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Re: Intellectual Property II


From: Alexander Terekhov
Subject: Re: Intellectual Property II
Date: Thu, 09 Feb 2006 19:25:42 +0100

Wallace on injury and standing:
 
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III. Accompanying Injury

Plaintiff Daniel Wallace has alleged market foreclosure and denial of
opportunity to enter into competition with his own operating system
product:
“The Defendant's pooling and cross licensing of intellectual property
with the described predatory price fixing scheme is foreclosing
competition in the market for computer operating systems. Said predatory
price fixing scheme prevents Plaintiff Daniel Wallace from marketing his
own computer operating system as a competitor.”; Plaintiff’s Fourth
Amended Complaint
Plaintiff has alleged a threat of market foreclosure - a type of
antitrust injury the Supreme Court has described as "facially
anticompetitive".
"The alleged conduct - higher service prices and market foreclosure - is
facially anticompetitive and exactly the harm that antitrust laws aim to
prevent."; EASTMAN KODAK CO. v. IMAGE TECH. SVCS., 504 U.S. 451 (1992)

The Supreme Court has explicitly held that predatory pricing harms both
competitors and competition:
"Predatory pricing may be defined as pricing below an appropriate
measure of cost for the purpose of eliminating competitors in the short
run and reducing competition in the long run. 12 It is a practice [479
U.S. 104, 118] that harms both competitors and competition. In contrast
to price cutting aimed simply at increasing market share, predatory
pricing has as its aim the elimination of competition. Predatory pricing
is thus a practice "inimical to the purposes of [the antitrust] laws,"
Brunswick, 429 U.S., at 488, and one capable of inflicting antitrust
injury."; CARGILL, INC. v. MONFORT OF COLORADO, INC., 479 U.S. 104
(1986) [emphasis added].

The Supreme Court’s ruling in 1990 in ATLANTIC RICHFIELD CO., supra,
re-affirms the principle that both competition and competitors may
suffer antitrust injury from predatory pricing.

Plaintiff has alleged (1) threatened future loss or damage of the type
the antitrust laws were designed to prevent -- market foreclosure and
(2) threatened future personal injury which flows from the defendant’s
unlawful acts -- the plaintiff will be substantially deterred from
vending in the market with his own operating system product.

"To seek an injunction under § 16 of the Clayton Act, a private
plaintiff must allege "threatened loss or damage 'of the type the
antitrust laws were designed to prevent and that flows from that which
makes defendants' acts unlawful.'" Cargill Inc., supra..

The antitrust injury to competition by a diminished market and the
resultant personal injury to the Plaintiff by his reduced opportunity as
a competitor in the relevant market are inextricably linked.
-------

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Standing

Although plaintiff would be entitled to standing for recovery under even
a § 4 action (treble damages), the defendant confuses the standing
threshold in the present § 16 action with that of the heightened
standard in § 4 cases to which the defendant erroneously cites: “Section
16 of the Clayton Act provides in part that "[a]ny person, firm,
corporation, or association shall be entitled to sue for and have
injunctive relief . . . against threatened loss [479 U.S. 104, 111] or
damage by a violation of the antitrust laws . . . ." 15 U.S.C. 26. It is
plain that 16 and 4 do differ in various ways. For example, 4 requires a
plaintiff to show actual injury, but 16 requires a showing only of
"threatened" loss or damage; similarly, 4 requires a showing of injury
to "business or property," cf. Hawaii v. Standard Oil Co., 405 U.S. 251
(1972), while 16 contains no such limitation. 6 Although these
differences do affect the nature of the injury cognizable under each
section, the lower courts, including the courts below, have found that
under both 16 and 4 the plaintiff must still allege an injury of the
type the antitrust laws were designed to prevent. 7 We agree.”; CARGILL,
INC. v. MONFORT OF COLORADO, INC., supra.

See also Judge Posner:

“But all that this implies, so far as equitable relief is concerned, is
that a plaintiff has to prove that he is likely to be harmed by the
defendant's wrongful conduct unless that conduct is enjoined.”; BLUE
CROSS, ET AL. v MARSHFIELD CLINIC, ET AL. No. 94-C-0137 (7th Cir 1998).

Whether viewed as a result of a per se pooling agreement as in New
Wrinkle Inc, supra, or as a result of a vertical agreement analyzed
under a rule of reason as in State Oil Co. v. Khan, supra, predatory
pricing results in antitrust injury -- it is "inimical to the purposes
of [the antitrust] laws," see Brunswick, 429 U.S., at 488, and ”harms
both competitors and competition”, CARGILL, INC, 479 U.S., at 118.

The plaintiff has alleged future personal injury because of elimination
of market opportunity -- an injury that flows directly from the
threatened market foreclosure:
“… Said predatory price fixing scheme prevents Plaintiff Daniel Wallace
from marketing his own computer operating system as a competitor.”;
Plaintiff’s Fourth Amended Complaint

In the course of vending his competing operating system, the plaintiff
has experienced firsthand the deleterious market effect of the GPL
license when used by a cartel of competitors to distribute the Linux
operating system.

The plaintiff’s complaint has certainly met the pleading requirements
expressed in PEGRAM. ET AL., and Denny's Marina, supra, by directly or
inferentially alleging the element of “an accompanying injury”. 
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regards,
alexander.


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