Southern District of New York Judge P. Kevin Castel dismissed a class action complaint against the sellers of Prilosec for failure to allege a plausible relevant product market. American Sales Co. Inc.’s proposed class action alleges AstraZeneca AB and The Procter & Gamble Co. initiated sham patent suits in order to perpetuate an unlawful monopoly over Prilosec OTC. The complaint asserts the defendants filed such litigation in order to trigger the automatic exclusivity provision of the Hatch Waxman Act and block the generic products from coming to market.
In ruling on the motion to dismiss, the court found that it insufficiently alleged that Prilosec had no acceptable substitute. Judge Castel ruled the complaint’s few allegations about the characteristics of Prilosec OTC made no attempt to distinguish the drug from potential competitor products. American Sales was not prohibited from amending the complaint.
The Federal Communications Commission granted Time Warner Cable Inc.’s petition to order AT&T Inc. to reveal subscriber numbers in certain San Antonio communities in order to allow Time Warner Cable to demonstrate it is subject to effective competition in the market. The FCC Media Bureau overruled AT&T’s confidentiality objections in ruling that Time Warner needed the information to show that more than 15 percent of the households in the market subscribe to competing multichannel video program distributors, or MVPDs.
Two competitive tests are available to dominate cable providers. Time Warner seeks to show that it meets the “competitive provider” test. In order to meet the requirements of that means of showing effective competition, Time Warner needs AT&T subscriber numbers for seven areas where direct broadcast satellite providers do not reach the 15 percent threshold. The company is also seeking subscriber information from DirecTV Inc. and Dish Network Corp. AT&T had argued that its customer information needed to be kept confidential given the competitive San Antonio market.
The company also claimed that Time Warner could instead demonstrate that it was subject to “local exchange carrier” effective competition, which bypasses the need for AT&T’s subscriber numbers. The FCC stated that AT&T couldn’t badger Time Warner into claiming LEC effective competition because each company was entitled to choose which form of effective competition it asserted and that AT&T could still be required to turn over confidential information even if Time Warner decided to claim LEC effective competition.
In the EU, the number of so-called pay-for-delay settlements between brand-name drugmakers and generics companies has dropped to 3 percent of the industry’s patent settlements last year, as opposed to 10 percent in 2009. The Commission is concerned that such deals designed to delay the release of a generic drug in return for a payment from the brand-name drugmaker can pose competition concerns and harm consumers by keeping cheaper drugs off the market.
The European Commission’s report contrasts sharply with a similar study released by the U.S. Federal Trade Commission in May, which found that the number of pay-for-delay deals monitored by that agency jumped by 60 percent in 2010 to 31 such deals. Of those 31 pay-for-delay deals, 26 involved generics makers that were the first to file for FDA approval to market their own version of the branded drug. The FTC views such deals as particularly dangerous to customers because they often block other generic drug companies from entering the market under the U.S. pharmaceutical patent regulatory scheme. U.S. appellate courts have repeatedly upheld the settlements against antitrust attack when they do not foreclose other generics from attempting to enter the market.
The European Commission accused 12 cable makers of colluding to fix the prices of the underground and submarine power cables used in electricity grids. The commission did not name the companies it targeted, but Italy’s Prysmian, France’s Nexans, Denmark’s NKT Holding A/S, Switzerland’s ABB Ltd. and subsidiaries of General Cable Corp. of the U.S. confirmed they had received the statements.
The statements, a preliminary step in the EC’s proceeding, follow its January 2009 raiding of records at the facilities of Prysmian, Nexans, and other cable makers. The U.S., Canada and Australia are also currently looking into cartel activity related to the high-voltage cables.
In 2010, Japan’s Fair Trade Commission fined three other Tokyo-based electric cable companies a total of over 630 million yen ($6.9 million) after finding they had engaged in bid-rigging and formed a cartel in an effort to land high-voltage electric cable supply orders in deals with Tokyo Electric Power Co. and others.
Southern District of New York Judge Barbara S. Jones dismissed a lawsuit accusing Marlborough Gallery Inc. of an attempt to monopolize and unfairly eliminate competition for the ceramic works of artist Chu Teh-Chun. In the lawsuit, SARL Galerie Enrico Navarra alleged that Marlborough sought to discredit the gallery and the reproductions of ceramic plates it had commissioned from Chinese artist Chu Teh-Chun, in an effort to eliminate competition for Marlborough’s own ceramic vases hand-painted by Chu.
The court ruled that SARL Galerie Enrico Navarra had failed to support its claim by identifying any predatory or anti-competitive acts. Judge Jones also held that Enrico Navarra had failed to allege a relevant market that encompassed both the plates and the vases, finding that the vases were original works of art while the plates were replicas and noting the large disparity in price between the two items.
Enrico Navarra contended that Marlborough had prompted Chu to demand that it cease and desist producing the plates, and had caused the publication of advertising in France claiming that the plates were not genuine as well as other disparagement.
The court also concluded that Enrico Navarra had not identified any false statements made by Marlborough in its advertising to support the Lanham Act claim.
