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Oct

12

Chicago Cubs Defeat Antitrust Lawsuit Based On Baseball’s Antitrust Exemption

Posted by : Matthew Wild | On : October 12, 2017

Category: Antitrust, Immunity, Section 2 (Sherman Act)

In Right Field Rooftops, LLC v. Chicago Cubs Baseball Club, LLC,  No. 16-3582, 2017 U.S. App. LEXIS 16847 (7th Cir. Sept. 1, 2017), the Seventh Circuit affirmed dismissal of monopolization (and attempted monopolization) claims against the Chicago Cubs based on professional baseball’s antitrust exemption.  Plaintiffs-appellants were owners of two buildings that sold tickets to view Cubs’ games from their roofs.  In support of their monopolization claim, the rooftop owners alleged, among other things, that the Cubs “attempt[ed] to set a minimum ticket price, purchas[ed] rooftops, threaten[ed] to block rooftops with signage that did not sell to the Cubs and beg[an] construction at Wrigley Field” that would obstruct views from rooftops.  Id. at *13-14.  The Seventh Circuit found that these allegations fell within baseball’s antitrust exemption because they part of the “business of baseball.”.   In doing so, the Seventh Circuit followed the U.S. Supreme Court precedent in which the Supreme Court long ago held “that the Sherman Act had no application to the ‘business of giving exhibitions [of] business of base ball’ . . .”  (Id. at *12, quoting Toolson v. New York Yankees, Inc., 346 U.S. 356, 357 (1953), followed by Flood v. Kuhn, 407 U.S. 258 (1972)).

As discussed in the previous post, it remains curious that baseball is the only sport that has an antitrust exemption.

Oct

02

Major League Baseball’s Antitrust Immunity Defeats Baseball Scouts’ Class Action

Posted by : Matthew Wild | On : October 2, 2017

Category: Antitrust, Immunity

In Wyckoff v. Officer of the Commissioner of Baseball, No. 16-3795-cv, 2017 U.S App. LEXIS 16728 (Aug. 31, 2017), the Second Circuit affirmed dismissal of a putative antitrust class action brought by professional baseball scouts against Major League Baseball.  The scouts alleged that the Major League Baseballs teams conspired to depress competition in their labor market in violation of § 1 of the Sherman Act.  However, in 1922, the Supreme Court created antitrust immunity for the “business of baseball,” and “repeatedly reaffirmed baseball’s antitrust exemption.”  Id. at *3 (citations omitted).  Because the scouts’ claim fell squarely within baseball’s antitrust exemption, their antitrust claim failed.

This case illustrates the vitality of baseball’s antitrust exemption.  It is curious that no other sport has such an exemption.

Jul

11

Reverse Payment Settlements in Patent Disputes Are Not Immune From the Antitrust Laws

Posted by : Matthew Wild | On : July 11, 2013

Category: Antitrust, FTC Actions, Immunity, Intellectual Property, Rule of Reason, Section 1 (Sherman Act)

On June 17, 2013, in FTC v. Actavis, Inc., the Supreme Court reversed a ruling, which held that settlements that have the patentee paying the patent infringer to withdraw its patent challenge and not to infringe (i.e., reverse payments) are immune from the antitrust laws as long as the agreement not to infringe is within the scope of the patent.  The Supreme Court held that these agreements are subject to the rule of reason under § 1 of the Sherman Act and an inquiry into the patent’s validity is unnecessary to the analysis.  Rather, the size of the reverse payment alone can be used as a proxy for the strength or weakness of the patent.  A large reverse payment can be sufficient for the agreement to violate the rule of reason.  The Supreme Court noted that other ways to settle patent litigation, such as allowing the alleged infringer to market the infringing product after a delay but before the patent’s expiration, would pass muster under the rule of reason.  This decision is going to change the way brand name pharmaceutical companies settle patent disputes with generic drug manufacturers as those settlements frequently involve large reverse payments in exchange for the generic drug manufacturer staying out of the market.  The decision is linked here: FTC v. Actavis.

