On May 18th, 2016, OnPoint expert Dr. Stephen Hamilton presented the results of his recent research and answered stakeholder questions as part of a public workshop hosted by the California Air Resources Board (“CARB”) at their headquarters in downtown Sacramento. The workshop marked the initial public release of three studies funded by CARB to investigate potential improvements to the current metrics used for determining the risk of emissions leakage in various industrial sectors. CARB commissioned three studies to inform this sector-by-sector assessment in 2012, and the studies were completed earlier this month.

The first two studies–led by researchers at the University of California, Berkeley, and Resources for the Future–measured international and domestic emissions leakage, respectively, for most industrial sectors that are directly regulated under the Cap-and-Trade program. The third study, led by Dr. Hamilton, measured the potential market transfer and emissions leakage in select food processing industries within the state that would result from the enforcement of proposed greenhouse gas (“GHG”) regulations under California’s Cap-and-Trade Program.

GHG regulations that raise energy input prices at food processing plants in California have the effect of selectively raising the cost of food processing for California plants, creating a cost advantage for unregulated plants in other production regions. The analysis conducted by Dr. Hamilton demonstrates how selective GHG regulation in California’s Cap-and-Trade Program can result in the substantial market transfer of production from California food processing industries to food processors that produce in unregulated regions outside of the state. These market transfer effects hinder well-functioning GHG regulations by reducing regional manufacturing activity in the state, thus decreasing both tax revenue and employment. Additionally, the associated transfer of production from California to other regions causes leakage of GHG emissions across state (and national) lines, dampening the effect of GHG regulations on global climate outcomes.

The results of Dr. Hamilton’s study will help to inform CARB about critically important aspects of the policy that need to be evaluated as the program’s third compliance period comes into effect in 2018. Dr. Hamilton’s work will therefore play a significant role in the formation and implementation of effective policies and regulations that will help ensure California is at the forefront of the battle to combat issues involving global air pollution and emissions leakage–two major factors driving global climate change.

For more information about the CARB Workshop, click here.
To read Dr. Hamilton’s study, click here.

In an Amended Final Judgment issued on April 25, 2016, Judge William H. Orrick upheld the jury’s award of $10,240,000 to the plaintiff in Fujifilm Corp. v. Motorola Mobility Holdings Inc. et al. Following a two-week trial held in the U.S. District Court for the Northern District of California last year—during which OnPoint expert Dr. Gareth Macartney provided both direct and rebuttal testimony as Fujifilm’s damages expert—the seven-person jury awarded Fujifilm $10.2 million in damages after determining that Motorola infringed upon U.S. Patent 6,144,763, a method of converting digital color photos to monochrome. The jury’s verdict on damages aligned with the estimates provided by Dr. Macartney, rather than those provided by Motorola’s damages expert. While the jury found that the three other patents at issue in the case (pertaining to face-detection and wireless data transfer) were invalid, the $10.2 million award for the ‘763 patent alone exceeded the damages estimated by Motorola’s damages expert for all four patents combined. In his latest order, Judge Orrick found that “most if not all” of Motorola’s post-verdict critiques of Dr. Macartney’s damages opinions were merely reiterations of arguments the Court had previously rejected in its ruling to deny Motorola’s motion to exclude Dr. Macartney’s testimony from trial. The Court also awarded Fujifilm pre-judgment interest at the prime rate, compounded quarterly, as calculated by Dr. Macartney.

OnPoint experts Gordon Rausser and Gareth Macartney co-authored an article featured in the Spring 2016 issue of Antitrust Magazine—an issue entirely devoted to class actions on the 50^th anniversary of the 1966 amendments to Rule 23 of the Federal Rules of Civil Procedure, which governs class action cases in federal courts. The article, entitled “Economic Principles for Class Certification Analysis in Antitrust Cases,” explores how certification standards have become increasingly rigorous in class action litigation, particularly with recent landmark rulings in In re Hydrogen Peroxide Antitrust Litigation (2008), Wal-Mart Stores, Inc. v. Dukes (2011), and Comcast Corp. v. Behrend (2013). In the article, Dr. Rausser and Dr. Macartney address the methodological failures that dismantled class certification in these cases, the new certification standards created by each ruling, and economic principles to help distinguish between sound and unsound methodologies going forward.

Antitrust Magazine is the premier magazine devoted exclusively to antitrust and consumer protection law. It has a circulation of about 9,000, including all ABA Antitrust Section members in the United States and abroad, individual subscribers and libraries.

To read the article—and the rest of the Spring 2016 issue of Antitrust Magazine—click here (American Bar Association subscription required).

