6/7. The U.S. Court of Appeals (7thCir) issued its opinion [PDF] in Kirsten Knudsen v. Liberty Mutual Insurance Company, a case involving application of the removal provision of the Class Action Fairness Act of 2005.

The Congress enacted this statute earlier this year. It was S 5. President Bush signed it on February 18, 2005. It is now Public Law No. 109-2. It provides, among other things, for removal of certain class actions from state court to federal court.

A key provision of the bill amends Title 28 by adding a new Section 1453 that creates jurisdiction in U.S. District Courts over class actions in which the aggregate amount in controversy exceeds $5 Million and any member of a plaintiff class is a citizen of a different state from any defendant.

The Act further provides that "The amendments made by this Act shall apply to any civil action commenced on or after the date of enactment of this Act."

Kirsten Knudsen and others filed a class action complaint in state court in Illinois in 2000 against Liberty Mutual Insurance Company. After enactment of the Act in February of 2005, Liberty removed the action to the U.S. District Court (NDIll). The District Court returned the action to the state court, based upon its finding 2000 came before 2005.

Liberty petitioned the Court of Appeals for leave to appeal. Liberty's argument is that while 2000 does in fact precede 2005, the act of removing the action to the federal court created a new action. Hence, Liberty argues, the federal court should hear the removed action, because it was commenced after the effective date of the statute.

Judge Frank Easterbrook wrote the opinion of the Court. He proclaimed that "Deconstructionist tactics do not permit its evasion", and denied the petition for leave to appeal.

He also addressed the possibility that plaintiffs' class action lawyers would similarly circumvent the underlying purpose of the Act by perpetually amending actions brought before February of 2005.

He wrote that Liberty "paints a picture of crafty lawyers tending a garden of pre-2005 class actions, in which they plant new claims by amendment so that the 2005 Act never comes into play. As we have already hinted, however, a new claim for relief (a new ``cause of action创 in state practice), the addition of a new defendant, or any other step sufficiently distinct that courts would treat it as independent for limitations purposes, could well commence a new piece of litigation for federal purposes even if it bears an old docket number for state purposes. Removal practice recognizes this point: an amendment to the pleadings that adds a claim under federal law (where only state claims had been framed before), or adds a new defendant, opens a new window of removal." (Parentheses in original.)

This case is Kirsten Knudsen, et al. v. Liberty Mutual Insurance Company, No. 05-8010, a petition for leave to appeal from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 05 C 1489, Judge Ruben Castillo presiding.

6/3. Hewitt Pate, Assistant Attorney General in charge of the Department of Justice's Antitrust Division, gave a speech titled "Competition and Intellectual Property in the U.S.: Licensing Freedom and the Limits of Antitrust" at an EU event in Florence, Italy. He focused primarily on application of antitrust principles to patents.

Pate (at right) said at the outset that "the recent trend has been one of increasing convergence in U.S. and European approaches to IP licensing questions". He concluded that "we have every reason to expect more of the same".

He also said that "for competition law purposes, intellectual property should be treated in essentially the same way as other forms of property", and "our policy is animated by the recognition that IP licensing is generally procompetitive".

He compared and contrasted the antitrust and IPR regimes. He said that antitrust "does not attempt to create an affirmative incentive for procompetitive conduct, by promising any specific reward or legal recognition for competitors who play by the rules. It focuses on specific anticompetitive actions". In contrast, IPR laws "provide a complex system of affirmative rewards for an important type of procompetitive behavior -- innovation." He added that "The hope is that such innovations will lead to increased competition and increased consumer welfare in the long term."

Refusals to License. He then discussed unilateral refusals to license patents. He said that "A unilateral, unconditional refusal to license a valid patent cannot, by itself, result in antitrust liability under U.S. law." But, he added that "the owner does not have the right to impose conditions on licensees that would effectively extend an intellectual property right beyond the limits of the Patent Act".

He also said the the Supreme Court's opinion in the Trinko case reinforces the principle regarding unilateral refusals. Quoting from the Trinko opinion, he said that "The Court showed great skepticism about expanding liability for the refusal to deal because such liability ``may lessen the incentive for the monopolist, the rival, or both to invest in . . . economically beneficial facilities创 and ``also requires antitrust courts to act as central planners ... a role for which they are ill-suited.创"

The Supreme Court issued its opinion [22 pages in PDF] in Verizon v. Trinko on January 13, 2004. See also, story titled "Supreme Court Holds That There is No Sherman Act Claim in Verizon v. Trinko" in TLJ Daily E-Mail Alert No. 825, January 14, 2004.

