A USB flash drive.

Yesterday, Blawgletter’s ears pricked up when we saw a WSJ report that the Antitrust Division has started probing possible anticompetitive behavior in the "flash memory" business.  We also noted a story that somebody — a certain Mr. Go — already filed a civil lawsuit against flash memory chip makers for price-fixing.

A few thoughts sprang to mind:

• The government probe likely built on the Antitrust Division’s prosecution of price-fixing in another kind of memory chip — the dynamic random access memory chip or DRAM — and its follow-on investigation of same regarding another chip type — the static random access memory chip or SRAM.
• Many of the probees make all three kinds of chips.
• A lot of the same plaintiffs’ firms serve as counsel in class actions relating to price-fixing on DRAMs and SRAMs.

All three thoughts reflect the reality that international cartels exploit economies of scale.  Scale economies allow a producer or group of producers to produce more efficiently as they produce more and more.  An effective conspiracy to fix prices in one product — DRAMs, say — eases the path to and lowers the cost of forming a parallel conspiracy to fix prices on others — SRAMs and flash-memory chips, for example.  Members of the conspiracy (or conspiracies) overlap, enhancing their ability to police compliance with the price-fixing agreement.  And spreading the original conspiracy to more products tends to raise the profits of illegality.

But the economies of scale come at a price.  Expanding a cartel, especially to other markets, may destabilize it as less trustworthy members join.  And, once antitrust enforcers get wind of the conspiracy, the temptation to squeal (in hopes of gentler treatment) may become unbearable.

Plus the enforcers, both criminal and civil, may exploit their own economies of scale.  The knowledge and expertise that they gain in one area (DRAMs) will aid them in the others (SRAMs and flash-memory).  They will already understand the basics of the relevant markets — cartel members, their respective market shares and distribution channels, overall size and scope of the markets, the identities of purchasers, cartelists’ pricing strategies and policing mechanisms, and technological issues.  The anti-cartel economies reflect a mirror-image of the cartel’s.

Blawgletter doesn’t believe that economies of scale in price-fixing litigation equal the advantages of fixing prices.  Indeed, the small number of truly new prosecutions in recent years suggests that cartels continue to form and operate without detection.  But the scale economies give civil and criminal enforcers at least a fighting chance.

Barry Barnett

Our feed promotes competition.

Yesterday, speaking to a law enforcement group in Iowa, Alberto Gonzales, who leaves office today, said:

We’re all human and all of us make mistakes, and the thing that’s important is to identify when those mistakes are made, acknowledge the mistakes, correct the mistakes and then you move on. So, you know, that’s what I’ve endeavored to do as the attorney general.

Barry Barnett

Our feed endeavors to make perfeckion.

Blue sky.

To Blawgletter, "repose" suggests tranquillity and sleep.  But in law it also implies shuffling off the legal coil.

So it went today for a bankruptcy trustee.  His claim arose from the bankruptcy debtor’s sale of stock in a company that he and his family owned.  The trustee alleged that the corporation forced the debtor to sell shares worth $7,850,000 for a paltry $266,000.  The Seventh Circuit held that the nominally common law claims fell within the Illinois Securities Law of 1953 — a "blue sky" law mimicking federal securities law — and that therefore the five-year "statute of repose" governed the claims.  Because the trustee sued after the period of repose expired, the claim arrived in a state of decease.  Klein v. George G. Kerasotes Corp., No. 06-2313 (7th Cir. Sept. 14, 2007).

Barry Barnett

Blue sky, lookin’ at me.  Nothin’ but blue sky, do I see.

The Federal Circuit reversed dismissal of a pro se complaint for patent and trademark infringement, holding that it "met the minimal pleading requirements".  The patent count sufficed because it asserted ownership of a specific patent, identified the infringer, cited the patent as the subject of infringement, "described the means" by which infringement occurred, invoked a particular section of patent law, and accused a device and line of products of infringing the patent.  The trademark count also survived.  McZeal v. Sprint Nextel Corp., No. 06-1548 (Fed. Cir. Sept. 14, 2007).

