Microsoft-Nokia: China’s MOFCOM Quietly Slips Into the Debate about Injunctive Relief for FRAND-encumbered SEPs

This past November and December, the US Federal Trade Commission (“FTC”) and European Commission (“EC”) cleared Microsoft Corporation’s (“Microsoft”) acquisition of the bulk of the devices and services business of Nokia Corporation of Finland (“Nokia”) without any conditions. In contrast, on April 8, 2014, the Chinese Ministry of Commerce (“MOFCOM”) approved the acquisition subject to conditions that include an intellectual property issue that is still to be resolved in the US, EU and other countries: whether holders of standard essential patents (“SEPs”) who make licensing commitments under fair, reasonable and nondiscriminatory (“FRAND”) terms should be barred from seeking injunctive relief against alleged infringers of their patents.  MOFCOM’s conditional approval is not controversial for this specific transaction, but raises the question of how MOFCOM’s treatment of this issue will be interpreted in future merger reviews and whether this will affect investigations related to anticompetitive conduct.

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Seventh Circuit Affirms Dismissal of Motorola’s LCD Antitrust Claims Based on Foreign Purchases

On March 27, in the latest major development in Motorola Mobility’s lawsuit alleging price-fixing of liquid crystal display modules (LCDs), a three-judge panel of the Seventh Circuit, including renowned antitrust jurist Judge Richard Posner, simultaneously granted Motorola’s petition for interlocutory appeal and affirmed a ruling by U.S. District Judge Joan B. Gottschall that more than 99% of Motorola’s $5.4 billion in claimed damages are beyond U.S. antitrust jurisdiction under the Foreign Trade Antitrust Improvements Act, 15 U.S.C. 6a.  The Court decided the substantive issue on the basis of the district court record and the parties’ interlocutory appeal papers, dispensing with further appellate briefing and oral argument.  We previously reported on Judge Gottschall’s decision in the trial court here.

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What Does the First-Ever Extradition on an Antitrust Charge Mean for the Auto Parts Investigation?

On April 4, 2014, the U.S. Department of Justice, Antitrust Division announced a milestone victory, having successfully litigated its first extradition for an alleged antitrust violation.[1]  Romano Pisciotti, an Italian national and former Parker ITS Srl executive, was extradited from Germany for his involvement with the marine hose cartel, almost seven years after the Division began its investigation with raids in Houston, Texas on May 2, 2007.  Pisciotti was arrested in Germany on June 17, 2013, and surrendered to the U.S. authorities under the terms of the U.S.-Germany extradition treaty, which provides for extradition where the alleged offense is punishable under both German and U.S. federal law.

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California Proposition 65 Caramel Coloring Suits

This January, Consumer Reports, an independent product testing organization, released a report entitled “Caramel Color:  The health risk that may be in your soda” detailing its investigation of the presence of 4-methylimidazole (“4-MeI”), an impurity and potential carcinogen created during the manufacturing of caramel coloring, in various soft drinks.  Because 4-MeI is a potential carginogen, and identified as such under California’s Proposition 65 law, any food or beverage sold in the state that exposes consumers to more than 29 micrograms of 4-MeI per day is supposed to carry the Proposition 65 warning.  The investigation by Consumer Reports concluded that varying amounts of MeI were found in a variety of soft drinks, including Coca-Cola, Diet Coke, Dr. Pepper, Brisk Ice Tea, and A&W Root Beer; and found levels of 4-MeI that purportedly exceeded the Proposition 65 threshold in 365 EveryDay Value Dr. Snap, Pepsi, Diet Pepsi, Pepsi One and Malta Goya.  These latter products did not carry the Proposition 65 warning language.

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U.S. Supreme Court Settles Lanham Act Standing Conflict

On March 25, 2014, the U.S. Supreme Court ruled that Static Control Components, Inc. had the right to sue Lexmark International Inc. under the Lanham Act’s false advertising prong.  In doing so, the Court established a new Lanham Act standing test, rejecting several different tests circuit courts have used to evaluate standing under the Lanham act’s false advertising provisions.

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Ninth Circuit Once Again Affirms That Malicious Actions To Destroy A Competitor Do Not State An Antitrust Claim Unless Accompanied By Injury To Competition

On February 24, 2014, the Ninth Circuit Court of Appeals affirmed the lower court’s grant of summary judgment dismissing DAW Industries’ claims of conspiracy to restrain trade and attempted monopolization, once again affirming the tenet that antitrust laws do not address malicious actions to destroy a competitor, unless injury to competition as a whole can also be established.  DAW Indus., Inc. v. Hanger Orthopedic Group, Inc., 3:06-cv-01222 (9th Cir. Feb. 24, 2014) (unpublished opinion).

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LCD Court Dismisses Motorola’s Multi-Billion Dollar Antitrust Claims Based On Overseas Purchases

On January 23, in a landmark decision that is one of the most important yet to be handed down in the sprawling LCD antitrust litigation pending in various federal courts since 2006, Judge Joan Gottschall of the Northern District of Illinois dismissed plaintiff Motorola Mobility’s price-fixing claims based on overseas purchases by its foreign affiliates, ruling that the claims were barred by the Foreign Trade Antitrust Improvements Act (“FTAIA”), which limits the application of American antitrust laws to foreign conduct.  The decision effectively eliminates from the case more than 99% of Motorola’s $5.4 billion in claimed damages.

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FTC Issues Updated Media Guidance for Screening Fake Weight Loss Claims

On January 7, 2014, the Federal Trade Commission announced “Operation Failed Resolution”, targeting false and deceptive claims made by marketers of weight loss products.  As part of this initiative, the FTC issued updated guidance for use by the media to help them spot phony weight-loss claims when screening ads for publication.  Along with the release of this media guidance, the FTC also announced the settlement of four enforcement actions against companies marketing foods, cosmetics or dietary supplements.  In connection with these weight-loss and similar cases, there appears to be disagreement among the Commissioners as to a substantiation rule that would require two “randomized controlled trials” to substantiate health and disease-related claims.

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