FTC And State Regulators Bring Enforcement Action In Southern District Of New York Against “Pharma Bro” Martin Shkreli
On Monday, January 27, 2020, the Federal Trade Commission (“FTC” or “the Commission”) and the New York Attorney General filed suit in federal court in the Southern District of New York against Martin Shkreli and Vyera Pharmaceuticals based on allegations of market monopolization. FTC v. Vyera Pharmaceuticals, LLC, No. 1:20-cv-00706 (S.D.N.Y. filed Jan. 27, 2020). The case has been assigned to U.S. District Judge Denise L. Cote. Shkreli, commonly referred to in the media as “pharma bro,” gained notoriety for behavior that led to his federal incarceration for securities fraud in 2017. The Complaint alleges that Shkreli and others engaged in an unlawful scheme to block low-cost generic competition and maintain a monopoly on Daraprim, an essential drug used to treat the potentially fatal parasitic infection toxoplasmosis, in violation of the Sherman Act and New York state law. The case is a notable example of close collaboration between federal antitrust enforcers and a state attorney general’s office.
Seventh Circuit Allows Beer Conspiracy Allegations One More Shot
On September 5, 2019, Judge Kenneth Ripple, writing for a unanimous panel of the U.S. Court of Appeals for the Seventh Circuit, partially reversed a lower court’s dismissal of antitrust claims alleging that two brewers conspired to restrict a competitor’s exports of beer to Ontario, Canada. Mountain Crest SRL, LLC v. Anheuser-Busch InBev SA/NV, No. 18-2327, 2019 WL 4198809 (7th Cir. Sept. 5, 2019). The Seventh Circuit held that agreements with a Canadian government-controlled entity (the Liquor Control Board of Ontario, or “LCBO”) were immune from antitrust scrutiny under the act of state doctrine. However, the Court held that claims of an alleged conspiracy between competitors to strong-arm the LCBO into entering into the agreements did not implicate the act of state doctrine and were improperly dismissed.
Seventh Circuit Extinguishes Antitrust Conspiracy Claims About Local Fire Alarm Laws
On July 15, 2019, the Seventh Circuit Court of Appeals dismissed claims alleging an antitrust conspiracy between a local municipality, an intergovernmental cooperation association and a private provider of commercial fire-alarm services. Alarm Detection Sys., Inc. v. Vill. of Schaumburg, No. 18-3316, 2019 WL 3071744 (7th Cir. July 15, 2019). The Court held that plaintiffs failed to plausibly plead the existence of an underlying agreement between defendants as required to plead an antitrust conspiracy claim.
Oregon District Court Allows Claim Against Association Of Colleges And Universities To Proceed And Accepts Harm To Defendant’s Members As Evidence Of Antitrust Injury
On November 28, 2018, Judge Marco A. Hernández of the United States District Court for the District of Oregon, on remand from the Ninth Circuit, reversed its prior grant of a motion to dismiss and held that plaintiff — which brought antitrust conspiracy claims against a non-profit corporation made up of 549 member colleges — sufficiently demonstrated antitrust injury by alleging harm to the member colleges. CollegeNET, Inc. v. The Common Application, Inc., No. 3:14-CV-00771-HZ (D. Or. Nov. 28, 2018).
Northern District Of California Holds That Commitments Made In Industry Standard Setting Required Chipmaker To License Standard-Essential Patents To “All Comers,” Including Competitors
On November 6, 2018, Judge Lucy H. Koh of the U.S. District Court for the Northern District of California sided with the Federal Trade Commission (“FTC”) and granted a motion for partial summary judgment, holding that contractual commitments it agreed to in the standards-setting process required the defendant chipmaker to license certain essential patents to competing modem chip suppliers. Federal Trade Comm’n v. Qualcomm Inc., No. 17-CV-00220 (N.D. Cal. Nov. 6, 2018).
Third Circuit Upholds Dismissal Of Attempted Monopolization Claims For Failure To Allege An Antitrust Violation Or Antitrust Injury
On March 27, 2018, the United States Court of Appeals for the Third Circuit upheld a March 2017 order by Judge Sanchez of the Eastern District of Pennsylvania dismissing an attempted monopolization claim asserted by the Philadelphia Taxi Association (“PTA”) and 80 individual taxicab companies against a leading ride-hailing company. Phila. Taxi Ass’n v. Uber Tech., Inc., No. 17-1871 (3d Cir. Mar. 27, 2018). The Court held that plaintiffs had failed to state a claim under Section 2 of the Sherman Act and had failed to allege antitrust injury.
District Of Delaware Denies Building Supply Company’s Motion To Dismiss Claims That It Monopolized And Unlawfully Restrained Trade In The Ceiling Tile Market Through Exclusive Agreements
On February 9, 2018, Judge Mark A. Kearney of the United States District Court for the District of Delaware denied in part Armstrong World Industries Inc.’s (“Armstrong”) motion to dismiss a lawsuit filed by rival ceiling tile manufacturer Roxul USA Inc. (“Roxul”), finding that Roxul alleged facts plausibly demonstrating monopolization and attempted monopolization in violation of Sherman Act Section 2, and concerted action in restraint of trade in violation of Sherman Act Section 1 and Clayton Act Section 3. However, Judge Kearney granted Armstrong’s motion to dismiss Roxul’s claims relating to the sale of ceiling tiles in Canada because Roxul failed to allege how reduced competition in Canada had a “direct, substantial and reasonably foreseeable effect” on U.S. commerce, as required by the Foreign Trade Antitrust Improvements Act (“FTAIA”).
United States District Court For The District Of Maryland Grants Summary Judgment To Non-Practicing Entity Intellectual Ventures Against Monopolization Counterclaims Alleging Sham Patent Litigation
On November 30, 2017, Judge Paul W. Grimm of the United States District Court for the Southern Division of the District of Maryland granted Intellectual Ventures (“IV”) and affiliates’ motion for summary judgment on Capital One’s antitrust counterclaims based on IV’s alleged bad faith assertion of patent claims, concluding that Capital One’s antitrust counterclaims were barred by both Noerr-Pennington immunity and collateral estoppel. Intellectual Ventures I LLC et al v. Capital One Financial Corp., 8-14-cv-00111 (MDD 2017-12-01, Order). The Court’s thorough and careful opinion is a good illustration of the challenges of litigation over the conduct of a non-practicing patent-assertion entity, or as some would have it, a patent troll, under the Sherman Act.
United States District Court For The Southern District Of Iowa Grants Motion To Dismiss Antitrust Claims Against PepsiCo Based On Alleged “Price Squeeze”
On September 15, 2017, Judge James E. Gritzner of the United States District Court for the Southern District of Iowa granted a motion to dismiss antitrust claims filed against PepsiCo Inc. and its bottler-distributor subsidiary by an independent bottling company. Mahaska Bottling Co. v. PepsiCo Inc., No. 4:16-cv-00114-JEG (S.D. Iowa Sept. 15, 2017). In so doing, Judge Gritzner rejected the bottler’s proffered “price squeeze” theory and its other allegations of exclusionary conduct under Section 2 of the Sherman Act, as well as its proffered market definition, and found that Mahaska had failed to allege harm to competition or, relatedly, antitrust injury. The Court also dismissed claims brought under the Robinson-Patman Act and Iowa state antitrust statutes. While this case does not break new ground, it is useful in demonstrating again the difficulties that a distributor faces in asserting antitrust claims against a supplier that the distributor believes is seeking to end the relationship, even with unusual “in perpetuity” exclusive arrangement at issue here.