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Lowenstein Sandler LLP

Jeffrey Blumenfeld

Jeffrey Blumenfeld

Partner
Co-Chair, Antitrust & Trade Regulation

Expertise

  • Antitrust & Trade Regulation
  • The Tech Group
  • White Collar Criminal Defense
  • Litigation

WSG Practice Industries

Activity

WSG Leadership

WSG Coronavirus Task Force Group
Member
Profile

Jeff is a leading figure in the competition issues that shape today's economy, particularly those affecting telecommunications, ecommerce, and other technology-based companies. Clients value his understanding of a wide variety of industries as well as his collaborative approach to accomplishing business goals. With more than 35 years of government and private practice experience, Jeff has an in-depth knowledge of competition principles, technology, regulation, and economics.

Drawing on nearly two decades of experience, Jeff works with clients on the increasingly important and complex competition issues in intellectual property including participation in standards setting, collective IP activity such as patent pools and collective defense, licensing issues including for standard essential patents (SEPs), and the competition issues that have become common in patent litigation over FRAND/RAND licensing terms for SEPs. As outside counsel, in-house general counsel, board director, and litigator, Jeff represents companies and their investors on a broad range of competition issues, including criminal antitrust matters (investigations and trials), class action antitrust lawsuits, actions brought by customers and suppliers, actions by or against competitors, monopolization cases, and transactions. Understanding that legal strategy must serve business strategy, Jeff functions as an integral part of his clients' business teams, from major brands to early-stage venture-backed tech companies.

Beginning his career with more than a decade at the Antitrust Division of the Department of Justice (DOJ) and in the U.S. Attorney's Office for DC, Jeff has first chaired more than 60 jury trials and has argued more than 20 appellate cases. As Assistant Chief of the Special Regulated Industries Section of the Antitrust Division, Jeff supervised investigative and trial staffs in complex matters in the financial services and telecommunications industries.

Jeff was one of four senior trial attorneys in the 18-month trial of United States v. AT&T (the divestiture case), arguably the most complex monopolization case ever tried successfully by the Government, covering anticompetitive conduct over a span of several decades.  He had a senior supervisory role directing a large team in determining the theory of the case, conducting discovery including extensive depositions, architecting the Government’s case, and both presenting and cross-examining numerous key witnesses, including fact, technology, engineering, and economic witnesses.  He then served as chief of the entire trial staff during the first wave of post-divestiture litigation.

While in private practice, Jeff was called back to the Antitrust Division several times to work with trial staffs in developing complex cases, including those that became US v Microsoft and US v MasterCard and Visa.  In addition, he has continued to advise clients in the technology and payments industries, working with electronic payment companies on both the issuer and merchant sides, as well as those providing transaction acceptance and fraud protection and remediation.  Jeff also regularly counsels clients and trade associations on antitrust issues relating to credit and collections.

Jeff is an accomplished litigator and trial lawyer in a variety of complex matters. His trial expertise includes both presenting and cross-examining not only fact witnesses but also  technologists, engineers, economists, and finance and other experts. He also has a long record of successfully trying complex technology matters involving these same issues at US District Courts, at the FCC, and at state regulatory commissions nationwide. All these benefit from his ability to ”translate” complex technology for non-technology-literate decision makers.

Drawing on this experience, Jeff has taught trial practice throughout his career, at a variety of forums including the Attorney General’s Advocacy Institute of the US Department of Justice, the National Institute for Trial Advocacy (“NITA”), as an adjunct professor at the Georgetown University Law Center, and at several law firms.

Bar Admissions

    District of Columbia

Education

University of Pennsylvania Law School (J.D.)
Brown University (A.B.), cum laude
Areas of Practice

Antitrust & Trade Regulation | Litigation | The Tech Group | White Collar Criminal Defense

Professional Career

Significant Accomplishments

Serve as outside general counsel to HEVC Advance, formed to accelerate the widespread adoption and deployment of H.265/High Efficiency Video Coding technology and products.

Represented Ethoca in its acquisition by MasterCard.

Represented an ecommerce company automating receivables in the real estate industry.

Represented a major provider of payments and issuer processing services.

Represented an air cargo carrier in international antitrust cartel investigations on fuel surcharges and related civil litigation.

Represented a Fortune 10 company as plaintiff in an antitrust civil litigation for recovery of overcharges by cartel members.

Represented a Fortune 100 company in defense of an antitrust class action.

Represented a major online company in defense of civil antitrust litigation.

Represented the Transport Workers Union in the Department of Justice challenge to the merger of American Airlines and US Airways.

Speaking Engagements

Lowenstein Sandler is partnering with Bloomberg Law to host a complimentary executive breakfast briefing on innovation and risk. This event will explore the critical areas of compliance and risk management for companies that must continue to innovate to thrive. The speakers will discuss innovations that leverage the Internet of things to create new opportunities, revenue streams, and differentiated products for businesses. The invitation-only Bloomberg NEXT series is designed to bring together senior professionals who are shaping the future of business and work, technology and innovation, law and governing. Jeff Blumenfeld will kick off the event with an introduction and Andrew Reidy will speak on a panel entitled "The Risk of Connectivity."

Lowenstein Sandler is hosting an American Bar Association program in New York City examining Telephone Consumer Protection Act (TCPA) developments in both government enforcement and private litigation. Jeff Blumenfeld will speak on a panel with Janice L. Kopec (FTC), Kristi Thompson (FCC), Leslie C. Bender, and David J. Kaminski, which will cover the recent increase in TCPA class action cases and recent guidance from both the Federal Communications Commission and the Federal Trade Commission that has consumer protection jurisdiction over conduct parallel to that covered by the FTC. The event is sponsored by the Antitrust Law and Federal Civil Enforcement section of the ABA.

