Free ABA Summer Associate/Intern Career Panel and Happy Hour 7/11/2013, Washington, D.C.

David Conway, the Young Lawyer’s Representative for the ABA Section of Antitrust Law’s Private Advertising Litigation Committee, will moderate a program and a related networking event on July 11, 2013, at Venable LLP’s DC offices. The program will provide career advice to summer associates and interns interested in practicing consumer protection, privacy and advertising law, and should also be relevant to other young attorneys starting-out in these fields. The program will be held from 5:00pm – 6:00pm ET and immediately followed by a networking event from 6:00pm – 8:00pm ET.

This should be a good opportunity for young lawyers, as well as summer associates or interns, to get some practical advice and network. If you attend, please introduce yourself to David Stanoch, the YLR for the Agriculture and Food Committee. The program and networking event are free, but advance registration is required. Please register through the attached program fliers.

ABA Networking Happy Hour

ABA Summer Associate Panel

Supreme Court Decision on Patented Genetic Traits of Seeds (Bowman v. Monsanto Co.)

On May 13, 2013, a unanimous U.S. Supreme Court held in Bowman v. Monsanto Co. that the patent exhaustion doctrine does not give a farmer who purchases beans containing Monsanto’s patented genetic traits the right to replicate the patented genes by planting and harvesting a crop containing the patented traits. Some background and highlights from this important opinion follow.

Monsanto’s patented soybean seeds have been genetically modified (GM) to survive exposure to glyphosate, the active ingredient in many herbicides, so weeds can be sprayed after a planted crop emerges without killing the crop. Monsanto sells the GM soybean seeds under a limited license that permits a grower to plant the purchased seeds in one, and only one, season. The grower may consume the resulting soybeans or sell them as a commodity, but may not save any of them for replanting. These license restrictions prevent farmers from creating their own copies of Monsanto’s patented GM seeds without paying Monsanto, since the patented genetic trait is passed on from the planted seeds to the harvested soybeans.

Bowman purchased commodity soybeans — anticipating that most were grown from seeds containing Monsanto’s patented herbicide resistant genes – from a local grain elevator that sold beans for human or animal consumption, not as seeds. Instead of using these beans for consumption or feed, however, Bowman planted them. By applying herbicide after the beans germinated, he eliminated the non-GM beans and grew a crop of GM beans. From this first crop, Bowman replicated Monsanto’s patented beans for eight seasons by saving some of each crop for replanting in the next growing season, thereby using and replicating Monsanto’s patented technology without re-purchasing GM seeds from Monsanto.

When Monsanto sued Bowman for patent infringement, Bowman argued unsuccessfully in the federal district court and on appeal to the Federal Circuit that Monsanto’s effort to restrict his use of beans lawfully sold by local farmers to the grain elevator that supplied Bowman’s beans violated the doctrine of patent exhaustion. Affirming the Federal Circuit, the Supreme Court held that, although the patent exhaustion doctrine requires that “the initial authorized sale of a patented article terminates all patent rights to that item,” Bowman was not protected by the doctrine because, by planting and harvesting the beans and replicating Monsanto’s patented technology in the harvested beans, he had gone beyond use of the purchased beans to “mak[ing] additional patented soybeans without Monsanto’s permission . . . .” Bowman v. Monsanto, slip. op., at 4, 5. It is settled that the patent exhaustion doctrine “leaves untouched the patentee’s ability to prevent a buyer from making new copies of the patented item,” the Court stated. Bowman v. Monsanto, slip. op., at 4-5. “Because Bowman thus reproduced Monsanto’s patented invention, the exhaustion doctrine does not protect him.” Id., at 6.

