Antitrust

Amici Briefs Supporting Supreme Court Review in FTC v. Rambus

December 25, 2008

When old engineers (and old lawyers) sit around decades from now reminiscing about patent and antitrust law in the late 1990s and early 2000s, the name of Rambus is sure to come up.  The topic will not be the Rambus DRAM (or RDRAM) chip technologies, but rather the massive volume of litigation that Rambus set off as result of its alleged “patent hold-up” actions and its patent enforcement efforts. Rambus, the lawyers on either side of its many cases, the courts, antitrust experts and economists, and of course investors in Rambus’ stock (a particularly loyal and attentive group), have debated the pros and cons and nuances of these lawsuits for years, and during this season (late 2008) an important and timely Rambus case is taking a run at the Supreme Court. The FTC adminstrative action against Rambus, which bothAndy Updegrove and Ihave written about at length in the past, involves somewhat arcane issues of single-firm conduct under Section 2 of the Sherman Act. However, the case also exists at a level that doesn’t require a degree in law and economics to understand – Rambus is accused of of withholding from an important standards-setting organization (SSO)  the fact that it had pending patent applications, resulting in adoption of the Rambus technology as a standard, following which Rambus used it patents to “hold up” the industry for unreasonable royalties. What a wonderful…

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"Excuse Me, What Isle is the Chutzpah In?"

December 11, 2008

Whole Foods, in the wake of the D.C. Circuit’s decision reinstating (in a manner of speaking) the FTC’s challenge to the Whole Foods – Wild Oats merger, has filed a most unusual lawsuit in the federal district court in the District of Columbia. Whole Foods is seeking to terminate the FTC’s administrative proceedings investigating the merger. The stated grounds are violation of the Due Process Clause and the Administrative Procedure Act (the APA). Here is a link to the complaint (scribd.com). This lawsuit is unusual, to say the least. The essence of Whole Foods complaint seems to be that the FTC has prejudged the case and set an unreasonably aggressive discovery schedule. I’m not aware of any grounds for this legal theory at this stage of an administrative proceeding, but I’m sure that Whole Foods’ lawyers have done their homework, and that these claims have some legal merit. Stay tuned.

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Federal Trade Commission Seeks Supreme Court Review of D.C. Circuit’s Decision in Rambus Case

November 26, 2008

The FTC’s decision to seek Supreme Court review in this case was widely expected, but nevertheless, it’s interesting to see that the FTC in fact did what many antitrust practitioners hoped it would do. For background on this matter, see this posting from May of this year, which discusses the background of this case in some detail. Additional posts discussing various aspects of Rambus are here, here, here and here. The D.C. Circuit decision that is the subject of the appeal is here. Not surprisingly, the FTC’s petition for certiorari argues that standard-setting is a ubiquitous and important economic activity, and that the D.C. Circuit’s decision leaves aspects of that process in legal limbo, due to a conflict with another circuit and a misreading of Supreme Court precedent. The FTC also suggests that this case is an opportunity for the Supreme Court to address the thorny issues of causation and competitive harm under Section 2 of the Sherman Act. The “Questions Presented” section of a cert petition is always important, since it is intended to summarize, in very few words, the key issue that the petitioner thinks will interest the Court in accepting the appeal. To be effective, the Questions Presented must be both concise and persuasive. The Questions Presented in the FTC petition are as follows: 1. Whether deceptive conduct that significantly contributes to a defendant’s acquisition of monopoly…

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"Why Antitrust Is More Interesting Than Any Other Area of Law"

November 13, 2008

OK, OK, this is not my blog post title. It’s the title of a post by Professor D. Daniel Sokol over at the Antitrust & Competition Law Policy Blog. He provides ten reasons in support of this statement, but undermines his argument (which I hope is at least a bit facetious), by stating that tax law is second. (Not, not, not.) Of course, he shows what a nerd (wonk?) he is by not only listing the ten reasons from 1 to 10 (rather than in reverse, à la David Letterman), but failing to inject even the slightest bit of humor into his post. Antitrust lawyers aren’t known for their sense of humor or for humility. As an antitrust aficionado myself, I am inclined to agree with him. I certainly did when I was in law school.

