In Pro Search Plus, LLC v. VFM Leonardo, Inc., Central District of California Judge Josephine Staton dismissed some of the monopoly claims brought by online booking company Pro Search Plus against Canadian rival VFM Leonardo Inc. Pro Search claims that VFM violated the Sherman Act, Lanham Act, and the Copyright Act when it allegedly engaged in anti-competitive behavior, such as tying products together and erecting barriers to switching providers. The court has previously dismissed plaintiff’s Sherman and Lanham Act claims because Pro Search did not make clear whether Pro Search is more like the “printer/publisher” or the “author” of the digital images and rich media it distributes. Following the dismissal, Plaintiff amended its complaint to add a copyright infringement claim. Judge Staton, however, dismissed the Lanham Act claim in plaintiff’s second amended complaint with prejudice because Pro Search did not address how the addition of its copyright claim affects its Lanham Act claim, despite the fact that VFML moved to dismiss on this ground. The court also dismissed plaintiff’s Sherman Act claim, but without prejudice.
House Subcommittee Questions FTC Over Its Approval of $29.1 Billion Pharmacy Merger
December 6, 2013 – 2:36 pm
Under questioning from the House Commerce, Manufacturing and Trade subcommittee, Federal Trade Commission chairwoman Edith Ramirez defended the FTC’s decision to approve the $29.1 billion merger of Express Scripts Inc. and Medco Health Solutions Inc. In April 2012, FTC approved the merger, despite concerns that the tie-up would harm competition. Responding to concerns from the subcommittee, Ramirez said that the FTC evaluated the competition impacts of the deal and would continue to monitor concerns over potential pharmacy benefits management market consolidation. During the questioning, the subcommittee also expressed concerns that the FTC may be overstepping its FTC Act Section 5 enforcement powers to address data security, when it regulates private companies’ data security practices. In response, FTC commissioner Julie Brill backed the agency’s mandate not only to ensure that companies are abiding by commitments they make to consumers through privacy policies but also through the exercise of the FTC’s unfairness jurisdiction, limited by the requirement to show harm.
Jury Awards $28.4 Million In F-16 Software Competition Suit
December 2, 2013 – 3:40 pm
In Command Tech., Inc. v. Lockheed Martin Corp. et al., a Montgomery County, Maryland jury found Lockheed Martin Corp. liable to Command Technology Inc. for illegally interfering with Command Technology’s efforts to sell competing technical maintenance software for F-16 jet fighters resold to American allies. According to Command Technology’s complaint, Lockheed allegedly sought to lock up the market for maintenance software for the jet, which it manufactures, and falsely claimed that Command Technology’s software and user manuals used for maintenance and upgrades, didn’t comply with government standards. Following a trial, the jury found that Lockheed competed unfairly with Command Technology and tortiously interfered with Command Technology’s business relationship, awarding economic damages of $24.8 million.
Court Denies Summary Judgment In Nexium Antitrust MDL
December 2, 2013 – 3:14 pm
In In re: Nexium (Esomeprazole) Products Liability Litigation, Massachusetts District Court Judge William G. Young denied AstraZeneca PLC and Ranbaxy Inc.’s motion for partial summary judgment in multidistrict litigation alleging the companies violated antitrust laws by agreeing to delay entry of a generic version of AstraZeneca’s heartburn drug Nexium. In their motion, defendants argued that the antitrust claims relating to Ranbaxy’s alleged exclusion from the market were time-barred because they accrued at the time AstraZeneca and Ranbaxy entered into a settlement agreement. The court disagreed with the defendants, holding that the plaintiffs presented enough evidence to show that the statute of limitations on those claims started to run when Ranbaxy would have launched a generic version of Nexium absent a settlement with AstraZeneca, since any overcharges would first be incurred upon that date, and not on the date of the settlement agreement.
Airlines Agree to Divest Assets To Settle DOJ Merger Suit
November 13, 2013 – 6:17 pm
In U.S. v. U.S. Airways Group Inc. et al., in order to settle the U.S. Department of Justice’s antitrust suit attempting to block the merger between U.S. Airways Group Inc. and American Airlines, the airlines have agreed to divest a number of departure gates and 138 takeoff and landing slots at seven key airports. Under the proposed settlement agreement, in order to preserve competition after the tie-up between American Airlines and U.S. Airways, the airlines will divest assets at airports in Boston, Chicago, Dallas, Los Angeles, Miami, New York, and the District of Columbia to low cost carriers, such as Southwest Airlines Co., and JetBlue Airways Corp. As part of the same deal, the two airlines entered into an agreement with the U.S. Department of Transportation to continue using their unspecified number of commuter slots at Reagan National Airport for their current purpose of promoting air travel to and from small and medium-sized cities. Although both parties have signed off on the agreement, the deal still requires the approval of a District of Columbia federal judge.
Judge Announces He Will Reverse Pay-for-Delay Dismissal Judgment If Appellate Court Remands In Light of Recent Supreme Court Decision
October 31, 2013 – 3:53 pm
In In Re: AndroGel Antitrust Litigation (No. II), Northern District of Georgia Judge Thomas W. Thrash Jr. announced that, if the Eleventh Circuit remands the case, he would overturn the dismissal of the plaintiffs’ pay-for-delay claims given the U.S. Supreme Court’s recent decision. That case involved a Federal Trade Commission prosecution of the same settlement agreements before the court in this class action – a deal between Solvay Pharmaceuticals, the owner of the AndroGel brand, and potential generic competitors. The high court reinstated the FTC’s claim on the ground that this type of settlement – in which a patent holder pays money to an alleged infringer in exchange for agreeing not to challenge the patent’s validity – can violate the antitrust laws.