March 18, 2013 ABA Program on “De Facto Partial Exclusive Dealing”

On March 18, 2013, from 12:30 – 1:30 pm Eastern, the ABA Section of Antitrust Law’s Agriculture and Food Committee, Joint Conduct Committee and Pricing Conduct Committee will present a call-in panel discussion of the Third Circuit’s ZF Meritor decision. David Stanoch of Dechert LLP will moderate as four panelists discuss the Third Circuit’s split decision, where the majority held that, notwithstanding a supplier’s above-cost prices, a jury applying the rule of reason could properly find that the supplier’s customer arrangements foreclosed competition in a substantial share of the market. Please join the discussion as panelists Jonathan M. Jacobson (Wilson Sonsini Goodrich & Rosati), Fiona M. Scott-Morton (Yale School of Management), Peggy J. Wedgworth (Milberg LLP) and Saami Zain (Antitrust Bureau, NY Attorney General’s Office) analyze and discuss the contours and significance of this recent antitrust decision. The program is free to Committee members, but advance registration is required. Please see the attached program flyer for more information and to register. ABA program on “De Facto Partial Exclusive Dealing”

Judge Refuses to Stay Sale of Bread Assets in California

On February 13, 2013, federal district court judge Emmet Sullivan denied a motion by Grupo Bimbo, S.A.B. de C.V. and Bimbo Bakeries USA, Inc. (collectively, “Bimbo”) to stay temporarily the divestiture of certain bread assets in California. On November 9, 2010, Bimbo agreed to acquire the North American Fresh Bakery business of Sara Lee Corporation. The United States Department of Justice, Antitrust Division (“DOJ”) investigated the acquisition, and concluded that it would likely substantially lessen competition for fresh sliced, bagged bread in eight geographic markets. DOJ filed suit on October 2, 2011. On February 16, 2012, with the parties’ consent, Judge Sullivan entered a final judgment, under which Bimbo agreed to divest Sara Lee bread assets in the California, Kansas City, Omaha, Oklahoma City, and Pennsylvania areas. Bimbo did not complete the sale of the California Assets within the allotted time. Accordingly, per the Final Judgment and on DOJ’s unopposed motion, Judge Sullivan appointed James A. Fishkin, of Dechert LLP, as the Divestiture Trustee charged with selling the California (and, ultimately, the Kansas City and Oklahoma City) Assets. The Divestiture Trustee entered into an agreement to sell the California Assets to Flowers Foods, Inc. (“Flowers”) on October 24, 2012, and that agreement was subsequently approved by DOJ on October 26, 2012. The sale is set to close on February 23, 2013. Flowers can terminate for any reason after May 30, 2013.

On January 29, Bimbo moved to stay the sale to Flowers. Bimbo cited the January 11 announcement that Flowers is the “stalking horse” bidder for the Hostess bread assets, which are scheduled to be sold at bankruptcy auction on February 28, 2013, and with a final approval hearing before the bankruptcy court in New York on March 5, 2013. The thrust of Bimbo’s motion was that drastically altered circumstances – namely, that Flowers allegedly stands to acquire a significant share of the California bread market if it successfully acquires both the Sara Lee and Hostess assets – at least required time for all parties (particularly DOJ) to assess whether Flowers remained an appropriate buyer for the California Assets. DOJ opposed Bimbo’s motion, arguing in part that, under a Tunney Act proceeding, a court should focus on the competitive harm alleged in the case before it, and whether the remedy will address that harm. That is, the divestiture of the California Assets would remedy the harm alleged by Bimbo’s acquisition of Sara Lee. Flowers’ potential acquisition of the Hostess assets presented a different matter that DOJ would investigate (in fact, it has already commenced its investigation) and take appropriate action if it deemed appropriate. DOJ also noted that Bimbo had other remedies available, such as filing a private action under Section 7 of the Clayton Act. Flowers intervened and argued that it is losing substantial sums of money daily in anticipation of acquiring the California Assets on February 23. At the court’s request, the Divestiture Trustee also submitted a brief setting forth his efforts to find a viable buyer for the California Assets. The Trustee noted that, if the deal with Flowers falls apart because of a delay (court-imposed or otherwise), there were no other viable buyers interested in the assets.

