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).
United States District Court For the Eastern District Of Pennsylvania Finds Violation Of FTC Act Section 5 By Pharmaceutical Companies And Orders $448 Million Disgorgement
On June 29, 2018, Judge Harvey Bartle III of the U.S. District Court for the Eastern District of Pennsylvania issued a decision ruling that AbbVie Inc., Abbott Laboratories, and Unimed Pharmaceuticals LLC (together, “AbbVie”), along with Besins Healthcare, Inc. (“Besins”), violated Section 5(a) of the FTC Act by engaging in sham litigation to delay entry of competition to its testosterone replacement drug, and ordered disgorgement of $448 million. Federal Trade Commission v. AbbVie Inc., No. 2:14-cv-05151-HB (E.D. Pa. June 29, 2018). This represents the largest monetary award that the Federal Trade Commission (“FTC”) has achieved in a litigated antitrust case.
United States Federal Trade Commission Administrative Law Judge Dismisses Complaint Challenging Reverse Payment Settlement Between Pharmaceutical Manufacturers
On May 11, 2018, U.S. Federal Trade Commission (“FTC”) Administrative Law Judge D. Michael Chappell issued an initial decision ruling that a reverse payment settlement by Endo Pharmaceuticals (“Endo”) with Impax Laboratories (“Impax”) did not violate Section 5 of the FTC Act, and dismissing the FTC’s complaint. In the Matter of Impax Labs., Inc., Docket No. 9373 (Initial Decision, May 11, 2018). Judge Chappell concluded that despite the reverse payment Endo made to Impax, the anticompetitive harm arising from the settlement was “largely theoretical,” and that the settlement’s procompetitive benefits outweighed any anticompetitive effect from the agreement. The initial decision is the first administrative ruling on a reverse payment trial since the U.S. Supreme Court’s 2013 Actavis decision. The decision has been noticed for appeal to the Commission.
Administrative Law Judge Upholds FTC Complaint Alleging That 1-800 Contacts Violated Section 5 Of The FTC Act By Unlawfully Restricting Online Competitor Advertising Through Anticompetitive Settlement Agreements
On October 27, 2017, the Federal Trade Commission announced a ruling by Administrative Law Judge D. Michael Chappell finding that online contact lens retailer 1-800 Contacts unlawfully restrained competition in violation of Section 5 of the FTC Act by restricting its competitors’ online search-based advertising through series of settlement agreements resolving trademark litigation it had filed against those competitors. In the Matter of 1-800 Contacts, Inc., Docket No. 9372 (U.S. Trade Commission, Oct. 27, 2017). In upholding the FTC’s complaint, ALJ Chappell found that the FTC had proved that the restrictions on the use of certain keywords in search-based advertising caused actual harm to consumers and competition in the market for the online sale of contact lenses in the United States and that the respondent 1-800 Contacts had failed to prove that the settlement agreements had countervailing procompetitive benefits that outweighed their harm to competition. As relief, the ALJ issued a broad remedial order prohibiting 1-800 Contacts from, inter alia, entering into any agreement that restricts a competitor’s ability to participate in search advertising auctions. Just as the Supreme Court’s landmark decision in Federal Trade Commission v. Actavis, Inc., 133 S. Ct. 2223 (2013), raised difficult questions as to how litigants could resolve patent disputes over pharmaceutical products, this decision raises difficult questions over potential settlements of trademark disputes, particularly in the context of internet search advertising.