ANTITRUST WIRE WINTER 2006 VOLUME 6, ISSUE 1

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1 ANTITRUST WIRE WINTER 2006 VOLUME 6, ISSUE 1 Inside this Issue 1-2 Federal Circuit Continues Assault on the Patent Misuse Doctrine U.S. Philips Corp. v. ITC (Fed. Cir. Sept. 21, 2005) 3 Antitrust Merger Enforcement in Decline 4 DOJ Focuses on Web-based Competition in the Real Estate Industry 5 Antitrust Modernization Commission Update 6 International Developments 7 Recent & Upcoming Events 7 Recent Articles 8 Profiles FEDERAL CIRCUIT CONTINUES ASSAULT ON THE PATENT MISUSE DOCTRINE U.S. Philips Corp. v. ITC (Fed. Cir. Sept. 21, 2005) In a decision [ that further erodes the patent misuse defense against infringement claims, the United States Court of Appeals for the Federal Circuit has reversed the International Trade Commission s (ITC s) recent ruling that U.S. Philips Corporation s package license, which combined both essential and nonessential compact disc patents, constituted patent misuse. Employing a full-blown antitrust analysis that it first created in 1986, the Federal Circuit rejected the ITC s determination of misuse based on both per se and rule-of-reason analyses. The decision further marginalizes patent misuse as an equitable defense in infringement litigation. The patent misuse doctrine was first established by the Supreme Court in its 1942 Morton Salt decision, 314 U.S In that case, Morton Salt had a patent on a machine for depositing unpatented salt tablets into canned food. Licensees of the machine patent were required to use Morton Salt s salt tablets. Ruling that public policy forbids the use of a patent to expand the scope of the claims beyond the patent granted, the Supreme Court held the patent unenforceable until the improper practice has been abandoned and the consequences of the misuse of the patent have been dissipated. Id. at 493. A long string of cases from various courts after Morton Salt recognized the doctrine of patent misuse as an affirmative defense based in equity, with no reliance upon, or direct connection to, antitrust principles. Examples of patent misuse included tying a license to the purchase of another product; requiring an agreement by the licensee not to deal in competing goods; the imposition of post-patent royalties, or seeking royalties on sales other than the patented product s; and the fraudulent procurement of patents or the assertions of those in sham litigation. While these practices also might amount to antitrust violations under the Sherman Act, the equitable defense of patent misuse arose to restrain practices that did not in themselves violate any law... but were deemed to be contrary to public policy. Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, 704 (Fed. Cir. 1992). The Federal Circuit Court of Appeals was first established in 1982 with exclusive jurisdiction to hear appeals of cases arising under the patent law, 280 U.S.C. Section In one of its earlier cases, Windsurfing International Inc. v. AMF, Inc., 782 F.2d 995 (Fed. Cir. 1986), the court overturned a finding of patent misuse and, for the first time, required that the alleged infringer show that the patent holder has impermissibly broadened the physical or temporal scope of the patent grant with anticompetitive effect. Id. at The addition of anticompetitive effect, obviously sounding in antitrust, was an apparent major deviation from the Supreme Court s ruling in Morton Salt. See The Decline (and Fall?) of the Patent Misuse Doctrine in the Federal Circuit, R. J. Hoerner, 69 ANTITRUST L.J. 669 Continued on Page 2...

