Tag Archives: DOJ

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Update: DOJ and FTC Petitioned to “Encourage” Standard-Setting Organizations Towards More Self-Policing

carrot-with-stickIn our March 15 post Are Antitrust Agencies Nudging Standard Setting Bodies on Patent Licensing?, we discussed a journal article authored by two current and one former senior economists from U.S. and European antitrust agencies which called on patent standard-setting organizations (SSOs) to take a stronger stand against anti-competitive behavior. The economists’ hope was that SSOs could nip in the bud controversies over standard-essential patent holders seeking injunctions or what constitutes a reasonable (i.e. “RAND”) licensing fee.

Yesterday, the American Antitrust Institute (AAI) petitioned the Justice Department and the Federal Trade Commission (FTC) to escalate the nudge into a menacing carrot and stick combination. The petition urges the agencies to adopt joint enforcement guidelines that could act as a “safe harbor” for SSOs from antitrust liability. Why would SSOs need such a safe harbor? Because AAI feels that SSOs should be held responsible for the anti-competitive activity of their members if SSOs don’t have in place “important safeguards against monopoly power.”

The petition suggests that the DOJ/FTC guidelines should require SSOs to adopt as part of their agreements, which are binding on their standard setting members, the following patent policies:

  1. Disclosure of patents as well as anticipated and pending patent applications supported by “good faith reasonable inquiry”
  2. Breach of the foregoing disclosure obligation should result in a zero royalty license if an undisclosed patent is incorporated into the standard
  3. Ex Ante RAND licensing commitment
  4. Stipulation that participants whose patents are incorporated into the standard are prohibited from seeking injunctions and exclusion orders against willing licensees
  5. Licensing terms run with the patent
  6. Licensees should have cash-only licensing options on individual SEPs
  7. Efficient, cost-effective process to resolve disputes over RAND royalty and non-royalty rates.

As we noted in our March 15 post, SSOs have been reluctant to adopt more demanding policies to which standard-setting participants must adhere, though the United Nation’s International Telecommunications Union intimated last October that it might be open to such changes. A stick-wielding carrot such as a joint DOJ-FTC guidance would likely move SSOs like the ITU beyond mere contemplation.

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Federal Government Abandons Defense of Graphically Unconstitutional FDA Tobacco Warnings

nosmokingAfter obtaining extension after extension from the U.S. Supreme Court (something our Rich Samp criticized here a few weeks ago), the time had come this week for the federal government to “fish or cut bait,” as it were, on whether it would urge reversal in one case involving the FDA’s graphic tobacco warnings, and oppose certiorari in another case.

As reported by several news outlets this morning, the Department of Justice announced that it would not seek Supreme Court review of the U.S. Court of Appeals for the D.C. Circuit’s R.J. Reynolds Tobacco Co. v. FDA decision. There, the court held in a facial challenge that the tobacco warnings violated the companies’ First Amendment rights. DOJ’s decision not to pursue reversal leaves in place a powerful precedent which businesses in other industries might deploy in situations where government labeling or warning requirements go beyond disclosure of pure, noncontroversial facts. The Washington Post story noted that FDA said it would “go back to the drawing board and ‘undertake research to support a new rulemaking consistent with the Tobacco Control Act.’” So that’s the end of the controversy for now, right?

Not necessarily. The government has until Friday to respond to a petition in the Supreme Court that it review another challenge to the graphic warnings, this one an “as applied” challenge rather than a “facial” challenge. The Sixth Circuit upheld the graphic warnings in American Snuff Co. v. United States. No doubt, the Solicitor General will argue that its decision not to appeal R.J. Reynolds Tobacco Co. obviates the need for the Court to grant certiorari in American Snuff. Will the justices take the government at its word that it now realizes the warnings can’t survive First Amendment scrutiny and that FDA will “go back to the drawing board”? If one were to look at the FDA web page on the graphic health warnings, one might question FDA’s interest in giving up the fight.

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Are Antitrust Agencies Nudging Standard Setting Bodies on Patent Licensing?

DOJ150px-US-FederalTradeCommission-Seal.svgEUAny article authored by three current or former economists from the world’s most powerful antitrust institutions would merit the free enterprise community’s attention (even if their bylines include the standard disclaimer that their views don’t necessarily reflect the views of their employers). But the context in which a recent Competition Policy International article was released and the message it sends make the piece required reading, especially for those in high-tech industries.