He offered this rationale. "When analyzing the effects of a unilateral refusal to deal, one cannot merely consider the effect on a rival that is refused a license; one must also consider the alternative world in which the IP owner would have had less of an incentive to innovate because he could not be assured of the right to refuse to license. Would that IP owner have chosen to innovate less? If so, would competition or consumer welfare have been better off with the present state of affairs, including the right to refuse? In the short term, it will always be more efficient to disregard the IP right and allow duplication. The IP system rests on the idea of long-term innovation incentives, so we must think about the long-term effects of a rule imposing liability in this context."

He then discussed how the US and EU approaches compare. He said, "Does this mean that the policy on unilateral refusals conflicts with EU law as stated in IMS Health? At this time, that it is difficult to tell. The European Court of Justice decision, issued a year ago, began by stating that a refusal to license a copyright "cannot in itself" constitute an abuse of a dominant position. That seems to match the U.S. view on unilateral refusals to license. But the court added that liability might occur if: (1) the refusal prevents the emergence of a new product for which consumer demand exists; (2) the refusal is not justified by any objective considerations; and (3) the refusal excludes competition in a "secondary market." It is not clear how these three factors will be interpreted, or whether the same reasoning would apply to other contexts such as a refusal to license a patent."

Pate has spoken in the past about differences between the EU and US on application of antitrust to IPR, particularly in the context of Microsoft. See, Pate speech of June 7, 2004 and story titled "Pate Addresses US EU Differences on Antitrust, Microsoft, and IPR" in TLJ Daily E-Mail Alert No. 913, June 8, 2004. See also, Pate statement of March 24, 2004, and story titled "US Antitrust Chief Says EU's Microsoft Decision Could Harm Innovation and Consumers" in TLJ Daily E-Mail Alert No. 863, March 25, 2004.

Pate had this to say about the Microsoft proceeding. "While the Justice Department required Microsoft to make certain IP available to its competitors as part of the agreed remedy for antitrust violations, the European Commission imposed liability for the failure to make IP available. It will be up to the Court of First Instance to determine whether this was permissible under EU law."

Royalties and Standard Setting. Pate also discussed patent royalties and the standard setting process. He said that the Antitrust Division hears complaints that "one or more patent holders can ``hold up创 licensees by waiting until participants are locked into the standard, then charging an allegedly ``excessive创 royalty for patents that cover the standard."

He also noted that the Federal Trade Commission (FTC) "has brought antitrust enforcement actions related to this issue in two recent cases, Rambus and Unocal. Both cases are ongoing."

However, he said that at the Antitrust Division, bringing a complaint "about ``excessive创 royalties, without more, is a losing strategy. Antitrust enforcers are not in the business of price control. We protect a competitive process, not a particular result, and particularly not a specific price. In fact, if a monopoly is lawfully obtained, whether derived from IP rights or otherwise, we do not even object to setting a monopoly price."

Compulsory Licensing. Pate said that "Compulsory licensing is another place where enforcers need to be fully aware of antitrust's limitations. Licensing can be an effective remedy in some contexts; for example, for merger cases, it can serve as a less drastic alternative to a divestiture."

But, he concluded, "compulsory licensing of intellectual property as an antitrust remedy should be a rare beast."

Market Power. Pate said that IP "cannot be presumed to establish market power. While intellectual property grants exclusive rights, these rights are not monopolies in the economic sense: they do not necessarily provide a large share of any commercial market and they do not necessarily lead to the ability to raise prices in a market. A single patent, for example, may have dozens of close substitutes."

Excessive Patenting. Pate also discussed whether there is excessive patenting, in that too many patents are being granted. He said that this is a matter for the U.S. Patent and Trademark Office (USPTO).

He continued that "It is open to question whether antitrust analysis, which is specific and effects-based, can be applied to a question as broad as ``excessive patenting.创 To know whether patenting is excessive, we would first have to make a conclusion about the "but-for" world. If fewer patents were granted, would innovation have decreased? Would firms have reduced their research and development in areas that currently are covered by patents, and would the result have been fewer benefits for consumers? Antitrust enforcement is not well suited to answering such questions. These questions should be directed, instead, to the patent authorities or to legislators."

However, he added the the Antitrust Division might "challenge the validity or scope of a patent as part of an antitrust claim".

6/7. The House Rules Committee adopted a closed rule for consideration of HJRes 27, a resolution pertaining to the World Trade Organization (WTO). The House may consider this item on Wednesday, June 8. See, Republican Whip Notice.

6/7. The U.S. Patent and Trademark Office (USPTO) requested public comments regarding its document titled "Green Paper", which describes and evaluates four options to reform restriction practice. The USPTO then plans to draft a "White Paper" that includes proposed legislation reforming restriction practice. Comments are due by Friday, August 5, 2005. See, notice in the Federal Register, June 6, 2005, Vol. 70, No. 107, at Pages 32761 - 32762.

