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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.

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

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.