Jeffrey Blumenfeld, Partner and Co-chair of Lowenstein's Antitrust & Trade Regulation practice, is a speaker at the China Institute of International Antitrust and Investment's "Annual Conference on Technology and Antitrust."

12:45-2 p.m.: IP/Antitrust in a Changing World

This panel will explore the challenges facing antitrust enforcers in China, the EU, and the U.S. as they relate to standard-setting, hold-up, and the determination of FRAND rates. The panel will also consider whether IoT providers and the suppliers of their components encounter particular IP/antitrust issues.

  • Chair: Eleanor M. Fox, Walter J. Derenberg Professor of Trade Regulation, New York University School of Law
  • Speakers:

The conference runs 9 a.m.-5:40 p.m. and takes place at the China Institute of International Antitrust and Investment.

Jeffrey Blumenfeld will be speaking at the 1st Annual IPWatchdog Conference. The virtual conference will host several panels addressing the issues facing innovators, creators, and brand owners as they find it increasingly difficult to monetize their proprietary creations in an economy where many large enterprises no longer want to pay for what they choose to implement and/or sell, and there is scant legal recourse to stop those who make the business decision to infringe instead of taking a license.

Program locationWebinar

 

Jeffrey Blumenfeld served as a panelist on IP Watchdog’s "Drug Repurposing and Diagnostics in the Age of COVID-19" webinar.  Panelists discussed what it really takes to develop vaccines, drugs, treatments, as well as what universities and pharma companies are doing with the private sector. The panel also discussed how this tragic event has led to a flood of new innovation, and why getting long term public policy right will matter for the next wave, whether that is a resurgence of COVID-19 or for the next pandemic, whatever that may be.  Other panelists included:

  • Orin Herskowitz - Senior VP of Intellectual Property and Tech Transfer for Columbia University - Executive Director of Columbia Technology Ventures (CTV) - Adjunct Professor, Intellectual Property for Entrepreneurs
  • Phil Johnson - founder and Principal of Johnson-IP Strategy & Consulting - retired senior vice president and chief IP counsel, Johnson & Johnson
  • David Kappos – Cravath, Swaine & Moore – former Director, US Patent and Trademark Office – former Chief IP Lawyer, IBM
  • Gaby L. Longsworth, PhD. – director, Sterne Kessler’s Biotechnology & Chemical Practice Group - counsels biopharmaceutical clients around the world
  • Honorable Chief Judge Paul Michel – former Chief Judge, U.S. Court of Appeals for the Federal Circuit
  • James Mayne, PhD. – Vice President, Science Advisory, PhRMA,
  • Gene Quinn – Patent Attorney – President, CEO & founder of IPWatchdog.com
  • Robert Greene Sterne – founding director, Sterne Kessler Goldstein & Fox - recognized by Law360 as one of the “Top 25 Icons of IP”.


Among other topics, the panelists discussed:

  • How university labs are alive and working with each other and the private sector on a multitude of COVID-19 detection approaches, cures, and treatments.
  • The financial investment it takes and regulatory hurdles to getting tests and vaccines to market.
  • How the antitrust laws are being applied to address near-overnight collaborations among competitors, and what you need to know.
  • How robust IP has put the U.S. in a position to respond faster to spin up clinical trials, but is not hospitable to the long term development of new vaccines.
  • Why talk about compulsory licensing is misguided and unnecessary.

 



Professional Activities and Experience

Accolades
  • The Best Lawyers in America - (2009-2018) - Jeffrey Blumenfeld
  • Washington DC Super Lawyers - Blumenfeld
  • Antitrust Division of the Department of Justice - Blumenfeld
  • Corporate INTL Technology Sector Antitrust Law Firm of the Year in Washington D.C. (2020)

Articles

Antitrust Does Not Shelter in Place During a Pandemic, Part 2: Don’t Claim the Failing Firm Defense Unless You’re Really Failing
Lowenstein Sandler LLP, May 2020

The Federal Trade Commission (FTC) has reminded us that the “failing firm defense” is much harder to pull off than might be imagined, and that the antitrust agencies will closely analyze all “failing company” claims even during the coronavirus pandemic. In its May 27 blog post, "On “Failing” Firms — and Miraculous Recoveries,"the FTC emphasized that the defense is difficult to make and, even more to the point, often not true...

Before You Cut Your Employees’ Wages–Antitrust for Employers in the Age of COVID-19
Lowenstein Sandler LLP, April 2020

As employers struggle with the poor economic conditions associated with the COVID-19 crisis, many are considering pay cuts. Naturally, in making this decision, many companies will consider what their peers are doing in order to determine how their actions will be received in the marketplace...

Did We Just Join OPEC? Part 2
Lowenstein Sandler LLP, April 2020

The Organization of Petroleum Exporting Companies (OPEC) is one of the longest-running and most successful price-fixing cartels in history. It proved its power in the 1970s by drumming up a “shortage” of oil that resulted in gasoline rationing in the U.S. Here in Washington, D.C. and the surrounding region, you could buy gas for your car only on alternate days, according to whether your license plate ended with an even or odd number...

