When I was a new lawyer, working at Howrey in Washington, D.C, the firm ‘s client, Litton Industries, was sanctioned in the amount of $10 million for discovery misconduct – the failure to produce relevant documents during discovery. But for the sanction, Litton would have been entitled to an award of its costs and attorneys fees in the litigation, which it had won. I suspect, however, that Litton (and Howrey) took this with good graces – Litton had been awarded $277 million in damages. See Litton Systems, Inc. v. AT&T, 91 F.R.D. 574 (S.D. N.Y 1981), aff’d, 700 F.2d 785 (2nd Cir. 1983).

Ironically, the documents in question (which were produced very late but before trial) were ruled inadmissible at trial, and therefore the defendant suffered no prejudice as a result of the late production.

Even though I was not involved in this case while at Howrey, this painful episode for the firm and the lawyers directly involved left a lasting memory upon my young and impressionable mind, and I recalled it as I read about the pickle in which a group of California lawyers have found themselves in the patent case Qualcomm v.Read the full article

Go Directly to Jail

by Lee Gesmer on December 19, 2007

We’re always warning our standards setting clients that U.S. antitrust laws are about more than just money – you can go to jail. After a while, it feels like these warnings lose their force. This recent press release from DOJ is a reminder that a violation of the antitrust laws is both a criminal and a civil violation:

An independent consultant and two executives of Dunlop Oil & Marine Ltd., a manufacturer of marine hose located in Grimsby, United Kingdom, pleaded guilty today and have agreed to serve record-setting prison sentences for participating in a conspiracy to rig bids, fix prices, and allocate market shares of marine hose sold in the United States, . . .

. . . Under the terms of their plea agreements, Whittle has agreed to serve 30 months in jail, Allison has agreed to serve 24 months in jail and Brammar has agreed to serve 20 months in jail.

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Antitrust. It shouldn’t be a surprise that it might be illegal under the antitrust laws for a company with a 90% marketshare in a key, patented technology to agree as a member of a standards developing organization that it would license its technology on “fair, reasonable and non-discriminatory” (or FRAND) terms if that technology is included in the standard, and then, after adoption, violate that pledge. Nevertheless, a federal district court held that Qualcomm could not be held liable under the antitrust laws under these facts. In an important decision at the intersection of standard-setting and antitrust law the Third Circuit disagreed, reversing the lower court. Andy Updegrove addresses the case (and provides a link to the decision) in his article here, so I’ll defer to his extensive discussion and analysis. Read the full article

As recently as 1977 virtually all “vertical restraints” were per se illegal under the federal antitrust laws. This included “nonprice” restraints, which are agreements between firms operating at different levels than the manufacturer that restrict the conditions under which firms may resell goods. An example might be a restriction on the locations from which a retailer may sell a manufacturer’s product.

Supreme Court precedent also restricted both vertical “maximum” price restrictions (example: “you may not price this product higher than $12/unit”) and vertical “minimum” price restraints (example: “you may not price this produce at less than $10/unit”).

However, over the last 30 years the Supreme Court has, in effect, withdrawn each of these antitrust prohibitions, holding that these restraints must be subject to the “rule of reason” (requiring an economic examination in every case to determine whether the harms outweigh the benefits), rather than the per se doctrine (per se illegal = automatically illegal; no excuse will do).… Read the full article