Author: Matthew S. Wild, Wild Law Group PLLC

Sep

13

District Court Rejects Act of State Defense in Vitamin C MDL

Posted by : Matthew Wild | On : September 13, 2011

Category: Antitrust, Immunity

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On September 6, 2011, the United States District Court for the Eastern District of New York denied summary judgment for vitamin C manufacturers in In re Vitamin C Antitrust Litig., MDL No. 1738 (Decision (Vit C)).   The Court rejected defendants’ act of state defense under which defendants claimed immunity contending that Chinese law required them to fix prices.

The Chinese government provided support for defendants, by providing a statement that the scheme was required by the Chinese legal system (the Chamber also filed an amicus brief).  The Court disagreed – what at first glance appears surprising is explained by the fact that the Chinese government did not explain many aspects of the law and was vague on other aspects.

The Court acknowledged that trying to apply some foreign legal systems to U.S. law is akin to fitting a round peg in a square hole.  For example, experts explained to the Court that “law” in China is not based so much on the written law, but rather a mix of law (as we understand it) and voluntary behavior.

After analyzing these cultural differences, the Court found that the Chinese legal and regulatory system was not sufficiently concrete to justify a finding that the otherwise illegal (within the U.S. Court’s jurisdiction) behavior was required by the Chinese law.  Thus, while the behavior was legal under the Chinese system, it was not required.  The lack of a requirement to comply with a law was, inter alia, fatal to the defendants.  The Court was unconvinced of compulsion because the statement of Chinese law read like a litigation position and the Chinese government had made contrary representations to the WTO.

There are a number of other noteworthy  issues.  The Court refused to defer to the Chinese government’s evidence on the Chinese law. The Court did not need to set a standard of deference; so it did not so.  The jurisprudence is still uncertain on the level of deference to be afforded a foreign government’s statements of foreign law.  The Court took notice of a WTO Panel decision (July 5, 2011, not yet (and, may not be) appealed to the Appellate Body), which neither of the parties had made reference.  The Court also did not examine the level of deference to a WTO Member’s statements that the WTO affords – both during accession negotiations and at a Panel hearing.  The Court appeared to take the findings of the WTO Panel at face value, and not subject it to a factual analysis.  This is particularly interesting because at the WTO the U.S.’s position is that Panel and Appellate Body decisions are not “law.”

As an aside, the U.S. recognized China’s market economy status in 2010.

This post was co-authored by Adrian Render.

Sep

30

FTC and DOJ Urge Reversal in American Needle v. NFL

Posted by : Matthew Wild | On : September 30, 2009

Category: Antitrust, FTC Actions, Immunity, Rule of Reason, Section 1 (Sherman Act), U.S. Department of Justice (Antitrust Division)

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As noted in the June 29, 2009 Post, the Supreme Court granted certiorari to review the Seventh Circuit’s decision in American Needle v. Nat’l Football League.  As explained in the September 4, 2008 Post, American Needle applied the Copperweld doctrine to a sports league’s joint licensing scheme for the first time. In so doing, it affirmed summary judgment in favor of the NFL, its teams and Reebok in an antitrust challenge to an exclusive license of team names and logos to Reebok for use on headwear.  (The decision is linked to the September 4 Post).  As explained in Wild, et al., “Private Equity Groups Under Common Legal Control Constitute a Single Enterprise Under the Antitrust Laws,” 3 NYU Journal of Law and Business 231, 237 and n.31 (attached under articles above), that doctrine treats two or more firms that are under common ownership or have a unity of interest in a common course of action as a single firm incapable of conspiring or otherwise acting collectively under the antitrust laws.

