Sep

30

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

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 BriefAAI Brief

Aug

12

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

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

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

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

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

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

26

Posted by : Matthew Wild | On : February 26, 2009

Yesterday, the Supreme Court in Pacific Bell Telephone Co. v. Linkline Communications, Inc., No. 07-512 (Feb. 25, 2009) (LinkLine decision  here) unanimously rejected a price squeeze claim alleged under Section 2 of the Sherman Act.  Pac Bell is a DSL transport service and retail service provided.  Linkline, an independent DSL service provider, competed with Pac Bell on the retail level but needed to purchase Pac Bell’s transport service to provide DSL to its retail customers.  Linkline alleged that Pac Bell engaged in a price squeeze by charging Linkline too high a wholesale price for DSL transport service and charging its retail customers too low a price on DSL service.  The Court rejected this claim because (1) Pac Bell had no obligation to deal with Linkline and thus the prices it charged to Linkline are of no consequence and (2) Pac Bell was not alleged to have engaged in predatory pricing at the retail level — i.e., charging prices below  cost with a dangerous probability that it can raise its prices later and recoup its losses.  Chief Justice Roberts aptly summarized the Court’s rationale, “Trinko holds that a defendant with no antitrust duty to deal with its rivals has no duty to deal under terms and conditions preferred by those rivals.  Brooke Group hold that low prices are only actionable under the Sherman Act when prices are below cost and there is a dangerous probability that the predator will be able to recoup the profits it loses from low prices.  In this case, plaintiffs have not stated a duty-to-deal claim under Trinko or a predatory pricing claim under Brooke Group.  They nontheless tried to join a wholesale claim that cannot succeed with a retail claim that cannot succeed and alchemize them into a new form of antitrust  liability never before recognized by this Court.  We decline the invitation to recognize such claims.  Two wrong claims do not make one that is right.”

The background to this case is unusual.  The June 3, 2008 Post reported a rare disagreement between the DOJ’s Antitrust Division and FTC over whether to grant certiorari.  The Antitrust Division filed a brief supporting certiorari (which the FTC declined to join) and the FTC issued a statement explaining why certiorari should be denied.  It also seems as if the Supreme Court reached out to decide this case as Linkline argued that it abandoned its price squeeze claim and wanted to pursue a predatory pricing claim under Brooke Group.  The Court rejected the mootness argument and believed that the issues were adequately explored to make a reasoned decision based on the amici’s submissions.

Feb

24

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

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

23

Posted by : Matthew Wild | On : February 23, 2009

On February 18, 2009, the United States Court of Appeals for the Tenth Circuit affirmed dismissal of a complaint filed by a ski rental store against the Deer Valley, Utah ski resort operator with its own ski rental operation alleging monopolization and attempted monopolization in violation of Section 2 of the Sherman Act.  Christy Sports LLC v. Deer Valley Resort Co., Ltd., No. 07-4198 (10th Cir. Feb. 18, 2009) (Christy Sports v. Deer Valley Resort Decision).  Plaintiff had sought to prevent enforcement of a restrictive covenant governing its use of property sold by the ski resort operator.  When the ski resort operator sold the parcel of land on which the ski rental store operates, it imposed a restrictive covenant in the deed only permitting the operation of a ski rental business with its permission.  For years, the ski resort operator permitted plaintiff to operate accepting a share of the profits in return.  Preferring to capture that business in the future, the ski resort operator sought to enforce the restrictive covenant and put the ski rental store out of business.  The Tenth Circuit rejected plaintiff’s claims under Section 2 of the Sherman Act for two independent reasons.  First, the Court rejected plaintiff’s relevant product market definition of ski rental stores.  Rather the Court held that the relevant market was the skiing experience.  It reasoned that skiers do not come to the area to rent skis and that ski rentals are just one component of the skiing experience that they seek.  It should be of no consequence that the ski resort operator charges more for ski rentals and as a consequence, less for e.g., lift tickets.  Second, the Court held that there were no allegations of anticompetitive conduct.  The antitrust laws do not forbid a business from imposing a restrictive covenant on a neighboring parcel of land to avoid competition and justify its investment in entry.  Accordingly, nothing precludes the enforcement of an otherwise permissible restrictive covenant.

Oct

20

Posted by : Matthew Wild | On : October 20, 2008

In In re Apple & AT&TM Antitrust Litigation, No. 07-CV-05152-JW (N.D. Cal. Oct. 1, 2008) (attached IPhone Decision), plaintiffs alleged that the arrangement in which the Apple IPhone worked exclusively with AT&TM not only for the initial two-year contract period but also for three additional years after their contracts expired with AT&TM violated Section 2 of the Sherman Act.  Plaintiffs also alleged that Apple’s restrictions on dowloadable applications for use on IPhones violated Section 2.  Plaintiffs alleged Section 2 claims of monopolization and attempted monopolization of the market for IPhone applications and monopolization, attempted monopolization and a conspiracy to monopolize the market for voice and data services to IPhone owners.  The Northern District of California held that there were cognizable relevant product markets limited to Apple IPhone customers in these aftermarkets.  The court distinguished cases in which customers voluntarily commit to a lock-in through a contract such as when a franchisee agrees to purchase certain products from its franchisor.  In this case, the Complaint alleged that the lock-in was created through deceit or unbeknownst to the customers at the time of purchase.  The Complaint alleged that the IPhone customers did not know that they could not unlock their IPhones from AT&TM service after the two-year commitment or  the limitation on downloadable applications.  This case is consistent with the Supreme Court’s approach in determining whether aftermarkets represent separate relevant product markets.  The key inquiry is whether the consumer knows or has reason to know of limitations in purchasing products or services in the afermarket before he becomes locked-in by the initial purchase.

Sep

11

Posted by : Matthew Wild | On : September 11, 2008

The attorneys general of Virginia, Alabama, Colorado, Florida, Kansas, Nebraska, Oklahoma, Utah and Washington filed an amicus curiae brief in favor of petitioner in Pacific Bell Telephone Co. v. Linkline, No. 07-512, which is pending before the Supreme Court.  This case raises the issue of whether a price squeeze claim can be maintained against a firm that does not have a duty to deal with the plaintiff.  As discussed in the Post of June 24, 2008, this case created a conflict between the Antitrust Division and FTC.  The Antitrust Division filed an amicus curiae brief supporting certiorai and urging reversal while the FTC issued a statement asserting that this case was not appropriate for certiorari and in any event, was correctly decided.  The brief (attached States Amicus Curiae Brief) filed by these nine state attorneys general supports the Antitrust Division’s position.

Sep

04

Posted by : Matthew Wild | On : September 4, 2008

The United States Court of Appeals for the Seventh Circuit applied the Copperweld doctrine to a sports league for the first time. In so doing, it recently 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. American Needle Inc. v. Nat’l Football League, No. 07-4006, 2008 WL 3822782 (7th Cir. Aug. 18, 2008) (attached  American Needle v. NFL). The plaintiff — an unsuccessful bidder — alleged that the collective action by the teams to combine all of their intellectual property rights and create an exclusive license was a conspiracy to prevent other vendors from obtaining licenses to the team names and logos in violation of Section 1 of the Sherman Act. The plaintiff also alleged that the teams monopolized “the NFL team licensing and product wholesale markets” in violation of Section 2 of the Sherman Act. Id. at *2. The Seventh Circuit held that the teams should be treated as a single entity under the Copperweld doctrine. 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. The Seventh Circuit did so because “the teams share a vital economic interest in collectively promoting all of NFL football” (id. at *7) and should be able to cooperate so that the NFL “can compete against other entertainment providers.” Id. at *8.