Additional Articles

On June 14, 2019, a United States district judge in the Northern District of California took a rare step: U.S. District Judge Edward J. Davila completely denied the U.S. Department of Justice's standard request to stay related proceedings brought by the U.S. Securities and Exchange Commission pending resolution of a criminal case. Such requests are often made and granted at least in part as a matter of course. The court’s decision, made in the well-known Theranos case, may have far-reaching consequences in the context of parallel proceedings by the DOJ and the SEC.

The defendant in the SEC and DOJ cases is Ramesh “Sunny” Balwani, the former president of Theranos. The DOJ moved to intervene in the SEC’s lawsuit against Balwani after he issued a number of subpoenas to various blood-testing centers and medical providers, which the DOJ contended were relevant not to the civil action, but to the criminal case.[1] The court granted the DOJ’s motion to intervene in the civil case — which, among other things, affords the DOJ the right to oppose subpoenas issued by Balwani to the extent that they in fact bear on only the criminal case — but took the unusual step of completely denying the DOJ’s motion to stay the civil SEC proceedings.

In coming to his decision, Judge Davila weighed the U.S. Court of Appeals for the Ninth Circuit's so-called Keating factors, which originated in the decision in Keating v. Office of Thrift Supervision.[2] These factors include the interest of plaintiffs and the possible prejudice to them; any burden on the defendants; convenience of the court; the interest of third parties and the public; and the defendant’s right against self-incrimination.[3]

Judge Davila found that virtually all of the Keating factors weighed against a stay. But most of the facts the court emphasized in his Keating analysis are present in nearly all cases — suggesting that Balwani will be difficult to distinguish and, though not legally persuasive, may have more far-reaching consequences. For instance, Judge Davila pointed to the fact that a stay, which would “forc[e Balwani] to halt [his civil] investigation indefinitely,”[4] would “increase the likelihood that witnesses will not be able to recall information, that they will become unavailable.”[5]

Likewise, Judge Davila was extremely skeptical of the DOJ’s standard argument that “first resolving the Criminal Case would streamline discovery and decide a number of issues” in the civil action.[6] Judge Davila dismissed that argument out of hand — holding that, even “[a]ssuming that is correct, the Court would still be wary of abridging Balwani’s procedural and discovery rights in an effort to save resources and time.”[7] It is difficult to imagine a case where all these facts and considerations would not be present — suggesting that, to the extent courts are inclined to follow the court’s analysis in Balwani, courts may be more likely to deny requests for complete stays of discovery.

That said, Judge Davila emphasized two factors in his analysis that can distinguish Balwani and make it easier for prosecutors to obtain stays. First, the court emphasized the timing of the request for the stay. He noted that the government “could have moved to stay the Civil Action immediately after Balwani’s indictment, but instead it chose to let this Action proceed far enough that a stay would significantly prejudice Balwani.”[8] To the extent prosecutors want to stay criminal proceedings, therefore, we can expect after Balwani that such requests will come earlier in criminal cases.

Second, the court emphasized the fact that Balwani did not object to being put in the position, during civil discovery, of having to decide whether to invoke his Fifth Amendment rights — if, for instance, the SEC sought to depose him.[9] If defendants do not oppose stays on the basis of being put in this position, the court suggested, it is more likely that the court will not grant them.

Finally, we can also expect that such requests, if they are to succeed, may only be for partial stays of discovery. Judge Davila noted that the DOJ’s intervention in the case would permit it to challenge particular discovery requests by Balwani without stopping discovery altogether; the court even pointed to a situation in the case where a third-party subpoena was quashed. As the court explained: “[T]he system worked. Nonparty witnesses, DOJ, and SEC may object to Balwani’s discovery requests in the future, and the Court will then decide those objections on a case-by-case basis.”[10]

Indeed, prosecutors have already begun successfully seeking partial stays. For instance, in a case in the Southern District of New York, United States v. Devon Archer et al.,[11] the government only sought a stay of discovery that would constitute witness material discoverable under the Jencks Act.[12] The partial stay was granted.[13] As Judge Davila put it, the court “is not unsympathetic to DOJ’s concerns that Balwani may attempt to overreach in civil discovery, but the Court is capable of addressing such concerns with a scalpel instead of a saw.”[14]

Balwani may thus be used by courts to deny stays that in the past were routinely granted. Prosecutors may seek to avoid this outcome by moving for a stay early in proceedings and by moving for only a partial stay, e.g., a stay that applies only to Jencks Act material. A defendant’s position — i.e., if he does not object to having to invoke his Fifth Amendment rights — can also be expected to be a significant factor. But the DOJ should not count, as it has in the past, on courts routinely staying civil discovery in SEC actions.

But, in the end, is Balwani a win or a loss for defendants facing parallel actions? To be sure, parallel proceedings pose significant risks for those facing prosecution. For instance, if discovery is not stayed, the government — or third-party plaintiffs, such as shareholders, bringing suit — can seek to depose the defendant. If the defendant invokes his Fifth Amendment rights, then — in civil actions, unlike criminal actions — an adverse inference against the defendant is permitted to be taken by the jury. (This explains why Judge Davila emphasized Balwani’s willingness to be put in the position of considering whether to invoke his Fifth Amendment rights in denying the stay motion.)

On the other hand, civil actions afford defendants the opportunity to obtain much more discovery than in a criminal action, including depositions. That said, this opportunity is reduced in cases where, as in Balwani, the court permits the government to intervene and object to various discovery requests on a more surgical basis. Because of these competing interests, Balwani is not really a win or loss for any party; it is likely that the precedent will be used equally by the DOJ and by defendants depending on the particular facts and posture of their case.

