Antitrust Law Daily Wrap Up, ANTITRUST—Fed. Cir.: Jury finding of no antitrust violation in patent and trademark filings upheld, (Jul 1, 2014)

By Linda O’Brien, J.D., LL.M.

In a case consolidating four lawsuits among competitors in the business of selling, distributing, or manufacturing shaved ice confection machines and flavoring syrups, a district court properly found that there was no antitrust violation by one manufacturer in its patent filings and assertion of trademark rights, according to the U.S. Court of Appeals for the Federal Circuit. The district court also did not err in dismissing the competitors’ claims under the Racketeering Influenced and Corrupt Organizations Act (RICO) (Southern Snow Manufacturing Co., Inc. v. SnoWizard Holdings, Inc., June 30, 2014, Clevenger, R.).

SnoWizard Holdings, Inc. manufactures shaved ice machines and flavor concentrates and held the exclusive license to U.S. Patent Nos. 7,536,871 (the ‘871 patent) and 7,543,459 (the ’459 patent). At the conclusion of the consolidated action involving members of every segment of the snowball industry concerning the patents and trademarks held by SnoWizard, a jury found, and the district court affirmed, that there was no antitrust violation. The district court also dismissed the competitors’ RICO claims against SnoWizard. The competing manufacturers appealed.

Monopolization. The district court properly found that there was no antitrust violation because the competitors failed to show that there was a dangerous probability of one manufacturer, SnoWizard, achieving monopoly power. In rejecting the competing manufacturers’ argument that SnoWizard’s restatement of stipulated sales data of its flavor concentrates at trial misled the jury, the appellate court noted that the competing manufacturers had the opportunity to discredit SnoWizard’s evidence at trial. Their failure to discredit the evidence was insufficient to overturn the jury verdict.

RICO claims. The district court did not err in dismissing the RICO claims, since SnoWizard’s patent and trademark filings with the United States Patent and Trademark Office and trademark infringement did not constitute mail and wire fraud. To establish a claim under RICO, a plaintiff must plead facts sufficient to plausibility establish the predicate criminal acts of mail or wire fraud. In this case, the competing manufacturers failed to allege some racketeering activity that amounted to or posed a threat of continued criminal activity or assert that any of the alleged predicate acts were actually criminal, the appellate court concluded.

The case is Nos. 2013-1586 and 2014-1043.

Attorneys: Mark Edward Andrews (Andrews Arts & Sciences Law LLC) for Southern Snow Manufacturing Co., Inc. and Banister and Co., Inc. Jack E. Morris for SnoWizard, Inc.

Companies: Southern Snow Manufacturing Co., Inc.; SnoWizard, Inc.

Cases: Antitrust RICO