The FOSS Patents blog first flagged the article, Standard Setting Organizations Can Help Solve the Standard Essential Patents Licensing Problem. Its authors are the chief economist at the European Commission’s DG Competition agency; a former chief economist of the Justice Department’s Antitrust Division; and the Director of the Federal Trade Commission’s Bureau of Economics. The article was published in the context of a still-simmering debate over “standard-essential patents” (SEPs), a subject which we’ve addressed here (and here) several times. WLF has also waded into the most recent U.S. government pronouncement on SEPs, FTC’s consent decree with Google, with comments to the Commission.

The two thorniest challenges related to SEPs are: 1) whether SEP holders should be permitted to seek enforcement of their patents through injunction or exclusion order? and 2) what constitutes a “reasonable” royalty for such a patent, so that the patent holder is in compliance with its commitment to the standard setting organization (SSO) that set the underlying standard? Continue reading →

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Vigorous Antitrust Enforcement Forecast at WLF Media Briefing Event

FTC_Man_Controlling_TradeAt Washington Legal Foundation’s media briefing program last Tuesday, Same Administration, New Management: What to Expect from DOJ and FTC on Antitrust and Consumer Protection, speaker Janet McDavid noted the aggressive challenges William Baer, the Justice Department’s new Assistant Attorney General for the Antitrust Division, initiated against mergers when he was director of the Federal Trade Commission’s Bureau of Competition.

Mr. Baer wasted no time substantiating Ms. McDavid’s point, filing suit to prevent the consummation of a merger between America’s highest market-share brewer, Anheuser-Busch InBev and Mexico’s largest, Grupo Modelo.

If the Justice Department takes action to keep inexpensive beer inexpensive (an action certainly counter to governments’ taxation and other policies aimed at advancing temperance), the business community can be sure that it won’t hesitate to move against other combinations, joint ventures, etc. in the next four years. Our hour-long program would be thus be a worthy investment of time.

In addition to Ms. McDavid, a partner at Hogan Lovells LLP, WLF’s January 29 program (which can be viewed by clicking the title above) included experienced perspectives from Squire Sanders partner Brady Dugan and Wilson Sonsini Goodrich & Rosati Of Counsel Andrea Murino. WLF Legal Policy Advisory Board Chairman, K&L Gates Counsel Dick Thornburgh, moderated the discussion.

In addition to assessing the future of merger review and enforcement, the speakers addressed civil exclusionary conduct actions; FTC and DOJ approaches to intellectual property (including standards-essential patents and patent “trolls”); criminal enforcement; international antitrust cooperation; and the division of labor between the two federal agencies.

A Powerpoint deck including slides utilized by Ms. McDavid and Ms. Murino can be downloaded here.

Addendum (Feb. 5): Further evidence of a more aggressive approach to mergers can also be seen in the Justice Department’s challenge to an already-consumated merger between two online product review companies.  Read more about it from several of Janet McDavid’s colleagues here.

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DOJ’s Advantage-Seeking Delay Maneuvers at Supreme Court: Time for Transparency

delay of game

Cross-posted at WLF’s Forbes.com contributor page

When a litigant files a certiorari petition in the U.S. Supreme Court, seeking review of a lower court decision, the opposing party has 30 days to file a response.  The Supreme Court Clerk’s office can and does grant extensions of time to file a response when counsel for the opposing party sets out “specific reasons why an extension of time is justified.”  But one should reasonably expect complete candor from attorneys, particularly federal government attorneys, when requesting such extensions.  Events this week call into question whether the United States is being completely candid in explaining its extension requests.

The U.S. Court of Appeals for the Sixth Circuit last May handed the federal government a major victory when it largely rejected First Amendment challenges to the new federal law that strictly regulates the labeling of tobacco products.  The tobacco industry filed a Supreme Court certiorari petition in October, and the federal government’s brief in response to the petition was initially due on November 26, 2012.  Since then, the Solicitor General’s Office has sought and received three successive extensions of time to respond, first to December 26, then to February 1, and then (in response to a request submitted just this week) to March 8.  On all three occasions, the “specific reason” proffered for seeking an extension was that the government attorney assigned to the case was busy attending to other legal matters.