2 Federal Circuit Continues Assault on the Patent Misuse Doctrine Continued from Page 1... (2001). Since its 1986 Windsurfing decision, the Federal Circuit has continued to require a party asserting the patent misuse defense to prove harm to competition in a relevant market, using either per se or rule-of-reason analysis. Many district courts have since followed the Federal Circuit s lead. 1 The ITC, in conformance with Windsurfing, had ruled that package licensing arrangements combining essential with nonessential patents were among those few practices that were so clearly anticompetitive as to be deemed per se illegal, thereby establishing the patent misuse defense. The ITC s ruling relied heavily on two Supreme Court cases that condemned the practice of block-booking movies to theaters or to television stations. The Federal Circuit, however, first found the Supreme Court s 1948 Paramount case inapposite. A patent tied to a product, as in Paramount, effectively precluded movie exhibitors from showing other films that they might have preferred over the tied films. By contrast, the U.S. Philips patent-to-patent tie, which did not compel the licensees to use any particular technology, posed no harm to the patent holder s competitors. Similarly, the ITC erred in relying upon the Supreme Court s 1962 Loew s decision, which found patent misuse when TV stations were required to pay fees not only for the feature films they wanted, but also for other, lesspreferred films. Per the Federal Circuit: In this case, unlike in Loew s, there is no evidence that a portion of the royalty was attributable to the patents that the Commission characterized as non-essential. Because all licensees were charged the same royalty by U.S. Philips Corp., regardless of which of the essential or non-essential patents they needed, it is clear that the royalty charged by Philips was not increased because of the inclusion of the non-essential patents. While one might logically conclude that U.S. Philips royalty would have been lower but for the inclusion of non-essential patents, this was not an assumption the Federal Circuit was willing to accept. The court made a point of detailing the procompetitive advantages of package licensing. These included reducing transaction costs by eliminating the need for multiple contracts, obviating potential patent disputes between a licensor and a licensee, and protecting against the unpleasant surprise for a licensee who learns, after making a substantial investment, that he needed a license to more patents than he originally obtained. Given the efficiencies of package patent licensing and the questionable harm to competition in patent-to-patent tying, the court found the ITC s application of per se illegality to be legally flawed. The Federal Circuit then went on to reject the ITC s alternative finding that Philips package licensing agreements constituted patent misuse even under a rule-of-reason analysis. The court dismissed this ruling by saying that it largely tracked the analysis that led it to conclude that the package licensing agreements constituted per se patent misuse. Because there was no showing that the non-essential patents had a negative effect on alternative commercially available technology, there was no showing of a foreclosure of competition. Moreover, the ITC failed to take into account the proper procompetitive effects of the package license. Consequently, its ruling on patent misuse was reversed and the matter remanded to the ITC presumably properly to apply the rule of reason in determining whether the patent misuse defense was made out. U.S. Philips Corp. is notable in several respects, but perhaps most for illustrating the Federal Circuit s continuing and escalating hostility to the patent misuse defense. Far from an equitable defense based on unclean hands, as originally contemplated by the Supreme Court s Morton Salt decision, patent misuse in the Federal Circuit s jurisprudence now essentially requires the defendant to plead and prove all of the elements of an affirmative antitrust case under the rule of reason. If successful in that daunting endeavor, the accused infringer presumably will be entitled to treble damages, with any defense against the alleged infringement becoming almost secondary. If the patent defendant is unable to establish an antitrust violation, however, it effectively has no patent misuse defense regardless of how egregiously the patent holder may have used the patent to obtain market benefits beyond those inherent in the statutory patent right. Ironically, even in U.S. Philips Corp., the Federal Circuit continues to cite its own 1992 decision in Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, 704 (Fed. Cir. 1992), describing the equitable basis for the patent misuse doctrine and its purpose of restraining patent use contrary to public policy. Despite Mallinckrodt, not to mention the Supreme