In Lenox MacLaren Surgical Corp. v. Medtronic Inc. et al., District of Colorado Judge Richard P. Matsch dismissed for failing to sufficiently allege anticompetitive harm. Lenox accused Medtronic of monopolizing the market for surgical bone mill devices by disparaging Lenox’s product. In dismissing Lenox’s suit, the court held that Lenox’s claims failed because they were premised on an overly narrow definition of the relevant product market and an inaccurate portrayal of the competitive landscape. Lenox ignored evidence that several rival bone mill devices were available during Medtronic’s alleged monopoly period, and the plaintiff failed to show that Medtronic’s actions had otherwise harmed consumers.
Although an arbitration panel previously found that Medtronic issued a false recall notice for Lenox’s device and that some consumers relied on the notice, those facts were insufficient to establish a Sherman Act claim. To be actionable, disparagement must be “prolonged” so that the plaintiff is unable to offset any negative effects through reasonable countermeasures. Here, by late 2006, the FDA had cleared the plaintiff’s device, thereby terminating the recall. Moreover, the prospective buyers were sophisticated hospitals and doctors who would have understood the market situation.
In MPEG LA LLC v. GXI International LLC, New York Supreme Court Judge Melvin L. Schweitzer dismissed GXI International LLC’s antitrust counterclaims in MPEG LA’s breach of contract action for allegedly unpaid patent royalties.
MPEG LA manages a pool of patents covering the technology needed to make converter boxes that allow analog televisions to receive digital signals. GXI makes and sells a converter box using technology covered by the MPEG LA-managed pool. In July 2008, GXI agreed to pay royalties to MPEG LA for sales of converter boxes using the licensed patents. MPEG LA later sued GXI for allegedly failing to pay. GXI counterclaimed, accusing MPEG LA of monopolizing the market for converter boxes and charging unreasonably high royalty rates.
In dismissing GXI’s counterclaim, the court held that GXI failed to plausibly allege that MPEG LA restrained competition in the converter box market. The court further noted that even if GXI had “adequately alleged facts” to support the antitrust claims, those claims would have been dismissed because the statute of limitations had run.
In In re: Skelaxin (Metaxalone) Antitrust Litigation, Eastern District of Tennessee Judge Curtis L. Collier denied a motion to dismiss multidistrict litigation accusing King Pharmaceuticals, a Pfizer subsidiary, and Mutual Pharmaceutical Co. Inc. of conspiring to keep generic versions of the muscle relaxer drug Skelaxin off the market. In 2005, King and Mutual settled infringement litigation through a pay-for-delay settlement.
The plaintiffs — including retail pharmacies, labor organizations, health insurance companies, and drug consumers — alleged that the defendants conspired to raise the drug’s price by restricting output of the drug through the settlement. The complaint also says King filed sham patent infringement suits, and that the two defendants filed meritless petitions” with the U.S. FDA. The defendants countered that the settlement was a lawful cross-licensing deal.
The defendants sought dismissal on the ground that the plaintiffs failed to plausibly establish antitrust injury or prove that the alleged scheme had anticompetitive effect. Judge Collier disagreed, ruling that the plaintiffs had plausibly alleged King and Mutual had filed sham patent litigation designed to gain access to antitrust immunity and that the plaintiffs had sufficiently alleged that the unsupported FDA citizen petitions were objectively baseless shams filed subjectively in bad faith.
In State of West Virginia v. Pfizer Inc. et al., District of West Virginia Judge Robert C. Chambers remanded, at West Virginia’s request, the state’s case alleging that Pfizer entered an anti-competitive settlement of a patent dispute with a generic Lipitor manufacturer and engaged in other anticompetitive conduct designed to delay the generic’s introduction into the market. The state originally filed in West Virginia state court alleging violations of the state’s antitrust and consumer protection laws. Defendants removed the case, but the federal court remanded because it found no federal claim for relief.
The suit alleges that the defendants anticompetitively delayed the entry of generic Lipitor by (1) filing a fraudulent, duplicate patent application, (2) lodging sham patent infringement litigation against the generic manufacturer, and (3) settling the patent dispute with an anti-competitive “pay-for-delay” agreement.
The court rejected the defendants’ argument that federal issues were triggered by the relevance of Pfizer’s patent to the case. “Because none of the theories in support of [the state’s] claims necessarily raises substantial questions of patent or other federal law,” Judge Chambers ruled, the claims do not arise under federal law.” As a result, the court was compelled to remand because it lacked jurisdiction.
