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Howard Morse is an antitrust partner in Cooley LLP's Washington, D.C., office. He represents businesses before the U.S. Department of Justice, the Federal Trade Commission and state attorneys general in investigations of mergers and acquisitions, alleged restraints of trade, and monopolization, with a focus on high-tech industries. He served for 10 years at the FTC, as assistant director of the Bureau of Competition, and before that as deputy assistant director for policy, and as a staff attorney. He has been active in the American Bar Association's Antitrust Section, as chairman of its Computer Industry, Exemptions and Immunities, Federal Civil Enforcement, and Intellectual Property Committees. He is currently a member of the Antitrust Section Council.
Q: What is the most challenging case you have worked on and what made it challenging?
A: The most challenging case I have worked on involved the acquisition of a startup company with innovative equipment used to manufacture advanced computer chips, by the world's largest provider of equipment used to make chips. At the time, the government was eager to find a case to stop a dominant firm from acquiring a new entrant with a promising product. We were able to convince senior management to overrule a staff recommendation to block the acquisition by demonstrating that sales of the upstart's product would grow more quickly with the acquisition, and that innovation would not be harmed because of the pressure fringe firms with new products would exert. Soon thereafter, the government filed suit against another merger in the computer industry on the same theory, but not my client's deal.
In another matter, I recently convinced the FTC to take action against exclusive dealing by my client's biggest competitor, despite my client's success in the market. Again, we faced opposition within the agency, but prevailed by marshalling evidence that the exclusive dealing raised the client's costs, and that the client's product was superior and would have been even more successful but for the exclusionary practice.
Q: What aspects of your practice area are in need of reform and why?
A: The Second Request process. It imposes huge and often unnecessary costs. I believe that greater transparency regarding the number of custodians required to be searched, the number of documents being produced, the size of privilege logs, and the length of investigations would lead to reforms that would reduce the burden without compromising the integrity of agency investigations. It would probably also make sense to extend the statutory waiting period after compliance with Second Requests from 30 to 60 days, rather than negotiate timing agreements on an ad hoc basis in nearly every matter.
Q: What is an important issue or case relevant to your practice area and why?
A: The U.S. Supreme Court heard argument on March 25 in FTC v. Actavis, an appeal of the Eleventh Circuit decision in FTC v. Watson. The FTC succeeded initially in its challenges to so-called "reverse payment" settlements of patent litigation in the pharmaceutical industry, in which the pioneer manufacturer paid the first generic firm to challenge its patent to drop the patent litigation, on the theory that the settlements created a bottleneck to new entry. The FTC subsequently expanded its theory to challenge settlements as "payments for delay," even when settlements allowed entry before patent expiration, with less success. There is now a split in the circuit courts on how to analyze such settlement agreements.
The Supreme Court is poised to resolve that split. Whether it will address only naked cash payments and "sham" side deals, or also side deals for fair value will be interesting to watch.
The case is of particular interest to companies in the pharmaceutical industry, but the court's reasoning could have broader implications for analyzing issues at the intersection of antitrust and intellectual property law.
Q: Outside your own firm, name an attorney in your field who has impressed you and explain why.
A: I worked with Bill Baer in private practice and when he was director of the Bureau of Competition at the FTC. He understands antitrust law, he brings good judgment to deciding what matters to pursue, and he knows how government works, from the front office at the Department of Justice, to the White House, to Capitol Hill. I expect he will be extremely effective in getting things done in his new role as assistant attorney general.
Q: What is a mistake you made early in your career and what did you learn from it?
A: As a junior attorney fresh out of law school, I relied too heavily on case law. I remember thinking after one oral argument where I focused on case precedent, that I had just wasted an opportunity to convince the judge that my client deserved to prevail. I quickly learned that cases are won on the facts. While you have to understand and apply legal principles to the facts, you have to be able to convince the decision maker that your client deserves to prevail before you cite a single precedent.
The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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