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Federal Judge Finds Qualcomm Violated the FTC Act Through Monopolistic and Exclusionary Conduct

On May 21, a California federal judge ruled in favor of the Federal Trade Commission (FTC) in its suit against Qualcomm in a much-anticipated decision, concluding that Qualcomm violated the FTC Act by maintaining its monopoly position as a modem chip supplier through a number of exclusionary practices, including refusing to license standard essential patents (SEPs) on fair, reasonable and non-discriminatory (FRAND) terms. Qualcomm likely will appeal the decision to the US Court of Appeals for the Ninth Circuit, but in the meantime, the court’s sweeping decision is likely to affect the course of dealing between SEP-holders and licensees. The decision is likely to substantially affect the ways in which SEP-holders take their technology and associated components that they manufacture to market. Access the full article.

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THE LATEST: FTC Settles Civil Complaint for Wage-Fixing

A recent settlement shows that the US Federal Trade Commission (FTC) will use its enforcement authority to target employer collusion in the labor market. WHAT HAPPENED The FTC brought a complaint against a medical staffing agency, Your Therapy Source, LLC, and the owner of a competing staffing agency, Integrity Home Therapy, for allegedly agreeing to reduce the rates they would pay to their staff. Simultaneously, the FTC settled the case with a consent order that forbids the parties from any future attempt to exchange pay information or to agree on the wages to be paid to their staffs. This was the first FTC wage-fixing enforcement action since the FTC and US Department of Justice (DOJ) issued their joint Antitrust Guidance for Human Resource Professionals in October 2016. That guidance stated that naked wage-fixing and no-poach agreements—e.g., agreements separate from or not reasonably necessary to a larger legitimate collaboration between the employers—are...

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Bag Fee Case Highlights Antitrust Risk Of Public Statements

For publicly traded companies, earnings calls are routine business events, as are press releases, speeches, investor conferences and trade association meetings. However, in the world of antitrust law, words uttered in these situations can provide fodder for plaintiffs to claim that instead of providing information for investors and the public, the communication’s purpose was to invite competitors to unlawfully collude. In the past several years, allegations that competitors used public statements to carry out a price-fixing agreement have been a common thread in antitrust class actions and multidistrict litigations. Recently, a federal district court granted summary judgment in an antitrust case based on earnings calls in the airline industry. While the defendants ultimately prevailed, the case stands as a reminder to publicly traded companies to be mindful of antitrust considerations in earnings calls and other public communications. Read the full article....

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FTC Commissioner Brill Urges Congress to Act on Patent Trolls

In a speech at the American Antitrust Association (AAI) and Computer & Communications Industry Association (CCIA) Conference on Innovation, Patents and PAEs on December 10, 2014, Federal Trade Commissioner (FTC) Julie Brill reported that the FTC hopes to complete its study of patent assertion entities (PAEs) by the end of 2015.  She cautioned against complacency, however, and said there is much Congress and enforcement agencies can do even before the study of so-called patent trolls is complete. The FTC is currently conducting an extensive review of PAE activity, using its authority under Section 6 of the FTC Act.  The Commission's authority under section 6(b) enables it to conduct broad economic studies that do not have a specific law enforcement purpose. Under this provision the Commission may also publicize portions of the information it obtains where such publication would serve the public interest. The FTC has devoted substantial attention to PAEs in...

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North Carolina Dental Board Urges Reversal of FTC’s “Radical” Stance on State Action Immunity

North Carolina’s State Board of Dental Examiners has urged the U.S. Supreme Court to reject the Federal Trade Commission’s (FTC’s) “radical departure” from decades of established precedent that offers state actors immunity from antitrust scrutiny, arguing that the FTC’s approach contradicts the federalist principles that originally gave rise to the state action immunity doctrine. Earlier this year, the Court agreed to consider whether the Fourth Circuit erred in upholding the FTC’s ruling against the Board.  The Board presented its arguments in a brief submitted in advance of oral arguments, which are scheduled for October 2014. The Board’s brief is but the latest salvo in a long-running battle with the FTC that dates back to 2010.  The North Carolina state agency—which includes practicing dentists among its members—licenses dentists in the state and can take disciplinary measures against licensees. Approximately a decade ago, following complaints from...

