Enforcement Perspectives

on the

Noerr-Pennington

Doctrine

An FTC Staff Report

2006

Federal Trade Commission

DEBORAH PLATT MAJORAS Chairman

James C. Cooper, Deputy Director, Office of Policy Planning

Gregory P. Luib, Assistant Director, Office of Policy Planning

Christopher M. Grengs, Attorney Advisor, Office of Policy Planning

Alden F. Abbott, Associate Director, Bureau of Competition

This Report represents the views of the FTC staff and does not necessarily represent the views of

the Commission or any individual Commissioner. The Commission (with Commissioner Rosch

recused), however, has voted to authorize the staff to issue this Report.

Standard Oil Co. v. FTC, 340 U.S. 231, 248 (1951)); accord FTC v. Superior Court Trial

Lawyers Ass’n, 493 U.S. 411, 423 (1990).

U.S. CONST. amend. I.

The doctrine takes its name from the first two cases that the Supreme Court

considered in this jurisprudential line. See E. R.R. Presidents’ Conference v. Noerr Motor

Freight, Inc., 365 U.S. 127 (1961), and United Mine Workers of America v. Pennington, 381

U.S. 657 (1965). This line of cases is referred to collectively as the “Noerr” doctrine in the

remainder of the Report.

conduct that impedes competition. As the United States Supreme Court has observed,

“ultimately competition will produce not only lower prices, but also better goods and services.

‘The heart of our national economic policy long has been faith in the value of competition.’”

In

some circumstances, however, courts must harmonize competition values with other values, such

as the ability of citizens to request government action, even if such action would hinder or

supplant competition. The First Amendment guarantees citizens freedom of speech, of assembly,

and “to petition the government for a redress of grievances.”

To avoid a conflict with these

require deference, but accommodating these values sometimes also imposes costs on consumers.

4

Thus, it is important to consumer welfare to analyze carefully these values when determining the

extent to which anticompetitive conduct is properly shielded from antitrust challenge.

Commission) has undertaken an examination of the Noerr-Pennington doctrine. This Report

provides the staff’s views on how best to interpret the application of the Noerr doctrine to three

By singling out for analysis the three types of conduct addressed in this Report,

types of conduct where the risk to competition is great and antitrust enforcement need not

impinge on the values underlying Noerr. Guiding staff’s choice of these particular circumstances

are its recent enforcement experience and its assessment of the types of issues the Commission is

likely to encounter in the future.

5

unlikely to generate cognizable efficiencies)).

United Mine Workers v. Illinois State Bar Ass’n, 389 U.S. 217, 222 (1967).

Introduction

parties, acting either unilaterally or in concert, from improperly acquiring and exercising market

power to the detriment of consumers. One of the most effective ways for parties to acquire or

maintain market power is through the abuse of government processes. The cost to the party

engaging in such abuse typically is minimal, while the anticompetitive effects resulting from

6

enforcement agency must take into account other considerations. As the Supreme Court has

explained in a series of cases that has come to be known collectively as the Noerr-Pennington

doctrine, courts must interpret the Sherman Act in a way that respects the ability of government

to take and the rights of citizens to request government action – even when that government

action limits or eliminates competition. Grounded in First Amendment principles and concerns

about impinging on the governmental decision-making process, the protection provided by Noerr

and its progeny furthers important goals in our democracy. As the Supreme Court has noted, the

right to petition government is “among the most precious of the liberties safeguarded by the Bill

of Rights.”

goals.

Commission), available at http://www.ftc.gov/os/adjpro/d9305/050802statement.pdf. At the

same time, the Commission stressed how the type of intentional misrepresentations alleged in

Unocal do not further any values protected by the First Amendment and hamper effective state

For additional information on the generic drug approval process, see Bristol-

Myers Squibb Co., FTC Dkt. No. C-4076, at 3-4 (2003) (complaint), available at

http://www.ftc.gov/os/2003/04/bristolmyerssquibbcmp.pdf.

enforcement, it is important to understand both the benefits and costs of that protection.

