June 27, 2012

Court Holds Football Players’ Claims Fail To Thread American Needle

Football players’ antitrust claims that the National Football League (“NFL”) and teams conspired to deprive them of their rights to football game footage are being kicked out of court after a federal judge found that the plaintiffs had failed to come within the Supreme Court’s holding in American Needle, Inc. v. National Football League, 130 S. Ct. 2201 (2010).

Judge Paul A. Magnusen of the U.S. District Court for the District of Minnesota has dismissed with prejudice a putative class action antitrust lawsuit brought in Washington v. National Football League by retired NFL players against the NFL, NFL Ventures, L.P., NFL Productions, LLC, NFL Enterprises, LLC, and each of the 32 NFL teams.

The plaintiffs, former professional athletes seeking to represent a class of similarly situated individuals, alleged that the defendants monopolized the market for former players’ images and likenesses in violation of the Sherman Act by not allowing them the rights to films and images from their games.

The court found that the plaintiffs’ claims failed to come within the holding of American Needle that the NFL and its teams might, in some instances, be capable of concerted action in violation of the Sherman Act.

Specifically, Judge Magnusen found that American Needle does not support plaintiffs’ contentions because that Supreme Court decision involved intellectual property that each team owned individually.  By contrast, the intellectual property involved in this case is historical football game footage – something that the individual teams do not separately own.  Judge Magnusen found this distinction dispositive on the ground that the NFL and its teams could not be considered to have conspired with respect to property that the teams and the NFL collectively owned.

The court concluded that the plaintiffs failed to plausibly allege any antitrust violation from defendants’ conduct.  Judge Magnusen stated that “[i]f the NFL is refusing to pay Plaintiffs for the use of their images in its copyrighted material, then Plaintiffs may have a claim for a violation of their right of publicity.… What they have are claims for royalties, not claims for antitrust.  The Complaint is therefore dismissed with prejudice.”

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Categories: Antitrust and Intellectual Property Law, Antitrust Law and Monopolies, Antitrust Litigation

    June 22, 2012

    Pharmacies Allege Antidepressant Manufacturers Depressed Generic Competition

    CVS and Rite Aid pharmacies have filed an antitrust complaint in the U.S. District Court for the District of New Jersey against Wyeth Inc. and Teva Pharmaceuticals for allegedly conspiring to keep generic versions of the popular antidepressant Effexor XR out of the hands of consumers.

    The two pharmacies allege in Rite Aid Corp et al. v. Wyeth Inc. et al, that the anticompetitive conspiracy included fraudulently obtaining patents for Effexor XR and wrongfully using litigation to keep generic manufacturers of that antidepressant from entering the market.

    The pharmacies claim that Wyeth, now part of Pfizer, obtained three patents by falsifying clinical data.  Wyeth’s data showed the extended release version of Effexor XR decreased nausea and vomiting, both side effects of the immediate-release version of the drug.

    According to the complaint, after obtaining the patents through false data, Wyeth listed them in the FDA Orangebook, enabling Wyeth to bring lawsuits against 17 generic manufactures that wanted to produce a cheaper version of the drug.

    Teva Pharmaceuticals was the first company to file suit against Wyeth.  Instead of further litigating, Teva agreed not to market a generic version of extended release Effexor XR until July 2010.

    In exchange, Wyeth agreed to give Teva an “exclusive license” to sell a generic option and settled the other 16 lawsuits, which allowed Teva to control the market for a longer period of time.  For one year, Teva was the only company selling a generic version of the extended release antidepressant.

    CVS and Rite Aid join several other companies in bringing antitrust claims against Wyeth and Teva.  A previous complaint was filed in the same federal court last November.

    Effexor XR, or venlafaxine hydrochloride, is prescribed by doctors to treat major depressive disorder.  The mental health condition affects 6.7 percent of adults in the United States.  Women are 70 percent more likely to experience the disorder than men.

    The plaintiffs in the two cases argue that Wyeth’s and Teva’s actions have inflated prices for their customers.  Reuters has reported that sales for brand name Effexor XR topped $2.5 billion during the period that Wyeth had control of the market.

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    Categories: Antitrust and Intellectual Property Law, Antitrust Litigation

      June 7, 2012

      Proposed Universal-EMI Merger Could Remix Antitrust And Copyright Law

      The proposed Universal-EMI merger could lead to another remix of antitrust and copyright law as regulators grapple with consolidation in the recorded-music business.

      Notably, the proposed acquisition could affect digital sampling, the technique musicians use to digitally copy and remix sounds from existing albums into a new sound recording.

