SEPTEMBER 8-15, 2013 WRITTEN BY MAC CONFORTI AND LOGAN BREED MERGERS & ACQUISITIONS FTC Orders Compulsory IP Licensing to Remedy Competitive Concerns in Honeywell/Intermec Transaction The FTC required Honeywell International Inc. to license its patents covering two-dimensional (2D) bar code scanners to resolve the FTC s concerns regarding the proposed acquisition of rival scan engine manufacturer Intermec Inc. The proposed consent order required Honeywell to license its and Intermec s patents for 2D scan engines to Datalogic IPTECH s.r.l for the next 12 years. According to the FTC s complaint, Honeywell, Intermec, and Motorola are the only 2D scan engine makers that have sufficiently broad U.S. intellectual property portfolios to compete effectively in the United States. The FTC stated that Datalogic sells competitive 2D scan engines outside of the United States, but it lacks the necessary patent rights to enter the United States effectively. The FTC claimed that IP rights are a significant barrier to entry in the U.S. market, and the proposed acquisition would leave Honeywell and Motorola with control of more than 80 percent of the already highly concentrated U.S. market for 2D scan engines and increase the likelihood of post-acquisition coordination between Honeywell and Motorola. Additionally, the proposed consent order barred Honeywell from filing patent infringement actions against Datalogic for 2D scan engine products and from transferring the patents in the license to any third party that does not commit to abide by the terms of the order. Deborah Feinstein, Director of the FTC s Bureau of Competition, stated that [a]lthough divestiture of assets is the preferred remedy in merger cases, licensing requirements can preserve competition in markets where access to needed technology is the main barrier to entry.
In the Matter of Honeywell Intl., Inc. FTC File No. 131 0070 (Sept. 13, 2013), materials available at http://www.ftc.gov/os/caselist/1310070/index.shtm. Katy Oglethorpe, FTC Clears Honeywell s Scanner Deal With Licensing Conditions, Global Competition Review (September 16, 2013), available at http://globalcompetitionreview.com/news/article/34166/ftc-clears-honeywells-scannerdeal-licensing-conditions/. UNILATERAL CONDUCT Commissioner Wright Urges Cautious Approach to Antitrust Enforcement Regarding SEPs In a speech at George Mason University School of Law, FTC Commissioner Joshua Wright urged hesitation on the part of antitrust enforcement agencies before becoming involved in disputes over standard setting organizations (SSO) and standard essential patents (SEP). Wright argued that antitrust laws can and should come into play [only] when participants abuse and manipulate the standard setting process to exclude competitors from the market. Other claims involving SSO and SEPs are better governed by contract and patent law, Wright argued, and imposing the blunt weaponry of antitrust rules in pure contractual disputes could decrease incentives for companies to participate in SSOs and commercialize innovation. Wright stated that [t]he sanctions available to address patent holdup and related concerns under other legal regimes are more than adequate to provide optimal deterrence against patent hold-up. Joshua Wright, Commissioner, Federal Trade Commission, SSOs, FRAND, and Antitrust: Lessons from the Economics of Incomplete Contracts, Center for the Protection of Intellectual Property Inaugural Academic Conference (Sept. 12, 2013), available at http://ftc.gov/speeches/wright/130912cpip.pdf. Melissa Lipman, Wright Says Antitrust Agencies Should Stay Out of SEP Fights, Law360 (Sept. 12, 2013), available at http://www.law360.com/competition/articles/472413. Google Offers Amended Remedies to EC in Search Bias Investigation Google submitted new concessions to the European Commission on September 6 to avoid an antitrust fine of up to $5 billion. The EC investigation has focused on four areas of concern: -2-