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Hmmm … I Guess Two Weeks Notice is Enough

November 9, 2008

From a Department of Justice press release, November 7, 2008 – WASHINGTON — Attorney General Michael B. Mukasey issued the following statement on the resignation of Assistant Attorney General Thomas O. Barnett of the Antitrust Division: “Tom Barnett has been an effective enforcer of the antitrust laws and a strong advocate for consumers. Under his leadership, the Antitrust Division has increased cartel enforcement to record levels with unprecedented fines and prison sentences, improved the efficiency and efficacy of its merger enforcement, and enhanced cooperation with our foreign counterparts.” …. Barnett was confirmed by the Senate as Assistant Attorney General of the Antitrust Division on Feb. 10, 2006. He became acting Assistant Attorney General on June 25, 2005, and previously served as Deputy Assistant Attorney General since April 18, 2004. Barnett’s resignation is scheduled to be effective Nov. 19, 2008. Click here for full press release.

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The FTC and DOJ – "So Sorry, but When it Comes to Sherman Action Section 2 Conduct, We Can’t Agree on What the Law Is, or What it Should Be"

November 4, 2008

The Federal government has two antitrust enforcement authorities – the Antitrust Division of the Department of Justice and the Federal Trade Commission. These two agencies have partially overlapping enforcement authority over civil cases, and they often collaborate in setting antitrust policy. Although the federal courts are the final arbiters of the federal antitrust laws (which are statutory, and therefore originate with Congress), the business community relies heavily on the Justice Department and the FTC to provide their views on the law. Accordingly, from time-to-time the Justice Department and FTC issue detailed joint guidelines. (Examples include: Collaborations Among Competitors, 2000; Antitrust and IP Rights, 2007; and Antitrust Licensing Guidelines, 1995). The DOJ/FTC joint reports are a big deal – they often include lengthy hearings, prepared testimony and position papers from interested parties, proposed guidelines, revised guidelines, and so on, until (drum role ….) the big day when the final report is issued. And, as a result, these reports are given great weight by the antitrust community – and by that I mean the vast army of antitrust lawyers and economists who endeavor to understand this stuff, harmonize it with court decisions (where possible), and advise their clients on how to behave. So, it’s no understatement to say that it is an unwelcome surprise when the federal antitrust enforcement agencies can’t agree on the law. Yet, this is what occurred when the…

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Google Makes the Case for its Advertising Deal With Yahoo

October 18, 2008

Here’s an interesting web page from Google entitled Facts About the Yahoo-Google Advertising Agreement. There, Google “makes the case” for its proposed deal with Yahoo, which it describes as follows: On June 12, 2008, Yahoo! and Google announced an agreement that gives Yahoo! the ability to use Google’s search and contextual advertising technology through its AdSense™ for Search and AdSense for Content advertising programs. Under the agreement, Yahoo! has the option to display Google ads alongside its own natural search results in the U.S. and Canada. In addition, Yahoo! can serve contextually targeted ads on its U.S. and Canadian web properties as well as on its current publisher partner sites. Yahoo! will continue to operate its own search engine, web properties and advertising services. In addition, Yahoo! and Google agreed to enable interoperability between their respective instant messaging services bringing easier and broader communication to users. On this web page Google presents a White Paper of sorts, in web format, with links to sections such as “what the deal means for advertisers” and “why the deal is good for competition.” It’s somewhat unusual for a company under Federal antitrust scrutiny to make a public “pitch” like this, but it’s consistent with Google’s corporate personality, which tends to be more “outward facing” than more conventional corporations. Here’s the Powerpoint embedded on the Google page:

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Will the FTC Appeal the D.C. Circuit's Decision in FTC v. Rambus?

October 7, 2008

At least one FTC Commissioner recently stated that he would support an appeal: As I said earlier, I personally support a petition for certiorari in Rambus. I think the D.C. Circuit’s decision is wrong and given the fact that it rests on important legal principles respecting causation in Section 2 cases. I think its implications are much broader than the standard setting context. The petition is due in mid- November and it is my hope that the Solicitor General weighs in to support us on this important effort. Section 2 and Standard Setting: Rambus, N-Data & The Role of Causation J. Thomas Rosch, Commisioner, Federal Trade Commission, Oct. 2, 2008 Click here for an earlier discussion of the D.C. Circuit Court of Appeals’ decision in the FTC/Rambus litigation.

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"Honey, I'm Going to Whole Paycheck, Has Our Home Equity Loan Come Through Yet?"