In this case, the trial court had dismissed private antitrust claims attacking the same settlement agreements. The case is currently pending on appeal to the Eleventh Circuit. The defendants oppose remand despite the Supreme Court decision in the FTC case because the private case involves a separate sham litigation claim. The trial court, however, maintained that the circuit court’s taking up that issue now would simply delay the inevitable. “The defendants say,” Judge Thrash commented, “that a post-judgment change in the law is not sufficiently extraordinary to justify Rule 60(b) relief. Well, it seems pretty extraordinary to me because the change in the law resulted from reversal of a judgment I entered in this case. That does not happen every day.”
PI May Be Appropriate Under State Law Even if All Factors of Test Not Met
October 31, 2013 – 3:52 pm
In Heil Trailer International Company v. Gavin Kula et al., the U.S. Court of Appeals for the Fifth Circuit preliminarily enjoined the defendant from using the plaintiff’s trade secrets. Heil Trailer alledged that former employees – while still working for Heil – illegally sent confidential information to a competitor. The trial court denied Heil’s request for a preliminary injunction because it found that the information could have been acquired by competitors (one of the factors in the applicable state law test) and that Heil’s damages would be quantifiable, making an injunction unnecessary.
The Fifth Circuit rejected the second ground because it rested on federal law that was inapplicable to the state law question at issue.
As to the availability-to-competitors factor, the appellate court observed that under state law a plaintiff is not required to satisfy all six factors for determining whether confidential information was a trade secret. Rather than rest its decision on the lack of a single factor, the Fifth Circuit held, the lower court should have weighed the factors in context.
“Texas courts,” the Fifth Circuit panel emphasized, “have explained consistently that ‘the party claiming a trade secret should not be required to satisfy all six factors because trade secrets do not fit neatly into each factor every time.’” Here, the injunction should have been granted, the court found, because five of the six factors were met, and there was “no indication that the district court balanced this single unfavorable factor against the other five.” Nor did the lower court, “explain why this factor should be given greater weight than the other five factors or tip the balance in this particular case against trade secret status.” The panel also expressed a lack of confidence in the lower court’s fact finding, commenting on its failure to hold an evidentiary hearing despite conflicting affidavits on the factor that the court found controlling.
Samsung Pledges to EU that It Will Use Circumspection in Seeking Injunctions for Infringement of Standard Essential Patents
October 31, 2013 – 3:50 pm
Samsung Electronics Co. Ltd. has told the European Commission that it will limit attempts to enjoin infringers of its standard-essential patents for five years in exchange for the EC’s ending an antitrust investigation into the company’s assertion of its patents rights against Apple Inc. The Commission believes that Samsung sought to enjoin Apple, even though the rival was willing to pay a reasonable royalty. Samsung dropped its request for an injunction against Apple, but the EC has continued its antitrust investigation.
Specifically, Samsung proposed that it would not seek injunctions in Europe if the alleged infringer agreed to (1) negotiate for up to a year and (2) permit a third party to determine what constituted a fair royalty rate if an agreement can’t be reached. Further, if the parties can’t agree on who should set the royalty, Samsung pledged to arbitrate the issue.
The Commission will consider competitor comments before deciding whether Samsung’s use of standard essential wireless patents constituted an anti-competitive abuse of its dominant market position. EU Competition Commissioner Joaquin Almunia issued a statement acknowledging that “[e]nforcing patents through injunctions can be perfectly legitimate.” He added, “[h]owever, when patents are standard-essential, abuses must be prevented so that standard-setting works properly and consumers do not have to suffer negative consequences from the so-called patent wars. If we reach a good solution in this case, it will bring clarity to the industry.”
The Commission is also investigating Google Inc.’s Motorola Mobility based on that company’s use of essential patents. Motorola reached an agreement with the Federal Trade Commission in the U.S. that resembles Samsung’s EU proposal, except the Motorola/FTC arrangement had no time limit.
Congress Examining Drug Companies’ Allegedly Improper Use of Citizen Petitions to Delay FDA Approval of Generic Drugs
October 31, 2013 – 3:49 pm
The FDA reported to Congress that pharmaceutical companies owning branded drugs may be filing 505(q) petitions for reconsideration (aka “citizen petitions”) to delay approval of generic versions of their drugs. The agency expressed concern that the need for it to respond to bogus petitions delays its ability to perform other necessary regulatory work.
The process was designed to encourage petitions raising scientifically valid issues or legitimately requesting warning labels, while discouraging abusive filings intended solely to delay. The agency is concerned, however, that drug companies have found a way to use them for delay purposes. The “FDA remains concerned,” the report stated, “about the resources required to respond to 505(q) petitions within the statutory deadline at the expense of completing the other work of the agency.”
The FDA told Congress that it would continue to monitor petition filings.
State Regulations on Cardiac Procedure Upheld
October 31, 2013 – 3:47 pm
In Yakima Valley Memorial Hospital v. Washington State Department of Health et al., the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of the plaintiff hospital’s challenge to Washington state’s restrictions on the number of hospitals that can perform elective angioplasties. The complaint alleged that the practices were anticompetitive and discriminatory, but the Court held that they fell within the power of the state and did not impinge on inter-state commerce.
The challenged regulations prohibited hospitals without on-site cardiac surgical facilities from performing elective percutaneous coronary interventions — nonsurgical procedures treating coronary heart disease – unless they first obtained a certificate of need showing that the area had a minimum number of cases. The plaintiff argued that the regulations effectively favored “large New York Stock Exchange-traded health care systems” at the expense of smaller health care facilities, decreasing access and increasing prices. Although the regulations limited the provision of the service and thus affected competition, the Ninth Circuit held “the regulations did not violate the dormant Commerce Clause, which prohibits states from discriminating against interstate commerce, because the impact on interstate commerce, if any, was highly attenuated, and did not outweigh the safety benefits of the regulations.”