The court also rejected the argument that the case was effectively a class action removable under diversity jurisdiction under the Class Action Fairness Act.
Similar claims are currently being litigated in multi-district litigation in a New Jersey federal court.
The European Commission issued a statement of objections to Google subsidiary Motorola Mobility indicating the Commission’s concern that the company may have abused its dominant market position when seeking to ban sales in Germany of Apple products that allegedly infringe Motorola’s standard essential mobile phone patents. In the EU, patented technology that manufacturers must use to meet a standard must be licensed on fair, reasonable and nondiscriminatory (FRAND) terms.
The EC stated that seeking to enjoin the sale of products that use standard essential patents when the alleged infringer is willing to pay FRAND royalties can constitute the misuse of a dominant position. It expressed concern that the threat to enjoin sales “can distort licensing negotiations” and yield license terms that could harm consumers. “The protection of intellectual property is a cornerstone of innovation and growth,” EC Chief Joaquin Almunia explained, “[b]ut so is competition.” He urged technology companies to focus on innovation and competition rather than employing “their intellectual property rights to hold up competitors to the detriment of innovation and consumer choice.”
An investigation into the issue will now move forward.
In Sky Angel U.S. LLC v. National Cable Satellite Corp. d/b/a C-SPAN, District of Columbia Judge Rudolph Contreras dismissed Sky Angel’s antitrust suit against National Cable Satellite Corp. (C-SPAN). In its suit, Sky Angel, a Christian Internet television provider, claimed that C-SPAN violated §1 of the Sherman Act by pulling its programming from Sky Angel’s services. Sky Angel also accused C-SPAN of violating §2 by monopolizing the distribution of real-time, multichannel video programming.
In dismissing Sky Angel’s claims, the court held that the presence of representatives from cable TV competitors on C-SPAN’s board of directors did not render the board’s decisions horizontal conspiracies. The court further held that Sky Angel’s complaint did not adequately define a relevant market or allege that C-SPAN holds monopoly power.
Canadian antitrust authorities have charged candy manufacturers and distributors of fixing the price of chocolate candy.
U.S. multidistrict litigation continues to examine the same issues. A Pennsylvania federal judge has certified a class of direct chocolate purchasers, and a putative class of indirect purchasers who bought chocolate for resale is seeking class certification.
In Omnis Group v. Commission, a European Union court upheld the European Commission’s refusal to pursue a Romanian software company’s antitrust complaint against Microsoft Corp. The company accused Microsoft of using software licensing deals with Romanian government to monopolize enterprise application software in the Romanian market. The EC rejected Omnis’ complaint and declined to open an in-depth investigation, because Microsoft held a low share of the market for the software at issue and little evidence supported Omnis’ claims. The EC further found that vigorous competition existed and barriers to entry are low.
In In the Matter of Pinnacle Entertainment Inc. and Ameristar Casinos Inc., the Federal Trade Commission moved to block Pinnacle Entertainment Inc. from buying Ameristar Casinos Inc. for $2.8 billion. In the proposed transaction, Pinnacle was to acquire Ameristar’s portfolio of eight casino resort properties. The Commission moved to block the deal because it was concerned that it would increase prices and diminish quality for customers in St. Louis and Lake Charles, Louisiana. The deal would leave Pinnacle with only one significant competitor in those markets. The FTC also argued that the deal would make it easier for Pinnacle to raise prices by offering less favorable hold rates, rake rates, table game rules and odds, and lower player reinvestments. The agency also expressed concern that the deal would erode Pinnacle’s incentives to improve the quality of its service and other offerings in the St. Louis and Lake Charles areas.
The Department of Justice, Antitrust Division, has asked the Federal Communications Commission to boost the ability of small wireless providers to compete in an upcoming auction of valuable low-frequency spectrum that is valuable because of its ability to penetrate obstacles. The Division argued that without protection, Verizon and AT&T could “foreclos[e] their rivals from access.”
In a letter to the FCC, AT&T objected, categorizing the DOJ’s input as “a naked plea for regulatory favoritism.” Providing the sort of assistance requested to firms as large as Spring and T-Mobile, AT&T argued would violate the law and threaten to undermine the auction process. The company urged the Commission to “conduct an open and competitive auction that awards spectrum to the highest bidder.”
The spectrum auctions, which are likely to begin in 2014, are intended to transfer underutilized television spectrum to wireless Internet service as well as to raise money to reduce the budget deficit and fund a nationwide emergency network for first responders.