makan Delrahim, Assistant Attorney General in the Department of Justice’s Antitrust Division as part of the Subcommittee’s fourth hearing in its “Online Platforms and Market Power” series. The latest hearing focused on the perspectives of the antitrust authorities, while previous hearings have examined the effects of the big tech companies on innovation and entrepreneurship; online platforms’ effect on a free and diverse press; and the role of data and privacy in competition. While both Delrahim and Simons said they are aggressively investigating and monitoring dominant platforms like Facebook and Google, they warned against overreach. Subcommittee Chair David Cicilline (D-RI) expressed his concern that, over the past decade, the largest tech firms have acquired more than 436 companies, “many of which were actual or potential competitors,” without intervention from antitrust enforcement authorities. The last major monopolization case was brought in 2001 against Microsoft, Cicilline noted. “This has created a de facto antitrust exemption for online platforms.,” he said, questioning whether the failure lies in the need for congressional action to amend and strengthen existing laws, a lack of agency resources to effectively combat the problem, or simply a lack of will to enforce the laws on the books.

This week in tech and innovation hearings in Washington, D.C., the U.S. House of Representatives gets underway on Wednesday by exploring rulemaking at the Environmental Protection Agency (EPA), regulating online platforms through antitrust law, preparing the medical workforce for innovation and checking the progress of NASA’s plans to put American astronauts on the Moon and Mars. Later in the week, House committees focus on innovation in water and geothermal energy as well as the impact of big tech on small businesses across America. Over in the Senate, the Senate Environment Committee holds a hearing to look at expanding commercial nuclear power and the Senate Commerce Committee will mark up various pieces of legislation, including one bill that would reauthorize compulsory licenses for satellite broadcasts under STELAR despite Copyright Office opposition to such reauthorization. Elsewhere in D.C., The Brookings Institution holds an event today to discuss potential biases that can develop through the use of algorithms in AI technologies.

This week in Other Barks & Bites: new patent collective for video technology launched; inventor rally to be held during live IPR hearing at AIPLA meeting; the White House indicates that the first phase of the U.S.-China trade deal will focus on IP; the USPTO shifts burden of proving patentability in PTAB motions to amend to the petitioner after Aqua Products; the House of Representatives passes the CASE Act in a 410-6 vote; the EU invalidates the three-dimensional trademark to the Rubik’s Cube; Power Integrations settles its patent infringement litigation against ON Semiconductor; Intel files an antitrust suit against SoftBank over patent acquisition and assertion activities; Amazon.com posts its first year-over-year earnings loss in more than two years; and the Federal Circuit overturns Google’s challenge to a Philips patent on appeal from the PTAB.

Senators Thom Tillis (R-NC) and Chris Coons (D-DE), Chair and Ranking Member, respectively, of the Senate Judiciary Committee’s Subcommittee on Intellectual Property, sent a letter on October 21 to U.S. Attorney General William Barr and Assistant U.S. Attorney General, Antitrust Division, Makan Delrahim, asking them to “work with the United States Patent and Trademark Office (USPTO) to provide guidance on remedies for infringement of standard-essential patents (SEPs) subject to fair, reasonable and nondiscriminatory (FRAND) licensing commitments.” Tillis and Coons applauded the Department of Justice (DOJ), Antitrust Division’s decision to withdraw from the 2013 joint DOJ-U.S. Patent and Trademark Office “Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments,” but expressed concerns over a “growing divide” among the Department of Justice, the Federal Trade Commission (FTC) and the USPTO about the role of antitrust law in policing SEPs.

This week in the nation’s capital, subcommittees in the House of Representatives will hold a series of technology-related hearings focused on online competition in data privacy, artificial intelligence (AI) and cloud computing in the financial sector, Internet consumer protections and NASA’s goal to speed up the return of a manned mission to the moon. The House Investigations Subcommittee will also hold a field hearing outside of D.C. exploring innovation in lead mitigation employed within the state of New Jersey. Elsewhere in D.C., the R Street Institute will discuss their theory on the national security implications of patents, the Brookings Institution will look at the impact of digital technologies on African entrepreneurship and the American Enterprise Institute hosts an event exploring the impact of globalization and robotic innovation on the workforce.

This week in the U.S. capital, the Senate will hold committee hearings on antitrust issues in digital platforms and real-time payment systems, a sector of fintech that will also be explored by the House Task Force on Financial Technology. Elsewhere in the House of Representatives, there will be hearings on Veterans’ Affairs scheduling technology, clean industrial innovations and medical research funding at the NIH. The week kicks off at the Information Technology and Innovation Foundation with a look at small business innovation funding programs. The Brookings Institution will also host events on Army modernization efforts and issues in disaggregating health data for improved policy-making.

