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FTC Seeks to Examine Patent Assertion Entities and Their Impact on Innovation, Competition

The Federal Trade Commission voted to seek public comments on a proposal to gather information from approximately 25 companies that are in the business of buying and asserting patents, known as Patent Assertion Entities (“PAEs”). The FTC intends to use this information to examine how PAEs do business and develop a better understanding of how they impact innovation and competition.

After considering the public comments, the FTC will submit a request to the Office of Management and Budget (OMB) in compliance with Paperwork Reduction Act, seeking clearance of the FTC’s proposal to issue compulsory process orders seeking information from the PAEs.

PAEs are firms with a business model based primarily onpurchasing patents and then attempting to generate revenue by asserting the intellectual property against persons who are already practicing the patented technologies. The FTC is conducting the study in order to further one of the agency’s key missions—to examine cutting-edge competition and consumer protection topics that may have a significant effect on the U.S. economy.

In December 2012, the FTC and the Antitrust Division of the United States Department of Justice (DOJ) jointly sponsored a workshop to explore the impact of PAE activity on innovation and competition. The FTC and DOJ also received public comments in conjunction with the workshop. While workshop panelists and commenters identified potential harms and efficiencies of PAE activity, they noted a lack of empirical data in this area, and recommended that FTC use its authority under Section 6(b) of the Federal Trade Commission Act. Responding to these requests, and recognizing its own role in competition policy and advocacy, the Commission proposes a Section 6(b) study that will provide a better understanding of PAE activity and its costs and benefits.

“Patents are key to innovation and competition, so it’s important for us to get a better understanding of how PAEs operate,” said FTC Chairwoman Edith Ramirez. “We want to use our 6(b) authority to expand the empirical picture on the costs and benefits of PAE activity. What we learn will support informed policy decisions.”

The proposed study would add significantly to the existing literature and evidence on PAE behavior. Earlier studies have focused primarily on publicly available litigation data and concluded that PAE litigation activity is on the rise. The Commission, however, has unique Congressional authority to collect nonpublic information, such as licensing agreements, patent acquisition information, and cost and revenue data, which will provide a more complete picture of PAE activity.

Because the Commission believes a broader study will enhance the quality of the policy debate surrounding PAE activity, it proposes information requests directed to the following questions:

How do PAEs organize their corporate legal structure, including parent and subsidiary entities?
What types of patents do PAEs hold, and how do they organize their holdings?
How do PAEs acquire patents, and how do they compensate prior patent owners?
How do PAEs engage in assertion activity (i.e. demand, litigation, and licensing behavior)?
What does assertion activity cost PAEs?; and
What do PAEs earn through assertion activity?

To understand how PAE behavior compares with patent assertion activity by other patent owners in a particular industry or sector, the FTC also proposes sending information requests to approximately 15 other entities asserting patents in the wireless communications sector, including manufacturing firms and other non-practicing entities and organizations engaged in licensing.

The Commission vote to approve and publish the Federal Register Notice soliciting public comment on the proposal was 4-0. The Commission is authorized to issue Orders To File Special Reports by Section 6(b) of the FTC Act. The proposal will be published in the Federal Register shortly. Public comments on the proposal can be submitted electronically and will be accepted until 60 days after the Notice is published. Written comments should be sent to: FTC Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., N.W., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC Settles Charges That Actavis’s Proposed $8.5 Billion Acquisition of Warner Chilcott Would be Anticompetitive

International drug manufacturer Actavis, Inc. has agreed to sell all rights and assets to four generic pharmaceuticals – three oral contraceptives and an osteoporosis treatment – to settle FTC charges that its proposed $8.5 billion acquisition of drug-maker Warner Chilcott plc would be anticompetitive. As part of the proposed settlement, Actavis is seeking FTC approval to sell the rights and assets for each drug to New Jersey-based Amneal Pharmaceuticals L.L.C.