In their amici curiae brief, the government urges reversal.  It argues that the Seventh Circuit extended the Copperweld doctrine in a manner inconsistent with prior precedent — e.g., Texaco Inc. v. Dagher, 547 U.S. 1 (2006), in which the Supreme Court applied the rule of reason to a price-setting joint venture and NCAA v. Board of Regents, 468 U.S. 85 (1984), in which the Supreme Court applied a “quick look” to a NCAA restriction on each individual college’s right to broadcast their football games.  While the government conceded that the league should be entitled to Copperweld immunity under circumstances in which the teams need to cooperate such as to produce games, the licensing of NFL team logos is not one of them.  Indeed, the government observed that the NFL joint licensing scheme was similar to the type of scheme under review in Broadcast Music, Inc. v. CBS, 441 U.S. 1 (1979).  In BMI, the Supreme Court applied the rule of reason to a joint venture in which composers created a clearinghouse to sell a blanket license to works by more than one of them.   The American Antitrust Institute and Consumer Federation of America also filed a brief as amici curiae urging reversal.  Their brief and the government’s brief are linked below.  DOJ and FTC Brief;  AAI Brief

Aug

12

MLB Grants Exclusive License for Baseball Cards to Topps

Posted by : Matthew Wild | On : August 12, 2009

Category: Antitrust, Immunity, Intellectual Property, Rule of Reason, Section 1 (Sherman Act)

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On August 6, 2009, the New York Times reported that Major League Baseball granted an exclusive license to Topps for baseball cards.  To justify its legality under the antitrust laws, the MLB Executive Vice President is quoted as having relied on the recent Seventh Circuit decision in American Needle v. NFL, under review by the Supreme Court, which upheld a similar licensing scheme implemented by the NFL with respect to headwear (see September 4, 2008, February 24, 2009 and June 29, 2009 Posts).  In that case, the Seventh Circuit held that the NFL was shielded from liability under the Copperweld doctrine.  The Court reasoned that because “the teams share a vital economic interest in collectively promoting all of NFL football,” they could not conspire within the meaning of the antitrust laws when jointly marketing a license that no one time could sell by itself.  MLB’s reliance on American Needle might be unnecessary, however, in light of the Second Circuit’s decision in Major League Baseball Properties, Inc. v. Salvino, Inc., No. 06-1867 (2d Cir. Sept. 12, 2008) (see October 6, 2008 Post).  In that case, the Second Circuit upheld MLB’s exclusive licensing of team logos under the rule of reason.  Although it would be easier to obtain immunity under the Copperweld doctrine than litigate a full blown rule of reason case, the MLB should take comfort in the fact that two circuits would uphold the licensing scheme regardless of which rationale is applied.

Jun

29

Supreme Grants Certiorari to Review NFL’s Licensing Program in American Needle

Posted by : Matthew Wild | On : June 29, 2009

Category: Antitrust, Immunity, Intellectual Property, Section 1 (Sherman Act), Section 2 (Sherman Act)

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The Supreme Court granted certiorari to review American Needle Inc. v. Nat’l Football League, No. 07-4006, 2008 WL 3822782 (7th Cir. Aug. 18, 2008). As explained in the September 4, 2008 Post, that case applied the Copperweld doctrine to a sports league for the first time. In so doing, it affirmed summary judgment in favor of the NFL, its teams and Reebok in an antitrust challenge to an exclusive license of team names and logos to Reebok for use on headwear.  (The decision is linked to the September 4 Post).  This case’s journey to the Supreme Court was unusual.  As explained in the February 24, 2009 Post, the NFL — the prevailing party — also sought review because it wanted an authoritative decision on the scope of its antitrust liability for league activity.  And the Supreme Court requested the Solicitor General’s view about whether to grant certiorari.  The Supreme Court ultimately disagreed with the Solicitor General’s view and granted certiorari.

Mar

08

Sham Litigation Allegations Held Sufficient to Avoid Dismissal under Noerr-Pennington Doctrine

Posted by : Matthew Wild | On : March 8, 2009

Category: Antitrust, Immunity, Intellectual Property, Section 2 (Sherman Act)