Court s original Morton Salt decision, the Federal Circuit in U.S. Philips confirms its rulings that mere violations of public policy for impermissibly broadening the scope of a patent grant do not make out a defense of patent misuse absent affirmative violations of the Sherman or Clayton Acts. 1 In the meantime, Congress passed the Patent Reform Act of 1988, 35 U.S.C. 271(d), which provided that certain practices that might violate the antitrust laws would not constitute patent misuse. One safe harbor in 271(d)(5) covered patent holders who illegally extended the patent right by tying, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned. The Federal Circuit did not rely on this section of the Patent Reform Act because it found that the Administrative Law Judge at the ITC had ample support for finding that Philips indeed had market power in the relevant market. Interestingly, the Federal Circuit also recently has held that ownership of a patent on the tying good is presumed to give the patentee monopoly power. See Independent Ink, Inc. v. Illinois Toolworks, Inc., 396 F.3d 1342, 1349 n. 7 (Fed. Cir.), cert. granted, 125 S. Ct (2005), discussed in the Wilson Sonsini Goodrich & Rosati Antitrust Wire, Summer [ Without waiting for the Supreme Court s decision in Independent Ink, the Federal Circuit reconciled its rulings by simply stating: Section 271(d)(5) makes clear, however, that such a presumption [of market power from a patent] does not apply in the case of patent misuse. PALO ALTO AUSTIN NEW YORK RESTON SAN DIEGO SALT LAKE CITY SAN FRANCISCO SEATTLE 2

3 ANTITRUST MERGER ENFORCEMENT IN DECLINE In a report that comes as no surprise to antitrust lawyers, U.S. antitrust agencies revealed a notable decline in merger enforcement during the fiscal year ending September 30, According to the Federal Trade Commission (FTC) and the Department of Justice s (DOJ s) Annual Report to Congress, the 1,454 transactions reported under the Hart-Scott- Rodino Antitrust Improvements Act of 1976 (HSR Act) in FY 2004 represented a 43% increase from the 1,014 transactions reported the year earlier. See reports/hsr05/050810hsrrpt.pdf. Despite this substantial year-to-year increase in HSR filings, the agencies launched only 35 formal investigations (Second Requests), identical to the number in FY Put differently, the percentage of transactions resulting in major antitrust investigations declined from 3.6% to 2.5%, year to year. The 1,454 HSR filings last year, while up 43% from the previous year, continued to bounce along the bottom of the chart for the last 10 years. In FY 1995, for example, 2,816 filings were reported, which rose to a peak of 4,926 filings in FY Similarly, the dollar value of reported transactions was $630 billion last year, by contrast to a peak of $3 trillion in FY 2000 and $509 billion in FY 1995 (before adjusting for inflation). The 2001 increase in the HSR reporting threshholds no doubt accounts for a good portion of this decline in transactions reported under the HSR Act. The other factor is an overall decline in merger activity from the peak years of the Internet Bubble ; this activity only has begun to stabilize and grow in the past 12 to 18 months. The recent increase in merger activity has not been accompanied by a concomitant rise in enforcement statistics. Obvious from the historical data is a steady decline in merger enforcement activity by the agencies dramatically so last year, but in evidence over the last 10 years. The absolute number of Second Requests issued by the FTC and DOJ was 101 in 1995, rising to a peak of 125 in Since then, the number of Second Requests has declined each year, from 111 in 1999 to 98 in FY 2000, 70 in 2001, 49 in 2002, and 35 in both 2003 and The percentage of Second Requests as a total of those possible in FY 2004, 2.5%, was lower than every year since 1995 except FY 2000 the peak year for HSR filings, when nearly three times as many Second Requests (98) were issued by the agencies. The apparent decline in merger antitrust enforcement is substantiated by data on agency merger challenges in FY 2004, which were anemic in both absolute and relative terms. The Department of Justice challenged only 9 mergers and the FTC 15, for a total of 24. The FTC challenges represented only 55% of the transactions in which it issued a Second Request far short of both the agency s internal performance goal of 60-80% and its actual performance during of 68%. In its FY 2004 Performance and Accountability Report, the FTC observed no discernable change in standards to explain this decline. Instead, it rather vaguely cited only an unusual number of cases involving difficult decisions to close investigations based on key facts that became available only as a result of staff s thorough investigation. The reality is that the FTC litigated only one of its 15 merger challenges in FY 2004, and lost that decision in federal court. See FTC