The FTC’s proposed order is designed to preserve competition in each of the following pharmaceutical markets:

Generic Femcon FE, a chewable oral contraceptive tablet that contains progestin and estrogen;
Loestrin 24 FE and its generic equivalents, which are low-dose progestin/estrogen combination oral contraceptives;
Lo Loestrin FE and its generic equivalents, which are also progestin/estrogen combination oral contraceptives; and
Atelvia and its generic equivalents, which are delayed-release tablets used to treat post-menopausal osteoporosis.

According to the FTC’s complaint, Actavis and Warner Chilcott are the only two significant manufacturers of generic Femcon FE, and the proposed acquisition would eliminate current competition between them in the market for this drug. For pharmaceutical products, the price generally decreases as the number of generic competitors increases. Accordingly, the reduction in the number of suppliers likely would have a direct and substantial effect on pricing.

In the other three markets, Warner Chilcott sells the branded drugs, but no company currently sells a generic version of Loestrin 24 FE, Lo Loestrin FE, or Atelvia. According to the FTC’s complaint, Actavis is likely to be the first generic supplier to compete with Warner Chilcott’s branded versions of these three drugs. Thus, the proposed acquisition would likely result in higher prices for U.S. consumers, because the merged firm would have the ability to delay the entry of Actavis’s generic product in each of these markets.

More information on the branded and generic manufacturers of these products, as well as the respective market shares of the companies, can be found in the analysis to aid public comment on the Commission’s website.

The proposed consent order requires Actavis to sell to Amneal all of Actavis’s rights and assets related to its generic versions of Femcon FE, Loestrin 24 FE, Lo Loestrin FE, and Atelvia. It also requires Actavis to enter into an agreement to supply generic versions of Femcon FE and Loestrin 24 FE to Amneal for two years, after which Amneal may extend the agreement for two more years. With 65 other generic products already on the market, the FTC believes Amneal has the expertise to replicate the competition for the four drugs that otherwise would have been lost through the proposed acquisition.

Finally, the proposed order requires Actavis to relinquish its claim to first filer marketing exclusivity for generic Lo Loestrin FE and Atelvia products to preserve the incentives of the companies currently leading the patent litigations against Warner Chilcott related to those products.

The Commission vote to accept the consent agreement containing the proposed consent order for public comment was 4-0. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through October 28, 2013, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section.

Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. Comments also can be submitted electronically.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau of Competition about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., N.W., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC Seeks Public Comment on Polypore International’s Application to Sell Microporous to Seven Mile Capital Partners; Sale Would Unwind Illegal 2008 Acquisition

The Federal Trade Commission is seeking public comment on an application by Polypore International, Inc. for approval to divest all stock and assets related to Microporous, which it acquired in February 2008, to Seven Mile Capital Partners (Seven Mile). The divestiture is required by a Commission final decision and order that found the acquisition anticompetitive and required Polypore to sell Microporous to an FTC-approved buyer.

The FTC challenged the consummated transaction in a September 9, 2008, complaint, charging that the merger had resulted in decreased competition and higher prices in four North American markets for battery separators, a key component in flooded lead-acid batteries. Following an administrative trial, on February 22, 2010, the Administrative Law Judge (ALJ) found that Polypore’s acquisition of Microporous was anticompetitive , and further, that complete divestiture of the acquired assets was necessary to remedy the effects of the illegal acquisition and restore competition in the affected markets.

On November 5, 2010, the Commission upheld the ALJ’s Initial Decision, ruling that the acquisition was anticompetitive in three of the four North American markets identified in the complaint but not in the fourth market for separators used to make batteries for backup power supply. The Commission’s order required Polypore to sell Microporous within six months after the divestiture provisions became final to an FTC-approved buyer. Polypore appealed the Commission’s decision to the U.S. Court of Appeals, which on July 11, 2012, affirmed the FTC’s final decision and order, including the requirement that it divest Microporous. Polypore then appealed the case to the U.S. Supreme Court, which declined to hear it.

