By Seth D. Greenstein

The Supreme Court heard oral argument today on whether litigation over a toy based on Spider-Man’s web should be used to vanquish a 50-year-old precedent precluding patent owners from collecting patent royalties on expired patents under a per se rule, and to replace it, in effect, with an antitrust Rule of Reason analysis.

In Kimble v. Marvel Enterprises, Inc., an individual inventor patented a toy glove that shoots foam string, similar to Spider-Man’s web.  After Stephen Kimble, the patent owner, showed his invention to the president of Marvel, Marvel began selling an allegedly infringing “Web Blaster” toy.  The patent owner and Marvel settled their patent and breach of contract litigation with an agreement assigning the patent to Marvel, and requiring Marvel to pay specified royalties on sales, with no reduction in the royalty amount or termination date after the patent expired.

When the patent owner filed suit over a dispute under the settlement agreement, Marvel responded with a declaratory judgment claim that, under Brulotte v. Thys Co., 379 U.S. 29 (1964), it had no obligation to pay any royalties after the patent expired.  In Brulotte, the Court prohibited the licensor of a hop-picking invention from collecting royalties after the patent term, as “an assertion of monopoly power” analogous to tying sales of patented items to unpatented items, since an invention disclosed in an expired patent enters the public domain.  Kimble and Marvel testified, however, that neither was aware of Brulotte when settling the prior case.  Both the district court and the Ninth Circuit found for Marvel, holding that Brulotte prohibits collection of patent royalties on sales after the expiration of a patent.

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Here are some of the developments in antitrust news this past week that we found interesting and are following.

Amex to Ask for Stay of Ruling Prohibiting Merchants From Promoting Other Cards.  American Express has announced that it will be seeking a stay of a ruling that could ban the company’s longstanding practice of prohibiting merchants from encouraging customers to pay with lower-cost cards.  Judge Nicholas G. Garaufis of the U.S. District Court for the Eastern District of New York ruled last month that the practice violates U.S. antitrust laws.  The court is currently in the process of considering proposed remedies.

EU antitrust regulators to investigate ecommerce.  European Union regulators plan to investigate ecommerce in an effort to remove barriers to cross-border trade in the 28-nation bloc, according to the EU’s antitrust chief.  The investigation could lead to action against companies that deliberately block online sales.  European Competition Commissioner Margrethe Vestager said she decided to launch the inquiry because such anticompetitive hurdles are hampering the growth of online sales.

F.T.C. Addresses Its Choice Not to Sue Google.  Several members of the Federal Trade Commission are defending the actions taken by the agency in its antitrust investigation of Google, nearly a week after an internal document from 2012 came to light, revealing that some staff attorneys  had wanted to sue Google for anticompetitive practices.  However, the FTC’s five commissioners ultimately voted not to sue.  The three commissioners who were at the FTC at that time defended the decision and issued a joint statement asserting that the report represented “a fraction” of the “voluminous record and extensive internal analysis” that was conducted on the matter.

German Business Leaders Clash With Google, Antitrust Officials.  German business leaders are clashing with Google and European Union antitrust officials in a heated public debate over how to deal with the power of U.S. Internet firms.  Mathias Döpfner, the chief executive of German publishing house Axel Springer SE, and Deutsche Telekom AG Chief Executive Timotheus Höttges have both attacked the business practices of certain U.S. Internet firms in Europe, and expressed frustration at the lack of action by competition authorities.  The dispute is occurring as the EU prepares to announce the next steps in its long-running antitrust investigation of Google, which has been fruitless to date, despite three attempts at a settlement.

A View from Constantine Cannon’s London Office

By Richard Pike

The United Kingdom announced today that the Consumer Rights Bill has passed its final legislative hurdle and has been adopted as the Consumer Rights Act 2015 – heralding a major overhaul of consumer protection law in the UK.

Schedule 8 of the Act contains radical new provisions designed to boost private antitrust enforcement in the UK.  Most noteworthy is the adoption of an opt-out class action remedy specifically, and uniquely, for claims alleging infringement of UK and European competition law.  Never before has there been any form of opt-out action in the UK for any purpose.

