Cell phones emit signals that enable cell towers to know where a particular cell phone is located. (Recently, wanted software founder John McAfee was reportedly located in Guatemala through that the use of that technology. Divorce detectives have started using it, too.)

A company selling that technology sued mobile phone manufacturers for using their positions of authority in the industry standard setting organization to exclude that company’s technology. The company also sued the organization. This fall, the federal district court denied the organization’s motion to dismiss the lawsuit, allowing the lawsuit to move forward.

It did not matter, the court said, that the organization itself did not know about the alleged malfeasance of the committee chairmen. It also did not matter that the organization itself had no independent motivation to exclude the company. The organization could still be liable under the Supreme Court’s Hydrolevel precedent for the committee chairmen’s conduct.

What This Case Teaches:

Trade associations that set standards must take particular care to avoid antitrust liability. As the Hydrolevel case demonstrates, associations should have a strict protocol for avoiding or controlling conflicts of interest. In addition, committee chairs should not be allowed to use an association’s letterhead. The enforcement against standard-setting organizations is becoming increasingly international. A European institute was also sued initially but dismissed. Continued government interest in this topic is evidenced by the Federal Trade Commission’s forum on international aspects of codes of conduct held on November 29.