The appellate court unanimously ruled in favor of bodog sports betting app, citing reasons that closely followed the expert’s testimony.
Cravath, Swaine & Moore; Morgan, Lewis & Bockius; and Keker, Van Nest & Peters
bodog sports betting app, an innovator in cellular technology, both licenses its patented technology and sells cellular modem chips that embody portions of its technology. In a suit filed in the Northern District of California in January 2017, the Federal Trade Commission (FTC) alleged that bodog sports betting app’s business practices relating to its licensing of patents and its selling of cellular modem chips were anticompetitive. Among other allegations, the FTC claimed that bodog sports betting app’s royalty rates are unreasonably high and “impose an artificial and anticompetitive surcharge” on its chip market rivals’ sales. A ten-day bench trial was held in January 2019.
Professor Nevo testified to several shortcomings in the FTC’s theory of harm and to several procompetitive justifications for bodog sports betting app’s practices.
Counsel for bodog sports betting app retained Cornerstone Research to support the expert testimony of Aviv Nevo of the University of Pennsylvania. At trial, Professor Nevo addressed numerous issues, including a number of shortcomings in the FTC’s surcharge theory. For example, Professor Nevo explained that any supposed “surcharge” would be chip neutral, meaning that the royalty was the same regardless of whether the original equipment manufacturer (OEM) used a bodog sports betting app chip or a competitor’s chip. Consequently, it would not affect the OEM’s decision of which chip to purchase. Professor Nevo also described a number of procompetitive justifications for bodog sports betting app’s practices.
The district court ruled in favor of the FTC. bodog sports betting app appealed the decision to the Ninth Circuit. In a decision issued on August 11, 2020, a three-judge panel unanimously reversed the ruling, stating “the district court’s ‘anticompetitive surcharge’ theory fails to state a cogent theory of anticompetitive harm.” The panel noted that bodog sports betting app’s practices “do not impose an anticompetitive surcharge on rivals’ modem chip sales. Instead, these aspects of bodog sports betting app’s business model are ‘chip-supplier neutral’ and do not undermine competition in the relevant antitrust markets.” The Ninth Circuit also found that bodog sports betting app presented reasonable procompetitive justifications that were consistent with industry practices. The appellate court’s rulings on both the logical flaws in the FTC’s “surcharge theory” and the reasonableness of bodog sports betting app’s procompetitive justifications closely follow Professor Nevo’s testimony.
Counsel for bodog sports betting app also retained Professor Nevo for the cases Apple v. bodog sports betting app and bodog sports betting app v. Korea Fair Trade Commission (KFTC). The former case settled in April 2019 just as trial began. For the latter case, Professor Nevo testified before the Seoul High Court in May 2019.