American Quarter Horse Association Rule Against Registration Of Cloned Horses Found Not To Violate Sherman Act

A Matsushita "Quick Look" Analysis Demonstrates that While Plausible, No Evidence Supports An Actionable Conspiracy or Monopoly. Abraham & Veneklasen Joint Venture et al. v. Am. Quarter Horse Ass'n, 776 F.3d 321 (5th Cir. Jan. 14, 2015).

In Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984), the Supreme Court put to rest the "intraenterprise conspiracy" doctrine, and held that a parent corporation and its wholly owned subsidiary constitute a "single enterprise" incapable of "conspiring" with itself for purposes of Section 1 of the Sherman Act. It re-emphasized the basic distinction between concerted and independent action. However, since the Supreme Court's 2010 decision in American Needle, Inc. v. National Football League, 560 U.S. 183 (2010), the precedential value of Copperweld has been limited to its facts, and arguably relegated to the "mothball fleet" of antitrust, with its intraenterprise predecessors. See Richard M. Steuer, Monsanto and the Mothball Fleet of Antitrust, 30 Antitrust Bulletin 1 (1985). Emphasizing substance over form, the Court held that the inquiry is whether the challenged agreement joins together "separate economic actors pursing separate economic interests" such that it "deprives the marketplace of independent centers of decision making." (citing Copperweld, 467 U.S. at 768-9). Thus, in American Needle, the Court held that conduct relating to the licensing of individually owned intellectual property covering caps bearing logos and art work of the individual NFL teams, on a joint and exclusive basis, was not categorically beyond the coverage of Section 1. While some restraints on competition will be necessary to produce the NFL's joint product, the Rule of Reason should be employed to sort the wheat from the chaff. While most joint activities in brand development and promotion will pass muster, some may not. It "depends". The American Needle Court also noted that the Rule of Reason can at times be applied without detailed analysis, and "can sometimes be applied in the twinkling of an eye", or on a "quick look" basis. (citing National Collegiate Athletic Ass'n v. Board of Regents of University of Oklahoma, 468 U.S. 85, 109, n. 39).

Abraham is a case in point. There, plaintiffs were engaged in the cloning of quarter horses through a process known as "somatic cell nuclear transfer". Through this process, animals may be created without distinct sire and dam bloodlines. The AQHA is a breed registry for...