6/7. Viviane Reding, the European Commissioner for Information Society and Media, gave a speech, in French, titled "Television Haute Definition".

6/6. The Office of the U.S. Trade Representative (USTR) issued a news release regarding the program titled "Strategy Targeting Organized Piracy" or "STOP". It states that representatives of U.S. government agencies will meet with German, UK, French and European Commission officials on June 6-10, 2005 to discuss global piracy and counterfeiting. In addition, the Senate Homeland Security and Governmental Affairs Committee announced that it will hold a hearing on the STOP program on June 14, 2005.

The House will meet at 10:00 AM for legislative business. The House may consider HJRes 27, a resolution pertaining to the World Trade Organization (WTO), and/or HR 2475, the Intelligence Authorization Act for FY 2006. See, Republican Whip Notice.

The Senate will meet at 9:30 AM. It will continue its consideration of the nomination of Janice Brown to be a Judge of the U.S. Court of Appeals (DCCir).

The Supreme Court is in recess until Monday, June 13, 2005. See, Order List [13 pages in PDF] at page 13.

8:30 AM - 5:00 PM. Day two of a three day meeting of the National Institute of Standards and Technology's (NIST) Information Security and Privacy Advisory Board (ISPAB). See, notice in the Federal Register, May 20, 2005, Vol. 70, No. 97, at Page 29279. Location: Doubletree Hotel and Executive Meeting Center, 1750 Rockville Pike, Rockville, MD.

9:30 AM. The Senate Commerce Committee's Subcommittee on Technology, Innovation, and Competitiveness will hold a hearing titled "Manufacturing Competitiveness in a High-Tech Era". See, notice. Location: Room 253, Russell Building.

10:00 AM. The House Judiciary Committee (HJC) will hold a hearing titled "Reauthorization of the USA PATRIOT Act". The hearing will be webcast by the Committee. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. This hearing will be webcast by the HJC. Location: Room 2141, Rayburn Building.

2:30 PM. The Senate Commerce Committee's (SCC) Subcommittee on Disaster Prevention and Prediction will hold a hearing. The SCC's notice states that "The hearing will examine the National Institute of Standards and Technology's recent World Trade Center report, as well as their computer security, and chemical, biological and radiological detection standards. Additionally, the hearing will focus on the National Science Foundations' scientific research in areas such as computer security and data mining ..." (Emphasis added.). The witnesses will be Hratch Semerjian (Director of the National Science Foundation), Conrad Lautenbacher (NOAA Administrator), and Arden Bement (Director of the National Institute of Standards and Technology). Location: Room 253, Russell Building.

RESCHEDULED FOR SEPTEMBER 8. 3:00 - 5:00 PM. The Federal Communications Commission's (FCC) WRC-07 Advisory Committee's Informal Working Group 1 (Terrestrial and Space Science Services) will meet. See, notice [PDF]. Location: Lockheed Martin, 1550 Crystal Drive, Suite 300, Arlington, VA. See, FCC's June 3 notice [PDF].

The House will meet at 10:00 AM for legislative business. The House may consider HJRes 27, a resolution pertaining to the World Trade Organization (WTO), and/or HR 2475, the Intelligence Authorization Act for FY 2006. See, Republican Whip Notice.

8:30 AM - 12:00 NOON. Day one of a three day meeting of the National Institute of Standards and Technology's (NIST) Information Security and Privacy Advisory Board (ISPAB). See, notice in the Federal Register, May 20, 2005, Vol. 70, No. 97, at Page 29279. Location: Doubletree Hotel and Executive Meeting Center, 1750 Rockville Pike, Rockville, MD.

9:00 AM. The House Judiciary Committee's Subcommittee on Courts the Internet and Intellectual Property will hold a hearing titled "H.R. __, "The Patent Act of 2005". The hearing will be webcast by the HJC. Press contact: Jeff Lungren or Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.

9:30 AM. The Federal Communications Commission (FCC) will hold a meeting. See, agenda [PDF]. The event will be webcast by the FCC. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

9:30 AM. The Senate Judiciary Committee (SJC) has scheduled an executive business meeting. The SJC frequently cancels meetings without notice. See, notice. Press contact: Blain Rethmeier (Specter) at 202 224-5225, David Carle (Leahy) at 202 224-4242 or Tracy Schmaler (Leahy) at 202 224-2154. Location: Room 224, Dirksen Building.

10:00 AM. The U.S. Court of Appeals (FedCir) will hear oral argument in Broadcast Innovation v. Charter Communications. This is App. Ct. No. 05-1008. It is a patent infringement case appealed from the U.S. District Court (DColo). Location: U.S. Court of Appeals, LaFayette Square, 717 Madison Place, Courtroom 203.