gained through the Commission’s recent activities, this Report focuses on the proper application

of Noerr protection to three types of conduct that can use government processes to seek

anticompetitive rewards: 1) requests for ministerial government acts; 2) misrepresentations to a

government decision maker in a non-political context; and 3) repetitive requests for government

action filed regardless of merit solely to use the government process to suppress competition. A

conduct in connection with this process was protected under Noerr. The FDA makes public the

patents identified by branded-drug companies as claiming a given product in a publication

entitled “Approved Drug Products with Therapeutic Equivalence Evaluations,” which is

commonly referred to as the “Orange Book.” To obtain approval to make and sell a generic

version of a branded drug, a company must provide certification to the FDA that there is no valid

patent listed with the FDA that will be infringed by marketing of the generic product.

however, simply lists such patents; it performs no independent review of the patents. In In re

Buspirone, generic drug manufacturers charged that Bristol-Myers Squibb had fraudulently filed

a patent with the FDA for its branded drug. The filing caused the FDA to list the patent in

question in the Orange Book, and that listing, in turn, enabled Bristol-Myers Squibb to trigger a

ultimately held that Noerr did not shield the Orange Book filing.

Bristol-Myers Squibb, alleging that it engaged in a pattern of anticompetitive conduct to delay

market entry by low-price generic substitutes for three branded drugs, including (1) making false

and misleading statements to the Patent and Trademark Office (PTO) to obtain unwarranted

patent protection; (2) making false and misleading statements to the FDA to obtain listing of

patents in the Orange Book that did not satisfy the statutory listing criteria; (3) filing meritless

processes is the FTC’s recent case against Union Oil Company of California (Unocal), in which

the Commission addressed the application of Noerr to misrepresentations to the government

outside of the political context. In Unocal, the Commission reinstated charges that Unocal

illegally acquired monopoly power in the technology market for low-emission reformulated

gasoline by misrepresenting to the California Air Resources Board (CARB) that certain

information was non-proprietary and in the public domain, while at the same time pursuing

patents that would enable Unocal to charge substantial royalties if CARB enacted regulations that

effectively required complying refiners to use Unocal’s technology. The Commission and

Unocal ultimately entered into a consent order in which Unocal agreed to refrain from enforcing

its patents.

doctrine and then examines in greater depth the issues surrounding the application of Noerr to

365 U.S. 127.

Relations Act. See BE & K Constr. Co. v. NLRB, 536 U.S. 516 (2002); Bill Johnson’s Rests.,

Inc. v. NLRB, 461 U.S. 731 (1983). The Court, however, has never explained precisely which

federal statutes are affected by Noerr or whether the FTC Act is among them. Accordingly, this

Report is concerned only with the application of Noerr to the Sherman Act.

365 U.S. at 135-44.

Part I: History and Underpinnings of the Doctrine

the Supreme

Court first recognized that liability under the Sherman Act

may not be premised on concerted

efforts to secure government-imposed restraints on competition. In Noerr, trucking companies

sued a group of railroads and their public relations firm for conspiracy to monopolize the long-

distance freight business. The trucking companies alleged that the defendants had conspired to

conduct a public relations campaign to encourage the adoption of laws destructive of the trucking

business, as well as to disparage truckers to both their customers and the general public. The

petitioning was to harm competitors: “The right of the people to inform their representatives in

government of their desires with respect to the passage or enforcement of laws cannot properly

be made to depend upon their intent in doing so.”

would make liability for urging government action turn on intent to advantage oneself at the

expense of marketplace rivals, reasoned the Court, would both deprive government of “a

404 U.S. 508 (1972).

Id. at 512 (internal quotation omitted).

valuable source of information” and “deprive the people of their right to petition in the very

instances in which that right may be of the most importance to them.”

petitioning activity that, although “ostensibly directed toward influencing governmental action, is

a mere sham to cover what is actually nothing more than an attempt to interfere directly with the

business relationships of a competitor.”

the antitrust laws would be appropriate.

legislative arena to prohibit an antitrust challenge to a petition by a mine workers’ union and a

Authority) that sought a higher minimum wage for mining companies wishing to sell coal to the

agency. The Court reiterated that it is irrelevant to the Noerr analysis whether parties seek

government action that would hinder rivals: “Joint efforts to influence public officials do not

violate the antitrust laws even though intended to eliminate competition.”

14

legitimate grievance and further explained that “unsuccessful but reasonably based suits advance

some First Amendment interests” by allowing “public airing of disputed facts” and promoting the

“evolution of the law by supporting the development of legal theories.”

constitutional question, holding that the NLRB’s standard was invalid because there was nothing

in the relevant statutory text to suggest that it “must be read to reach all reasonably based but

unsuccessful suits filed with a retaliatory purpose.”

