Antitrust in the News

On July 11, 2019, Makan Delrahim announced a major reversal in the Antitrust Division's treatment of Corporate antitrust compliance programs. In a speech titled “Wind of Change: A New Model for Incentivizing Antitrust Compliance Programs,” Delrahim stated: “effective immediately, the Antitrust Division will: (1) change its approach to crediting compliance at the charging stage; (2) clarify its approach to evaluating the effectiveness of compliance programs at the sentencing stage; and (3) for the first time, make public a guidance document for the evaluation of compliance programs in criminal antitrust investigations.” Read more

On June 20, 2019, Judge Edward M. Chen of the Northern District of California in Diva Limousine, Ltd. v. Uber Technologies Inc. issued an order containing four primary holdings: (1) granting without prejudice Uber’s motion to dismiss for lack of subject matter jurisdiction; (2) granting Uber’s motion to dismiss Diva’s claim under California’s Unfair Practices Act; (3) granting in part and denying in part Uber’s motion to dismiss Diva’s claim under California’s Unfair Competition Law; and (4) denying without prejudice Diva’s motion for partial summary judgment on its Unfair Competition Law claim. Significantly, the court recognized the competitive advantage that Uber derives from classifying drivers as independent contractors and commented that this classification undermines the spirit, if not the letter, of the California Labor Code. Read more

On May 21, 2019, District Judge Lucy H. Koh of the Northern District of California ruled that Qualcomm, Inc.’s standard essential patent licensing practices were anticompetitive.[1] FTC v. Qualcomm, No. 5:17-cv-002200, 2019 U.S. Dist. WL 2206013 (N.D. Cal. May 21, 2019). Judge Koh found that Qualcomm possessed monopoly power in the markets for CDMA and premium-LTE modem chips. Qualcomm in turn used this monopoly power to (a) force SEP licensees into anticompetitive licensing agreements, (b) refuse to license its SEPs to rival modem chip manufacturers, (c) extract supra-competitive royalties from customers, (d) push competitors out of the market, and (e) secure exclusive deals. This anticompetitive behavior harmed original equipment manufacturers (“OEMs”) and Qualcomm’s rivals in the CDMA and premium-LTE modem chip markets. Indeed, Qualcomm had required OEMs to sign a patent license agreement before they could purchase their model chips (i.e., the no license/no chip policy), a practice which the court deemed anticompetitive. Read more

In July 2018, Plaintiffs Wi-LAN Inc., Wi-LAN USA, Inc., and Wi-LAN Labs, Inc., (collectively, “Wi-LAN”) brought a patent infringement action against Defendants LG Electronics, Inc., LG Electronics U.S.A., Inc., and LG Electronics Mobilecomm U.S.A., Inc., (collectively, “LG”) alleging that LG’s wireless communications products that are compliant with the 3rd Generation Partnership Project 4G LTE standard (3GPP LTE) directly infringed four of Wi-LAN’s patents. Wi-Lan Inc., et al. v. LG Elecs., Inc., et al., --- F. Supp. 3d ----, No. 18-cv-01577-H-BGS, 2019 WL 1586761, at *1 (S.D. Cal. Apr. 12, 2019). Wi-Lan was once a company that engaged in research and development of various wireless technologies but now primarily focuses on licensing patent portfolios owned by others. LG, in response, asserted various counterclaims relating to the unenforceability of Wi-LAN’s purported standard-essential patents and, particularly, claims for (1) monopolization and attempted monopolization in violation of Section 2 of the Sherman Act, 15 U.S.C. §2; (2) unfair business practices under Section 17200 of the California Business and Profession Code, Cal. Bus. & Prof. § 17200; and (3) declaratory judgment of unenforceability of U.S. Patent No. 8,867,351 (“the ’351 patent”) under a theory of infectious unenforceability. Read more

On March 8, 2019, the U.S. District Court for the Northern District of California ruled in favor of a class of current and former NCAA Division I basketball and FBS football players who brought a multidistrict class action antitrust suit against the NCAA and eleven of its member conferences challenging the NCAA’s rules capping the amount of compensation that student-athletes can receive in exchange for their athletic services. In re NCAA Grant-in-Aid Cap Antitrust Litig., 375 F. Supp. 3d 1058, 1062 (N.D. Cal. 2019) (the “Grant-in-Aid Litigation”). Read more

On May 6, 2019, the San Francisco Board of Supervisors voted 8-1 to pass the “Stop Secret Surveillance” Ordinance severely limiting facial recognition technology by the San Francisco Police department and other City government agencies. The Ordinance is the first of its type in the United States and is expected to go into effect 30 days after its passing. Read more

On May 16, 2019, the California Senate Appropriations Committee held a hearing that included S.B. 561, the “Attorney General amendment” to the California Consumer Privacy Act (“CCPA”). The bill is being held in committee and under submission, which means the bill has been blocked and is likely dead. Read more

On April 22, 2019, the United States District Court for the Northern District of California granted a motion by Defendants VIP Petcare Holdings, Inc. (VIP) and PetIQ, Inc. (PetIQ) to dismiss with prejudice an amended complaint by Plaintiffs Med Vets Inc. (“Med Vets”) and Bay Medical Solutions Inc. (“Bay Medical”), which alleged unlawful merger and other antitrust violations, finding that Plaintiffs failed to allege a relevant market and market power in such a market. Med Vets, Inc. v. Vip Petcare Holdings, Inc., No. 18-cv-02054-MMC, 2019 U.S. Dist. LEXIS 68099 (N.D. Cal. Apr. 22, 2019). United States District Judge Maxine M. Chesney issued the decision. Read more

Employers and business owners breathed a collective sigh of relief on April 24, 2019, when the United States Supreme Court issued its highly anticipated ruling in Lamps Plus, Inc. v. Varela, No. 17-988, ___ U.S. ___, 139 S. Ct. 1407 (2019), and held, in a 5-to-4 decision, that under the Federal Arbitration Act (FAA), an ambiguous agreement cannot provide the basis for concluding that the parties agreed to submit to class arbitration. The Varela opinion reaffirms the Court’s decision in Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662 (2010), which held that a court may not compel class arbitration when an agreement is silent on the availability of such proceedings. Read more

The United States Supreme Court held that consumers have standing to pursue a putative antitrust class action against Apple for monopolization. In Apple Inc. v. Pepper, et al., Case No. 17-204 (May 13, 2019), the Court ruled 5-4 that the consumer plaintiffs were not barred by the “indirect purchaser rule” that generally limits standing in federal antitrust cases for damages to direct purchaser plaintiffs only. Read more