In its application, Polypore states that Seven Mile has the competitive ability to restore the competition eliminated by its acquisition of Microporous. The Commission will decide whether to approve the proposed divestiture after expiration of the public comment period. Public comments may be submitted until October 28, 2013. Written comments should be sent to: FTC Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580. Comments can also be submitted electronically. Copies of the application also can be found on the FTC’s website and as a link to this press release. (FTC Docket No. 9327; the staff contact is Elizabeth A. Piotrowski, Bureau of Competition, 202-326-2623; see related press release dated September 10, 2008)

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., N.W., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC Files Amicus Brief Supporting Class Action Suit that Challenges Payday Lender’s Arbitration Practices

The Federal Trade Commission filed an amicus brief in the U.S. Court of Appeals for the Seventh Circuit supporting a class action lawsuit brought by consumers who are challenging a payday lender’s practice of requiring them to submit to arbitration at a Native American reservation in South Dakota.

The FTC has an interest in the class action case because, in a separate action, the agency has sued the payday lender, Payday Financial, LLC, for unfair and deceptive collection practices in connection with its attempts to garnish consumers’ pay checks. The agency expanded the case against Payday Financial to allege unfair and deceptive conduct associated with its practice of filing collection suits against consumers in the Cheyenne River Sioux tribal court, which allegedly lacked jurisdiction. The case remains in litigation.

The amicus brief argues that although arbitration is not an issue in the FTC’s case, the Commission’s allegations are relevant to the issue raised in the class action case — specifically, whether the defendants can legally compel consumers to submit to tribal arbitration.

“For the vast majority of consumers, who can little afford the expense, travel to the Reservation to participate in either arbitral or court proceedings is simply infeasible,” the brief states.

The brief notes that as a general matter, Native American tribes and tribal courts have legal authority over their own members and not over non-members, unless non-members conduct activities inside the reservation or enter into a commercial relationship with the tribe or a member of the tribe. According to the brief, consumers who take out payday loans from these companies do so via the Internet, and they do not conduct business on the reservation.

To learn more about alternatives to payday loans, see Payday loans.

The FTC vote to join the amicus brief filing was 4-0.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC Halts Elusive Business Opportunity Scheme

At the Federal Trade Commission’s request, a federal court has halted an elusive business opportunity scheme that allegedly conned more than $6 million from American and Canadian consumers. The FTC has alleged that the defendants falsely promised consumers that they could make money by referring merchants in their area to the defendants’ non-existent money-lending service.

The court froze the defendants’ assets and appointed a receiver to take control of the operation, pending litigation. The FTC seeks to permanently shut down the operation and return money to consumers.

The FTC’s complaint, filed in August 2013, names 20 individuals and eight companies as defendants in the case against the enterprise, which started out doing business under the name “Money Now Funding.” To avoid detection by law enforcement, they often changed product names, office locations, and merchant identities, at one point changing the company’s name to “Cash4Businesses.”

According to the FTC, the defendants falsely claimed consumers would earn up to $3,000 per month by referring small businesses to the defendants to obtain an average loan or cash advance of $20,000, and that they could operate a profitable business from their home. Act quickly, they said, or the opportunity would go to someone else. Consumers paid from $299 to $499 to buy the business opportunity.

The FTC also charges that after the defendants allegedly promised consumers assistance in finding referrals in their area, the defendants then told consumers that, to succeed, they needed to buy business leads, that is, lists of “high quality” or “pre-approved” merchants supposedly obtained from well-known lenders. The leads provided to consumers were nothing but random names and email addresses, many with no apparent connection to any business. The total charge for the so-called leads often exceeded $10,000, and some consumers paid tens of thousands of dollars.

The FTC has alleged that the defendants violated the FTC Act by misrepresenting that consumers would earn substantial income, and violated the agency’s Telemarketing Sales Rule by calling phone numbers listed on the National Do Not Call Registry, calling consumers who had told them not to call, repeatedly calling consumers to annoy them, using obscenities and threats, and failing to pay the Registry access fee. The FTC also charged the defendants with violating the Commission’s Business Opportunity Rule, which requires business opportunity sellers to provide specific information to help consumers evaluate a business opportunity, and prohibits sellers from making earnings claims without substantiation.