In light of the BE & K decision, the Ninth

additional basis for the Noerr doctrine. The Sherman Act regulates business activity, not

political activity, and Noerr ensures that antitrust law does not impinge on government decision-

making. The Court has expressed concern that a rule limiting citizens’ right to petition their

government for anticompetitive rules may hinder governmental decision-making. Specifically, in

Noerr the Court noted that “to a very large extent, the whole concept of representation depends

upon the ability of the people to make their wishes known to their representatives.”

Subjecting

legitimate lobbying to antitrust scrutiny would deter this valuable conduct and hence “would

substantially impair the power of government to take actions through its legislature and executive

Omni, 499 U.S. at 379.

Id.

15

from Sherman Act scrutiny, then these same considerations must protect private conduct to urge

such action:

[W]here a restraint upon trade or monopolization is the result of

valid governmental action, as opposed to private action, no

violation of the Act can be made out. These decisions rest upon

the fact that under our form of government the question whether a

provision of the Constitution. We think it equally clear that the

associating together in an attempt to persuade the legislature or the

executive to take particular action with respect to a law that would

produce a restraint or monopoly.

Citing Parker, the Court continued: “To hold that the government retains the power to act in this

representative capacity and yet hold, at the same time, that the people cannot freely inform the

government of their wishes would impute to the Sherman Act a purpose to regulate, not business

activity, but political activity, a purpose which would have no basis whatever in the legislative

history of that Act.”

the States’ acts of governing, and the latter the citizens’ participation in government.”

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Part II: Delineating the Proper Parameters of the Doctrine

sovereign capacity to hinder or supplant competition and the ability of citizens to request such

government action. Equally clearly, the doctrine recognizes that not all activities directed at

government are genuine attempts to request a sovereign government action. What is not clear,

however, are the exact boundaries of Noerr’s protection for such activities, and neither the

animating antitrust enforcement with respect to the three varieties of conduct addressed herein.

with anticompetitive conduct in the form of communications with the government. Given that

limits on competition impose substantial costs on consumers, staff believes it is vital to consumer

welfare to avoid setting the boundaries of Noerr protection beyond the limits compelled by the

First Amendment or effective government decision-making concerns. It would be pointless to

permit anticompetitive behavior to thrive and inflict increasing harm on consumers, if such

behavior does not advance the important values Noerr is meant to safeguard.

U.S. political system. Although our government could not function properly without open

access, it is also true that the abuse of governmental processes can impose a substantial financial

vindicating legal rights. Firms can also use repetitive administrative filings to inflict similar

government decision maker to exercise its discretion to decide in a certain way. In some cases,

called a sham, a variant of sham, or something else, this Report instead focuses on whether

sheltering such conduct from the antitrust laws protects the values identified in Noerr. Thus, for

E. R.R. Presidents’ Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 144

(1961).

City of Columbia v. Omni Outdoor Adver., Inc., 499 U.S. 365, 380 (1991)

(emphasis in original).

17

however, the government decision maker lacks discretion to evaluate the communication and

must simply accept it and its contents.

inquiry. For example, current case law supports an exception to Noerr for material

misrepresentations or omissions made to government decision makers outside of the political

arena.

in which a publicity campaign, ostensibly directed toward influencing governmental action, is a

“encompasses situations in which persons use the governmental process – as opposed to the

petitioning “is not genuinely aimed at procuring favorable government action,” the sham

exception applies.

raises serious competitive concerns under certain circumstances. For each, we show that it is

feasible to apply the antitrust laws without intruding upon the principles that Noerr and its

progeny seek to protect.

Black’s Law Dictionary 1145 (6th ed. 1990). Because not all communications

concern that some lower courts have not sufficiently grasped this distinction, with the result that

“[p]arties have been granted Noerr protection even if the anticompetitive conduct at issue had no

‘petitioning’ component whatsoever.”); Raymond Ku, Antitrust Immunity, the First Amendment

and Settlements: Defining the Boundaries of the Right to Petition, 33 IND. L. REV. 385, 404

(2000) (“Valid petitioning is defined as a formal or informal attempt to persuade an independent

governmental decision maker . . . .” If no such attempt is made, the protection is not triggered,

regardless of whether the criteria for a “sham” are met.) (emphasis added); Gregory A. Mark, The

Vestigial Constitution: The History and Significance of the Right to Petition, 66 FORDHAM L.

was a communication that, 1) had to be addressed to an authority such as the King, 2) had to state

a grievance, and, 3) had to pray for relief”) (emphasis added).