v. Arch Coal, Inc., 329 F. Supp. 2d 109 (D.D.C. 2004), discussed in the Wilson Sonsini Goodrich & Rosati Antitrust Wire, Fall [ ectionname=publications\pdfsearch\antitrust wire_1004.htm] For its part, the DOJ did even less last year. It challenged a grand total of nine mergers in FY 2004, only one of which was litigated: United States v. Oracle Corp., 331 F. Supp (N.D. Cal. 2004). The Oracle case represented, of course, one of the government s most visible and dramatic courtroom defeats in recent years. See the Fall 2004 Antitrust Wire, cited above. The U.S. antitrust agencies declining appetite for merger enforcement is seen perhaps most clearly in transactions involving high-technology companies. Of the DOJ s nine challenges in FY 2004, only one Oracle s acquisition of PeopleSoft involved the kind of software, computer equipment, electronics, and life sciences companies generally characterized as high tech. The FTC s 15 challenges did include two large pharmaceutical mergers and others involving the markets for liquid argon, in-space propulsion thrusters, and ultrasonic nondestructive testing equipment. But only General Electric s acquisition of InVision Technologies involved a Silicon Valley company. While the agencies have, since October 2004, looked at multibillion-dollar mergers in the telecom, energy, and pharmaceutical industries, the enforcement spotlight scarcely has shined on mergers involving emerging growth technology companies. In a recent statement, Thomas O. Barnett appointed in August to be the new assistant attorney general for antitrust in the Department of Justice made it clear that the DOJ s primary antitrust focus will be on breaking up and preventing international price-fixing cartels, rather than mergers. Commenting upon the FY 2004 data in the agencies Annual Report, Barnett s only observation was that: One can infer from the increase in filings, but the lack of an increase in challenges, that we are not seeing a significant increase in horizontal mergers between sizeable competitors. The 1992 Horizontal Merger Guidelines remain in place, as do talented agency staff who are motivated to stop truly anticompetitive transactions. Customers and competitors have become far more active in opposing mergers they view as harmful, and contacting the agencies with their concerns. Moreover, long-running leadership transitions at the DOJ and FTC are largely completed, as exemplified by the December 2005 Senate confirmations of new FTC Commissioners Thomas Rosch and William Kovacic. Both of these men are highly capable and experienced antitrust practitioners, who will no doubt put their own stamps on FTC enforcement policy. Nevertheless, there is little reason to anticipate any near-term reversal in the relative quiescence of antitrust merger enforcement. The steady, multiyear decline in antitrust merger enforcement by the DOJ and FTC, coupled with a string of court defeats when the agencies have litigated a challenge, suggests a continuing favorable environment for mergers between competitors. There can be little doubt from the data that close calls have been going in favor of merging parties. That tendency, especially in nascent or rapidly changing technology markets, seems likely to continue at least through the current administration. 3

4 On September 8, 2005, the Department of Justice (DOJ) filed suit against the National Association of Realtors (NAR), challenging a newly enacted policy allegedly designed to insulate traditional full-service real estate brokers from having to compete with online brokers offering similar services at a discount. Although NAR made immediate revisions to its policies, the DOJ persisted, amending its complaint on October 4, See htm. This case serves as a clear reminder that collaborations between competitors that occur within trade associations (or even joint ventures) fall squarely within the purview of antitrust law, and will be sanctioned if they lessen the members competition with one another or otherwise impede efforts to satisfy consumer demand in innovative ways. In its complaint, the DOJ characterized NAR s policy as an illegal attempt to preserve traditional ways of doing business and standardize service offerings. Such coordinated activities, if true, violate the very premise upon which the Sherman Act was founded; namely, that consumers benefit most from the unrestrained interaction of competitive forces. As stated by the Supreme Court, the Sherman Act was designed to safeguard meritorious competition the environment most likely to yield the best allocation of our economic resources, the lowest prices, the highest quality, and the greatest material progress. At issue in this case is a NAR policy that prevents Internet-based real estate brokers from enabling their customers to view, through password-protected websites, all homes listed for sale on the Multiple Listing Service (MLS) database. As