I have no inside knowledge regarding the workloads of government attorneys, but the too-busy-on-other-matters explanation is highly suspect in this instance.  While the federal government routinely obtains one 30-day extension of filing deadlines in its Supreme Court cases and not infrequently obtains a second, the 98-day extension in this case is very unusual, even by federal government standards.  Given the importance of the issues raised by the Sixth Circuit petition, entitled American Snuff Co. v. United States, and the Solicitor General’s ability to handle briefing in other cases, it does not seem plausible that his office could not have met the February 1 filing deadline. Continue reading →

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Update: DOJ/USPTO’s Curiously Timed “Statement” on Standards-Essential Patents

DOJusptoIn our January 8 post, FTC’s Standards-Essential Patent Settlement: The Real “Elephant” in the Room?, we advanced the question of how much of a role regulatory turf has played in motivating the Federal Trade Commission’s recent actions regarding “standard-essential patents” (SEPs). SEPs are a major legal policy issue, and the Commission and the Justice Department both want to be the cop on the beat regarding alleged competition-related abuses of such patents.

The concept of a turf battle seems a bit more plausible to us today after reading about, and then reading, a joint Justice Department-U.S. Patent Office “Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/Rand Commitments.” While not directed specifically at any case or open docket, the statement is clearly aimed at the U.S. International Trade Commission (USITC) and its consideration of injunction requests in cases involving SEP patents.

After five pages of extolling the purposes and virtues of SEPs, the statement offers that in “some circumstances” injunctions or exclusions “may be inconsistent with the public interest.” One page later though, the agencies state, “This is not to say that consideration of the public interest factors set out in the statute would always counsel against the issuance of an exclusion” where patents are encumbered by a F/RAND commitment. It goes on to note some of those exceptional circumstances, adding, “This list is not an exhaustive one.”

The statement also declares, “The DOJ is the executive-branch agency charged with protecting U.S. consumers by promoting and protecting competition” (emphasis ours). FTC shares the same consumer protection mission, though it is an independent, not an “executive-branch,” agency.

The DOJ/USPTO statement’s declaration of regulatory primacy, the timing of its release (one week after the FTC settlement with Google), and the statement’s complete failure to reference the very relevant Google consent decree, are certainly all very curious.

The possibility of regulatory turf battles should be of interest not only to inside-the-Beltway antitrust policy types, but also to anyone effected by government action on standards-essential patents. In its statement, DOJ/USPTO related a desire to “ensure greater certainty concerning the meaning of a F/RAND commitment.” DOJ/USPTO’s perspective on SEPs and injunctions arguably differs in some significant respects from what four FTC Commissioners said regarding the Google consent decree, fomenting, not alleviating, uncertainty from the U.S. government.

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FTC’s Standards-Essential Patent Settlement: The Real “Elephant” in the Room?

elephantCross-posted at WLF’s Forbes.com contributor page

Our 700th post!

The Federal Trade Commission’s decision last Thursday not to pursue a case under the Sherman Act or the Federal Trade Commission Act regarding Google’s online search business practices has elicited a wide range of opinions, including one particularly biting quip from within the Commission. Departing Commissioner J. Thomas Rosch noted in his statement of concurrence and dissent that “after promising an elephant more than a year ago, the Commission instead has brought forth a couple of mice.”

Perhaps that elephant was in the FTC press room last Thursday after all, however, in FTC’s resolution of its other investigation involving Google. Though it was completely unrelated to FTC’s online search practices inquiry, Chairman Leibowitz announced the same day that a formal Complaint and a Proposed Consent Order had been filed involving Google-owned Motorola Mobility’s standards-essential patents (SEPs).

Like it alleged in settlements involving Robert Bosch GmbH (November 2012) and Negotiated Data Solutions (2008), FTC concluded that Motorola’s refusal to license SEPs on fair, reasonable and non-discriminatory (FRAND) terms was “unfair” under FTC Act Section 5. The Commission’s use of Section 5 always raises eyebrows and motivates some to invoke the specter of the “National Nanny” FTC of the 1970s. We’re not sure if the Google/Motorola agreement will usher in an era of renewed “unfairness jurisdiction” cases, but it certainly raises some interesting issues and questions:

Regulatory Turf/Muscle-Flexing? FTC Act Section 5 provides the Commission with a unique regulatory weapon, and the Google SEPs case offered it a seemingly undeniable opportunity to sharpen this tool while also one-upping its counterparts at the Justice Department. When announcing its approval of Google’s purchase of Motorola Mobility last February, DOJ-Antitrust expressed “concern” that the company’s commitments to FRAND licensing of SEPs were “ambiguous” and that “how Google may exercise its patents in the future remains a significant concern.” Such concern did not rise to the level of a violation of the Sherman Act, so DOJ could only wring its hands. Continue reading →

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Welcome to “Sorrellonia”!: WLF Seminar Assesses Off-Label Drug Speech Ruling

PodiumPic1Off-Label Speech After U.S. v. Caronia: Implications for Drug & Device Regulation and the First Amendment, a Washington Legal Foundation Web Seminar program, is now available for on-demand viewing.