18

Black’s Law Dictionary defines a “petition” as “[a] written address, embodying an application or

prayer from the person or persons preferring it, to the power, body, or person to whom it is

presented, for the exercise of his or their authority in the redress of some wrong, or the grant of

some favor, privilege, or license.”

As the Noerr Court itself noted, petitioning activity is by its

nature “directed toward obtaining governmental action.”

constitute “petitioning” within the meaning of Noerr, and those petitioning communications that

the status under Noerr of a tariff filed by AT&T with the Federal Communications Commission

(FCC), which required the use of an AT&T interface device to connect non-AT&T telephone

equipment to the Bell System network. Because the tariff filings at issue there were mechanical

and the FCC’s consideration of them ministerial, the Second Circuit concluded they did not

amount to petitioning under Noerr:

AT&T erroneously assumes that a mere incident of regulation – the

tariff filing requirement – is tantamount to a request for

governmental action akin to the conduct held protected in Noerr

Id. at 807 (emphasis in original).

See, e.g., Ticor Title Ins. Co. v. FTC, 998 F.2d 1129, 1138 (3d Cir. 1993) (holding

that a collective rate filing is not a petition to the government); City of Kirkwood v. Union Elec.

Co., 671 F.2d 1173, 1181 (8th Cir. 1982) (holding that utility rate filings are not protected

regulators for tariff changes are not protected petitions), modified on other grounds, 908 F.2d

1064 (1st Cir. 1990); In re Wheat Rail Freight Rate Antitrust Litig., 579 F. Supp. 517, 537-38

(N.D. Ill. 1984) (finding that a tariff filing is not protected under Noerr because “[t]hough the

[ICC] may reject a tariff on its own initiative or at the request of a third party, the filing of a tariff

itself cannot be considered a ‘petition’ to the government.”); AREEDA & HOVENKAMP, supra note

77, ¶ 210 (collecting cases).

Litton, 700 F.2d at 807. Cf. Noerr, 365 U.S. at 138 (protected petitioning

19

and Pennington. But in this case, as in Continental Ore Co. v.

Union Carbide & Carbon Corp., 370 U.S. 690, 707 (1962), the

Noerr-Pennington doctrine is “plainly inapposite” because AT&T

was “engaged in private commercial activity, no element of which

involved seeking to procure the passage or enforcement of laws.” .

. . AT&T cannot cloak its actions in Noerr-Pennington immunity

simply because it is required, as a regulated monopoly, to disclose

publicly its rates and operating procedures.

requesting governmental action nor expressing a political opinion, and this “essentially

require purely ministerial action and do not involve discretionary judgment or adjudication.

reflects in part the reality that, with the former, there is little check on the truth or falsity of

parties’ representations, whereas with the latter, the government decision maker can assess

veracity and weigh those statements in accordance with the public interest. Under Noerr, it is

both the nature of the submission (informational or persuasive) and the nature of the

governmental agency’s review (ministerial or discretionary) that determine whether a given

protected petitioning under Noerr, but arguing to a legislature or regulator that a competitor’s

700 F.2d at 807-08.

legislation were Noerr-protected); Mass. Sch. of Law at Andover, Inc. v. ABA, 107 F.3d 1026,

1037-38 (3d Cir. 1997) (affirming district court’s holding that efforts by the ABA to convince

states to prohibit graduates of unaccredited law schools from taking the bar examination were

Noerr-protected); PTI, Inc. v. Philip Morris, Inc., 100 F. Supp. 2d 1179, 1193 (C.D. Cal. 2000)

(holding that “activities involved with the negotiation, execution, and attempts to implement the

[tobacco litigation] MSA, the Qualifying Statute, and the Model Act” were Noerr-protected);

Omega Homes, Inc. v. City of Buffalo, 4 F. Supp. 2d 187, 193-94 (W.D.N.Y. 1998) (holding that

20

communication may be shielded from antitrust enforcement. Thus, while advocacy filings in

political contexts are protected, informational filings in ministerial contexts are not.

still found that AT&T’s filings were not shielded by Noerr:

The fact that the FCC might ultimately set aside a tariff filing does

not transform AT&T’s independent decisions as to how it will

conduct lawful, particularly where, as in this case, the agency

84

providing content of the filing, or (2) an absence of judgment or discretion on the part of the

government agency – has been present in recent cases in which Noerr was held to apply. Rather,

cases in which Noerr is successfully invoked typically involve efforts to persuade or negotiate

with the government to promulgate statutes or regulations, enter into agreements, or engage in

law enforcement actions (i.e., appeals to the substantive judgment or discretion of a government

agent).

that efforts to convince city council to initiate a lawsuit to dissolve a local redevelopment

authority were Noerr-protected).