Northern District of California Judge James Ware has dismissed with prejudice a putative class action alleging that Apple Inc. violated the antitrust laws by updating its iTunes media player software to thwart programs that would have removed encryption from music files sold through the iTunes Music Store. The suit, filed on behalf of Itunes music purchasers, claimed that Apple maintains a monopoly over digital music file sales through updates to its digital rights management file encoding software that prevented competitors from entering the market. Relying on a previous ruling, the court held that Apple’s adopting and maintaining its system did not violate the antitrust laws.
The Third Circuit held that because it is not a direct purchaser, a Pennsylvania hospital lacks standing to represent a class of purchasers accusing Amgen Inc. of violating federal antitrust laws by tying pharmaceutical rebates to purchases of its anemia drug Aranesp. Hospital Warren General filed its putative class action in September 2009, alleging Amgen improperly tied its discounts and rebates on white blood cell growth factor products Neupogen and Neulasta to purchases of red blood cell growth factor product Aranesp. Warren General contended that even though Aranesp had a higher price per dose than Procrit, it had to purchase Aranesp or end up paying more for Neupogen and Neulasta than Medicare would reimburse. The hospital does not qualify as a direct purchaser of the drugs, the court of appeal said, because it acquired them through distributor AmerisourceBergen Corp. The Third Circuit rejected Warren General’s arguments that its relationship with Amgen qualified it as a direct purchaser. Even if it had some direct interactions with Amgen, Warren General was not a direct purchaser because it (1) placed orders for the Amgen drugs through AmerisourceBergen, (2) received deliveries of the drugs directly from AmerisourceBergen, and (3) paid the distributor directly for the pharmaceuticals.
Update July 2011: An en banc panel of the 9th Circuit reversed, holding that although the supermarket chains’ profit sharing agreement was subject to antitrust review, the panel erred in treating it as inherently anticompetitive. Because the purpose of the agreement was to support the chains in collective bargaining negotiations, and thus lower labor costs, it held that a full Rule-of-Reason inquiry was required.
The Ninth Circuit rejected a claim by major grocery chains that their agreement to share profits in the event of a strike was exempted from antitrust scrutiny by the non-statutory labor exemption, which protects the outcome of labor-management negotiations. In anticipation of a strike aimed at certain supermarkets, the major chains entered an agreement through which they would redistribute profits during a strike to the chains that lost share as a result. California attacked the agreement as per se illegal and anticompetitiveunder the Rule of Reason. The defendants argued that the agreement was exempted by the labor exemption and that it was pro-competitive because it would help them reduce labor costs in the long run, which would benefit consumers more than any short-run anticompetitive effect. The court held that the agreement was patently anticompetitive and not protected by the exemption. In the court’ s view, the agreement would obviously reduce competition among the chains in the event of a strike. The labor laws, the court held, were primarily intended to assist workers to earn high wages. The desire to reduce labor costs thus could not serve to insulate otherwise anticompetitive conduct.
The Sixth Circuit has heldthat the plaintiff’s failure to specifically plead facts of price discrimination was fatal to New Albany Tractor Inc.’s complaint against Louisville Tractor Inc. and Metalcraft of Mayville Inc. over mowing equipment. The Court cited the U.S. Supreme Court’s Twombly and Iqbaldecisions for the proposition that a plaintiff could not use the discovery process to obtain the facts necessary to allege a plausible complaint. This requirement applied, the court held, even when the information needed to establish a claim of discriminatory pricing is solely within the purview of the defendant or a third party.
New Albany invoked the “indirect purchaser” doctrine — which is meant to stop a manufacturer from protecting itself from Robinson-Patman liability by using a dummy wholesaler to make sales on terms the manufacturer actually controls — to back up its case.
Mowing equipment maker Metalcraft (which does business as Scag Power Equipment) sells equipment and parts indirectly to retailer New Albany through Louisville Tractor, which is both an exclusive distributor and retailer of Scag’s goods in the Louisville, Ky. area, according to New Albany. Scag sold its products to Louisville Tractor at a lower price than it sold the same equipment to New Albany through Louisville Tractor, New Albany claimed. The appeals could held that the complaint was inadequate because New Albany failed to allege that Scag controlled Louisville Tractor to the extent that Scag forced Louisville to sell at a certain price, or that that price was discriminatory.
Southern District of Ohio Judge Edmund A. Sargus, Jr., denied motions to dismiss a complaint against prosthetics maker The Ohio Willow Wood Co. Inc. and inventor Bruce Kania, rejecting the defendants’ argument that the suit failed to state a claim under Section 1 of the Sherman Act because it alleges harm caused by patent enforcement.
The lawsuit accuses Ohio Willow Wood and Kania of carrying out a scheme to impede competition in the U.S. market for fabric-covered polymetric gel liners used with prosthetic devices, by using fraudulently obtained patents and the threat of litigation to force other competitors into unreasonable licensing deals.
The court had previously held that even if the fraudulent prosecution of a patent by itself doesn’t run afoul of the Sherman Act, a scheme involving multiple parties using fraudulent means to obtain and enforce a patent could constitute such a violation, Judge Sargus said. And although Judge Sargus noted that licensing agreements typically were not subject to antitrust liability, courts assessing antitrust liability must look at the alleged monopolist’s conduct as a whole. He concluded that discovery could yield evidence that Ohio Willow Wood engaged in fraudulent or anticompetitive conduct in making the licensing agreements as part of an overall scheme to create a monopoly.