Insights

On Friday, June 28, 2024, the U.S. Supreme Court overruled Chevron U.S.A. v. Natural Resources Defense Council (“Chevron”)[1] in Loper Bright Enterprises v. Raimondo (No. 22-451) and Relentless v. Dep’t of Commerce (No. 22–1219)[2] (the two cases collectively referred to as “Loper Bright”), bringing an official end to the decades-old and eponymously named “Chevron deference” doctrine. Not content to stop there, the Court returned fresh to work Monday, July 1, to, in Corner Post, Inc. v. Board of Governors of the Federal Reserve System (No. 22-451)[3] (“Corner Post”), effectively extend the limitations period to challenge final agency actions under the Administrative Procedure Act (“APA”).

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a $2 trillion stimulus package, was approved by the U.S. House of Representatives by a voice vote on March 27, 2020 despite opposition from certain Republican members who were seeking a roll call vote. The package was approved unanimously by the U.S. Senate with a vote of 96-0 on March 25, 2020. It is the third coronavirus emergency response bill considered this month in Congress, which passed the Coronavirus Preparedness and Response Supplemental Appropriations Act on March 6 and the Families First Coronavirus Response Act on March 18.

The recent ruling by a California federal court in the Federal Trade Commission’s monopolization case against Qualcomm sparked immediate and strong reactions from varied quarters. In a lengthy opinion, the court held that Qualcomm violated federal antitrust law. It ordered a broad injunction that could alter Qualcomm’s business model just as the global cellular system transitions to 5G. Qualcomm has appealed to the Ninth Circuit. 

In late January, the U.S. Department of Justice’s Antitrust Division submitted a statement providing its views on antitrust theories advanced by the plaintiff in u-blox v. InterDigital, a district court case involving the licensing of standard-essential patents in the wireless communications sector. 

For the first time since President Woodrow Wilson appointed the first Federal Trade Commission over a century ago, one president has secured the nominations of five new Commissioners, who will soon replenish a Commission that has served for more than a year with just two. This complete overhaul of the FTC’s composition injects added uncertainty about the direction of U.S. antitrust and consumer protection policies, but also presents opportunities as the five Commissioners establish their priorities and shape their views of the many pressing issues now facing the agency. In this Client Alert, we consider the issues likely to be at the forefront of the FTC’s enforcement agenda.

On November 10, 2017, Makan Delrahim, Assistant Attorney General for the Antitrust Division at the Department of Justice, delivered a speech announcing that DOJ would realign its policy and enforcement priorities in the areas of standard development and standard-essential patent licensing with the antitrust and competition policy principles articulated in the joint DOJ/FTC 1995 IP Licensing Guidelines and reaffirmed in updated Guidelines issued in 2017.1 The speech clarified the Antitrust Division’s policy objectives in this important area and should be of interest to all firms who own or may need to license standard-essential patents, participate in standard development, or compete in markets built around collaborative technical standards. 

On January 13, 2017, the Antitrust Division of the Department of Justice and the Federal Trade Commission released the final version of their revised Antitrust Guidelines for the Licensing of Intellectual Property. While the revised Guidelines update relevant authorities to reflect developments in federal statutory law, Supreme Court precedent, and other agency guidance that has been issued over the past 20 years—particularly the 2010 Horizontal Merger Guidelines—the 2017 Antitrust-IP Guidelines retain the core concepts and enforcement principles of the original version, first issued in 1995.

On November 17, 2016, the Federal Trade Commission issued a Staff Report exploring competition and consumer protection issues associated with what is often referred to as the sharing economy. "The 'Sharing' Economy: Issues Facing Platforms, Participants and Regulators" synthesizes information that was presented at the FTC’s June 2015 workshop and in the 2,000 comments that were filed with the agency in association with that workshop. Although the agency does not make broad policy recommendations for balancing the competition and consumer protection issues implicated by the sharing economy, the Report signals the FTC’s ongoing commitment to innovation “as a major driver of long-term consumer welfare gains” and to use of its advocacy tools to protect competition for emerging business models and disruptive technologies.

On August 12, 2016, the Antitrust Division of the Department of Justice and the Federal Trade Commission announced that they are seeking public comments on a proposed revision of the 1995 Antitrust Guidelines for the Licensing of Intellectual Property. The proposed revisions leave the main principles and substantive guidance of the 1995 IP Guidelines largely intact, while modernizing language and updating relevant authorities to reflect developments in federal statutory law, Supreme Court precedent, agency practice, and other agency guidance that has been issued in the interim, especially the 2010 Horizontal Merger Guidelines. Importantly though, more subtle revisions indicate that the agencies were careful to preserve their flexibility to pursue potentially novel enforcement theories when innovation and intellectual property rights play a key role in competitive dynamics.

