[Update: the FTC did file a reply brief. Link here]
All the briefs are in on the FTC petition for cert in its antitrust case against Rambus, (unless the FTC decides to file a reply brief, which is unlikely to change things much). I’ve added the Rambus opposition to the Rambus Group page on scribd.com, here. Now its time for the antitrust community to hold its breath and see whether the Court takes the case. Some knowledgeable commentators have opined that FTC/Rambus case has the best chance of any antitrust case obtaining review this year, but that plus a dime will get you …. well, nothing I guess. If the petition is allowed, it will be very exciting times for antitrust and standards setting law and policy wonks.
In federal court in Boston the Gatehouse Media v. New York Times case (described in these two (1, 2) earlier posts) has settled, as I suspected it would. The settlement agreement (or a preliminary agreement which is binding in the event a “definitive agreement” is not reached), is on scribd.com, here. It appears that this agreement was not intended to be made public (at least not yet), but apparently someone leaked it, so it’s public now.
As I read this, Gatehouse prevailed, hands down over the NYT/Boston.com. Gatehouse will erect “technical solutions” to prevent Boston.com from copying the Gatehouse original content, and Boston.com will respect those “solutions.” If a “solution” proves ineffective, Gatehouse will notify Boston.com, and Boston.com will back off right away. Why the parties went about it in this manner (which implicates DMCA-like anti-circumvention) I’m not sure, but I appears to accomplish the same result as if the NYT/Boston.com simply said “we won’t copy your ledes.”
From what I can seek, Boston.com/yourtown has already dropped its ledes and links to the Gatehouse sites, at least based on a quick sampling.
[postscript: here is a link to the report of Gatehouse’s copyright expert, Douglas Lichtman, Professor of Law, UCLA. The report is an analysis of the case under copyright fair use principles, and a rebuttal of the NYT/Boston.com’s unclean hands argument]
You would think that in a capitalist economy the right of one business to to say to another “I don’t want to deal with you” would be close to sacrosanct. And, you would be right, with qualified exceptions in cases where the party refusing to deal has monopoly power. Even then, the Supreme Court has narrowed the “duty to deal” to fact situations so limited that antitrust liability can be avoided with careful planning.
The two leading Supreme Court cases in this area of the law are Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U. S. 585, 601 (1985) and Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004). Post-Trinko, the consensus of the courts is that “refusal to deal” claims are viable only where there was no voluntary prior course of dealing between the parties, where the monopolist’s conduct increased its short term profits, or where the refusal to deal is used to monopolize an adjacent market.
“Refusal to deal” cases involving Internet companies have been rare, but in a recent decision the 9th Circuit held that exclusionary conduct by MySpace.com, directed at another social networking site, Vidilife.com, did not constitute monopolization under the federal antitrust laws.
Both MySpace.com and Vidilife.com are “social networking” websites. MySpace is very well known, Vidilife site much less so.
Vidilife.com, owned by LiveUniverse, Inc., allows users to post videos on its site. Some of those users embedded their videos in their MySpace web pages (a comon practice on social networking sites). MySpace deleted the videos and references to Vidilife.com. LiveUniverse sued in federal district court in California, charging MySpace with attempted monopolization and monopolization under the federal antitrust laws.
The district court found that MySpace.com’s actions did not constitute an illegal “refusal to deal,” and the 9th Circuit upheld this ruling. At the heart of the 9th Circuit’s ruling is the fact that LiveUniverse did not (and could not) allege a prior course of dealing between the two companies or that MySpace was forsaking short-term profits, as required by Trinko. In addition, the court held that LiveUniverse had failed to adequately allege causal antitrust injury.
There is some back story to this case. LiveUniverse’s CEO, Brad Greenspan, is the the former CEO of eUniverse/Intermix–the company that sold MySpace to News Corp in 2005 for a half-billion dollars. Apparently, there is some bad blood between Greenspan and MySpace.com left over from that transaction, suggesting that MySpace.com may have been acting from personal motives. If so, it was an expensive exercise in ego gratification for both companies.
The amici briefs of “Twenty Scholars,” Hynix, Micron and Nvidia, the CCIA and the American Antitrust Institute have been added to the Rambus group page on scribd.com.
Click here for a recent post discussing this appeal.