The opinions expressed are those of the author(s) and do not necessarily reflect the views
of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This
article is for general information purposes and is not intended to be and should not be taken
as legal advice.

[1] Securities and Exchange Commission v. Balwani, 18 Civ. 1603 (EJD), Order dated June
14, 2019 (the “Order”) at 3.

[2] 45 F.3d 322 (9th Cir. 1995).

[3] Id. at 4.

[4] Order at 5.

[5] Order at 5.

[6] Order at 5.

[7] Order at 5.

[8] Order at 6.

[9] Order at 7.

[10] Order at 6.

[11] 16 Civ. 3505 (WHP), Order dated August 10, 2016.

[12] See 18 U.S.C. § 3500.

[13] 16 Civ. 3505 (WHP), Order dated August 10, 2016, at 1.

[14] Order at 6.

As a legal matter, analyses of patents pools by antitrust authorities begin with the proposition that they include only valid patents; antitrust analysis, and patent law, do not countenance the request for royalties, or the enforcement of patent claims, for patents that are not valid. Knowingly including invalid patents can threaten the legal standing of the pool, injuring the pool itself and all the pool licensors, as well as the pool licensees.

As a practical matter – and a very compelling one in a patent pool – licensors would not join, or remain in, a pool in which royalties were being allocated to “bad patents”. This is unassailable for a very simple and obvious reason: any revenue being allocated to “bad patents” takes money away from all of the other licensors (and their “good patents”).

An accurate understanding of how patents are issued and treated in well-managed patent pools, and of the business and legal issues around testing for validity, show that patent pools have struck the right balance and have both the intent and incentive to include only valid patents in their pool.

Let’s start by looking at the facts of how patents are issued and the process by which they are included in patent pools.

In all major patent-issuing jurisdictions, an entity believing it has an invention deserving of patent protection submits an application, along with extensive technical support, to a government body specifically equipped and authorised to determine if the submitted invention is entitled to such protection.

The patent authorities, of course, do not just take the submitter’s statements at face value. Rather, they go through a process of examination that involves professional patent examiners analysing the claims of the potential patent, comparing them against patents already issued in the field in which the invention is claimed, asking the submitter for additional support and engaging in interactive discussions of the claims with the submitter. That process is both expensive and timeconsuming. For example, it commonly takes about 12 to 18 months in the United States and, on average, about four years in South Korea. 

At the end of that process, the patent office may reject the submission or limit the scope of the claims in a narrower patent than the applicant had hoped to achieve.

A patent is issued only if – and only in the form in which – the applicant’s claims survive that process. Put another way, a patent is issued only if the expert government agency charged with making the determination in fact determines that the patent is valid. That is the reason issued patents are presumed to be valid.

As a first order response to the criticism, therefore, a well-managed patent pool like HEVC Advance relies on the determination of validity made by the issuing patent authority.

Implementers have the right and the ability to challenge the validity of any patents they believe are not valid. Patents are subject to post-grant challenge in patent offices or related administrative proceedings, as well as in courts. Any patent in the HEVC Advance patent pool can be challenged for validity at any time. HEVC Advance removes from its pool any patent that has been finally determined to be invalid by a court or other appropriate tribunal.

Some critics point to the percentage of challenged patents that are found invalid as proof that there is little or no basis for the presumption of validity of an issued patent. But that criticism is a fundamental error of logic. Challenging a patent requires analysis and decision: deciding if the challenge is likely enough to succeed and that it is worth the time, effort and cost of the challenge. As a result, the patents challenged for validity are those the challenger believes are most likely to be held invalid. Therefore, only a very small portion of issued patents are ever challenged for validity, because the vast majority of issued patents would be affirmed as valid in any challenge.

There are significant practical problems in the implicit proposal by critics that patent pools should make their own determinations of validity.

The most significant is also the most obvious: few patent owners would join a patent pool if the first step were a re-examination of each patent in which the owner had already invested considerable time and expense in the long process of examination by the patent agency. The result would be fewer pools, each with fewer licensors (patent owners) and therefore less extensive patent coverage. This would be a very poor trade-off for the supposed benefits of pool determinations of validity.

The damage caused by that trade-off would be widespread, including on the implementers, who would have to negotiate many more bilateral licences, and on consumers, who would see a slower and less broad adoption of new technology, as well as higher prices caused by the implementers’ higher expenses and lower volumes. Thus, implementers would almost certainly suffer, not benefit, from pools determining validity.

In the event HEVC Advance has a credible basis for concern about a patent’s validity despite the patent office’s action, it investigates further. However, unless that investigation’s result conclusively proves the patent is invalid, or the patent holder agrees to withdraw the patent from the pool and not assert it against pool licensees, there are legal risks to both pool licensees and pool administrators in withdrawing (or excluding) the patent.

For example, the owner of a patent excluded on the basis of a pool’s validity determination would have the right to sue an implementer for infringing that patent, because the implementer would not be covered for that patent by the pool licence. The implementer would then be forced to litigate a patent infringement case for a patent that would otherwise have been included in the pool licence. And while the licensee could raise the validity issue in the infringement litigation (or in a parallel post-grant review), that would only add to the expense and time of defending the claim.

The bottom line is clear: patent pools should not test for validity as they do for essentiality. They should continue to rely on the expertise of government agencies to determine the validity of issued patents and on the expertise of courts and other government authorities that conduct post-grant reviews. Such a balanced approach provides the largest overall benefit of pool licensing to both patent implementers and patent owners alike.