The class action provisions are intended to strike a balance between enhancing access to justice and avoiding the creation of what has been termed an “American litigation culture.”  As such, there are a number of limits on what will be possible.  First, the opt-out class will be limited to persons domiciled in the UK.  All other persons would have to opt in to obtain the benefit of actions that are brought, or else bring their own claims.  Second, contingency fees will be prohibited, and it is likely that the arrangements for fees and funding will effectively be set by the Competition Appeal Tribunal at the outset.  Third, it will be for the Tribunal to decide in each case whether it is appropriate to allow the case to proceed on an opt-out basis, an opt-in basis or not as a collective action at all.  The Tribunal will also be tasked with deciding whether the lead plaintiff is an appropriate person to represent the class.

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Here are some of the developments in antitrust news this past week that we found interesting and are following.

Take Google to Court, Staff Report Urged F.T.C.  The Federal Trade Commission is facing renewed questions about its handling of its antitrust investigation into Google, after documents revealed that an internal report had recommended stronger action.  The 2012 report, from the FTC’s bureau of competition, recommended suing the Internet search giant for anticompetitive practices, according to anonymous sources who saw the report.  In early 2013, the FTC voted unanimously against bringing charges after an investigation.  Google’s critics and competitors are arguing that the FTC failed to take appropriate action, and are urging the European Union to take action to rein in Google.

Tour Bus Companies Agree to Settle Antitrust Lawsuit.  Two of New York City’s biggest tour bus operators have agreed to pay $7.5 million and give up almost 50 of their stops in Manhattan to settle antitrust claims brought by the U.S. Department of Justice and the New York State Attorney General.  The proposed settlement could reshape an industry that was allegedly monopolized after the two companies, City Sights and Gray Line New York, formed a joint venture called Twin America.

Sysco, FTC Battle Over What Stays Secret in Antitrust Tussle.  Sysco is accusing the Federal Trade Commission of failing to provide necessary information about its witnesses in advance of a hearing that will be crucial in determining whether the food distributor can rescue its merger with rival US Foods Inc.  The FTC filed a lawsuit in February asking the U.S. District Court for the District of Columbia for a preliminary injunction blocking the $3.5 billion merger while an FTC administrative law judge holds a parallel proceeding to determine if the deal should be scrapped.

Here are some of the developments in antitrust news this past week that we found interesting and are following.

U.S. Is Seeking Billions From Global Banks in Currency Manipulation Settlement.  The U.S. Department of Justice is putting a price tag of about $1 billion each on potential settlements that it is trying to reach with global banks that it is investigating for manipulation of currency markets, according to people claiming to be familiar with the talks.  The banks, however, are reportedly pushing back harder than in some previous negotiations, including those for mortgage-backed securities, and the final penalties could be lower.  The discussions could lead to settlements of government allegations of criminal activity in the currency markets against Barclays Plc, Citigroup Inc., JPMorgan Chase & Co., Royal Bank of Scotland Group Plc and UBS Group AG.

Apple Asks U.S. Appeals Court to Disqualify Antitrust Monitor.  The U.S. Court of Appeals for the Second Circuit heard arguments on Tuesday on Apple’s latest effort to disqualify a court-appointed antitrust monitor.   Judge Dennis Jacobs sharply questioned the activities of Michael Bromwich, who was appointed as monitor after Apple was found liable for conspiring with publishers to raise e-book prices.  Apple has repeatedly tried to have Bromwich sacked, pointing to his aggressively seeking interviews with executives and engaging in private discussions with the U.S. Department of Justice.

EU Regulators Clear Aviva’s $8.3 Billion Bid for Friends Life.  European Union antitrust regulators approved British insurer Aviva’s proposed 5.6-billion-pound purchase of rival Friends Life, saying it did not have any competition concerns.  According to the European Commission, the merged company would have a moderate market share.

Waste Management wins antitrust approval for Deffenbaugh deal.  The U.S. Department of Justice Department said on Friday that it granted antitrust approval for Waste Management’s purchase of waste disposer Deffenbaugh Disposal.  Waste Management, a $14 billion a year garbage and recycling giant, agreed to sell assets in Kansas and Arkansas in order to win Government approval for the $405 million deal.