On August 5, 2013, at the FTC’s request, the federal district court for the District of Arizona issued a temporary restraining order against all defendants, freezing assets, and appointing a receiver over the corporate entities. The court entered a preliminary injunction on August 19, 2013 against all the corporate entities and fifteen of the individual defendants, including Lukeroy Rose and Lance Himes. On September 13, the court entered a preliminary injunction against defendants Cordell Bess, Clinton Rackley, and Ronald W. Hobbs.

The corporate defendants are Money Now Funding LLC, also known as Money Now Funded, Cash4Businesses, and CashFourBusinesses; Rose Marketing LLC; DePaola Marketing LLC; Affiliate Marketing Group LLC; Legal Doxs LLC, a/k/a First Business LLC; US Doc Assist LLC, a/k/a First Business LLC; Affinity Technologies LLC; and Marketing Expert Solutions LLC.

The individual defendants are Lukeroy K. Rose, a/k/a Luke Rose; Cordell Bess, a/k/a Blaine Thompson, also doing business as JJB Marketing; Solana DePaola; Jennifer Beckman; William D. Claspell, a/k/a Bill Claspell; Richard Frost, a/k/a Richard Strickland; Dino Mitchell, a/k/a Dino Jones; Clinton Rackley, a/k/a Clinton Fosse; Lance Himes, a/k/a Lance R. Himes, a/k/a Raymond L. Himes, a/k/a Lance Haist; Leary Darling; Donna F. Duckett, also d/b/a D&D Marketing Solutions; Della Frost, also d/b/a ZoomDocs and Zoom Docs LLC; Christopher Grimes, also d/b/a Elite Marketing Strategies; Alannah M. Harre, also d/b/a National Marketing Group; Ronald W. Hobbs, a/k/a Ron Hobbs, also d/b/a Ron Hobbs & Associates and Sales Academy USA LLC; Janine Lilly, also d/b/a Doc Assistant; Michael McIntyre, also d/b/a McIntyre Marketing; Benny Montgomery, also d/b/a Montgomery Marketing; Virginia Rios, also d/b/a V&R Marketing Solutions; and Kendrick Thomas, also d/b/a KT Advertising.

The Commission acknowledges the assistance of the U.S. Postal Inspection Service, the Oregon Department of Justice, and the Better Business Bureau of Central, Northern, and Western Arizona.

The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the District of Arizona.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

FTC Puts Conditions on Mylan’s Proposed Acquisition of Agila from Strides

The Federal Trade Commission will require Mylan, Inc., and Agila Specialties Global Pte. Ltd and Agila Specialties Pvt. Ltd. (collectively, Agila) to divest 11 generic injectable drugs as a condition of allowing Mylan’s proposed acquisition of Agila from Strides Arcolab Ltd. (Strides).

According to the complaint, in each of these 11 markets, Mylan and Agila are two of only a limited number of current or likely future competitors. The number of suppliers in generic pharmaceutical markets matters because prices generally decrease as the number of competing generic suppliers increases. In addition, the injectable generic products of concern are highly susceptible to supply disruptions caused by the inherent difficulties of producing sterile liquid drugs. The complaint alleges that by reducing the number of competitors in these markets, the acquisition as originally proposed would eliminate important competition and likely lead to higher prices, absent the remedies required by the proposed consent agreement.

“This proposed settlement will ensure that these important generic injectable medications, which are used to treat conditions ranging from heart disease and hypertension to cancer, remain available at a competitive price, now and in the foreseeable future,” said Deborah Feinstein, Director of the FTC’s Bureau of Competition. “Preserving existing competition is especially important in markets for injectable drugs where supply disruptions have led to shortages.”