Reprinted with permission from the March 26, 2020, issue of IAM (Intellectual Asset Management). © 2020 Law Business Research. All Rights Reserved. Further duplication without permission is prohibited. 

Lawyers assume that electronic communication is always available, fast and reliable, and that it’s also often the most efficient and effective way to communicate. Few firms still pay rent for physical law libraries. We have replaced most file cabinets with electronic storage, knowing we can print out anything we need on paper. And we instant message at least as much as we email.

But we can easily forget how recent all those developments are, or how long they took to accomplish. And in one of the most important parts of our profession — court proceedings — we’re still stuck in the 1950s. The profession in general, and the courts in particular, have been slow to adopt the technologies that can and someday will transform trials.

The COVID-19 pandemic is rapidly teaching us that there is surprisingly little legal work or activity that absolutely requires everyone to be in the same room. And that’s equally true for trials and other court proceedings.

The issue is not whether it is possible to have virtual trials. We have the technology. We just need the incentive. COVID-19 should give us all the incentive we need. 

Electronic Court Records

PACER made its debut in 1988, allowing public access to court filings and proceedings. At first, electronic access was available only at a few pilot courts and provided only basic information, such as docket sheets, to users sophisticated enough to have dial-up modems (for those who remember them). Actual case documents remained unavailable, except at the courthouse.

Electronic Filing

Electronic filing in federal courts did not begin for another decade, when Case Management/Electronic Case Files first enabled the legal community to both file and retrieve court records electronically. Forty-five state courts, plus those in Washington, D.C., allow electronic filing in at least some of their courts.

At least some of us still remember the late-night mad dash to the courthouse (at least for the U.S. district court in D.C.) for the guard to time-stamp the filing with the current date, so that when those papers actually reached the clerk’s office the following day — which would have been one day past the filing date — the clerk would stamp the papers with the date they reached the guard’s desk.

For many years, the requirement of physical signatures on pleadings and other filings in federal courts prevented electronic filing. While federal courts now accept electronic filing, some require that an electronic filing be followed shortly by physically filing paper copies. There is little reason for this requirement, as the court can simply print out filings for any court personnel who may prefer physical documents.

And not all state courts allow electronic filing. Friends who are judges in Pennsylvania, for example, report that their courts do not allow electronic signatures, and that in the current lockdown no motions can be docketed because there are no people to process them, and all of their many cases subject to mandated dates must be continued. Both the discovery and rules offices are closed for the same reasons.

Court Proceedings

Courts have been slow to adopt the technologies that would make virtual proceedings possible even though lawyers have been using videoconferencing for years in their professional lives, and for even longer in their personal lives.

Adoption of technology by courts has moved at a stately pace, mainly because it could. Looking back, it’s obvious that courts could not have handled today’s volumes of fillings without electronic filing and retrieval, and that the clerks’ offices could not have handled the volume of foot traffic and copying that would be required for getting copies of filings. But at the time each of these was adopted, it was a nice-to-have not a must-have, and that is still the case for technology that would allow virtual court proceedings. For example:

  • For any use of videoconferencing in a federal court, the litigants must get permission from the presiding judge, provide one month’s advance notice, and use only enterprise-level technology (such as Cisco or Polycom), not consumer-focused applications (such as Skype or FaceTime).
  • Courts in 15 states (including Washington, D.C.) allow videoconferencing for at least some proceedings, most often for arraignments, and in some courts for testimony in some kinds of cases.

No one knows how long the current lockdowns will last. Government studies in the U.S., the U.K. and elsewhere, warn that a pandemic will last 18 months or longer and could include multiple waves, if people resume their normal routines prematurely. Working from home is not new to lawyers: We all learned that skill when the same technology that made it possible to “work from anywhere” created the expectation that we would “work from everywhere” and be available 24/7.

Surprisingly little needs to be solved or changed to make it possible to replace physical proceedings with virtual proceedings.

Technology

For any virtual function it will be necessary to ensure that all the participants have access to the hardware and software needed to make it work.

I suspect that the federal court rules mandating that the technology be enterprise-level rather than consumer-level were written at an early stage of development of so-called consumer technologies. 

In 2003, Apple introduced the iSight webcam for use with iChat AV, their videoconferencing software, and introduced FaceTime on their mobile devices in 2010. Skype was launched as a Voice over Internet Protocol service in 2003 and as a video-calling service in 2005. 

Today, companies conduct business every day on their laptops and desktop — and have done so even before COVID-19 — using Skype and FaceTime even before Zoom, Microsoft Teams, Webex and other similar products. It has often been the case that what began as consumer technology was so convenient, and sufficiently reliable, that it was imported or even smuggled into the enterprise. IM was the first example, and videoconference is the most recent. The distinction between consumer and enterprise apps for collaboration is less meaningful today than ever.

During the current lockdown, children are attending school, college students are taking classes and exams, businesses and law firms are conducting meetings and conferences — even corporate board meetings — using these same consumer technologies. It may be nice to be looking at a giant monitor on one of the federal court’s designated enterprise-level technologies, but it’s entirely adequate to be working on a personal computer. And, as with all technologies, the more we use it, the more adequate it becomes.

Even where a virtual proceeding will involve a judge or other presiding official, the only requirement is that all the participants have access to the same or interoperable technology. Because the courts will be budget-constrained, they may continue to dictate the technology. 