Judge Dyk dissented on the ground that the patent count, in his view, didn’t pass muster under Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007).  He argued that Form 16 in the Appendix of Forms to the Federal Rules of Civil Procedure may satisfy Rule 8 in a claim of literal infringement but that it doesn’t work for a doctrine of equivalents claim like McZeal’s.

Barry Barnett

Our feed has real zeal.

At a Defense Department briefing on February 12, 2002, then Secretary of Defense Donald Rumsfeld said:

Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know.  We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know.

Amen.

Barry Barnett

Our feed knows but only in the Biblical sense.

The Tenth Circuit yesterday affirmed denial of a motion for preliminary injunction against sale of "body kits" that make a regular truck look like a "military-style vehicle".  General Motors sought the injunction because, it claimed, the body kits infringed its "Humvee" trade dress.  The court agreed with the district court GM failed to prove a likelihood that consumers would confuse vehicles using the body kits with the real Humvee.  General Motors Corp. v. Urban Gorilla, LLC , No. 06-4128 (10th Cir. Sept. 12, 2007).

Barry Barnett

Dress for success with our feed.

The end for Rich Uncle Pennybags?

Packing up his desk today, Assistant Attorney General Thomas O. Barnett announced the break-up of the U.S. Department of Justice’s Antitrust Division.  The tear in his eye betrayed a wistful sadness.  "You know, the Division had a great run.  But, after 75-plus years, we just ran out of price-fixers, monopolists, boycotters, price discriminators, market-allocators, supply-suppressors, and cartelists to go after.  We won."

Barnett cited the Division’s recent implementation of a voluntary-compliance program as a big factor in accomplishing the pro-competitive mission.  And he pointed to the fact that in the last couple of years the Division has uncovered only a couple of large price-fixing conspiracies.  The latest one victimized multinational oil companies by overcharging them for the enormous hoses they use to off-load petroleum.  "When about the only people who still need the Division’s help already make tens of billions of dollars in profits, you have to feel pretty good about the job you’ve done," he said.

Outgoing Attorney General Alberto Gonzales likened Barnett to the legendary banisher of snakes from Ireland, "Saint what’s-his-name.  Really, what was his name?"

Turning for one last look at his now-empty office, Barnett added:  "Did I mention that hell froze over?"

Barry Barnett (no relation)

Saint Patrick.

The Federal Circuit appears oblivious to Blawgletter’s law practice.  Why else would it issue four patent decisions in one day?  A more considerate court would have spaced them out so that we’d have time to digest them for sharing with our dear readers.

So, instead of cutting the cases into tasty morsels, we offer these savory chunks:

• Daiichi Sankyo Co., Ltd. v. Apotex, Inc. , No 06-1564 (Fed. Cir. Sept. 12, 2007) — Patent on a method for treating bacterial ear infections fails the pre-KSR test for obviousness.
• ACCO Brands, Inc. v. ABA Locks Manufacturer Co., Ltd., No. 06-1570 (Fed. Cir. Sept. 12, 2007) — Evidence of direct infringement of a patent on "Computer Physical Security Device" failed to support the jury’s verdict of infringement by inducement.
• Arminak & Assocs., Inc. v. Saint-Gobain Calmar, Inc., No. 06-1561 (Fed. Cir. Sept. 12, 2007) — District court properly granted summary judgment of noninfringement on two "design" patents relating to "trigger sprayer shrouds".
• L.B. Plastics, Inc. v. Amerimax Home Products, Inc., No. 06-1465 (Fed. Cir. Sept. 12, 2007) — The court affirmed noninfringement summary judgment as to patents on "gutter guards" under both a literal infringement analysis and the doctrine of equivalents.

Barry Barnett

Writing this didn’t make us hungry.