This week in Other Barks & Bites: the Federal Circuit issued a pair of precedential opinions affirming the USPTO’s determinations on patent term adjustment; Chuck Yeager filed a trademark lawsuit against Airbus; Facebook CEO Mark Zuckerberg met with Capitol Hill lawmakers and President Trump; the Office of Technology Assessment Improvement and Enhancement Act was introduced into both houses of Congress; the Sixth Circuit affirmed the dismissal of a copyright case lodged against musician Steve Winwood; the U.S. Department of Justice announced criminal charges over the theft of pediatric medicine trade secrets; and the NMPA doubled the damages sought against Peloton after finding more unlicensed songs used by the streaming exercise companies.

Last week the United States Court of Appeals for the Federal Circuit issued an important decision that might be easy to overlook. In Intellectual Ventures I LLC v. Capital One Financial Corporation, the Federal Circuit dodged the antitrust question presented by finding that a prior ruling had collateral estoppel effect. Still, the arguments raised by Capital One against Intellectual Ventures are part of a disturbing trend. Unwilling licensees who engage in a scheme of efficient infringement to avoid paying for patent licenses are increasingly looking to creative antitrust theories to escape liability for their actions. Efficient infringement is a cold-hearted business calculation whereby businesses decide it will be cheaper to use patented technology without paying than to license it and pay a fair royalty to the patent owner. This calculus is made on the part of large entities who realize there are a certain number of patent owners that are just simply not going to assert their patents for one reason or another, frequently because they don’t have the money to do so. Then there is another group of those that will assert their patents but will not win. The calculation progresses to realize that there is a small group of those who are likely to both assert patents and prevail, thanks to all the hurdles put in place (i.e., patent eligibility challenges, the Patent Trial and Appeal Board, etc.). The calculation further recognizes that even if a patent owner prevails, a permanent injunction is virtually impossible to obtain as the result of the Supreme Court’s decision in eBay v. MerchExchange, and damages are likely to be minimal thanks to a continual judicial erosion in damages available to victorious patent owners. This cold-hearted business approach to using intellectual property without paying has gone on for decades, but with the weakened state of the U.S. patent system since 2006, it has grown progressively worse.

On August 30, a number of amicus briefs were filed in the FTC v. Qualcomm appeal in the U.S. Court of Appeals for the Ninth Circuit. The appeal stems from a May 2019 order finding Qualcomm liable for anticompetitive behavior and issuing “sweeping” injunctive relief. Following Judge Koh’s ruling, her opinion has been called “disastrous,” an “utter failure,” and “based on scant evidence,” and further been accused of “mangling” antitrust law. The Ninth Circuit, in granting a partial stay of the injunction, noted there were “serious questions on the merits” of Judge Koh’s decision. Three of the amicus briefs in particular point out the errors in Judge Koh’s opinions that have given rise to these “serious questions.” Retired Federal Circuit Chief Judge Paul Michel filed an amicus brief focusing primarily on patent law issues, including the smallest salable patent-practicing unit (SSPPU) concept and reasonable royalty calculation. The International Center for Law & Economics (ICLE) and Scholars of Law and Economics filed an amicus brief arguing that Judge Koh’s decision “is disconnected from the underlying economics of the case” and will cause serious harm to antitrust law. Finally, a number of Antitrust and Patent Law Professors, Economists, and Scholars filed an amicus brief highlighting how antitrust overreach, as they allege is present here, will harm innovation and arguing that the district court failed to engage in the level of real-world economic analysis as is required by this case.

Commissioner Christine Wilson of the U.S. Federal Trade Commission (FTC) addressed the IPWatchdog Patent Masters Symposium on Tuesday, September 10, emphasizing three main points in her keynote: that Judge Lucy Koh’s decision in FTC v. Qualcomm was flawed, that antitrust analyses should be more focused on dynamic, rather than static effects, and that, despite the latter point, antitrust authorities routinely try and fail to integrate dynamic effects into antitrust law. She was clear up front that her views did not necessarily match those of her fellow commissioners. First, Wilson reiterated the ideas expressed in her May 28 op-ed for the Wall Street Journal, which she summarized by saying that U.S. District Court for the Northern District of California Judge Lucy Koh’s opinion in the FTC v. Qualcomm case “creates bad law and bad policy.” Wilson explained that Koh in her lengthy analysis took the opportunity to “radically expand a company’s legal obligation to help its competitors” by reviving a “discredited” 1985 Supreme Court case, Aspen Skiing Co. v. Aspen Highlands Skiing Corp. “My opposition to the court’s opinion does not stem from any desire to help or protect Qualcomm,” Wilson said. “I am focused on applying and preserving sound antitrust principles and this decision scares me.”

This week marks Congress’ return from its August recess and patent owners should be encouraged to see the Senate IP Subcommittee meeting on Wednesday to explore the STRONGER Patents Act in its latest attempt to improve the U.S. patent system. In the House, various subcommittees will focus on FCC broadband map accuracy, advancements in forensic science, and security issues in the nation’s Internet architecture. Outside of Capitol Hill, the Information Technology and Innovation Foundation will hold a pair of events to look at the global race for dominance in artificial intelligence (AI) and the country’s R&D funding agenda, and the Brookings Institution will explore autonomous transportation and service delivery systems, as well as federal data privacy legislation.