Some participants may not have, and may not be able to afford, a personal computer and broadband access at home. That is an issue of cost, not of technology, and can be solved in multiple ways. 

A participant represented by an attorney could use the technology in the attorney’s office. A participant not represented by an attorney could have court-subsidized access to borrowed or rented equipment. It may even be cost-effective for courts to maintain some inventory of equipment that can be loaned to participants who do not have or cannot afford their own. And the same is true for jurors.

Hearings and Pretrial Proceedings

Virtual proceedings are currently permitted only in limited circumstances in both federal and state courts, but where they are available, they have proven to work effectively. Only a change in rules is needed to make possible a wide range of virtual proceedings, including trials.

For example, today nearly all depositions are videotaped. Under current rules, if the deponent testifies live, the video recording can be used to impeach on cross-examination. If the applicable rule is satisfied, the testimony of an out-of-jurisdiction witness, both direct and cross, can be presented on video at a trial. 

But with today’s technology it is certainly possible to have a virtual deposition, with each participant attending by videoconference. Only minor changes in the rules would be needed to make that possible, specifying that by agreement of the parties, any witness could be presented entirely by video.

As a trial lawyer, I would never say that cross-examining a witness, or even putting on a direct examination, can be just as effective by videoconference. But it can be done, and not only when it is not possible for everyone to be in the same room, but also where it is preferable either for convenience or to avoid the expense and time of bringing everyone together.

Trials

There is little difference between a deposition and a trial in terms of whether it can be done virtually. Not to put too fine a point on it, but a trial is little more than a series of depositions witnessed by a trier of fact. Witnesses are placed under oath, shown exhibits and asked questions on direct and cross. If the judge, the jurors, the court reporter, the lawyers and the witnesses can see and hear everything that happens, we can have a trial. And since we can make that happen over videoconference, we can have virtual trials.

Issues

Of course, there are issues that have to be addressed for virtual trials to become routine, and there is an established process for making such sweeping changes for the federal courts. To begin the process of revising the Federal Rules of Evidence (approved by Congress in 1873), the chief justice appointed a panel — the Advisory Committee on Rules of Evidence — at the direction of the Judicial Conference of the United States, the national policymaking body for the federal courts.

Here, the Judicial Conference could direct the chief justice to convene a similar advisory committee on virtual proceedings made up of judges, lawyers, court reporters, court clerks, marshals and others with relevant expertise. The first job of the advisory committee would be to define the issues that need to be addressed. 

Some potential issues may be easier to solve than it might seem. For example:

Q: In a virtual jury trial, how do we ensure that jurors don't see or hear news about the trial?

A: The same way we do now: The judge instructs the jurors to not read or listen to news about the trial.

Q: How do we ensure the safety of the jurors in a virtual trial?

A: Actually, it would be easier to ensure the security of the jurors in a virtual trial than in a real-world trial for the simple reason that instead of all the jurors being gathered in one place, each juror will be attending from a location he or she chooses, and no one else (including the judge, the lawyers and the witnesses) needs to know those locations.

Q:  How do we ensure the secrecy of the jury’s deliberations?

A: For the most part, the answer is a combination of the same answer as for the jurors’ safety and the same answer as for jurors not reading or hearing news about the trial: The court instructs the jurors that they must not allow anyone else to hear their deliberations. A combination of earphones and a closed door will go a long way to solving this issue.

Other issues are more difficult, but no doubt can be solved by the experts on the task force:

  • Will jury deliberations be less effective in a virtual jury room? This can likely be assessed in a series of mock trials in courtrooms with two juries: one in attendance and one observing by videoconference.
  • Is there a basis to challenge jury verdicts that result from a virtual jury room?
  • What would need to be done if a jury needs to be sequestered?

And there are particular issues in criminal trials that may prove more challenging:

  • Does video cross-examination satisfy the confrontation clause?
  • Need the defendant be in the same room as the witness to satisfy the confrontation clause? There are likely some near-precedents from criminal trials where the defendant has not been in the courtroom throughout the trial.
  • Would a defendant have to consent to a video trial?
  • If the defendant prefers a video trial, can the government insist on a traditional trial?
  • Do we need to make any changes to the rules of evidence?
  • In the case of a piece of physical evidence — a gun, a knife, a “model” of a bomb — is it sufficient to display the object without the jurors being able to hold it?

Conclusion

COVID-19 is teaching us that whatever activities cannot be continued virtually will grind to a halt when they cannot be continued in the real world. But it’s also teaching us that there is surprisingly little about legal work and legal proceedings that cannot be accomplished virtually in the online world.

We have the technology to make virtual trials possible. Now we have to do the hard work to make virtual trials a reality. 

Reprinted with permission from the April 2, 2020, issue of Law360. © 2020 Portfolio Media, Inc. All Rights Reserved. Further duplication without permission is prohibited.

To see our other material related to the pandemic, please visit the Coronavirus/COVID-19: Facts, Insights & Resources page of our website by clicking here.

Regarding John W. Mayo and Mark Whitener’s March 22 Outlook essay, “Five Myths: Antitrust law”:

The authors concluded by noting that “enforcers and courts tend to take competitors’ complaints about their rivals’ behavior with a grain of salt.” That is true, and, in my view, more unfortunate the more true it is. 

Competitors are the first ones to notice that other, usually bigger companies are abusing their market power, and they often notice that by observing that they are being hurt by the anticompetitive conduct of those companies. So while some competitors’ complaints may not be true, one would hope that enforcers and courts have become sophisticated enough to look carefully and not just take all competitors’ complaints with a grain of salt.