RESCHEDULED FOR JULY 21. 12:15 PM - 2:00 PM. The Forum on Technology will host a luncheon panel discussion titled "Basic Research - The Foundation of the Innovation Economy". See, notice. Location: Room 902, Hart Building, Capitol Hill.

1:00 PM. The House Commerce Committee's (HCC) Subcommittee on Commerce, Trade, and Consumer Protection will hold a hearing titled "Issues before The U.S.-China Joint Commission on Commerce and Trade". The hearing will be webcast by the HCC. See, notice. Location: Room 2123, Rayburn Building.

6:00 - 8:00 PM. The Federal Communications Bar Association (FCBA) will host an event titled "2nd Annual Spring Reception with FCC Commissioners and Legal Advisors". The price to attend ranges from $30 to $60. The FCBA requests an RSVP. See, registration form [PDF]. Location: Washington Hilton Hotel, 1919 Connecticut Ave., NW.

The Federal Trade Commission (FTC), American Intellectual Property Law Association (AIPLA), and National Academies' Board on Science, Technology, and Economic Policy (STEP) will jointly host a public meeting on patent reform. See, FTC notice. See also, story titled "FTC, AIPLA, and National Academies to Host Series of Public Meetings on Patent Reform" in TLJ Daily E-Mail Alert No. 1,043, December 23, 2004.

The House may meet at 10:00 AM for legislative business. See, Republican Whip Notice.

9:00 AM - 4:00 PM. The Federal Communications Commission's (FCC) Consumer Advisory Committee will hold a meeting. See, FCC notice [PDF] and notice in the Federal Register, June 1, 2005, Vol. 70, No. 104, at Pages 31469 - 31470. Location: Commission Meeting Room (TW-C305), 445 12th Street, SW.

The Supreme Court will meet. It is possible that it will issue opinions in MGM v. Grokster (regarding copyright and P2P systems), NCTA v. Brand X (regarding regulation of broadband internet services), and/or Merck v. Integra (regarding a research exemption to patent infringement).

9:30 AM. The Intellectual Property Owners Association (IPO) will hold a news conference to announce the winners of its Inventor of the Year Awards. For information call 202 466-2396. Location: National Press Club, 529 14th St. NW, 13th Floor.

10:00 AM. The Senate Appropriations Committee's Subcommittee on Homeland Security will meet to mark up HR 2360, the Department of Homeland Security appropriations bill. Location: Room S-128, Capitol Building.

10:00 AM. The Senate Homeland Security and Governmental Affairs Committee will hold a hearing on the Bush administration's program titled "Strategy Targeting Organized Piracy" or "STOP". Location: Room 562, Dirksen Building.

8:30 AM - 3:15 PM. The Chamber of Commerce will host a program titled "The Global Potential of Radio Frequency Identification". The speakers will include Daniel Caprio (Deputy Assistant Secretary for Technology Policy, and Chief Privacy Officer, at the Department of Commerce), Claus Heinrich (SAP Executive Board Member), Bill McDermott (P/CEO of SAP America), and Patrick Gauthier (SVP of Visa USA). The price to attend ranges from free to $195. For more information, contact Andrew Persson at 202 463-5500. See, notice and agenda [PDF]. Location: Chamber of Commerce, 1615 H Street, NW.

12:00 NOON - 2:00 PM. The Progress and Freedom Foundation (PFF) will host a luncheon. The speaker will be Dan Glickman, P/CEO of the Motion Picture Association of America (MPAA). For more information, contact Brooke Emmerick at 202-289-8928 or bemmerick at pff dot org. Press contact: Patrick Ross at 202 289-8928 or pross at pff dot org. See, notice and registration page. Location: Rotunda Room, Ronald Reagan Building and International Trade Center, 1300 Pennsylvania Ave., NW.

2:00 - 4:00 PM. The Federal Communications Commission's (FCC) WRC-07 Advisory Committee's Informal Working Group 5 (Regulatory Issues) will meet. See, notice [PDF]. Location: Boeing, 1200 Wilson Boulevard, Arlington, VA. The nearest Metro is Rosslyn.

6:00 PM. The Intellectual Property Owners Association (IPO) will host a reception for its Inventor of the Year Award winners. Rep. Zoe Lofgren (D-CA) will present the awards. For information call 202 466-2396. Location: Caucus Room, Cannon House Office Building.

12:00 NOON - 2:00 PM. The DC Bar Association will host a program titled "An Introduction to Copyright Law". The price to attend ranges from $25-$35. For more information, contact 202-626-3463. See, notice. Location: D.C. Bar Conference Center, 1250 H Street NW, B-1 Level.

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