Mylan proposes to acquire Agila for approximately $1.85 billion, under an agreement dated February 27, 2013. The FTC’s complaint charges the deal as proposed would violate the antitrust laws, by substantially reducing competition in the markets for 11 generic injectable drugs. The FTC alleges the deal would reduce current or future competition in six product markets and future competition in five other markets. A list of all 11 drugs, along with the structure of the relevant markets, can be found in the analysis to aid public comment for this matter on the FTC’s website.

The complaint alleges that the proposed acquisition would eliminate existing or imminent competition in markets for the following six generic drugs:

Amiodarone hydrochloride injection, an anti-arrythmic heart drug used to treat patients with frequently recurring ventricular fibrillation or unstable ventricular tachycardia;
Etomidate injection, an anesthetic used during surgery;
Fluorouracil injection, which is used to treat several types of cancer, including breast and pancreatic;
Labetalol hydrochloride injection, which is used to treat severe hypertension;
Mesna injection, a detoxifying agent used to prevent urinary tract damage caused by a particular chemotherapy drug; and
Methotrexate sodium preservative-free injection, which is used to treat several types of pediatric cancers, as well as certain autoimmune disorders.

The FTC’s complaint also alleges that the proposed transaction would reduce future competition for four drugs by increasing the likelihood that the combined company would forego or delay the launch of these generic products or otherwise reduce important price competition. These drugs include:

Acetylcysteine injection, which is used to prevent or minimize liver damage caused by acetaminophen overdose;
Fomepizole injection, which is used to treat accidental poisoning caused by ethylene glycol or methanol;
Ganciclovir injection, an antiviral drug used to treat patients with weakened immune systems to slow the growth of a form of herpes that can lead to blindness; and
Meropenem injection, an antibiotic used as a last resort to treat serious bacterial infections in the ICU.

Finally, the FTC’s complaint alleges that the proposed acquisition would likely reduce competition in the future market for generic mycophenolate mofetil injection, which is currently only available as a branded drug. Mycophenolate mofetil is used in transplant medicine to reduce the chance of organ transplant rejection. Roche Palo Alto, LLC currently sells the branded version of this drug. When generic entry occurs, Mylan and Agila would likely be among a limited number of suppliers. Thus, the proposed acquisition reduces the number of likely future generic competitors in this market.

The proposed consent order is designed to remedy the alleged anticompetitive effects that the proposed acquisition otherwise would have in each of the 11 drug markets. It requires Mylan to divest either Mylan or Agila/Strides products as follows: 1) Mylan’s fluorouracil injection and methotrexate sodium preservative-free injection to Intas Pharmaceuticals Ltd.; 2) Mylan’s etomidate injection, ganciclovir injection, meropenem injection, and mycophenolate mofetil injection, as well as Agila/Strides’amiodarone hydrochloride injection and fomepizole injection to JHP Pharmaceuticals, LLC; and 3) Agila/Strides’ acetylcysteine injection and mesna injection to Sagent Pharmaceuticals. The proposed order also requires Mylan to release all of its rights relating to labetalol hydrochloride injection to Gland Pharma Ltd. Finally, the proposed consent order contains supply and technology provisions to ensure the acquirers can immediately and effectively compete in the marketplace.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., N.W., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC Brings First Case Alleging Text Messages Were Used In Illegal Debt Collection Scheme

A Glendale, California-based debt collector will pay $1 million dollars to settle Federal Trade Commission charges that the defendants violated federal law. This is the first FTC action against a debt collector who used text messaging to attempt to collect debts in an unlawful manner.

The FTC, the nation’s consumer protection agency, alleged that Archie Donovan and two companies he controls – National Attorney Collection Services, Inc., and National Attorney Services LLC used English- and Spanish-language text messages and phone calls in which they unlawfully failed to disclose that they were debt collectors. The FTC charged the defendants with violating both the Fair Debt Collection Practices Act and the FTC Act.

In their text messages, phone calls, and mailings, the defendants also falsely portrayed themselves as law firms – by using the names National Attorney Services, National Attorney Service, National Attorney, and Abogados Nacionales. Building on their deceptive company name, the defendants falsely threatened to sue consumers for not paying their debts or to garnish their wages.