2002), which also dealt with Orange Book filings. It might be argued that the Twin City Bakery

is only relevant to the triggering of a 45-day stay of generic drug approval, not a 30-month stay,

as the latter, longer, and hence more competitively significant stay can only be triggered by the

combination of an Orange Book filing and a patent infringement lawsuit. The argument would

continue that, because a 30-month stay is necessarily triggered, in part, by the filing of a lawsuit,

which is clearly Noerr-protected conduct, no antitrust liability may follow.

Clayton Act or Section 2 of the Sherman Act. See 3 PHILLIP E. AREEDA & HERBERT

HOVENKAMP, A NTITRUST LAW, ¶ 707a, at 200 (2d ed. 2002); U.S. Dep’t of Justice and FTC,

Antitrust Guidelines for the Licensing of Intellectual Property § 5.7 (1995). In such a case, the

anticompetitive effect occurs only because of the combined impact of two separate causes: (1) a

non-Noerr protected step – the acquisition of the patent, and (2) a subsequent Noerr-protected

step – enforcement of the patent through infringement litigation. In the Orange Book context, as

the Buspirone court explained, an Orange Book filing can cause an anticompetitive effect in

21

exercise of governmental discretion or judgment has been extended beyond the tariff-filing

context. In In re Buspirone,

of certain patents in the FDA’s Orange Book was shielded by the Noerr doctrine. Defendant

Bristol-Myers Squibb asserted, among other things, that the mere fact that its patent filings were

accepted and reviewed by the FDA was sufficient to trigger Noerr protection, but the Buspirone

court rejected this argument.

FCC in the tariff-filing process, the Buspirone court focused on the passive role of the FDA in

activity” under Noerr because the FDA’s action is “purely ministerial”); Mylan Pharms., Inc. v.

Thompson, 139 F. Supp. 2d 1, 10-11 (D.D.C.) (noting the FDA’s own characterization of its role

in listing patents as “purely ministerial”), rev’d on other grounds, 268 F.3d 1323 (Fed. Cir.

2001).

In re Buspirone, 185 F. Supp. 2d at 369.

22

the Orange Book listing process. Like the FCC, the FDA expressly declined to rule on the

legality of the filings in question.

government are protected, it is critical to distinguish between activities in which the decision

maker acts “only after an independent review of the merits of the petition,” and those in which

the decision maker acts “in a merely ministerial or non-discretionary capacity in direct reliance

on the representations made by private parties.”

agenda. As the Buspirone court explained, “[o]ne of the reasons for extending Noerr-Pennington

often only obtain the anticompetitive effects in question by first convincing the government of

the merits of their views and by obtaining a valid and independent governmental decision, which

intervenes between the private parties’ actions and these anticompetitive results.”

do not is instructive for determining the boundaries of Noerr in other contexts. Where the

communication furthers the exercise of governmental discretion or judgment, it likely warrants

protection. Where it does not further – or even undermines – a valid and independent

government decision, it likely deserves no special treatment and should be subject to the antitrust

laws. This analysis provides guidance for evaluating whether certain communications to the

Supreme Court, without mentioning the Noerr doctrine, concluded that the enforcement of a

486 U.S. at 503 (rejecting the “absolutist position that the Noerr doctrine

immunizes every concerted effort that is genuinely intended to influence governmental action”).

Id. at 499 (comma omitted).

23

whether a misrepresentation exception is an independent exception or a variety of sham, it is

distinguishable from the PRE sham litigation exception.

There are instances in which parties

may mislead government decision makers in an attempt to secure government action that harms

competition.

initiation of baseless litigation, in that the purpose of making the misrepresentations likely is to

obtain government action.

Because the parties in such cases are concerned with the outcome of

the governmental process (as distorted by the parties’ misrepresentations), and not just with using

the process itself to hamper competitors, rigid application of PRE’s sham test fails to identify the

Transport, in which the Court observed: “Misrepresentations, condoned in the political arena,

stressed that the Noerr doctrine does not protect all genuine attempts to procure governmental

action.

activity.”

