Seventh Circuit Affirms Dismissal Of 99% Of Motorolas Claims In LCD Case Based On Motorolas Lack Of Standing
On the day before Thanksgivingless than two weeks after oral argumentthe Seventh Circuit issued its ruling on Motorola's interlocutory appeal in Motorola Mobility LLC v. AU Optronics Corp., affirming dismissal of the vast majority of Motorola's claims regarding LCD panels. In its decision, authored by Judge Posner, the Seventh Circuit partially retreated from its prior, vacated opinion and agreed that some of the conduct alleged by Motorola had a sufficiently direct impact on United States commerce to satisfy Foreign Trade Antitrust Improvements Act ("FTAIA"). But despite finding that the defendants' actions satisfied FTAIA, the court nonetheless found that Motorola was barred from asserting claims under United States antitrust law, as the true plaintiffs in interest under the Sherman Act were Motorola's foreign subsidiaries, rather than Motorola.
We've previously discussed this appeal, which concerns Motorola's claims arising from a foreign conspiracy to fix the price of LCD panels. (This conspiracy has been the subject of prior prosecutions and litigation, including a criminal conviction of defendant AU Optronics Corp. for the conduct at issue here.) Motorola purchases LCD panels to use as components in cell phones that it manufactures. The court found that approximately 1% of the panels purchased by Motorola were delivered to the United States and used in manufacturing performed here; the remaining 99% were bought by Motorola's foreign subsidiaries and used in manufacturing abroad. Of the latter category, a little over 40% were incorporated into cell phones that were then shipped to the United States for sale after manufacture; the remainder was incorporated into cell phones sold abroad. The parties did not contest that the 1% of the panels sold to Motorola in the United States could be subject to the Sherman Act. The trial court rejected Motorola's claims, however, related to the remaining panels, finding that such claims were barred under FTAIA, which limits the application of United States antitrust law to conduct that occurs in foreign countries. As the Seventh Circuit explained, the FTAIA bars suits based on foreign conduct unless it has both a "direct, substantial, and reasonably foreseeable effect" on United States commerce.
The Seventh Circuit swiftly disposed of the argument that the Sherman Act could reach the panels incorporated into phones manufactured and sold abroad, noting that the sale of those phones had no impact on...
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