Our program featured analysis and commentary from Coleen Klasmeier of the Sidley Austin law firm and WLF’s Chief Counsel, Richard Samp. Coleen and Rich make reference to a Powerpoint slide deck, which due to a technical problem wasn’t available to viewers during the program.  The slide deck can be downloaded here.

For her presentation, Coleen coined the term “Sorrellonia” because the U.S. Court of Appeals for the Second Circuit two-judge majority in Caronia became the first court to fully apply the holding and rationale of the U.S. Supreme Court’s 2011 Sorrell v. IMS Health opinion.

Coleen’s and Rich’s presentations drew upon their combined years of experience in dealing with FDA’s application of its off-label speech restrictions and the Justice Department’s prosecution of cases where criminal violations of those rules allegedly occurred.

While they both saw great promise in the opinion for greater freedom in the exchange of critical medical information, they also offered firm notes of caution that the ruling not be interpreted as a green light for businesses’ promotion of off-label uses. Great peril still exists in this area they warned, a fact that is all the more apparent today with the announcement of another nearly $1 billion Justice Department settlement with a pharmaceutical company.

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Update: U.S DOJ & California Pursue Antitrust Claim vs. eBay on “Anti-Poaching” Agreement

In separate Legal Pulse posts last February and April, we noted developments in a private antitrust class action lawsuit, In re: High-Tech Employee Antitrust Suit. The suit piggybacked on a settlement the U.S. Department of Justice had reached with a number of companies who had entered into an agreement to avoid “poaching” each other’s engineering employees.

While that private suit advances towards trial, reports this past Friday indicated that DOJ and the California Attorney General have filed complaints against eBay for having an anti-poaching agreement with Intuit. Intuit was not named as a party to the complaints, according to DOJ, because it was one of the five companies to enter into the settlement in 2011. According to a Reuters story, the eBay complaint arose out of the earlier investigation which led to charges against Intuit.

One would expect a follow-on class action lawsuit against eBay (whose path to trial has been made easier by the April ruling in In re: High-Tech Employee) to be filed any day.

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Supreme Court Hears Challenge to Electronic Surveillance

The Supreme Court heard oral arguments today in Clapper v. Amnesty International, a case that will decide whether a group of American lawyers have standing to challenge the 2008 law that expanded the authority of the U.S. government to engage in electronic surveillance of overseas aliens suspected of terrorism.  Although the law does not permit American citizens to be targeted for surveillance, the plaintiffs fear that the government will end up overhearing some of their conversations with those foreigners who are being targeted.  The nine justices appeared to be closely divided on whether such fears are sufficient to support the plaintiffs’ standing claims.

In asking the Court to uphold their standing, the plaintiffs assert that if they are not permitted to challenge the surveillance law, then no one will be able to do so.  They may well be correct in that assertion, but that is immaterial. If no potential plaintiff can demonstrate that he has been injured by the law, the courts have no reason to examine claims that the law might infringe on someone else’s constitutional rights.  Of course, nothing prevents the plaintiffs from raising their concerns with appropriate officials in the Executive Branch and Congress, the branches of government with primary responsibility for national security matters.

The 2008 law is an outgrowth of the revelation by The New York Times in 2005 that the Bush Administration had adopted a Terrorist Surveillance Program (TSP), under which the overseas communications of suspected terrorists were being monitored.  Some critics charged that the TSP violated the requirements of the Foreign Intelligence Surveillance Act (FISA), a 1978 congressional statute that sought to regulate the use of electronic surveillance for national security purposes.  In response, Congress amended FISA in 2008 to establish a supplemental procedure whereby the Government could obtain judicial approval to engage in the sorts of overseas electronic surveillance undertaken pursuant to the TSP.

On the day that the amendments were enacted, several lawyers and several organizations (represented by the ACLU) filed a lawsuit seeking an injunction against the conduct of surveillance pursuant to the new law, the FISA Amendments Act (FAA).  They alleged that the FAA violated their First and Fourth Amendments rights as well as separation-of-powers principles.  Named as defendants are several senior Obama Administration officials, including Attorney General Eric Holder (whose authorization is required before any surveillance may be undertaken under the FAA).  The federal appeals court in New York held that the plaintiffs had standing to challenge the FAA; in June, the U.S. Supreme Court agreed to review that decision. Continue reading →