Thus, for example, Noerr protects a publicity campaign that employs unethical and

deceptive methods in seeking legislative or executive action, “[b]ut in less political arenas,

unethical and deceptive practices can constitute abuses of administrative or judicial processes

that may result in antitrust violations.”

The reason for this distinction is that there is an

expectation that the information supplied to the government in a non-political context is not

public comment), available at http://www.ftc.gov/os/2003/03/bristolmyersanalysis.htm.

508 U.S. at 57.

Id.

Id. at 67. The concurring opinion asserted that the majority exaggerated the

filing of a single lawsuit, and “set up a straw man to justify its elaboration of a two-part test

describing all potential shams.” Id. at 69 (Stevens, J., concurring).

30

lawsuits “without regard to the merits,” repeated filings of patents with the FDA “without regard

to their validity, enforceability, or listability,” and repeated filing of false statements with

government agencies – constituted “a clear and systematic pattern of anticompetitive misuse of

the government process,” and thus was outside of the scope of Noerr’s protection.

plaintiff to show that each underlying filing meets PRE’s test for objective baselessness can be

found in California Motor Transport.

In that case, the plaintiff alleged that a group of trucking

that such a pattern of actions brought “with or without probable cause, and regardless of the

been abused in a way that justifies application of a sham exception to Noerr.

decision had left unresolved the question of whether “litigation may be sham merely because

subjective expectation of success does not motivate the litigant.”

The Court then answered the

question in the negative, stating that “an objectively reasonable effort to litigate cannot be sham

regardless of subjective intent.”

The concurring opinion by Justice Stevens, joined by Justice

O’Connor, however, raised questions about the “unnecessarily broad dicta” in the majority

opinion, disagreeing with “the Court’s equation of ‘objectively baseless’ with the answer to the

question whether ‘any reasonable litigant could realistically expect success on the merits.’”

hard to apply when there is evidence that the judicial process has been used as part of a larger

program to control a market and to interfere with a competitor’s financing without any interest in

the outcome of the lawsuit itself.” PRE, 508 U.S. at 73. In Otter Tail, the Supreme Court

reconsider whether this conduct was protected under Noerr in light of the Court’s decision in

California Motor Transport. Otter Tail, 410 U.S. at 379. On remand, the district court held that

“the repetitive use of litigation by Otter Tail was timed and designed principally to prevent the

establishment of municipal electric systems,” and fell within the sham exception to Noerr as

articulated in California Motor Transport. United States v. Otter Tail Power Co., 360 F. Supp.

451, 451-52 (D. Minn. 1973). The Supreme Court affirmed this finding without comment. Otter

Tail Power Co. v. United States, 417 U.S. 901 (1974).

31

cases, in which the plaintiff is indifferent to the outcome of the litigation itself, but has

nevertheless sought to impose a collateral harm on the defendant, by for example, impairing his

credit, abusing the discovery process, or interfering with his access to government agencies.”

of which are successful and some unsuccessful, may support an inference that the process is

being misused. In such a case, a rule that a single meritorious action can never constitute a sham

cannot be dispositive.”

to harm marketplace rivals may be inferred from evidence such as the plaintiff’s failure to

California Motor Transport to hold that a pattern of invoking the judicial or administrative

process, without regard to the individual merit of each filing and with the intent to harm

competitors, amounts to an abuse of government process that is not shielded from antitrust

enforcement by Noerr, even though some of the filings individually may not meet PRE’s

standard for objective baselessness.

Id.

The court used the success rate as a means to infer whether the litigation was filed

without regard to merit. See id. (that more than half of the actions turned out to have merit

“cannot be reconciled with the charge that the unions were filing lawsuits and other actions

willy-nilly without regard to success”).

Primetime 24, 219 F.3d at 101.

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In USS-POSCO, the Ninth Circuit stated that PRE’s evaluation of a single suit is

“essentially retrospective: If the suit turns out to have objective merit, the plaintiff can’t proceed

to inquire into subjective purposes, and the action is perforce not a sham.”