Envelope showing a large arm shaking money from a consumer who is strung upside down.

Example of envelope allegedly used by defendants to contact consumers’ family members, friends and co-workers about their debts.

The FTC also alleged that Donovan and his companies illegally revealed debts to the consumers’ family members, friends and co-workers. Among other tactics, the defendants used mailing envelopes picturing a large arm shaking money from a consumer who is strung upside down. The law does not allow debt collectors to disclose publicly someone’s private debts, because doing so could endanger their jobs and reputations. Mailing envelopes can include only the name and address of the company, and cannot indicate that the consumer may owe a debt.

“No matter how debt collectors communicate with consumers – by mail, by phone, by text or some other way – they have to follow the law,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “The FTC has a zero tolerance policy for deception.”

The FTC held a workshop in 2011 and issued a report in 2009 that addressed how debt collectors can use text messages to collect debts in a lawful manner while maintaining consumers’ privacy.

In addition to the $1 million civil penalty, the settlement requires the defendants to stop sending text messages that do not include the disclosures required by law, and to obtain a consumer’s express consent before contacting them by text message. The defendants also are barred from falsely claiming to be law firms, and from falsely threatening to sue or take any action – such as seizure of property or garnishment – that they do not actually intend to take.

For consumer information about dealing with debt collectors, see Debt Collection.

The Commission vote to authorize the staff to refer the complaint to the Department of Justice, and to approve the proposed consent decree, was 4-0. The DOJ filed the complaint and proposed consent decree on behalf of the Commission in U.S. District Court for the Central District of California on August 23, 2013. The proposed consent decree is subject to court approval.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. Consent decrees have the force of law when signed by the District Court judge.

Federal Trade Commission and Justice Department Issue Updated Model Waiver of Confidentiality for International Civil Matters and Accompanying FAQ

The Federal Trade Commission staff and the Department of Justice’s Antitrust Division today issued a joint model waiver of confidentiality for individuals and companies to use in merger and civil non-merger matters involving concurrent review by the DOJ or FTC and non-U.S. competition authorities.

A waiver provides the terms on which an individual or company agrees to waive statutory confidentiality protections to the agency that originally received the company’s confidential information. The model waiver is designed to streamline the waiver process to significantly reduce the burden on individuals and companies, as well as to reduce the agencies’ time and resources involved in negotiating waivers.

The model waiver updates and replaces the agencies’ prior forms. It reflects both agencies’ recent experience with waivers, incorporating updated language and provisions, including a provision addressing the agencies’ treatment of privileged information.

A waiver of confidentiality is voluntarily provided by an individual or company involved in a civil matter. A waiver describes an agency’s policy regarding its treatment of information received from another competition agency under a waiver, although it is not an agreement signed by the agency. A waiver allows for the sharing of confidential information only among the competition agencies listed in the waiver.

Waivers enable more complete communication, cooperation and coordination between competition agencies concurrently investigating a matter. By permitting cooperating agencies to discuss or otherwise exchange the individual’s or company’s confidential information, a waiver enables agencies to make more informed, consistent decisions and coordinate more effectively, often expediting the review.

To promote greater transparency and better understanding of the FTC’s and DOJ’s and policies and practices related to waivers, the FTC staff and DOJ also released a Frequently Asked Questions (FAQ) document to accompany the model waiver. The FAQ provides introductory information on waivers and on the confidentiality rules applicable to the information provided under the model waiver. It also describes the process for providing a waiver to either agency and explains specific provisions of the model waiver. By issuing the model waiver and accompanying FAQ jointly, the Federal Trade Commission and Department of Justice hope to facilitate parties’ use of waivers generally and, in particular, the model waiver.

Further information about waivers of confidentiality, the model waiver of confidentiality, and FAQ are available here.