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FTC Promotes Competition Among Professionals Through Advocacy, Enforcement

On July 16, 2014, Andrew Gavil, Director of the Office of Policy Planning at the Federal Trade Commission (FTC), testified on the subject of “Competition and the Potential Costs and Benefits of Professional Licensure” before the House Committee on Small Business.  Gavil explained the FTC’s rationale for evaluating the competitive effects of different licensing regimes and described its strategy of promoting competition among professionals through a combination of advocacy and enforcement. The FTC’s approach in this area is to evaluate the pros and cons of specific licensure regulations on a case-by-case basis.  In a nutshell, the agency recognizes that, “although licensure may be designed to provide consumers with minimum quality assurances, licensure provisions do not always increase service quality,” and indeed “may . . . discourage innovation and entrepreneurship” and “impede the flow of labor or services.”  Advocacy is an important component of the FTC’s...

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Patent Enforcement Protected by First Amendment?

After receiving a draft complaint and a stipulated order from the Federal Trade Commission (FTC) banning its allegedly deceptive letters to infringers of its scanning technology, MPHJ Technology Investments LLC (MPHJ) filed suit against the FTC in the Western District of Texas, alleging violations of the First Amendment.  The complaint alleged that the FTC’s investigation prevented MPHJ from its government-granted right to enforce its patent, a form of free speech under the Bill of Rights.  On March 28, 2014, the FTC filed a motion to dismiss the complaint, and MPHJ filed its response on April 18, 2014. The FTC argued in its motion to dismiss that the controversy was not ripe for suit because there had been no final agency action, that MPHJ was not immune from suit because patent enforcement activity is not protected by the First Amendment and that the FTC is not looking to prevent MPHJ from sending letters, only looking to prevent the deceptive statements...

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FTC Commissioners Disagree on Section 5 Authority

Section 5 of the Federal Trade Commission (FTC) Act confers broad enforcement powers on the Commission to prohibit “unfair methods of competition.”  In her February 13, 2014 keynote address to the Competition Law & Economics Symposium at George Mason law school, FTC Chairwoman Edith Ramirez argued that it would be a mistake for the Commission to circumscribe its authority by issuing guidelines for Section 5 enforcement.  While Chairwoman Ramirez “do[es] not object to guidance in theory,” she believes any guidance should be descriptive rather than prescriptive. Other commissioners, however, have strongly backed providing companies with a clearer set of rules.  Commissioner Maureen K. Olhausen has said that she would refuse to support any Section 5 enforcement actions until the FTC establishes guidelines, while Commissioner Joshua D. Wright has already proposed such guidelines. Section 5 may confer broader powers than the Sherman Act and Clayton Act in...

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FTC Commissioner Wright Renews Calls for Section 5 Guidelines

Federal Trade Commission  (FTC) Commissioner Joshua Wright continues to press for a “policy statement” that would define, and perhaps limit, the scope of the FTC’s authority to police unfair methods of competition under Section 5 of the FTC Act.  Commissioner Wright first advanced his proposed policy statement in June 2013.  A lively debate has ensued, with contributions from his fellow Commissioners as well as leading academics and practitioners.  Commissioner Wright published additional comments in November and also spoke on the issue in December during testimony before the House Subcommittee on Commerce, Manufacturing and Trade. Commentators have long noted the vagueness inherent in Section 5’s prohibition of “unfair” methods of competition.  Some see this vagueness as a virtue that allows the Commission the potential to police activities that fall outside the reach of other tools of antitrust enforcement.  Others, however, view Section 5 as creating...

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Republicans Press FTC to Establish a Clear Standard for Section 5

In a letter to the Federal Trade Commission (FTC) on Wednesday, October 23, eight GOP lawmakers from both the House and the Senate called on the FTC to publish clear guidance on Section 5 of the FTC Act. Section 5 grants the Commission broad authority to regulate “unfair methods of competition” beyond the scope of the Sherman Act and Clayton Act.  In FTC v. Sperry & Hutchinson Co., 405 U.S. 233 (1972), the Supreme Court opined that the FTC was authorized to consider public values beyond the letter or spirit of the antitrust laws when enforcing Section 5.  Then, during the 1980s, courts began rejecting the FTC’s attempts to bring Section 5 actions, out of concern that the agency had failed to put forth adequate standards.  More recently, the FTC has used Section 5 in various agency actions to target invitations to collude and breaches of standard-setting commitments, but no cases have been affirmed by the courts. In their letter, the legislators warned...

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