Because the

Supreme Court recognized in California Motor Transport, however, that a series of suits can

inflict much more harm on a competitor than a single suit, the Ninth Circuit reasoned that

“[w]hen dealing with a series of lawsuits, the question is not whether any one of them has merit –

some may turn out to, just as a matter of chance – but whether they are brought pursuant to a

policy of starting legal proceedings without regard to the merits and for the purpose of injuring a

Because the defendants in USS-POSCO had succeeded in fifteen of twenty-nine suits, however,

defense.

involved allegations that the defendants violated Section 1 of the Sherman Act by coordinating a

series of repeated signal-strength challenges under the Satellite Home Viewer Act, without

regard to the merits of each, for the purpose of injuring a market rival. When adjudicating

defendants’ Noerr defense, the court followed USS-POSCO, citing its distinction between the

retrospective test for a single suit under PRE and the prospective test for multiple suits.

Applying this standard, the court concluded that defendants’ conduct was not entitled to Noerr

protection because Primetime 24 had alleged adequately that the signal-strength challenges were

Amoco Corp., 926 F. Supp. 948, 959 (S.D. Cal. 1996).

192 F. Supp. 2d 519, 537 (M.D. La. 2001).

Id. at 538-39.

Id. at 541.

Unlike California Motor Transport, which concerned numerous filings in various

fora, PRE involved an allegation that a single copyright infringement lawsuit was a sham “that

33

defendant of Noerr protection for a pattern of litigation.

Jefferson Downs Corp.,

the plaintiff alleged that defendants had engaged in a pattern of

baseless litigation designed to “prevent or delay its entry into the market for live horse racing.”

The court concluded that because the defendants “filed a series of predatory lawsuits” with

“repetitive and groundless claims,” it should “invoke the USS-POSCO variant of the sham-

litigation analysis.”

lawsuits necessary to trigger the prospective test of California Motor,” the “approximately nine

petitioning is involved, recognizing that such cases may present more complex fact patterns and,

in some instances, graver antitrust harm. Implicit in these decisions appears to be a view that to

the extent that PRE limited California Motor Transport, it did so only with respect to cases

presenting facts similar to those in PRE, not those involving repetitive use of government

processes to hinder competitors directly. Although the PRE Court made clear that California

Motor Transport fits within the Court’s consistent requirement that only objectively baseless

conduct would forfeit Noerr protection, PRE did not involve repetitive conduct,

that PRE articulated may need to be applied flexibly to take into consideration the particular

circumstances presented by repetitive conduct.

PRE, 508 U.S. at 73 (Stevens, J., concurring).

174 F.3d 1337 (Fed. Cir. 1999). See also Globetrotter Software, Inc. v. Elan

Computer Group, Inc., 362 F.3d 1367, 1377 (Fed. Cir. 2004) (holding that the district court

properly granted summary judgment for defendant on state unfair competition claims that were

plaintiff made no attempt to show that the underlying claims of patent infringement were

objectively baseless).

34

case, the Court held that Noerr does not “immunize[] every concerted effort that is genuinely

intended to influence governmental action.”

Instead, in cases where the restraint on

competition is the result of private rather than government action, the “validity” of the effort to

urge government action, even if not a sham, must be judged by the “nature and context” of the

activity: “in less political arenas, unethical and deceptive practices can constitute abuses of

administrative or judicial processes that may result in antitrust violations.”

Thus, even if some

petitions in a pattern were, by themselves, objectively reasonable under PRE – and thus deemed

pattern exception to Noerr exists after PRE. Some district courts, however, have expressed

skepticism about a pattern exception. In Travelers Express Co. v. American Express Integrated

Equipment Development, Inc. v. Besten,

as applying PRE’s standard for objective baselessness

to each filing in a pattern of repetitive petitioning. Given the small number of suits in Besten

See USS-POSCO, 31 F.3d at 811 (“[w]hen dealing with a series of lawsuits, the

question is not whether any one of them has merit . . . but whether they are brought pursuant to a

market rival.”) (emphasis added); Primetime 24, 219 F.3d at 101 (PRE’s two-part test is

applicable only when “determining whether a single action constitutes sham petitioning”)

into the defendant’s win-rate is not a separate PRE inquiry into each case, but “merely . . .

circumstantial evidence of the defendants’ intent in filing them. In effect, the POSCO court

inferred that, inasmuch as most of the suits had merit, the defendants’ purpose in filing them was

not to delay or harass the plaintiff, but rather was to achieve a favorable ruling.” 192 F. Supp. 2d

31 F.3d at 810 (emphasis in original).

35

language from each court expressly stating that the test it is applying is distinct from that in

PRE.