Judge Sullivan held a hearing the next day, on January 30, during which he set an accelerated briefing schedule. On February 13, he held a full hearing on Bimbo’s motion. Judge Sullivan orally denied Bimbo’s motion the same day. In his lengthy oral ruling (he orally delivered his opinion over the course of approximately 50 minutes), Judge Sullivan found, among other things, that Bimbo had not satisfied its burden of demonstrating a compelling need that warranted the “extraordinary relief” of relieving a party from its obligations under an agreed final judgment. He found that the harm Bimbo alleged – such as that Flowers might acquire the Hostess assets in bankruptcy; that DOJ might not require Flowers to divest Hostess assets; that a combined Flowers-Hostess entity would substantially lessen competition even though Hostess bread has been off the shelves since November, when the company went into liquidation – was simply too contingent. The Court also agreed with the Divestiture Trustee that it was highly speculative and unlikely that alternative, viable buyers might be found for the California Assets were the deal with Flowers not to close.

Remaining Defendants Settle in Southeastern Milk Antitrust Litigation

On January 21, 2013 – literally the eve of trial — counsel for a plaintiff class of approximately 7,200 current and former dairy farmers filed a motion for expedited preliminary approval of a proposed $158.6 million settlement agreement dated January 17, 2013, with Dairy Farmers of America, Inc. (DFA) and all other remaining defendants in the Southeastern Milk Antitrust Litigation. With this latest proposed settlement, the plaintiff class has achieved total cash settlements exceeding $300 million: $158.6 million in this settlement, plus $140 million from Dean Foods and $5 million from Southern Marketing Agency and James Baird in settlements that were approved by Judge Ronnie Greer in June 2012.

Baker Hostetler stated in a news release that: “In addition to the monetary award, DFA agreed to change its business conduct in the Southeast, including taking steps to increase raw milk prices [paid to farmers]; removing cancellation penalties on certain full-supply agreements with bottling plants and not entering into new full supply agreements during the Settlement’s term; modifying membership agreements to improve farmer ability to change cooperatives; enhancing price-related information on milk checks; boosting transparency through auditing and disclosure commitments; and facilitating delegate votes on additional meaningful changes to conduct.”

According to the motion for expedited preliminary approval, the other settling defendants in the January 22, 2013 settlement are Dairy Marketing Services, LLC, Mid-Am Capital LLC, National Dairy Holdings, LP and Gary Hanman.

The plaintiffs allege a conspiracy to artificially lower the price paid to dairy farmers in the southeast U.S. for fluid Grade A milk in violation of Sherman Act section 1; and monopolization, attempted monopolization and monopsonization, and conspiracy to monopolize and monopsonize in violation of Sherman Act section 2. The parties have been litigating for five and a half years according to the motion for expedited preliminary approval.

New Australian Thoroughbred Antitrust Decision

On 19 December 2012, the Australian Federal Court handed down an important Competition Law ruling concerning the rules of sport. The court held that the Australian Jockey Club’s rule requiring Thoroughbred horses to be bred by natural cover was not anticompetitive and did not violate the Competition Law. Robertson, J. referred to some Sherman Act precedent in a lengthy (369 pages), detailed analysis.

The opinion is available through the following link by searching “Judgments” and entering the case name: http://www.fedcourt.gov.au/publications/judgments/last-week.

Direct-Purchaser Class Certified in Chocolate Litigation

On December 7, 2012, the Federal District Court for the Middle District of Pennsylvania certified a direct-purchaser class in a multi-district antitrust price-fixing action against producers of chocolate confectionary products. Judge Christopher C. Conner concluded that a thorough Daubert analysis is appropriate in considering class certification, but denied the defendants’ Daubert motion to exclude the opinions of the plaintiffs’ experts. The certified class consists of persons and entities who directly purchased single serving standard and King size chocolate candy for resale directly from the defendants between December 9, 2002 and December 20, 2007.