Google s favoring its own vertical search services in its general search results; copying content from competing vertical search services and using it in its own offering; exclusivity agreements between Google and its partners in search advertisements; and the portability of online search advertising campaigns. Google previously submitted a proposal to settle the investigation, but the EC stated it was not enough to overcome the concerns. With the new proposal, the EC now may choose to transform the proposal to a legally binding commitment under Article 9 of the EU antitrust rules, or apply Article 7 and move for possible sanctions against Google. Harry Phillips, Almunia weighing new Google remedies, Global Competition Review (Sept. 9, 2013), available at http://globalcompetitionreview.com/news/article/34128/almunia-weighing-new-googleremedies/. Toby Wolpe, Europe s competition watchdog weighs up Google antitrust ruling, ZDNet (Sept. 13, 2013), available at http://www.zdnet.com/europes-competition-watchdogweighs-up-google-antitrust-ruling-7000020659/. PATENT LITIGATION Judge Rules Patent Infringement Could Constitute Anticompetitive Conduct In Retractable Technologies, Inc. v. Becton, Dickinson and Co., District Court Judge Leonard Davis rejected defendant Becton, Dickinson s claim that patent infringement could never, as a matter of law, serve as anticompetitive conduct under the Sherman Act. Beckton, Dickinson relied on 5th Circuit precedent holding patent infringement is not an injury cognizable under the Sherman Act. Nw. Power Prods., Inc. v. Omark Indus., Inc., 576 F.2d 83, 88 (5th Cir. 1978); Kinnear-Weed Corp. v. Humble Oil & Ref. Co., 214 F.2d 891, 894 (5th Cir. 1954). Judge Davis stated that the Kinnear-Weed holding was inapplicable because Kinnear-Weed focused on whether patent infringement may suffice as an antitrust injury, not whether patent infringement may comprise anticompetitive conduct, if there were some other injury to competition. The suit, in which Retractable alleges Becton, Dickinson maintained a monopoly in the syringe industry by infringing Retractable s patents for safe syringes and IV catheters, among other actions, will move forward after Judge Leonard denied defendant s motion for summary judgment. Source: Emily Atkin, Patent Infringement Can Be Anti-Competitive, Judge Rules, Law360 (Sept. 10, 2013) available at http://www.law360.com/competition/articles/471319. -3-
District Court Denies Pfizer s Request for Interlocutory Appeal in Pay-For-Delay Case A Federal District Judge in Tennessee denied Pfizer s request for an interlocutory appeal of his previous decision that the plaintiffs antitrust claims were exempt from the statute of limitations. The claims are based on a previous pay-for-delay settlement; the plaintiffs argued that Pfizer and generic manufacturer Mutual Pharmaceutical Co. conspired to prevent other generics from entering the market for metaxalone and to raise the price of Skelaxin, the brand name of the drug. In a previous decision, the court found the plaintiffs claims to be exempt from the statute of limitations because of both the continuing violation doctrine and the fraudulent concealment exception. In their request for an interlocutory appeal, the defendants argued that two issues needed to be addressed, (1) whether the continuing violation doctrine requires injurious anticompetitive conduct within the statutory period; and (2) whether the fraudulent concealment exception to the antitrust statute of limitations applies if the concealed facts were not necessary for a plaintiff to state its claim. However, the defendants did not seek a stay pending appeal, as they believed the appeal process would be concluded prior to trial or disposition of summary judgment motions. Although the court agreed with defendants argument that the continuing violations doctrine presents a question over which substantial disagreement exists, the court rejected defendants motion because they did not establish that a substantial grounds for difference of opinion existed regarding the fraudulent concealment exception. Further, the court also found the defendants did not demonstrate that an interlocutory appeal would materially advance the termination of the litigation. Memorandum and Order, In re: Skelaxin (Metaxalone) Antitrust Litigation, No. 1:12-md- 2343 (Sept. 10, 2013), available at http://www.mlex.com/us/content.aspx?id=443022. Dan Prochilo, Pfizer Denied Interlocutory Appeal in Pay-For-Delay MDL, Law360 (Sept. 10, 2013), available at http://www.law360.com/competition/articles/471487. Visit our resources page at: http://www.americanbar.org/content/dam/aba/publications/antitrust_law/at315000_resources_arc hived.authcheckdam.pdf -4-
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