question “[w]hether litigation that is not objectively baseless can still constitute ‘sham litigation’

sufficient to eliminate . . . Noerr-Pennington immunity.”

political arena, a pattern of repetitive petitions filed without regard to merit and for the sole

purpose of using the government process, rather than the outcome of the process, to harm directly

rivals differently from single lawsuits.

what is actually nothing more than an attempt to interfere directly with the business relationships

of a competitor.”

however, courts strive to avoid rules that chill incentives to petition; a legal rule that too easily

allows a plaintiff to bring an antitrust challenge to petitioning conduct would impose significant

costs on society. When trying to discern whether petitioning conduct evidences a scheme to

restrict competition, one lawsuit is unlikely to provide courts with sufficient information to

determine with any degree of precision the true nature of a defendant’s petitioning conduct.

Thus, given the high risk of erroneously subjecting legitimate petitioning conduct to antitrust

scrutiny, PRE’s high threshold represents a sensible rule when courts face only one data point.

See supra Part II.A for a discussion of the important distinction between

communications that call for a purely ministerial response from the government and those that

conclusion that for a misrepresentation to lose Noerr protection, the misrepresentation must be

central to the legitimacy of the affected government proceeding.

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Even though parties can initiate either a baseless or a reasonably based suit with the intent to

hinder marketplace rivals, only when a challenged suit stands no objective chance of success can

a court safely conclude that the suit was not brought to redress a grievance.

thus is likely to be in a better position to determine accurately whether a defendant’s conduct is

best characterized as a misuse of governmental processes that conceals an attempt directly to

harm marketplace rivals and suppress competition. Because the risk of error is likely lower in

conduct.

exception for repetitive petitioning should be cabined by the values underlying Noerr itself, such

as providing “breathing space” for legitimate petitioning and avoiding unnecessary interference

with the governmental decision-making process. Thus, for example, repetitive petitions to a

legislature should be sheltered from antitrust liability for the same reasons that

misrepresentations to a legislature are sheltered. Further, another prerequisite that avoids undue

burdens on the interests surrounding government decision-making is the requirement that the

competitive harm spring directly from the defendant’s actions rather than from a discretionary act

that truly can be ascribed to the government decision maker.

concurrence to PRE, “[t]he distinction between abusing the judicial process to restrain

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Part III: Recommendations

in the antitrust laws while fully respecting the core values identified in Noerr when analyzing

three types of conduct: filings that seek only a ministerial government response, material

misrepresentations, and repetitive petitioning. As explained in the following recommendations,

the Commission should take appropriate opportunities – either in cases brought by the

communications with government that do not require discretionary action by a government

decision maker. An over-broad application of Noerr to any interaction with the government

would shield anticompetitive conduct from antitrust enforcement, potentially resulting in

substantial consumer harm, without advancing any countervailing political objective.

review is discretionary or simply an automatic response. Likewise, a communication that seeks a

discretionary review by the governmental decision maker may be evidence of Noerr petitioning,

whereas a filing requiring mere ministerial review may not. For example, an advocacy filing may

be indicative of petitioning, whereas a merely informational submission may not.

misrepresentations, outside of the political arena, that meet the standards set

forth in the Commission’s Unocal decision.

misrepresentation exception not subject to PRE in its recent decision in Unocal.

standard-setting contexts, such as the one at issue in Unocal, courts and the Commission should

carefully scrutinize deliberate and material misrepresentations that deprive governmental

proceedings of their legitimacy in other non-political contexts. For example, to the extent that

misrepresentations in the FDA drug-approval context are deemed actual petitioning potentially

See discussion supra Part II.A.

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protected by Noerr (rather than ministerial filings not subject to Noerr),

whether Unocal and other relevant case law would disqualify such misrepresentations from

Noerr protection.

repetitive petitioning, outside of the political arena, filed without regard to

merit that employ government processes, rather than the outcome of those

processes, to harm competitors in an attempt to suppress competition.

any) predation is accomplished through pricing, while a good deal is achieved through

impose far greater costs on a competitor than a single lawsuit, both in delay and expense of

responding.

particularly meritless litigation – as an anticompetitive weapon. Nevertheless, courts and the

arena that has directly harmed a competitor through the cost and delay associated with

responding to such filings would not conflict with the values that Noerr was intended to protect

while furthering consumers’ interest in marketplace competition that the antitrust laws were

designed to protect.