In Lafaro v. New York Cardiothoracic Group PLLC, Second Circuit Court of Appeals vacated a lower court’s ruling of summary judgment for a surgeon and his practice – defendants in an antitrust case over access to operating rooms at state-run Westchester Medical Center in New York – finding that although the state-run hospital as a government entity is itself immune from the antitrust suit, can only extend its antitrust immunity to private parties with whom it contracts if it actively supervises the decisions of those private parties. In its decision to remand the case, the Second Circuit said that “the allegations of misconduct by the private defendants are not a tangential attack on the authority of the governmental entity to enter into anti-competitive agreements, but rather on the authority of the private defendants to act beyond the scope of the agreement” and “whether the private defendants were in fact actively supervised remains for the district court to determine in the first instance.”
Second Circuit Revives Hospital Antitrust Case Reversing State Action Based Summary Judgment
July 15, 2009 – 2:03 pm
Third Circuit Expedites Robinson-Patman Appeal, But Stays Injunction
July 15, 2009 – 2:01 pm
In Feesers Inc. v. Michael Foods Inc. et al., 3rd Circuit Court of Appeals, while expediting the appeal filed by Michael Foods Inc., stayed an injunction related to a contempt finding against Michael Foods, issued by the Middle District of Pennsylvania Judge Sylvia Rambo. The injunction and contempt finding stem from an order issued by Judge Rambo following a five year litigation by Feesers, a food distributer, against Michael Foods, a national manufacturer of egg and refrigerated potato products, that Michael Foods violated the Robinson-Patman Act by selling its wares to Sodexo, which competes for the same customers as Feesers, at lower prices than to Feesers. As part of that order Judge Rambo permanently enjoined Michael Foods from “discriminating unlawfully in price in favor of Sodexho.” Michael Foods violated the order by 1) refusing to continue the supplier arrangement unless Feesers agrees to pay a national list price – which was previously found to be illegal by the court; and 2) thereafter terminating its relationship with Feesers after Feesers filed its contempt motion.
Subclasses Certified in Toys R Us Litigation
July 15, 2009 – 1:59 pm
In McDonough et al. v. Toys R Us et al., Eastern Pennsylvania Judge Anita Brody certified five consumer subclasses, allowing purchasers of various baby products to proceed with the Sherman Act claims against Toys R Us and five baby-product manufacturers, including Baby Bjorn AB and Britax Child Safety Inc. The original complaint alleged that Babies R Us threatened to drop certain popular lines from its stores if their manufacturers didn’t agree to block e-commerce retailers from offering the same products at lower prices, which constituted vertical price restraints, in violation of the Sherman Act. In certifying the class actions, Judge Brody held that plaintiffs presented sufficient evidence that the price-fixing alleged against the defendants failed the Leegin test, which permits certain vertical price restraints, provided they don’t stifle the competition.
EC Issues Report on Drug Patenting Issues
July 10, 2009 – 10:23 am
On the heals of the DOJ’s recent tough stance against reverse payment suits, the EC has issued a major report on drug patent issues. Although it backs off tough earlier rhetoric against the industry and places some blame for delay on EU regulation, the Commission also cites patent suits and settlements as the cause of delay. Like the US enforcers, the EC has vowed to challenge settlements that it believes are delaying the entry of generic drugs into the market.
European CFI Upholds, but reduces, EC Fine of Peugeot
July 10, 2009 – 10:14 am
The European Court of First Instance has dismissed an action by Peugeot challenging an October 2005 European Commission decision fining Peugeot for obstructing exports of new cars between 1997 and 2003 from The Netherlands to consumers living in other Member States. The CFI upheld the decision, but reduced the fine from €49.5m to €44.55m because the Commission had adequately considered role that price differentials had played in reducing exports.
EC Inspects Special Glass Sector
July 10, 2009 – 10:07 am
The European Commission confirmed that on March 4, 2009, it inspected firms in the special glass sector. These products are used for commercial and industrial optics and electronics. The companies involved were not disclosed
EC Imposed First Energy Secter Fines on German & French Pipeline Operators
July 9, 2009 – 4:15 am
The European Commission has fined Germany’s E.ON AG and it subsidiary €553m each and on France’s GDF Suez SA for sharing markets. The parties had agreed in 1975, when they decided to jointly build the MEGAL pipeline to import Russian gas into Germany and France, that they would not sell gas transported over this pipeline in each other’s home markets. They maintained the market-sharing agreement after European gas markets were liberalized, and only abandoned it definitively in 2005. These are the first Commission antitrust fines involving energy.
Patent Reverse Payments Involving Cipro
July 8, 2009 – 5:37 pm
Update July 2009: In a similar Second Circuit case, the court requested the views of the Department of Justice. During the Bush administration, the DOJ had been at odds with the FTC over reverse payments, with the Commission asserting that such payments were presumptively illegal and the DOJ maintaining a more permissive view. In its comments on the Second Circuit Cipro case, however, the DOJ has joined the FTC in proclaiming that reverse payments are presumptive illegal and must be justified by the agreeing parties.
Update June 2009: The U.S. Supreme Court denied certiorari in the Ciprofloxacin Hydrocholoride case, upholding the Federal Circuit’s dismissal of the antitrust claim challenging a reverse payment scheme.
A number of recent cases have raised the quesiton whether a patent holder may pay a challenger to the patent to abandon the challenge. On the one hand, the patent is presumed valid and negotiated settlements are generally encouraged. On the other hand, many challenged patents are ultimately held invalid and a settlement that cuts off a challenge may lessen competition despite such an invalid patent. In In re Ciprofloxacin Hydrocholoride Antitrust LItigation, the Federal Circuit recently upheld the dismissal of cases challenging an agreement by the owner of a patented drug and a generic drug manufacturer to share the proceeds from sales of the patented drug and delay the introduction of a generic version until shortly before the patent would expire. The court held that any anticompetitive effect resulting from the settlement is legitimate because it falls “within the exclusionary power of the patent.” That sort of reasoning, however, begs the question of whether the patent is valid in the first place. If (1) the generic company believed that the patent was sufficiently suspect to mount a challenge, and (2) the patent holder was sufficiently concerned that it was willing to share a substantial portion of its revenue, then (3) the validity of the patent seems clearly suspect. And, of course, an invalid patent has no exclusionary power. Although this case is in accord with most courts to consider the issue, the Supreme Court may need to address the question.
DuPont Files Antitrust Counter-claim Against Monsanto
July 7, 2009 – 8:47 am
In this District of Missouri litigation, DuPont has fired back in response to Monsanto’s patent infringement suit with a counter-claim alleging that Monsanto is seeking to monopolize the market for herbicide resistant corn and soybean. Monsanto claims that DuPont’s use of its Round-up Ready crops in conjunction with other anti-herbicidetechnology infringes Monsanto’s patent. DuPont denies the allegation and accuses Monsanto of acting anticompetitively.
FTC Investigates Drug Company Merger
June 23, 2009 – 10:07 am
The Federal Trade Commission has issued a second request delaying the proposed $41.1 billion merger between Merck & Co. Inc. and Schering-Plough Corp.