As more U.S. companies and consumers do business overseas, more FTC work involves international cooperation. The Office of International Affairs serves both as an internal resource to Commission staff on international aspects of their work and as an official representative to numerous international organizations. In addition, the FTC cooperates with foreign authorities through formal and informal agreements. The FTC works with more than 100 foreign competition and consumer protection authorities around the world to promote sound policy approaches. For questions about the Office of International Affairs, send an e-mail to [email protected]. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases and the FTC International Monthly for the latest FTC news and resources.

FTC Sues to Stop Massive Sweepstakes Scam

At the request of the Federal Trade Commission, a federal court has halted a massive sweepstakes scam that has taken more than $11 million from consumers throughout the United States and dozens of other countries throughout the world, including Canada, the United Kingdom, France, and Japan. The FTC seeks to permanently end the allegedly illegal practices that have continued for seven years and return money to victims.

According to the FTC’s complaint, Liam O. Moran, a resident of Ventura, California, and his companies, mass mail personalized letters to millions of consumers telling them that they have won a large cash prize, typically more than $2 million with bold, large-type statements such as “Over TWO MILLION DOLLARS in sweepstakes has been reserved for you.” Consumers are told that they can collect the prize by sending in a small fee of approximately $20 to $30. The letters often indicate that recipients are “guaranteed” to receive the prize money if they pay the fee, and they create a sense of urgency by stating that it is a limited-time offer.

In “dense, confusing language,” often on the back of the letters, there are statements in direct conflict with the bold claims of major winnings. A very careful reader might learn that they in fact have not won, and that the defendants do not sponsor sweepstakes but instead claim only to provide consumers with a list of available sweepstakes. Consumers frequently fail to see or understand this language and send money to the defendants. The FTC alleges that this language does not appear designed to correct deceptive statements, but exists mainly as an attempt to provide a defense to law enforcement action. Consumers get nothing of value in exchange for their payment.

The defendants have sent more than 3.7 million letters during the past two years, including nearly 800,000 letters to people in 156 countries in the first half of 2013. They have collected more than $11 million from consumers since 2009. The vast majority of the victims of this scam appear to be over 65.

The court order temporarily stops the illegal conduct, freezes the operation’s assets, and appoints a receiver over the corporate defendants while the FTC moves forward with the case.

Moran’s co-defendants are Applied Marketing Sciences LLC; Standard Registration Corporation, also doing business as Consolidated Research Authority and CRA; and Worldwide Information Systems Incorporated, also doing business as Specific Monitoring Service, SMS, Specific Reporting Service, SRS, Universal Information Services, UIS, Compendium Sampler Services, and CSS.

The FTC would like to thank the United States Postal Inspection Service, the Vancouver Police Department, the Metropolitan Police in the United Kingdom, the National Fraud Intelligence Bureau, and the Australian Competition & Consumer Commission for their assistance in this case.

To learn how to avoid these kinds of scams, read the FTC’s Prize Offers.

The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Central District of California.

FTC Sends Refund Checks to Consumers Who Bought Walgreens’ ‘Wal-Born’ Dietary Supplements

An administrator working for the Federal Trade Commission is mailing 7,979 checks averaging $27.42 each to consumers who bought dietary supplements sold by national pharmacy chain Walgreens under its store-brand “Wal-Born” label.

In 2010, Walgreens settled FTC charges that it deceptively advertised that the supplements could effectively prevent colds, fight germs, and boost the immune system.

The company touted the similarity of Wal-Born supplements to those sold by Airborne Health, Inc., which settled similar deceptive advertising charges by the FTC in 2008.

The checks, which total $218,750.00, must be cashed within 60 days after they are issued. The amount consumers receive depends upon the amount of claims they submitted that were approved The redress is capped at $30 per consumer.

The deadline for filing a refund request has expired. Consumers who have questions should call 1-800-598-3025 or visit www.FTC.gov/refunds. The FTC never requires consumers to pay money or provide information before redress checks can be cashed.

Consumers should carefully evaluate advertising claims for dietary supplements. For more information see: Dietary Supplements.

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