This posting was written by Jeffrey May, J. D. . A group of authors, and the American Booksellers Association—a trade association representing independently-owned bookstores—are asking the Department of Justice to scrutinize the business practices ...
‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 

Click here to read this mailing online.

Your email updates, powered by FeedBlitz

Here is a sample subscription for you. Click here to start your FREE subscription

"Trade Regulation Talk" - 5 new articles

  1. Justice Department asked to investigate Amazon’s "monopolization" of book market
  2. New Texas law says franchisors are not employers of franchisees or their employees
  3. Mergers Reported under HSR Act Down Slightly in FY 2012
  4. Supreme Court Will Not Review Application of “Single Publication Rule” Barring Chuck Yeager’s Publicity Rights, Lanham Act Claims
  5. Food Distributor Not Enjoined From Selling Refined Olive Oil as “100% Pure”
  6. More Recent Articles

Justice Department asked to investigate Amazon’s "monopolization" of book market

This posting was written by Jeffrey May, J.D.

A group of authors, and the American Booksellers Association—a trade association representing independently-owned bookstores—are asking the Department of Justice to scrutinize the business practices of online retailer Amazon. They are calling on the Department of Justice Antitrust Division to investigate Amazon’s “power over the book market, and the ways in which the company exercises its power.”

In separate letters sent July 13 to William J. Baer, Assistant Attorney General in charge of the Antitrust Division, the groups made their case against Amazon. Among other things, they contended that the online retailer abuses its monopsony power over large and small publishers and harms competing book sellers though predatory, below-cost sales.

The author group, which calls itself Authors United, cites published figures in an effort to demonstrate Amazon's monopoly power. According to the authors, Amazon controls more than 75 percent of online sales of physical books; more than 65 percent of e-book sales; and more than 40 percent of sales of new books.

Also noted by the authors were Amazon's hard-ball business tactics with publisher Hachette Book Group during a long-running contract dispute in 2014 and the retailer’s purported efforts aimed at “content control.” Last year, Authors United sent a letter tothe directors of Amazon, accusing the company of “sanctioning Hachette authors’ books” in order to “enhance its bargaining position” with the publisher. In that letter, the self-identified “literary novelists, Pulitzer Prize-winning journalists, and poets; thriller writers and debut and midlist authors” explained that “[n]o group of authors as diverse or prominent as this has ever come together before in support of a single cause.” During the contract dispute, Amazon allegedly “engaged in content control, selling some books but not others based on the author’s prominence or the book’s political leanings.”

This latest call for a Justice Department investigation comes one month after the European Commission (EC) announced that it had opened a formal antitrust investigation into Amazon's e-book distribution contracts with publishers. The EC is looking into whether Amazon, the largest distributor of e-books in Europe, violated antitrust laws by requiring publishers to give Amazon the right to be informed of more favorable or alternative terms offered to its competitors and/or the right to terms and conditions at least as good as those offered to its competitors. 

New Texas law says franchisors are not employers of franchisees or their employees

This story was written by Edward L. Puzzo, J.D.

Texas has enacted legislation, effective September 1, 2015, specifying that franchisors will not be considered to be the employers of--or in a co-employment relationship with--either franchisees or the franchisees' employees for any purpose, including employment discrimination law, wage and hour law, minimum wage law, professional employer organization law, workers compensation law, or workplace safety law.

This follows the 2014 issuance of unfair labor practice complaints by the National Labor Relations Board (NLRB) against fast food franchisor McDonald;s and a number of its franchisees, finding them to be joint employers.

When Sen. Charles Schwertner introduced the legislation (Texas Senate Bill 652), he acknowledged that the impetus for the bill was "recent decisions by the NLRB that have expanded the definition of an `employer,' called the common understanding of a franchisor-franchisee relationship into question, and opened the door to lawsuits against franchisors for the actions of franchisees."

The legislation does provide an exception for situations in which a franchisor has been found by a court of competent jurisdiction in the state to have "exercisted a type or degree of control over the franchisee or the franchisee's employees not customarily exercised by a franchisor for the purpose of protecting the franchisor's trademark and brand."

Mergers Reported under HSR Act Down Slightly in FY 2012

This posting was written by Tobias J. Gillett, Contributor to Wolters Kluwer Antitrust Law Daily.

The number of mergers reported under the Hart-Scott-Rodino (HSR) Premerger Notification Program between October 1, 2011 and September 30, 2012 decreased approximately 1.4% from the previous fiscal year, according to the Hart-Scott-Rodino Annual Report for fiscal year 2012, issued on April 31 by the FTC and Department of Justice Antitrust Division.