explained in the DOJ s complaint, the MLS database is an invaluable resource for real estate brokers and consumers because it functions as a central repository for nearly all homes being DOJ FOCUSES ON WEB-BASED COMPETITION IN THE REAL ESTATE INDUSTRY advertised for sale by brokers in a given locality. Accordingly, the DOJ asserts that brokers who are unable to provide their customers with access to the larger pool of potential sellers are competitively disadvantaged. The MLS database is the product of a joint venture between competing brokers, and the substantial majority of local MLS databases in the country are controlled by NAR members. In years past, the MLS database was made fully accessible to all NAR members. However, under NAR s new policy, listing brokers (i.e., brokers representing home sellers) have the ability to control who may view information relating to homes they have listed for sale. Specifically, listing brokers can selectively preclude individual Internet-based buyers brokers (i.e., those representing potential home buyers) from displaying portions of the MLS system on their websites (commonly referred to as Virtual Office Websites, or VOWs). According to the DOJ, this selective opt-out feature serves no beneficial purpose. In fact, the DOJ alleges that the authors of the VOW policy recognized from the very beginning that the opt-out right would be abused beyond belief and regularly exercised by brokers notwithstanding the fact that it may not be in the seller s best interest. Further, the DOJ claims that the VOW policy was designed to provide traditional full-service brokers who comprise the bulk of NAR s membership with an effective mechanism for excluding from the market brokers with innovative, Internet-based business models and lower cost structures. Such exclusionary tactics, the DOJ alleges, would eliminate price competition among brokers and decrease the quality and variety of service options available to consumers. To this end, the complaint profiles the statements of leading NAR members who publicly lobbied for the selective opt-out provision, claiming that it s not feasible for full-service brokers with brick and mortar operations to compete with Internet-based brokers who (because of a lower cost structure) are able to kick-back 1% of the sales price to the buyer and, generally, place downward pressure on brokers commission rates. The fact that the DOJ chose to bring suit comes as little surprise to many. The new policy has been under investigation for more than two years, during which time NAR repeatedly has delayed implementation while trying to settle on a set of modifications that would allay the DOJ s competitive concerns. Having concluded that NAR s proposals were aimed at discriminating against brokers who use the Internet, the DOJ opted to challenge the policy and seek to enjoin the more than 200 local MLS boards who already had taken steps to implement NAR s original VOW policy. The antitrust agencies focus on the real estate industry is reflected in more than this particular lawsuit. The DOJ also has filed multiple competition advocacy briefs in opposition to various legislative and regulatory initiatives occurring at the state level that seek to establish minimum service obligations or standardize fee arrangements for brokerage services. Further, the DOJ s Antitrust Division and the Federal Trade Commission hosted a workshop on October 25, 2005, on competition policy and the real estate industry, covering topics such as buyers rebates, discount and limited-service brokers, and minimum service requirements. See workshops/reworkshop.htm#overview. 4

5 The Antitrust Modernization Commission (AMC), 1 established in to conduct a comprehensive review of U.S. antitrust laws, had an active year of public hearings in The AMC is a bipartisan organization consisting of 12 members four each appointed by the White House, the Senate, and the House of Representatives. 3 The 12 members, drawn from private practice, industry, academia, and government, include Wilson Sonsini Goodrich & Rosati antitrust partner Jonathan Jacobson, resident in the firm s New York office. The AMC s statutory duties are: to examine whether the need exists to modernize the antitrust laws and to identify and study related issues; to solicit views of all parties concerned with the operation of the antitrust laws; to evaluate the advisability of proposals and current arrangements with respect to any issues so identified; and to prepare and submit to Congress and the President a report While the AMC held its initial meeting in July 2004, it moved into high gear in In February, the AMC formed the following 10 specific Study Groups to focus their inquiry: 1. Enforcement Institutions 2. Merger Enforcement 3. Remedies ANTITRUST MODERNIZATION COMMISSION UPDATE 4. New Economy Issues 5. Robinson-Patman Act (concerning price discrimination) 6. Exclusionary Conduct 