The novel coronavirus pandemic has upended our lives, creating a far-from-normal “new normal.” And it has also given rise to countless collaborations between and among universities, hospitals, medical centers, pharma companies and others to pool their talent and resources to discover, test, manufacture and distribute diagnostics, treatments, vaccines, personal protective equipment and other resources needed to fight the pandemic.

Antitrust law poses no risk to these collaborations, so long as they remain focused on their core missions. But at the same time, antitrust law recognizes that in cooperating and exchanging information and insights for those missions there is the potential for “spill-over effects” that can create antitrust risk.

The trick is to know where that dividing line is and to avoid crossing over it.

The Dividing Line

Antitrust law has long recognized that collaborations among market participants, including competitors, can be pro-competitive even when not focused on fighting a pandemic. As a more prosaic example, buying groups, which allow smaller companies to aggregate their buying to get the same volume discounts collectively that bigger companies get individually, have been recognized as pro-competitive for 50 years because they allow smaller companies to compete more effectively against bigger companies and thus – both directly and indirectly – offer lower prices and better variety to consumers.

The Department of Justice Antitrust Division (DOJ) and the Federal Trade Commission (FTC) have long provided a great deal of guidance on these issues, both individually and jointly:

But antitrust also recognizes that collaborations can have anticompetitive results by reducing competition and its benefits with little or no offsetting benefits to consumers, or have results directly contrary to the interests of consumers. Collaboration in research, for example, can enhance public welfare by enabling breakthroughs the individual participants could not have made individually, but can also be contrary to the public welfare by limiting each participant’s incentives to pursue its own theories and approaches, thereby reducing rather than enhancing innovation.

With some specific exceptions, collaborations are analyzed under the rule of reason, an approach that takes account of all relevant factual and economic information about the market in which the collaboration occurs, the participants in the collaboration, and the likely effects of the collaboration. This is an intense case-by-case analysis, the direct opposite of a one-size-fits-all rigid set of rules.

The Role of Antitrust in a Pandemic

Obviously, the coronavirus and resulting disease, COVID-19, have created a “new normal,” but that doesn’t mean that antitrust no longer applies; antitrust doesn’t shelter in place during a pandemic. So how will antitrust deal with the need for cooperation and collaboration to fight the pandemic?

First, note that the CARES Act does not provide any antitrust exemption or modification of standards for the analysis of collaborations and other joint activities related to COVID-19.

Second, keep in mind that collaborations among entities in different parts of a supply chain inherently raise fewer antitrust concerns than collaborations among competitors. So, collaborations between producers and distributors are unlikely to raise concerns, unless one side or the other of that equation is so large that it could drive out of business producers or distributors on the other side.

Third, whether a particular collaboration is likely to pass antitrust muster –whether and how much risk there is to the participants – is ordinarily determined by those participants’ own in-house or outside counsel.

Fourth, on March 24, DOJ and the FTC provided an overview of guidance for joint activity to address the coronavirus pandemic, pointing to several of their prior publications in which one or both agencies have said:

  • As a general matter, when firms collaborate on research and development this “efficiency-enhancing integration of economic activity” is typically procompetitive. (Antitrust Guidelines for Collaborations Among Competitors, page 31.)
  • Sharing technical know-how, rather than company- specific data about prices, wages, outputs, or costs, may be “necessary to achieve the procompetitive benefits of certain collaborations.” (Antitrust Guidelines for Collaborations Among Competitors, page 15.)
    • Similar information was provided by the Federal Trade Commission (FTC) in Information Exchange: Be Reasonable, discussing the “safety zones” around information sharing).
  • They will not challenge, absent extraordinary circumstances, providers’ development of suggested practice parameters – standards for patient management developed to assist providers in clinical decision making – that also may provide useful information to patients, providers and purchasers. FTC and DOJ Statement of Antitrust Enforcement Policy in Health Care (1996, at page 41).
  • Most joint purchasing arrangements among healthcare providers, such as those designed to increase the efficiency of procurement and reduce transaction costs, do not raise antitrust concerns. (Statement of Antitrust Enforcement Policy in Health Care, page 53, also explaining circumstances in which joint purchasing arrangements may raise concerns.)
  • The antitrust laws would generally permit private lobbying addressed to the use of federal emergency authority, including private industry meetings with the federal government to discuss strategies on responding to COVID-19, “insofar as those activities comprise[] mere solicitation of governmental action with respect to the passage and enforcement of laws.” (Eastern Railroad Conference v. Noerr Motors, 365 U.S. 127, 138 (1961). The FTC discussed the applicability and limits of this doctrine in Enforcement Perspectives on the Noerr-Pennington Doctrine: An FTC Staff Report (2006).

Finally, the Antitrust Division’s long-standing Business Review Letter (BRL) process enable parties to a proposed collaboration to get at least a preliminary determination. But there are two factors that would have limited the utility of the process for the quick decisions needed today:

  • The FTC has had no similar process for proposed collaborations in industries in which it normally takes the lead in enforcement; and
  • The Antitrust Division’s Business Review Letter process normally takes anywhere from 6-12 months or more.

Fortunately, both enforcement agencies have solved these problems, as announced on March 24 in statements by both DOJ and the FTC, promising to respond to all proposals addressing public health and safety within seven calendar days. 