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As examined in the February 17, 2009 Post, there have been a number of recent appeallte decisions reviewing successful Noerr-Pennington immunity defense assertions.   Alternative Electrodes, LLC v. EPMI, Inc., No. 08-CV-1247 (JFB)(ETB), 2009 WL 250474 (E.D.N.Y. Feb. 4, 2009), provides a recent illustration of the allegations necessary to defeat that defense.
In that case, plaintiff, a medical device manufacturer, claims that its competitor filed sham patent litigation against it and other competitors and made false statements about the patent litigation to plaintiff’s customers to allow it to monopolize (or gain a dangerous probability of monopolizing) the market for electrical muscle stimulation devices used to treat difficulty swallowing.  Plaintiff alleged, among other things, “from the beginning of the patent litigation that the primary, if not sole purpose, of instigating suit was to advise customers of the pending (but meritless) litigation and attempt to drive [plaintiff] from the market.  The litigation was objectively unreasonable and was initiated in order to interfere directly with [plaintiff’s] business relationships and activities. …  The sham patent suit strategy failed.  Recognizing the frivolity of the claim in light of prior art, these Defendants completely dismissed their suit … without any penalty or payment of any kind.”  Id. at *7.  The Court held that “such allegations are sufficient to withstand a motion to dismiss” based on the Noerr-Pennington immunity defense because “Plaintiff alleges that the litigation was both subjectively and objectively baseless and plausibly supports this claim with the assertion that there could be no valid patent claim due to the existence of ‘prior art.’”  Id.

Feb

24

The Supreme Court Seeks Solicitor General’s View of Whether to Grant Certiorari in a Case that Shielded the NFL’s Licensing Arrangement from Antitrust Scrutiny

Posted by : Matthew Wild | On : February 24, 2009

Category: Antitrust, Immunity, Intellectual Property, Section 1 (Sherman Act), Section 2 (Sherman Act)

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The September 4, 2008 Post examined a recent Seventh Circuit decision that held that the NFL was immune under the antitrust laws for its exclusive licensing of team logos on headwear to Reebok.  American Needle Inc. v. Nat’l Football League, No. 07-4006, 2008 WL 3822782 (7th Cir. Aug. 18, 2008).  The Supreme Court has just expressed an interest in reviewing the case.  It has “invited” the Solicitor General to “file briefs expressing the views of the United States.”  This case is also unusual because both parties sought Supreme Court review.  Although it won below, the NFL sought Supreme Court review so that its potential antitrust liability for league activity will no longer depend on which Circuit it is sued.

Feb

17

The Second and Ninth Circuits Uphold Antitrust Immunity in Three Recent Cases

Posted by : Matthew Wild | On : February 17, 2009

Category: Antitrust, Immunity, New York Cases, Section 1 (Sherman Act)

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In January 2009, the United States Court of Appeals for the Second Circuit affirmed a district decision granting a motion to dismiss an action alleging that defendants “conspired to influence the FCC.”  The Court held that such activity cannot give rise to antitrust liability under the Noerr-Pennington doctrine.  Kahn v. iBiquity Digital Corp., No. 07-0475-cv, 2009 WL 102810 (2d Cir. Jan. 15, 2009).  That doctrine provides immunity for, among other things, lobbying the government including agencies which is precisely what the defendants were alleged to have done.  In another case, the United States Court of Appeals for the Ninth Circuit upheld application of the Noerr-Pennington doctrine in Kaiser Health Foundation, Inc. v. Abbott Laboratories, Inc., Nos. 06-55687, 06-55748, 2009 WL 69269 (Jan. 13, 2009).  This time defendant’s commencement of litigation against generic drug manufacturers was protected.  The Noerr-Pennington doctrine also shields litigation as a basis for antitrust liability unless it is “sham” litigation.  The Ninth Circuit affirmed dismissal of the monopolization claims based on Abbott’s seventeen patent infringement lawsuits against generic drug manufacturers noting that it could hardly be sham litigation when Abbott prevailed in seven of them and Abbott “had a plausible argument on which it could have prevailed” in the other ten suits.  Id. at *13.  In Wolfe v. City of Anaheim, No. 07-56031, 2008 WL 542079 (9th Cir. Dec. 31, 2008), the Ninth Circuit affirmed dismissal on summary judgment based on the Local Government Antitrust Act of 1984, 15 U.S.C. section 35(a).  That statute immunizes municipalities from antitrust damages.  Plaintiff had sought to recover damages from the City of Anaheim for alleged wrongful denial of a taxicab franchise under, inter alia, the Sherman Act.  The statute clearly precluded such liability.