7. Immunities and Exemptions 8. Regulated Industries 9. Criminal 10. International 5 The AMC then sought public comment and launched hearings in each of these areas. In June and July 2005, the AMC conducted public hearings on the Robinson-Patman Act, Civil Remedies, and Indirect Purchaser Actions. In the fall, hearings continued on the State Action Doctrine, Merger Enforcement, Enforcement Institutions (State), Enforcement Institutions (Federal), Criminal Remedies, Government Civil Remedies, Exclusionary Conduct, Immunities and Exemptions, and Regulated Industries. Of particular interest to Silicon Valley and emerging growth clients were the AMC hearings held in Washington, D.C., on November 8, 2005, dealing with antitrust and the new economy. Two broad issues were addressed: (1) Should industries involving significant technological innovation be treated differently under the antitrust laws? (2) How does the current intellectual property regime affect competition? The detailed listing of issues for the AMC s New Economy Study Group is set forth in a May 24 memorandum, available at gov/pdf/meetings/new_economy_study_plan. pdf. The public comments received on the New Economy issues may be found at studies_fr28902/new_economy.htm. On November 8, a number of well-informed witnesses spoke to the AMC New Economy issues. Participants included, for example, Jim O Connell of the Department of Justice, Dan Cooperman of Oracle, John Osborn of Cephalon, and economists Carl Shapiro and Rich Gilbert. Transcripts of witness statements at the November 8 hearings also are available on the AMC s website. See ew_economy.htm. Professor Gilbert later joined Wilson Sonsini Goodrich & Rosati partners Jon Jacobson, Chris Compton, and Charles Biggio in a December 6, 2005, client seminar on the AMC hearings and issues, which may be seen via webcast at s/wsgr/index.asp. On January 19, 2006, the AMC will hold an Economists Roundtable on Merger Enforcement. Upon conclusion of its public hearing process, the AMC s activity includes the preparation of its report to Congress and the President, which it expects to complete by April Interested members of the public are still encouraged to submit comments to the AMC on any of the issues included within its broad mandate. Comments can be sent by electronic mail to comments@amc.gov or by mail to the Antitrust Modernization Commission, 1120 G Street, N.W., Suite 810, Washington, D.C., 20005, Attn: Public Comments. Comments will be posted on the AMC website. Attorneys in Wilson Sonsini Goodrich & Rosati s antitrust practice group also may be contacted for questions regarding the AMC. 1 See 2 Antitrust Modernization Act of 2002, Pub. L. No , , 116 Stat Id. at Id. at See 6 The report is to contain a detailed statement of the findings and conclusions of the Commission, together with recommendation for legislative or administrative action the Commission considers tobe appropriate. Antitrust Modernization Act of 2002 at

6 International Developments INTEL FACES DAWN RAIDS ACROSS EUROPE, INVESTIGATIONS IN SOUTH KOREA AND JAPAN In late June 2005, Advanced Micro Devices (AMD) filed a federal antitrust complaint against Intel Corporation, alleging numerous violations of Section 2 of the Sherman Act. AMD alleges that Intel engaged in anticompetitive behavior designed to foreclose AMD from a substantial portion of the microprocessor market, including coercive measures taken by Intel in the distribution of its CPUs, specifically through OEMs, retailers, and distributors that sell personal computers and servers with x86 microprocessors. Intel answered AMD s complaint in early September. See Wilson Sonsini Goodrich & Rosati Client Alert of June 30, 2005, Advanced Micro Devices Launches Antitrust Suit against Intel Corporation for more details see ectionname=publications/pdfsearch/cliental ert_amd_intel.htm In a dramatic development set against the backdrop of this lawsuit, on July 12, 2005, the European Commission (EC) conducted surprise dawn raids at the offices of Intel and other computer makers across Europe, in order to gather evidence in connection with a preexisting, ongoing investigation of Intel by the EC over alleged unfair trade practices. Intel also disclosed (in SEC filings in August 2005) that it received a request for documents and information from South Korean regulators regarding potential antitrust concerns. Japan s Fair Trade Commission also has investigated Intel s conduct, finding in March 2005 that Intel violated competition rules by making rebates to certain computer makers conditional upon their forgoing or limiting purchases of AMD chips. In response, without admitting wrongdoing, Intel agreed to change some of its business practices. MICROSOFT FINED $32 MILLION BY SOUTH KOREA FOR ANTITRUST VIOLATIONS In early December 2005, the Korean Fair Trade Commission (FTC) fined Microsoft $32 million for antitrust violations relating to