The report states that 1,429 transactions were reported under the HSR Act during FY 2012, down from the 1,450 reported in FY 2011, but still significantly more than the 1,166 reported in FY 2010 and the 716 reported in FY 2009.

During FY 2012, the FTC brought 25 merger enforcement actions, including three in which the Commission initiated administrative litigation; 15 in which it accepted consent orders for public comment; 14 which resulted in final orders (with one still pending); and seven in which the transactions were abandoned or restructured as a result of antitrust concerns raised during the investigation.

The Antitrust Division also challenged 19 merger transactions that it concluded might have substantially lessened competition if allowed to proceed as proposed. These challenges resulted in seven consent decrees, seven abandoned transactions, two restructured transactions, and three transactions in which the parties changed their conduct to resolve Justice Department concerns. In addition, the agencies brought two actions against parties for failing to comply with the HSR notification requirements, resulting in a total of $1.35 million in civil penalties.

Other highlights of the report include a 10.9% decline from FY 2011 in the number of merger investigations in which second requests were issued, from 55 in FY 2011 to 49 in FY 2012. The number of transactions in which early termination was requested decreased from 82% (1,157) of reported transactions to 78% (1,094) of such transactions, while the number of requests granted out of the total requested increased from 77% in fiscal year 2011 to 82% in fiscal year 2012.

The report also discusses recent developments in HSR enforcement, including the FTC’s August 2012 issuance of a Notice of Proposed Rulemaking proposing changes to the premerger notification rules. The changes would revise the rules to provide a framework for determining when a transaction involving the transfer of rights to a patent in the pharmaceutical industry is reportable under the HSR Act. The FTC also published adjustments to its reporting thresholds, as required by the 2000 amendments to Section 7A of the Clayton Act, that increase the threshold from $66 million to $68.2 million.

The report contains descriptions of various FTC and Antitrust Division enforcement actions and includes appendices with tables of statistics summarizing transactions from fiscal years 2003-2012, as well as tables regarding the number of transactions reported and filings received by month during that period and data profiling Hart-Scott-Rodino premerger notification filings and enforcement interests. The report concludes that the HSR Act continues to do "what Congress intended, giving the government the opportunity to investigate and challenge those relatively large mergers that are likely to harm consumers before injury can arise."

The HSR Act requires certain proposed acquisitions of voting securities or assets to be reported to the FTC and the Antitrust Division prior to consummation. It imposes a waiting period, usually of 30 days (15 days in the case of a cash tender offer or a bankruptcy sale), before the parties may complete the transaction. The FTC and DOJ can issue second requests for more information, which will extend the waiting period for 30 days (10 days in the case of a cash tender offer or a bankruptcy sale) after compliance with the request. The FTC and DOJ may challenge the transaction in federal district court or in administrative proceedings.

Supreme Court Will Not Review Application of “Single Publication Rule” Barring Chuck Yeager’s Publicity Rights, Lanham Act Claims

This posting was written by John W. Arden.

The U.S. Supreme Court has refused to review the Ninth Circuit’s application of the “single publication rule” to an allegedly unauthorized endorsement posted on a website in 2003, effectively barring on statute of limitations grounds Chuck Yeager’s claims brought under California right of privacy and publicity laws and the federal Lanham Act. The high court today denied the petition for certiorari in Yeager v. Bowlin, Docket No. 12-1047, filed February 22, 2013.

In 2008, well known pilot Yeager brought an action against Connie and Ed Bowlin, claiming that statements on their “Aviation Autographs” website violated California’s common law right of privacy and right of publicity statute and that the use of his name, likeness, and identity to market memorabilia violated the Lanham Act. The federal district court in Sacramento dismissed the claims, applying the single publication rule, holding that the claims accrued in 2003, and concluding that the claims were time-barred.

In an opinion addressing the California claims, the Ninth Circuit ruled that there was no evidence in the record that the Bowlins added or changed any statements about Yeager after October 2003 and thus the right of privacy and publicity claims were barred by the two-year statute of limitations.

In a separate unpublished memorandum decision, the Ninth Circuit held that Yeager’s Lanham Act false endorsement claim also was barred by the single-publication rule. The appeals court acknowledged that it had not resolved whether a statute of limitations defense applies to claims under the Lanham Act, which are of “equitable character.” However, the court declined to address the issue on the theory that Yeager waived this argument by failing to raise it in the district court in his opposition to a defense motion for summary judgment.