August 4, 2008

“[Wild Oats] is the only existing company that has the brand and number of stores to be a meaningful springboard for another player to get into this space. Eliminating them means eliminating this threat forever, or almost forever.” – John P. Mackey, co-founder and chief executive of Whole Foods, in 2007 email to Whole Foods Board Member. Mr. Mackey also posted on Internet message boards under the pseudonym Rahodeb for seven years, ending in 2006 Every man is his own greatest enemy, and as it were his own executioner. – Sir Thomas Browne, Religio Medici My wife loves Whole Paycheck. Even though the nearest Paycheck is a 20 minute drive from our home outside of Boston, and the really good (huge) Paycheck is 30 minutes away, she is reluctant to buy fruit or meat anywhere else. Shaws, which is right around the corner? forget it. Roche Bros., the next nearest supermarket? Boxed cereal, if they’re lucky. In fact, half the time my wife calls Paycheck “Bread & Circus,” the name of the original chain which Paycheck acquired in 1992. My soon-to-be 90 year old mother, who lives quite near a Paycheck that began as a Bread & Circus, won’t call it anything else. When I go to Whole Paycheck, I assume that the minimum charge will be $100. For some reason, it’s almost impossible to get out of Paycheck for…

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Rambus: Monopolization Redux

July 22, 2008

Nvidia has filed a Sherman Act complaint against Rambus in federal district court in North Carolina. The allegations appear to echo (copy?) the allegations in the FTC case I reported on recently, where the D.C. Circuit reversed the FTC’s finding of illegal monopolization by Rambus. Can Rambus file a successful motion to dismiss in this new case based on the D.C. Circuit’s decision? Very likely. Why did Nvidia file this suit? My first thought is that Nvidia was concerned about a statute of limitations problem, and this filing (even if dismissed by the District Court) will allow them to appeal and keep their claims alive during the FTC’s motion for en banc review that is pending before the D.C. Circuit, and during a possible Supreme Court appeal by the FTC. Alternatively, they may be hoping that a district court in the Fourth Circuit (or even the Fourth Circuit itself), will see things differently from the D.C. Circuit, and allow their case to proceed.

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Quick Hits – Antitrust

July 14, 2008

The Federal Trade Commission has asked for en banc review of the D. C. Circuit’s decision in the FTC’s Rambus proceeding. I expect this case to be appealed to the Supreme Court, and given the Court’s propensity to accept antitrust cases over the last several years and the importance of this case, the case stands a better-than-average chance of being accepted for review by the Court. Of course better-than-average is still difficult, so the FTC shouldn’t get its printing presses warmed up quite yet. * * * The Supreme Court granted review of the Ninth Circuit’s decision in Pacific Bell v. Linkline, and will hear and decide the case next term. The issue in this case, as described in the Pacific Bell’s petition to the Supreme Court, is – Whether a plaintiff states a claim under Section 2 of the Sherman Act by alleging that the defendant – a vertically integrated retail competitor with an alleged monopoly at the wholesale level but no antitrust duty to provide the wholesale input to competitors – engaged in a “price squeeze” by leaving insufficient margin between wholesale and retail prices to allow the plaintiff to compete. The Ninth Circuit held that there was an antitrust duty, and Pacific Bell is appealing that ruling. The SCOTUS blog page for this case is here. * * * I strongly recommend that patent and antitrust attorneys…

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Rambus Court: "Price Raising Deception" Not Competitive Harm

May 22, 2008

The “Rambus litigation” in all its many permutations — Justice Department investigation, FTC proceedings and multiple civil cases — has been documented and commented upon widely. For a recap see Andy Updegrove’s article here. At the heart of the legal controversy is the allegation that during the 1990s Rambus, the owner of key DRAM patents or pending patents that solved the CPU-memory chip “bottleneck” problem, failed to disclose these patents to JEDEC, an important standards-setting organization (“SSO”) to which Rambus belonged. JEDEC, uninformed of the existence of these patents, incorporated the Rambus technology in its standards, which were then widely adopted in the memory chip market. Because Rambus withheld disclosure of its patents, JEDEC did not have the opportunity to exercise either of the two options open to it when a member disclosed proprietary technology: either choose another technology or negotiate industry-wide favorable licensing terms as a condition of adoption of the standard (so-called “reasonable and non-discriminatory” license fees, or”RAND” royalties). RAND royalties are negotiated and agreed-upon ex ante, that is, before the technology owner’s IP is adopted, and therefore before the technology owner acquires market power by reason of the adoption. By the time Rambus announced its patents and began demanding royalties (and filing patent infringement suits against companies that refused to pay royalties), Rambus had achieved a technical “lock-in” that made it difficult for the memory chip industry…

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