FCC) affirmed the agency's conclusion that inequitable conduct has occurred under a preemption statute applicable to this case. The court noted the existence of an administrative preemption statute in Title 17, Section 1121. This law provides specific jurisdiction to the FCC in cases involving “any restraint of trade by the application of economic or any other legal criteria.” The FCC has used the preemption authority in this case to rule that the alleged infringement by the Plaintiffs of a number of proprietary rights in the broadcast TV programming and the distribution methods of the programming would not amount to any restraint of trade under Section 1121, because these factors would not constitute economic criteria. The FCC noted that this rule is consistent with its past preemption rulings. The court has also rejected the Plaintiffs' argument that preemption of Section 1121 applies because it allows the FCC to impose a “general prohibition” on anticompetitive conduct that has been shown to have a serious impact on competition. The court considered the language and history of the statute with an eye to determining whether specific criteria are present that would be sufficient to show actual, substantial and irreparable injury. The court rejected the Plaintiffs' arguments that the FCC could not issue an order enforcing the Commission's preemptive authority to preempt in this situation because, in their view, the FCC had not previously preempted the market with its order requiring broadcasters to place their material on the air “fair and reasonable,” and the broadcasters had to pay damages if the violation occurred. The Court held that the agency could use the preemption authority to preempt anticompetitive conduct, that any harm to competition, if any, is outweighed by the overall economic benefit to consumers, in this case “the broadcasting industry” as a whole. This ruling could have a significant impact on the regulatory role of the Commission under Section 123 of the Cable Act. The FCC is entitled, under this ruling, to treat all competitive market participants the same. In this case, it is possible that other broadcasters will have to pay damages, if they distribute material in violation of the plaintiffs' demands to place the content into the air “fair and reasonable.” This ruling applies only to a market in the cable programming industry.
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Intellectual Property Alert May 26, 2011, AFC Heightens Standard for Inequitable Conduct On May 25, 2011, in an en band decision in Threatens, Inc. v. Benton, Dickinson and Co., the Court of Appeals
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