Sheppard Mullin

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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  DAW Indus., Inc. v. Hanger Orthopedic Group, Inc., 3:06-cv-01222 (9th Cir. Feb. 24, 2014) (unpublished opinion).
Continue Reading 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 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.
Continue Reading FTC Issues Updated Media Guidance for Screening Fake Weight Loss Claims

On December 6, 2013, a federal judge sentenced the former president of SeaStar Line LLC to five years in prison for his role in a price-fixing conspiracy – the longest-ever prison sentence imposed for an antitrust violation.  (U.S. v. Frank Peake, Case No. 3:11-cr-00512, U.S. Dist. Ct., DPR.).  The executive was convicted of engaging in a conspiracy to fix rates and surcharges to government and commercial customers for ocean freight between the Continental U.S. and Puerto Rico.
Continue Reading Longest-Ever Antitrust Prison Sentence Imposed

The City of San Jose, California, entered into an option contract to lease land to the Oakland A’s, a Major League Baseball (“MLB”) club, for the construction of a new stadium.  The land was within the exclusive territory of another MLB club, the San Francisco Giants, who refused to waive their right under MLB’s Constitution to territorial exclusivity.  The City sued MLB under the antitrust laws for not putting repeal of that constitutional provision up for a vote by all of the teams belonging to MLB, despite repeated demands by the City that it do so.  City of San Jose v. Office of the Commissioner of Baseball, __ F.Supp.2d __, 2013 WL 5609346, Case No. C-13-02787 RMW (N.D. Cal., Oct. 11, 2013).
Continue Reading Major League Baseball’s Antitrust “Exemption” Is Immune From Judicial Overrule

The current press is buzzing with news about the recent increase in antitrust investigations involving foreign companies with operations in China, and reports of foreign companies being told to expect higher fines if they “put up a fight” during investigations. At the same time, the Chinese enforcement agencies have started to make their decisions public. Putting these developments in perspective, the take-away is that antitrust in China should be taken seriously, the enforcement agencies are still in the development stage, and some progress is being made in transparency of decision-making.
Continue Reading Antitrust Investigations in China: Putting Things in Perspective

The Ninth Circuit Court of Appeals recently issued an opinion on a rare legal issue: buyer liability for violations of the Robinson-Patman Act. Gorlick Distribution Centers, LLC v. Car Sound Exhaust System, Inc., No. 10-36083 (9th Cir. July 19, 2013). The Gorlick court relied extensively on the Supreme Court’s opinion in Automatic Canteen Co. of America v. Federal Trade Commission, 346 U.S. 61 (1953) (Frankfurter, J.), which will be discussed first in this article, in affirming the grant of summary judgment dismissing plaintiff’s Robinson-Patman Act price discrimination claim. The court of appeals also affirmed dismissal of plaintiff’s Sherman Act section 1 claim, which reframed essentially the same facts as a conspiracy.
Continue Reading Disfavored Purchaser Loses Robinson-Patman Act and Sherman Act Section 1 Claims Against Favored Buyer

Plaintiff alleged that defendants, which were affiliates of each other, held patents that were essential for plaintiff to manufacture and market USB 3.0 connectors that complied with a standard adopted by the industry for such connectors. Defendants assertedly refused to license those patents to plaintiff for certain connectors despite being obligated to do so. Lotes Co., Ltd. v. Hon Hai Precision Industry Co. Ltd., No. 12 Civ. 7465 (SAS) (S.D.N.Y. May 14, 2013) (“Slip Op.”). The Court dismissed the claim pursuant to the Foreign Trade Antitrust Improvements Act (“FTAIA”), finding that plaintiff had failed to allege a direct, foreseeable effect on domestic U.S. commerce. The Court dismissed the case for lack of subject matter jurisdiction under Rule 12(b)(1), rather than for failure to state a claim under Rule 12(b)(6), because it felt bound by Second Circuit precedent to do so. Slip Op. at 18-22.
Continue Reading Foreign Trade Antitrust Improvements Act Defeats Claim Against Holder Of Patent Incorporated Into Industry Standard

By Bradley Graveline and Jennifer Driscoll-Chippendale 

On June 17, 2013, the United States Supreme Court announced a rule that blurs the lines between antitrust and patent law in the context of Hatch-Waxman litigation. In FTC v. Actavis, 570 U.S. 756 (2013), the Federal Trade Commission (“FTC”) prevailed when the Supreme Court held in a 5-to-3 decision [1] that reverse payment settlements in Hatch-Waxman cases are subject to antitrust scrutiny, resolving a circuit split and impassioned debate among antitrust lawyers. This is only the second antitrust case in 20 years where the enforcers have prevailed. The Court, however, rejected the FTC’s position that reverse-payment settlements were presumptively illegal, ruling that they are subject to scrutiny under the rule of reason.Continue Reading FTC v. Actavis: What Does It Mean for Reverse-Payment Settlements?

By Bradley Graveline and Jennifer Driscoll-Chippendale 

On June 17, 2013, the United States Supreme Court announced a rule that blurs the lines between antitrust and patent law in the context of Hatch-Waxman litigation. In FTC v. Actavis, 570 U.S. 756 (2013), the Federal Trade Commission (“FTC”) prevailed when the Supreme Court held in a 5-to-3 decision [1] that reverse payment settlements in Hatch-Waxman cases are subject to antitrust scrutiny, resolving a circuit split and impassioned debate among antitrust lawyers. This is only the second antitrust case in 20 years where the enforcers have prevailed. The Court, however, rejected the FTC’s position that reverse-payment settlements were presumptively illegal, ruling that they are subject to scrutiny under the rule of reason.Continue Reading FTC v. Actavis: What Does It Mean for Reverse-Payment Settlements?

By Thomas D. Nevins

For many years, California’s Unfair Competition Law had no traditional standing requirements. But since the passage of Proposition 64 in 2004, standing has been required, and standing continues to be litigated regularly. In Law Offices of Higbee v. Expungement Assistance Services, __ Cal.App.4th ___, No. G046778 (4th Dist. March 14, 2013), the Court of Appeal decided that a plaintiff had standing to sue under the Unfair Competition Law (Bus. & Prof. Code Section 17200, et seq.) to enjoin a horizontal competitor’s diversion of business to itself through unlawful means. The Court held that a plaintiff need not be threatened with the type of injury that would be compensable through restitution under Cal. Business and Professions Section 17204 to have standing to pursue an injunction against unfair competition under Section 17203.Continue Reading California Court of Appeal Allows Injunction Under Unfair Competition Law To Prevent Horizontal Competitor From Diverting Business Through Unlawful Means