the company s tying of its Media Player and instant-messaging software to the Windows operating system. The Korean FTC determined that such actions constitute abuse of market dominant position and unfair trade practices under monopoly regulations.... More important, the Korean FTC ruled that Microsoft must offer an alternate version of Windows without Media Player and instant messaging a ruling similar to that previously imposed by the European Commission. Microsoft indicated that it would appeal the Korean rulings. Such actions against both Microsoft and Intel by international authorities potentially signal an increasingly active enforcement environment, particularly for companies with a dominant market position. CHINA TO CONSIDER DRAFT ANTI-MONOPOLY LAW IN 2006 In late December 2005, China s National People s Congress (NPC), a parliamentary body charged with examining major laws, announced that it will consider as early as this year the draft Anti-Monopoly Law (ALM), which has been under development for more than a decade. After consideration, the NPC could pass the law, or send it back to the government for changes. The proposed AML, which would apply to both domestic and multinational companies operating in China, is somewhat controversial in that it could significantly broaden China s enforcement efforts regarding activities deemed potentially anti-competitive, particularly vis-à-vis multinationals with strong intellectual property positions. In mid-2005, representatives of the Financial & Economic Committee of the NPC visited the U.S. and met with government agencies, legal practitioners (including attorneys from Wilson Sonsini Goodrich & Rosati), and others to discuss these issues and to solicit input on the proposed AML. The American Bar Association, the U.S. government, and members of the bar continue to monitor the progress of the proposed AML with interest. EUROPEAN COMMISSION S 2001 PROHIBITION OF PROPOSED GE/HONEYWELL MERGER UPHELD Bringing to a close one of the lengthier merger contests, the European Court of First Instance recently dismissed appeals brought by GE and Honeywell against the European Commission s decision in 2001 that prohibited the parties proposed merger. U.S. antitrust authorities, on the other hand, previously had approved the proposed merger (with minor modifications required). In its decision, the European Court of First Instance expressly minimized the relevance of that U.S. determination, stating: The fact that the competent authorities of [another jurisdiction] determine an issue in a particular way for the purposes of their proceedings does not suffice per se to undermine a different determination by [the European Commission] because the matters and arguments... and the applicable legal rules... are not necessarily the same.... The European Court of First Instance's decision can be found at: en&submit=submit&alldocs=alldocs&docj=do cj&docop=docop&docor=docor&docjo=docjo& numaff=&datefs=&datefe=&nomusuel=genera l+electric&domaine=&mots=&resmax=100 < =en&submit=submit&alldocs=alldo cs&docj=docj&docop=docop&d ocor=docor&docjo=docjo&numaff=& amp;datefs=&datefe=&nomusuel=g eneral+electric&domaine=&mots=& amp;resmax=100 6

7 Recent & Upcoming Events Antitrust Modernization Committee Hearings, Washington, D.C., Jonathan Jacobson, Commissioner, as follows: Merger Enforcement, November 17, 2005 Government Civil Remedies, December 1, 2005 Statutory Immunities and Exemptions, December 1, 2005 Regulated Industries, December 5, 2005 Economist Roundtable on Merger Enforcement, January 19, 2006 ALI-ABA: Trying & Winning a Civil Antitrust Case, Washington, D.C., Jonathan Jacobson, December 1, 2005 Antitrust and the New Economy: Should Technology Companies Play by Different Rules? WSGR Litigation Counsel Series, TechMart, Santa Clara, California, Charles Biggio, Chris Compton, and Jonathan M. Jacobson of Wilson Sonsini Goodrich & Rosati and Richard Gilbert, Chair, Department of Economics, University of California, Berkeley, December 6, 2005 Recent Articles Chris Compton, Lessons from Trinko for a Consolidating Telecom Industry, 16 th Annual Communication and Competition Law Conference, Madrid, Spain, May 23-24, 2005, available at Scott Sher and Scott Russell, Adding Bite to Exclusive Dealings? An Analysis of the Third Circuit s Dentsply Decision, The Antitrust Source, May 2005, available at Chris Compton and Scott Sher, What United States v. Oracle Says about High-Tech Merger Review in the U.S., Corporate Finance, May 2005, available at Chris Compton, IP Issues in the Antitrust Treatment of Mergers, The Berkeley Conference on Antitrust in the Technology Economy, June 9, 2005, available at _Conf_PaperJune_05.pdf Scott Sher, The Settlement of IP Disputes through Merger and the Thicket of Probabilistic Competition, The Threshold (newsletter of the Mergers and Acquisitions Committee), Summer 2005, available at Scott Sher and Richard Woodworth, I Need to Report That? Hart-Scott-Rodino Notification Requirement for Individuals, The M&A Lawyer, October 2005, available at Scott Sher, e-normous: The Increasing Burden Associated with Electronic Document Production in Second Request Investigations, The Antitrust Source, November 2005, available at Antitrust/Developments, WSGR Client MCLE Day, Chris Compton, San Francisco, California, January 17, 2006; Palo Alto, California, January 19, 2006 New York State Bar Association Annual Antitrust Program: Annual Review; Single Firm Conduct/Innovation; Class Actions in Antitrust Cases; The Antitrust Modernization Commission: What Has It Done, What Will It Do?, Jonathan Jacobson, January 26,