      As described in a previous Antitrust Today post, the FTC and the European Commission are reviewing the proposed merger and the antitrust subcommittee of the U.S. Senate Judiciary Committee will hold a hearing on the controversial acquisition.  The idiosyncrasies of the music industry, however, as well as the challenge of defining the relevant market, make the analysis of the proposed merger’s likely effects on competition difficult. 

      This analysis is complicated by the fact that current copyright law, at least under the Sixth Circuit’s reasoning in Bridgeport Music, Inc. v. Dimension Films, 410 F.3d 792 (6th Cir. 2005), eliminates certain defenses when a plaintiff claims the defendant’s digital sample infringed a copyright in the sound recording.  In support of this conclusion, the Sixth Circuit stated, “[t]he sound recording copyright holder cannot exact a license fee greater than what it would cost the person seeking the license to just duplicate the sample in the course of making the new recording.”  

      A recent article by a Constantine Cannon attorney explores the antitrust overtones of the Sixth Circuit’s statement and examines how the proposed consolidation of record labels might affect the practice of digital sampling and the potential market of licensing sound recordings for sampling.

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      Categories: Antitrust and Intellectual Property Law, Antitrust Enforcement, International Competition Issues

        May 30, 2012

        Court Strikes Flash Memory Card Claims As Too Tardy

        Patent holders of technologies supporting digital camera and cell phone flash memory cards known as Secure Digital Memory Cards (“SD Cards”) have succeeded in defeating antitrust claims against them as too tardy.

        Judge Jeffrey S. White has dismissed the plaintiffs’ claims in Oliver v. 3D-3C, LLC, in the U.S. District Court for the Northern District Court of California, after finding the claims are untimely under the four-year statute of limitations for asserting private antitrust claims under the Clayton Act.

        Panasonic, Toshiba and SanDisk, through an entity known as SD-3C, LLC, provide intellectual property licenses for other companies that wish to manufacture and sell SD Card technology.  Under the terms of the licenses, the manufacturers are required to pay a royalty on each card sold.

        A group of consumers filed the antitrust claim against SD-3C and the three-company team, arguing that they used the licenses to inflate and control prices.

        The court based its decision largely on the decision in Samsung Electronics Co, LTD v. Panasonic Corp., which dismissed claims on similar grounds in 2010.  Unlike the Samsung case, in which a competitor filed the claim, the consumers here argued they were in a different position, since the price did not actually injure them until they purchased the products more recently.  This argument relied on cases such as Kaiser Foundation v. Abbott Laboratories, which held the limitations period did not bar claims based on continuing violations.

        Panasonic, Toshiba and SanDisk, created the royalty agreement in 2003 and amended it once in 2006.  The Court here held that the statute of limitations period began when the companies made an agreement on royalty prices, and that the plaintiffs’ claims arose when the defendants made their last alleged overt acts – more than four years ago – not when the plaintiffs made their purchases.

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        Categories: Antitrust and Intellectual Property Law, Antitrust Litigation

          March 16, 2012

          Sour Decision For Plaintiffs In Extra-Sweet Pineapple Litigation

          A California state appellate court has upheld the denial of class certification in a case brought by consumers alleging that Fresh Del Monte Produce Inc. monopolized the extra-sweet pineapple market in violation of California Unfair Competition Law.

          Del Monte was accused in Conroy v. Fresh Del Monte Produce Inc. of attempting to obtain a patent for extra-sweet pineapple – despite knowing that pineapple variety was unpatentable – and then using sham patent litigation to foreclose competition and to charge supracompetitive prices. 

          The California Court of Appeal for the First District held that the indirect purchaser class of plaintiffs failed to show that the trial court improperly denied class certification when it decided that substantial individual questions needed to be resolved to establish injury to class members.  Even if liability could have been established, the trial court held that plaintiffs did not meet their burden of showing how members of the class could be notified to participate in any kind of cost effective claims process. 

          In 2004, a complaint with similar allegations was filed in federal court in the Southern District of New York on behalf of direct and indirect purchasers.  In 2008, the federal court certified a class of direct purchasers but refused to certify an indirect purchaser class because of issues with manageability. 

          In 2009, the plaintiffs in the California action moved for class certification.  The trial court adopted portions of the Southern District’s decision and denied the motion. 

          The California appellate court affirmed the trial court’s decision and held that it had acted within its discretion by finding that plaintiffs’ evidence did not overcome the manageability issued identified by the Southern District.

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          Categories: Antitrust and Intellectual Property Law, Antitrust Law and Monopolies, Antitrust Litigation

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