The District Court of Eastern Pennsylvania recently certified the shell egg sub-class in a case brought on behalf of direct purchasers who alleged that the nation’s major egg producers conspired to artificially increase the price of shell eggs in the United States. In the September 18^th memorandum in In Re: Processed Egg Products Antitrust Litigation, Judge Gene Pratter concludes that “common issues predominate with respect to the antitrust injury to the shell egg subclass.” Judge Pratter’s class certification decision relied extensively on the testimony and analyses of OnPoint expert Dr. Gordon Rausser, who examined the economics of U.S. egg production and pricing and testified on behalf of the Direct Purchaser Class. Judge Pratter found that Dr. Rausser’s analysis of the shell egg industry “highly probative of the extent to which the alleged conspiracy, if shown to be successful, would have affected virtually every member of the proposed shell eggs subclass.” Judge Pratter also found:

• “Plaintiffs have shown that common evidence is capable of demonstrating that Defendants engaged in a series of complementary supply-reducing actions as part of a conspiracy to increase the price of eggs. Dr. Rausser has measured whether that conspiracy was successful in increasing the price of eggs. His model fits the theory of liability and satisfies ” (p. 38)

• “Plaintiffs have shown that Dr. Rausser’s model is reliable enough in attributing the damages found in Dr. Rausser’s model to the conspiracy.” (p. 38)

• “Defendants’ attempts to decouple the observed price increases from the alleged output restriction do not convince the Court that Dr. Rausser’ s model is incapable of demonstrating antitrust impact using classwide evidence.” (p. 39)

• “Defendants have not identified any variables materially affecting the price of eggs that were not included in Dr. Rausser’s models.” (p. 44)

• “Defendants argue that Dr. Rausser’s regression is flawed because the benchmark period (i.e. the “normal” years against which he compares the conspiracy years to see if the price of eggs was inflated-here, 1997-2000 is the benchmark) is allegedly also tainted by some anticompetitive conduct. As Plaintiffs point out, however, if anything, any anticompetitive activity during the benchmark period would make Dr. Rausser’s results conservative.” (p. 41)

The Judge declined to certify the much smaller subclass of egg products, which includes frozen, dried or liquid egg products.

To read the memorandum, click here.

OnPoint Analytics has been recognized as one of the best firms for “Intellectual Property Litigation Consulting Services” in The Recorder’s recent “Best of 2015” issue. The Recorder’s annual list ranks the top legal services providers according to a reader survey of nearly 3,000 legal professionals working throughout California. To learn more about OnPoint’s expertise and experience in intellectual property cases, click here; to learn about OnPoint’s focus on intellectual property in the pharmaceutical industry, click here.

The Recorder is one of the leading providers of breaking legal news and trends, courthouse and statehouse developments, law firm news, and profiles of the people of interest to California legal professionals.

Click here to read The Recorder‘s “Best of 2015” issue.
To read about OnPoint’s role in the recent IP case Fujifilm v. Motorola, click here.

OnPoint Expert Dr. Gareth Macartney testified as Fujifilm’s damages expert in Fujifilm v. Motorola at a jury trial held last month in the U.S. District Court for the Northern District of California. The case involved allegations that Motorola incorporated technologies patented by Fujifilm into its mobile phones and tablets. Following a two-week trial, during which Dr. Macartney provided both direct and rebuttal testimony, the seven-person jury awarded Fujifilm $10.2 million in damages after determining that Motorola infringed upon U.S. Patent 6,144,763—a method of converting digital color photos to monochrome. The jury’s verdict on damages aligned with the estimates provided by Dr. Macartney, rather than those provided by Motorola’s damages expert. While the jury found that the three other patents at issue in the case (pertaining to face-detection and wireless data transfer) were invalid, the $10.2 million award for the ‘763 patent alone exceeded the damages estimated by Motorola’s damages expert for all four patents combined.

To learn more about the verdict in Fujifilm Corp. v. Motorola Mobility Holdings Inc. et al., click here.

“Antitrust Class Proceedings – Then and Now,” an article co-written by OnPoint experts Gordon C. Rausser and Gareth J. Macartney, received a 2015 Antitrust Writing Award for Best Academic Article in the Private Enforcement category. The article, which was published last year in Vol. 26 of Research in Law and Economics, addresses the 2013 ruling in Comcast Corp. v. Behrend, 133 S. Ct. 1435, and its significance regarding the evolution of standards for reliable economic analysis in class certification.

The Antitrust Writing Awards are hosted by Concurrences Journal and George Washington University’s Competition Law Center. The Awards are intended to promote antitrust scholarship and competition advocacy by recognizing the best antitrust writing in the fields of law and economics. The winning articles—which were selected by a jury of academics, attorneys, and Concurrences readers—were announced at an April 14th gala dinner in Washington D.C.