In what the Federal Trade Commission has described as the first case of its kind, the Commission announced a complaint and proposed consent agreement alleging a national distributor of ductile iron pipe and fittings violated the FTC Act by inviting its supplying dual distribution manufacturer to collude on pricing. "Dual distribution" refers to a manufacturer using more than one distribution channel at a time to reach end customers. A dual distribution manufacturer typically sells directly to consumers as well as through intermediaries. That means that, instead of a purely vertical relationship, the manufacturer and distributor are also horizontal competitors for some purposes and need to be aware of the competitive consequences flowing from that hybrid situation.

The Federal Trade Commission continues its aggressive stance against the use of exclusive dealing agreements by dominant firms. On April 27, 2016, the Federal Trade Commission (FTC) filed a complaint against Victrex plc (operating as “Invibio”) charging that it monopolized the market for a high-performance polymer sold to medical implant manufacturers through exclusive dealing arrangements, in violation of Section 5 of the FTC Act. The FTC also announced a settlement that will require Invibio to refrain from enforcing the exclusivity provisions in its existing contracts. It will also prevent Invibio from including an even broader range of provisions in future supply contracts, including certain types of market share and retroactive loyalty discounts.

On August 13, 2015, the Federal Trade Commission issued a short policy statement describing how it will apply its authority to challenge unfair methods of competition under Section 5 of the FTC Act. 15 U.S.C. § 45(a)(1). The very brief policy statement is the first time the Commission has provided formal guidance on its "standalone" Section 5 authority. However, the statement merely reflects broad principles already apparent from Commission enforcement actions over the past decade, and according to FTC Chairwoman Edith Ramirez, "does not signal any change of course in our enforcement practices and priorities."

Late last week, in a long-awaited judgment concerning a dispute between Huawei and ZTE, the Court of Justice of the European Union (the "ECJ") confirmed that the owner of a standard-essential patent (SEP) subject to a fair, reasonable, and non-discriminatory (FRAND) commitment may seek an injunction against an alleged infringer that fails to negotiate towards a license in good faith without infringing Article 102 of the Treaty on the Functioning of the EU (TFEU). (Case C-170/13, Huawei Technologies Co. Ltd. v ZTE Corp., ZTE Deutschland GmbH, Judgment of the Court of July 16, 2015).

In a case watched closely by research institutions, technology companies, and intellectual property licensing professionals, the U.S. Supreme Court decided Monday of this week that Marvel Entertainment need not comply with its contractual obligation to continue to pay royalties to the inventor of a Spider-Man toy, after the inventor's licensed patent expired. In so ruling the Court affirmed its controversial 1964 decision, Brulotte v. Thys Co., 379 U.S. 29 (1964), which held unlawful the collection of royalties based on post-expiration use of a patented invention. Kimble v. Marvel Entertainment, LLC, 576 U.S. __ (2015) (Slip Op.). With no contractually-set expiration date to Marvel's commitment to pay a fixed percentage royalty, the Court ruled that Marvel need not pay royalties on sales of products covered by a patent after its expiration, currently set by 35 U.S.C. § 154(a)(2) as 20 years after the date the patent application is filed. At the same time, the Court acknowledged that technology licenses can be structured with payments made after the patent expires if they are for use of the patent before it expired. The Court also provided some examples how that goal could be accomplished under the affirmed Brulotte rule.

The FTC announced on May 28, 2014 that, just days before trial, it had settled its long-running antitrust lawsuit against Cephalon, Inc. and its parent company Teva Pharmaceutical Industries, Ltd. In the suit, the agency alleged that Cephalon unlawfully protected its monopoly for the sleep-disorder drug Provigil through a set of so-called "reverse payment patent settlements" with potential generic entrants. According to the FTC, the payments were in the form of commercial contracts that were favorable to the generic companies and executed as part of the settlement agreements.    

On May 7, 2015, the California Supreme Court's ruling in In re Cipro made clear that so called "pay-for-delay" settlement agreements are subject to challenge under California state antitrust law. In re Cipro Cases I & II, No. S198616, 2015 WL 2125291 (Cal. May 7, 2015) (Cipro). The decision, the first for the California Supreme Court, represents the latest in a line of cases in various federal and state courts throughout the country that have sought to understand and apply the framework set forth by the U.S. Supreme Court in F.T.C. v. Actavis, Inc., 133 S. Ct. 2223 (2013) (Actavis). The ruling aligned California's position on these "reverse" settlement agreements between pharmaceutical companies with that of federal antitrust laws as set forth by the Supreme Court Actavis decision in 2013. 

Earlier this week, the Court of Appeals for the Ninth Circuit heard oral argument in Motorola v. Microsoft. Before the court was Motorola's appeal of a Washington federal district court's decision in which (1) the district court determined a reasonable and nondiscriminatory (RAND) royalty rate for Motorola's standard-essential patents (SEPs) for WiFi and video coding technology and (2) the court refused to set aside a jury's verdict that Motorola had breached its contractual commitment to license on RAND terms. The case raises important issues for all parties involved in SEP license negotiations, including permissible negotiation and litigation tactics, the evidence necessary to support a finding of breach of RAND, factors to be considered in setting a RAND rate, and the appropriate fact finder in litigating RAND disputes.