The single publication rule limits tort claims premised on mass communication to the original publication date. While created to apply to print publications, the single publication rule also governs publications on the Internet, according to the appeals court. “In print and on the internet, statements are generally considered ‘published’ when they are first made available to the public.”

Under the single publication rule, the statute of limitations is reset when a statement is republished. A statement in a printed publication is republished when it is reprinted in something that is not part of the same “single integrated publication.” One general rule is that a statement is republished when it is repeated or recirculated to a new audience. As previously held by the Ninth Circuit, website operators did not republish a statement by simply continuing to host the website.

Yeager argued that the website was republished—and the statute of limitations restarted—every time the website was added to or revised, even if the new content did not reference or depict Yeager. The Ninth Circuit disagreed. “We reject Yeager’s argument and hold that, under California law, a statement on a website is not republished unless the statement itself is substantively altered or added to, or the website is directed to a new audience.”

In his petition for review, Yeager asked: “Does California’s single-publication rule govern the accrual of a Lanham Act claim arising from a web-based merchant’s refusal to remove a celebrity’s unauthorized endorsement from a merchant’s website?”


Food Distributor Not Enjoined From Selling Refined Olive Oil as “100% Pure”

This posting was written by Jody Coultas, Editor of CCH Unfair Trade Practices Law.

The federal district court in New York City declined to enjoin food distributor Kangadis Food Inc. from selling refined olive oil labeled as "100% Pure Olive Oil" (North American Olive Oil Association v. Kangadis Food Inc., April 25, 2013, Rakoff, J.). However, the court ordered Kangadis to provide reasonable notice to potential consumers of its past mislabeling.

NAOOA, a trade organization that represents the olive oil industry, filed suit against Kangadis for allegedly falsely and deceptively marketing its olive oil and "100% Pure," when it actually contained an industrially-processed oil produced from olive pits, skins, and pulp called Pomace, in violation of the Lanham Act and New York General Business Law.

Kangadis admitted that its "100% Pure Olive Oil" product contained only olive-Pomace oil. On April 12, the court preliminarily enjoined Kangadis from labeling products containing Pomaceas "100% Pure Olive Oil" and from selling any product containing Pomace without including the ingredient on the label. NAOAA asked the court to enjoin Kangadis from selling 100% refined olive oil as "100% Pure Olive Oil" as Kagadis alleged it currently sold.

In order to obtain a preliminary injunction, the party must show irreparable harm and either a likelihood of success on the merits or sufficiently serous questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping toward the party requesting the injunction.

Irreparable Harm

NAOAA was able to demonstrate that it would suffer irreparable harm absent an injunction, according to the court. Under the Lanham Act, NAOAA needed to show that the parties were competitors in the olive oil market and there was a logical causal connection between the false advertising and its own sales position. The parties were clearly competitors in the olive oil market, and Kangadis’ false marketing of the cheaper Pomace oil as pure olive oil would harm other sellers. The labeling also induced consumers to purchase a lower quality product, which could lead consumers to lose faith in the olive oil market as a whole.

Likelihood of Success on Merits

The court declined to issue the requested injunction because the NAOAA could not show a likelihood of success on the merits of its Lanham Act false advertising claims. It was clear that Kangadis violated federal and state standards by selling refilled oil as "100% Pure Olive Oil." However, NAOAA failed to seek direct enforcement of the standards, which are either nonbinding or unenforceable through a private action. NAOAA also could not show that a reasonable consumer’s understanding of olive oil aligned with the standards. A consumer could view 100% Olive Oil as being silent on whether it was virgin or refined.

Balance of Hardships

There also was a lack of evidence of the balance of hardships to support NAOAA’s New York General Business Law false advertising claims, according to the court. To state a claim, NAOAA had to show that Kangadis’s act was consumer-oriented, material deceptive, and injured NAOAA. Although there was sufficient evidence to litgate whether Kangadis violated the New York law, NAOAA failed to show that the balance of hardships tipped in favor of an injunction. Althougth false advertising may hurt competitors in the market, it was unclear to what extent the market would be harmed.

The court granted NAOAA’s request for a notice to consumers regarding Kangadis’ past mislabeling of products containing Pomace. NAOAA was able to show to show that the labeling claims were literally false and actually misleading to consumers. The balance of hardships and public interest also tipped in favor of an injunction. Therefore, Kangadis was required to provide reasonable notice of its mislabeling.

NAOAA was ordered to post bond in order to adequately compensate Kangadis in the event the injunction was issued in error.

More Recent Articles

You Might Like