308 F. Supp. 3d 1241
N.D. Ala.2018Background
- The Blue Cross and Blue Shield entities (36 independent regional "Plans") license and use shared trademarks (the "Blue Marks") governed by the Blue Cross and Blue Shield Association (the "Association").
- Historically Plans developed independently, then consolidated trademarks into national associations; today the Association owns the marks and issues license agreements that define exclusive service areas (ESAs) and other regulatory rules (Map Book, License Agreements).
- Association rules include ESAs (exclusive geographic territories), Local/National Best Efforts rules (limits on non-Blue branded business), BlueCard (interplan provider-network cooperation and rate passthrough), acquisition/uncoupling rules, and Standard 11 (restrictions on transfers to non-Blue entities).
- Plaintiffs (Subscriber and Provider classes) allege Section 1 Sherman Act violations based on geographic market allocations, output restrictions (National Best Efforts), BlueCard-related pricing/boycott restraints, and trademark uncoupling rules; defendants move for partial summary judgment on the standard of review and the single-entity defense.
- The court found genuine disputes of material fact on whether the Association is a mere single entity for Section 1 purposes and declined to resolve single-entity status as a matter of law; it held the aggregate of ESAs plus output restrictions warrants per se review, while BlueCard and trademark uncoupling are governed by rule of reason.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review for alleged restraints (per se v. rule of reason) | ESAs and related rules are horizontal market-allocating and output-limiting restraints like Sealy/Topco; per se applies | ESAs and other rules are procompetitive, vertical/ancillary to trademark licensing or are product-enabling; apply rule of reason | Aggregation: ESAs plus output restrictions (e.g., National Best Efforts) are per se; some restraints (BlueCard pricing, uncoupling) are rule of reason |
| Single-entity defense (are defendants incapable of concerted action?) | Association is a vehicle for horizontal agreement among independent Plans; they remain separate decisionmakers | Association owns marks and centrally administers licensing; that structure makes them a single entity for trademark enforcement | Genuine factual disputes exist; single-entity defense denied on summary judgment (cannot resolve as matter of law) |
| BlueCard (price-fixing / group boycott claims) | BlueCard fixes provider reimbursement by pegging out-of-area payments to host-plan-negotiated rates and precludes competing negotiations; per se price-fixing/group boycott | BlueCard is an integrated cooperative program (like a joint venture or joint purchasing) with procompetitive efficiencies; rule of reason applies | BlueCard price-fixing allegation: rule of reason (integration/procompetitive justifications); group-boycott theory: needs more factual development — analyzed under rule of reason now |
| Trademark uncoupling rules (restrictions on using trade names apart from Blue Marks) | Uncoupling functions as an agreement not to compete under individualized trade names; should be per se | Rules are trademark-management measures by the licensor to protect goodwill; procompetitive and typical of trademark licensing | Uncoupling rules resemble ordinary trademark restraints and have plausible procompetitive justifications; rule of reason applies |
Key Cases Cited
- United States v. Sealy, Inc., 388 U.S. 350 (1967) (licensee-controlled licensor used to effect horizontal territorial allocations; per se rule applied)
- United States v. Topco Assocs., Inc., 405 U.S. 596 (1972) (association of competitors allocating territories via a jointly owned licensor held per se illegal)
- Am. Needle, Inc. v. Nat'l Football League, 560 U.S. 183 (2010) (separate members of a joint venture remain capable of concerted action under §1; single-entity inquiry focuses on separate decisionmakers)
- Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984) (distinguishes single-entity conduct from concerted action; §1 requires separate economic actors)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (rule of reason is presumptive standard; explains limits of per se treatment)
- Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1 (1979) (blanket-license context where unique product/aggregation counseled against per se treatment)
- Palmer v. BRG of Georgia, Inc., 498 U.S. 46 (1990) (summarily reversed lower court; reiterated per se illegality of competitor market allocations)
- Texaco, Inc. v. Dagher, 547 U.S. 1 (2006) (pricing by a bona fide joint venture analyzed under rule of reason)
- Arizona v. Maricopa Cty. Med. Soc'y, 457 U.S. 332 (1982) (per se rules apply across industries, including health care, when restraints are the classic types)
- Nat'l Collegiate Athletic Ass'n v. Bd. of Regents, 468 U.S. 85 (1984) (rule of reason analysis; courts weigh business, history, nature, and effect of challenged restraint)