To read the full text of the winning article, “Antitrust Class Proceedings – Then and Now,” click here.

Dr. John Connor, OnPoint expert and Emeritus Economics Professor at Purdue University, is featured in an article in The Chronicle of Higher Education, which profiles Dr. Connor’s research and career as an expert on international price-fixing conspiracies. Dr. Connor is dubbed the “King of Cartels,” a status recognized by a lifetime-achievement award from the American Antitrust Institute, a bipartisan center where he serves as a senior fellow.

“Mr. Connor’s work, including his book Global Price Fixing, is influential. His private database, where he has recorded nearly 900 international price-fixing scandals, has no known parallel. He has become a courtroom fixture, consulting for cases against putative cartels.”

To read the article, “An Economist Corners the Market on Global Cartels,” click here.

OnPoint expert Dr. Gareth Macartney was recently published in The Review of Economics and Statistics. The article, which was co-authored with Dr. Rachel Griffith at the Institute for Fiscal Studies and University of Manchester, is entitled “Employment Protection Legislation, Multinational Firms, and Innovation.”

Abstract:
The theoretical effects of labor regulations, such as employment protection legislation (EPL), on innovation is ambiguous. EPL increases job security, and the greater enforceability of job contracts may increase worker investment in innovative activity. But EPL increases firms’ adjustment costs, which may lead to underinvestment in activities that are likely to require adjustment, including technologically advanced innovation. In this paper, we find empirical evidence that these effects are at work—in particular, a higher share of multinational enterprise innovative activity in countries with high EPL is technologically advanced.

To read the full article, click here.

A U.S. federal judge awarded AstraZeneca Plc $76 million in damages from generic drug manufacturer Apotex for infringing on patents for the heartburn drug, Prilosec® during 2003 to 2007.

After a two-week bench trial, Judge Denise Cote in New York concluded that Astra is entitled 50% of the profits gleaned by Apotex, Canada’s largest generic pharmaceutical company, from its infringing sales during the three-and-a-half years it sold a generic version of Prilosec.

Dr. Gordon Rausser, Chairman and Co-founder of OnPoint Analytics and Robert Gordon Sproul Distinguished Professor at the University of California, served as one of five expert witnesses for AstraZeneca. Dr. Rausser’s study of pharmacy log data and his supporting testimony played a significant role in litigation involving AstraZeneca’s efforts to protect their top-selling drugs over the course of the last decade.

A calculation of damages was the remaining issue in this trial because in 2007 Barbara S. Jones, a federal judge in New York, determined that the Apotex generic infringed AstraZeneca’s patent due to a microscopic, water-soluble salt layer or subcoating formed during the manufacturing process.

This decision finalizes action by AstraZeneca against various generic drug makers in an effort to protect their blockbuster drug Prilosec, before U.S. patent protection ends.

AstraZeneca successfully launched a non-prescription version of Prilosec as its patent expired, and their next-generation heartburn drug, Nexium, has garnered multibillion-dollar sales.

The case is AstraZeneca AB et al. v. Apotex Corp. et al., U.S. District Court for the Southern District of New York, No. 01-9351.

As one of five expert witnesses called to examine evidence and provide supporting testimony in AstraZeneca AB et al. v. Apotex, Dr. Rausser examined pharmacy log data for all prescription PPI purchases from sixteen California pharmacies and fourteen Massachusetts pharmacies obtained when Astra was responding to class action claims that consumers were misled into believing that Nexium® was superior to Prilosec®, and were injured by having to pay an unjustified price premium for Nexium®.

Dr. Rausser’s evaluation of the data provided incontrovertible evidence to support his opinion and expert testimony that a large portion of the proposed class suffered no economic harm because Nexium® was a less expensive therapy.

The study also demonstrated that the effective cost of Nexium® therapy for Third Party Payers (TPPs) to whom Astra offered rebates was often less than omeprazole therapy during the period between December 2002 and November 2003.

Astra’s official rebate policies support Dr. Rausser’s overarching hypothesis that Nexium® rebates were to some degree responsive to the price of generic omeprazole. Following the entry of generic omeprazole, Astra increased its rebates on Nexium®, and included the generic product in calculations of market share for rebates that were determined on that basis.

Dr. Rausser’s analysis could not include rebates generic omeprazole manufacturers may have been giving to mail order pharmacies. Because the data available to him included only the “deepest available rebates”, Dr. Rausser could not determine the effect those rebates might have had on average prices of omeprazole. But the mail order market accounted for only 13% of all U.S. drug sales in 2003, and only 8.5% of Nexium® sales from January to October 2003.