And true to that promise, DOJ announced that it had reviewed and approved the first COVID-19 related request for a business review letter in just six calendar days. The subject was a proposal by a consortium of medical supply distributors (McKesson, Owens & Minor, Cardinal Health, Medline Industries, and Henry Schein, Inc.) to support FEMA’s “Project Airbridge” to help the federal agencies “expedite and increase manufacturing, sourcing, and distribution of personal- protective equipment (PPE) and coronavirus-treatment-related medication.”

That was certainly helpful in demonstrating that it was possible, during this pandemic, for entities to get a very rapid determination from the DOJ that the agency would not challenge their proposed cooperation. But how much assurance other proposed collaborations can take from this approval likely is limited by the very specific facts of the collaboration, as set out in the Business Review Letter DOJ issued: “the “primary collaborative activity will occur at the direction of, and in the presence of FEMA, HHS, other government entities, and their agents” This close government involvement largely drove DOJ’s approval. 

The primary legal rationale for DOJ’s approval was based on the fact that the federal government, including its agencies, are not subject to the antitrust laws. Courts have extended this immunity to conduct by private parties when (i) the collaboration is compelled by an agreement with a federal agency or a clearly defined federal government policy and (ii) a federal agency supervises the conduct.

In this collaboration:

  • The companies will be acting under explicit agreements with the federal government (FEMA).
  • FEMA and its agents will be actively directing and supervising their conduct.
  • Any determinations of prices, wages, output, quality, bids, or allocations will only occur if at FEMA’s direction.

In addition, the parties proposed additional safeguards, which were important in gaining DOJ approval:

  • The collaborations will not be used to increase prices or reduce output or quality.
  • Exchanges of information will be made directly by each party with the U.S. Government rather than by the parties with each other.
  • The collaboration will end promptly when the exigent circumstances it is intended to address have ended.
  • Any competitively sensitive information acquired by the Requesting Parties will be “sequestered” and not referenced or used by the parties going forward.

Final Notes

Two final points. First, DOJ made clear that “This letter should not be interpreted as applying to any matter other than the Proposed Conduct as it relates strictly to, or arises directly out of, the COVID-19 pandemic.”

Second, as in any BRL, the statement by the DOJ is not that “this is okay,” but rather is much more modest: “This letter expresses the Department’s current enforcement intention in the exercise of its prosecutorial discretion.”

That means something like, “based on what we know now, and assuming the information you gave us is accurate, and if you actually do exactly what you said you would do, and in light of the fact that our opinion is ‘the outcome of an expedited, temporary review procedure that is necessarily less thorough than ordinary business review procedures,’ then we have no present intention to enforce against you.”

That’s not a guarantee, but it’s not nothing.

So, the bottom line is that, if structured and conducted thoughtfully in the context of antitrust law and policy, collaborations can help address the health problems the country faces and the business problems we are facing in the new world of COVID-19.

But if your cooperation and collaboration spill over into other exchanges of information, agreements and joint actions, you may be subject to antitrust liability, which can have consequences ranging from civil lawsuits to criminal prosecutions.

Knowing the difference between safe and spillover is the key to fighting the pandemic and safeguarding your enterprise while avoiding antitrust risks.

To hear more on this topic, listen to the archived recording of IPWatchdog’s recent webinar, “Drug Repurposing and Diagnostics in the Age of COVID-19.”

Reprinted with permission from the April 20, 2020, issue of IPWatchdog. © 2020 IPWatchdog, Inc. All Rights Reserved. Further duplication without permission is prohibited.

To see our other material related to the pandemic, please visit the Coronavirus/COVID-19: Facts, Insights & Resources page of our website by clicking here.

Competition and the Antitrust Laws

Competition creates significant consumer benefits including increased innovation, increased efficiency of companies making and selling products and services, greater variety and higher quality of goods and services, and lower prices.

The competitive process, left free of interference, makes life harder for businesses by increasing their uncertainty. That uncertainty forces suppliers to be more efficient and more creative to avoid losing business to competitors that are more efficient and more creative. 

Antitrust laws protect consumers by protecting the competitive process from interference either by companies acting together to avoid having to compete or by individual companies with substantial market power of their own taking improper actions in order to avoid having to compete.

Antitrust Laws and Enforcement

Federal antitrust laws are enforced by both the Antitrust Division of the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC).

The DOJ enforces antitrust laws by bringing both civil and criminal antitrust cases in federal courts against companies and individuals violating federal antitrust statutes. The FTC enforces the same federal statutes by bringing civil actions either in federal courts or before the agency itself; the FTC has no authority to bring criminal cases. In addition to its authority to file cases in federal courts, the FTC includes a branch that brings cases and a separate group of five commissioners who can decide cases brought before them and impose certain civil measures such as injunctions. The FTC also has a consumer protection mandate under which it enforces laws and regulations relating to privacy, deception, fraud, and unfair business practices.

In addition to the federal antitrust laws, each state and the District of Columbia has its own antitrust statutes, which are usually similar–but not identical–to federal antitrust statutes. Because the state laws are not identical, they can, and do, make illegal certain conduct that is not necessarily illegal under federal law. State antitrust laws are enforced by state attorneys general, who can file both civil and criminal antitrust actions in state courts. State attorneys general also can file federal antitrust claims on behalf of citizens of their states.

Finally, private parties also can bring antitrust actions. Both consumers and competing businesses that believe they have been harmed by anticompetitive conduct can bring civil antitrust cases seeking to enforce both federal and state antitrust laws and to recover money for the damages they have suffered.


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