8 Profiles Jonathan M. Jacobson is a partner in the firm's New York office, where he practices antitrust law. Considered one of the country's preeminent antitrust litigators, Jonathan has taken a lead role in representing major corporate clients in high-profile antitrust trials and investigations. He also serves as primary counsel for his clients on a wide variety of other antitrust matters. Among other noteworthy cases, Jonathan defended Coca-Cola in PepsiCo v. Coca-Cola, one of the leading Sherman Act "exclusive dealing" cases. He also represented American Express as the central third-party amicus curiae in United States v. Visa USA, and defended Clear Channel in Heerwagen v. Clear Channel. Recognized as a leading antitrust scholar and practitioner, Jonathan was appointed by Congress in 2002 to serve on the Antitrust Modernization Commission, which is dedicated to studying the nation's antitrust laws and considering potential changes. He also is the editorial chair of the American Bar Association's Antitrust Law Developments and has been selected to run several ABA committees. He has written or edited numerous articles and books spanning the gamut of antitrust topics, including merger enforcement, government and other civil litigation matters, and cartel enforcement. He speaks frequently on antitrust subjects, and is often quoted by the press on competition matters. Prior to joining Wilson Sonsini Goodrich & Rosati, Jonathan was a partner in Akin Gump Strauss Hauer & Feld's New York office, where he co-chaired the firm's national antitrust practice. He also has been a partner at Coudert Brothers and Lord, Day & Lord. Jonathan graduated magna cum laude in 1976 from Brooklyn Law School, where he was the co-editor in chief of the Brooklyn Law Review and editor of the Journal of International Law. He received his bachelor s degree from Columbia College in Charles E. Biggio is a partner in the firm's New York office, where his practice focuses on antitrust and trade regulation law. For 20 years, he has advised clients on all aspects of antitrust law, including mergers and acquisitions, joint ventures, and intellectual property agreements. In particular, he has extensive experience representing clients in merger and acquisition matters before the U.S. Department of Justice and the Federal Trade Commission. Before joining the firm, Charles was the acting deputy assistant attorney general for merger enforcement at the Antitrust Division of the U.S. Department of Justice, where he was responsible for formulating and implementing merger enforcement policy. He also had been a partner in Akin Gump Strauss Hauer & Feld's antitrust practice in New York. Charles is regularly quoted on antitrust matters in national business periodicals, and is a frequent writer and speaker on antitrust issues. He also has served on various panels and committees dealing with the field of antitrust law sponsored by the American Bar Association, the U.S. government, and other organizations. Charles graduated with honors from Fordham University School of Law in He graduated from Brown University in 1980 with a bachelor s degree in history and economics. Contacts Jonathan M. Jacobson, Partner (New York) jjacobson@wsgr.com Charles T. (Chris) Compton, Partner (Palo Alto) ccompton@wsgr.com Charles E. Biggio, Partner (New York) cbiggio@wsgr.com Mark D. Flanagan, Partner (Palo Alto) mflanagan@wsgr.com David A. Killam, Partner (Palo Alto) dkillam@wsgr.com Scott A. Sher, Partner (Reston) ssher@wsgr.com Richard L. Woodworth, Associate (Palo Alto) rwoodworth@wsgr.com Scott D. Russell, Associate (Reston) srussell@wsgr.com Lisa A. Davis, Special Counsel (Palo Alto) ldavis@wsgr.com Alisa Banda, HSR Assistant (Palo Alto) abanda@wsgr.com This Antitrust Wire was sent to our clients and interested parties via on January 17, To receive future Antitrust communications via , please antitrust@wsgr.com and ask to be added to the mailing list. This communication is provided for your information only and is not intended to constitute professional advice as to any particular situation. 650 Page Mill Road Palo Alto, CA Phone Fax wsgr@wsgr.com Wilson Sonsini Goodrich & Rosati, Professional Corporation All rights reserved. 8