When old engineers (and old lawyers) sit around decades from now reminiscing about patent and antitrust law in the late 1990s and early 2000s, the name of Rambus is sure to come up. The topic will not be the Rambus DRAM (or RDRAM) chip technologies, but rather the massive volume of litigation that Rambus set off as result of its alleged “patent hold-up” actions and its patent enforcement efforts.
Rambus, the lawyers on either side of its many cases, the courts, antitrust experts and economists, and of course investors in Rambus’ stock (a particularly loyal and attentive group), have debated the pros and cons and nuances of these lawsuits for years, and during this season (late 2008) an important and timely Rambus case is taking a run at the Supreme Court.
The FTC adminstrative action against Rambus, which bothAndy Updegroveand Ihave written about at length in the past, involves somewhat arcane issues of single-firm conduct under Section 2 of the Sherman Act. However, the case also exists at a level that doesn’t require a degree in law and economics to understand – Rambus is accused of of withholding from an important standards-setting organization (SSO) the fact that it had pending patent applications, resulting in adoption of the Rambus technology as a standard, following which Rambus used it patents to “hold up” the industry for unreasonable royalties.
What a wonderful blend of issues for lawyers and economists to dive into: patent law, antitrust law, conspiracies to deceive, very large sums of money (in the form of royalties potentially owed to Rambus by industry players), and all of this during the technology and stock market vortex of the 1990s and 2000s. Is it any wonder that Rambus’ litigation has attracted so much attention?
In context, the Federal Trade Commission case has been just one of many fronts on which Rambus has been forced to battle. As discussed here, the Federal Trade Commission found that Rambus’ actions toward the SSO was deceptive and violated the antitrust laws by enabling Rambus to gain monopoly power. The Court of Appeals for the D.C. Circuit reversed the FTC early this year on highly technical legal grounds that involved what some observers thought was a misapplication of the antitrust laws. However, no matter which side you’re on, it’s difficult to deny that the case raises legal issues that could benefit from clarification by the Supreme Court. Now, the FTC has asked the Supreme Court to review the case.
Persuading the Supreme Court to review a case is harder than getting into Harvard. In its most recent term the Court decided about 70 cases, out of over 7,000 appealed. However, like admissions at Harvard, the odds aren’t quite so bad once you eliminate the cases that had no chance of review and shouldn’t have been appealed in the first place – in effect “Hail Mary” appeals.
Many people are hopeful that the FTC/Rambus case will be accepted by the Court. The FTC/Rambus case certainly falls within the “first in class, perfect SAT scores” category, to stretch the analogy. This is a rare opportunity, these advocates believe, for the Court to clarify the law of “single firm” monopoly conduct. And, the standards setting industry believes that the case presents critical issues necessary to the health of standards setting, an area of domestic and international cooperation whose importance is hard to overstate. On the opposite side of the case, Rambus advocates argue that Rambus is the victim of a government witch hunt that lacks any merit, and conclude that the D.C. Circuit was correct to reverse the FTC and set matters straight.
I’ve set up an FTC v. Rambus certiorari petition group page on scribed.com to collect filings on this appeal. The first step for the FTC, of course, is to persuade the USSC to take the case. At present, the Rambus group pageholds the D.C. Circuit decision, the FTC’s cert petition, and the amici briefs that have been filed to date.
In addition to the petition of various companies urging the Court to take the case (Hewlett Packard, Cisco, Sun and Oracle), the Rambus group page holds the petition filed by our firm last week, which was written by Andy Updegrove. The SSO petition was written on behalf of 19 standards setting organizations representing over 13,000 members, and it emphasizes the practical importance of this appeal – its importance to the “law of SSOs”, for lack of a better term.
Will the Court take this case? We should know soon. I’ll continue to add amici petitions and, of course, Rambus’s opposition to the request for Supreme Court review, which will be forthcoming soon, to the Rambus group page, as they appear.
This lawsuit is unusual, to say the least. The essence of Whole Foods complaint seems to be that the FTC has prejudged the case and set an unreasonably aggressive discovery schedule. I’m not aware of any grounds for this legal theory at this stage of an administrative proceeding, but I’m sure that Whole Foods’ lawyers have done their homework, and that these claims have some legal merit. Stay tuned.
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settlement agreement (or a preliminary agreement which is binding in the event a “definitive agreement” is not reached), is on scribd.com, here. It appears that this agreement was not intended to be made public (at least not yet), but apparently someone leaked it, so it’s public now.
