Tuesday, September 10, 2019

CAFC addresses antitrust issues in Intellectual Ventures v. Capital One. Intellectual Ventures wins.

Intellectual Ventures prevailed on the ANTITRUST component of the case:

However, the court subsequently
granted summary judgment against Capital One on all the
antitrust claims. Intellectual Ventures I LLC v. Capital
One Fin. Corp., 280 F. Supp. 3d 691 (D. Md. 2017). We

Of some details:

To begin with, the premise of Capital One’s argument
is wrong. The two issues on which Judge Trenga based his
dismissal order are not independent and alternative
grounds of decision, but are integrally related. Specifically,
the presence of a relevant antitrust market is critical both
to whether a relevant market has been identified and to
whether the defendant possesses monopoly power in a
relevant market. As Judge Trenga explained, the first
element of the offense of monopolization under section 2 of
the Sherman Act is “the possession of monopoly power in
the relevant market.” Trenga Op. at *4 (citing United
States v. Grinnell Corp., 384 U.S. 563, 570–71 (1966)). It
is artificial to divide that element into (1) the possession of
monopoly power and (2) a relevant market, because the
possession of monopoly power is meaningless without
reference to the market in which that power is exercised.
What Judge Trenga ruled was that Capital One failed
to plausibly allege a proper relevant antitrust market and
failed to plausibly allege that IV wields monopoly power
within that antitrust market. The requirement of a
relevant antitrust market is a necessary component of both
determinations; therefore, Judge Trenga’s finding that a
relevant antitrust market was not plausibly pleaded is
fatal to Capital One’s position on both issues. Judge
Trenga’s finding on the relevant market issue therefore
satisfied the requirement, for collateral estoppel purposes,
that an issue of fact decided in the prior proceeding be
critical and necessary to the judgment in that proceeding.

This analysis is supported by comment i and
illustration 16 in section 27 of the Second Restatement of
Judgments. The Second Restatement generally provides
that if a judgment of a court “is based on determinations of
two issues, either of which standing independently would
be sufficient to support the result, the judgment is not
conclusive with respect to either issue standing alone.”
Restatement (Second) of Judgments § 27 cmt. i (1982).
However, that general rule is subject to an express caveat
that if “the first action, even though decided on alternative
grounds, necessarily adjudicated the issue” in dispute in
the second action, the determination in the first action
would be conclusive in the second. Id. at cmt. i & illus. 16.3

This case fits that exception. Although Judge Trenga
separately concluded that Capital One had not proposed an
appropriate relevant market and that it had not plausibly
alleged that that IV wields unlawful monopoly power
within that market, both grounds required a showing of a
relevant antitrust market, and therefore Judge Trenga’s
decision “necessarily adjudicated the issue” of the
appropriate relevant market. Judge Grimm was therefore
correct in holding that Judge Trenga’s determination on
the relevant market issue in the Virginia case was
conclusive on that issue in the Maryland action.


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