Lotes Co., Ltd. v. Hon Hai Precision Industry Co., No. 13-2280 (2d Cir. 2014)Annotate this Case
Plaintiff filed suit under the Sherman Act, 15 U.S.C. 1,2, alleging that defendants, a group of five competing electronics firms, have attempted to leverage their ownership of certain key patents to gain control of a new technology standard for USB connectors and, by extension, to gain monopoly power over the entire USB connector industry. The court held that, under principles articulated in a line of recent Supreme Court decisions extending from Arbaugh v. Y&H Corp. to Sebelius v. Auburn Regional Medical Center, the requirements of the Foreign Trade Antitrust Improvement Act (FTAIA), 15 U.S.C. 6a, are substantive and nonjurisdictional in nature. Because Congress has not clearly stated that these requirements are jurisdictional, they go to the merits of the claim rather than the adjudicative power of the court. In so holding, the court overruled the court's prior decision in Filetech S.A. v. France Telecom S.A. The court also concluded that, although the FTAIA's requirements are nonjurisdictional and thus potentially waivable, the court rejected plaintiffs' argument that defendants somehow have waived them by contract in this case; foreign anticompetitive conduct can have a statutorily required direct, substantial, and reasonably foreseeable effect on U.S. domestic or import commerce even if the effect does not follow as an immediate consequence of defendant's conduct, so long as there is a reasonably proximate causal nexus between the conduct and the effect; the court rejected the interpretation of "direct...effect" advanced by the Ninth Circuit in United States v. LSL Biotechnologies in favor of the interpretation advocated by amici curiae the United States and the FTC and adopted by the Seventh Circuit in its en banc decision in Minn-Chem, Inc. v. Agrium, Inc.; and the court need not decide, however, whether plaintiff here has plausibly alleged the requisite "direct, substantial, and reasonably foreseeable effect" under the proper standard. Accordingly, the court affirmed on alternative grounds the judgment of the district court dismissing plaintiff's claims.