Microsoft-Yahoo!
 Alex Epstein, an analyst at the Ayn Rand Institute, has published an op-ed explaining why antitrust regulators should not get in the way of any potential combinations of Microsoft, Google and Yahoo! Esptein notes, "What we are observing in the battle over Yahoo! is not genuine, merit-based competition, but competition based on political pull." You can read Epstein's article, "Set Yahoo! Free," at this link.
PATENT HOLD UP
 Bruce Kobayashi and Joshua Wright of George Mason University recently posted an article examining "restraint when applying the antitrust laws to conduct that is normally regulated by state and other federal laws," specifcially the use of antitrust "to regulate the problem of patent hold up of members of standard setting organizations." You can download their paper at this link.
Mises.org
 S.M. Oliva, president of the Voluntary Trade Council, authored an article for the Ludwig von Mises Institute on Mark and Marianne Hershiser's landmark First Amendment lawsuit against the Federal Trade Commission. You can read the article, "Consumer Protection or Legal Extortion?" at this link.
IP & Antitrust
 Damien Geradin, a professor at Tilburg University and a partner at Howrey LLP, recently presented a paper entitled, "What's Wrong with Royalties in High Technology Industries?" which focuses on royalties paid by companies seeking to implement industry standards, such as those at issue in the FTC's case against Rambus. You can dowload the paper at this link.
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Documents Detail FTC Extortion |
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Written by Skip Oliva
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Monday, 30 June 2008 20:49 |
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The assistant director of the Federal Trade Commission's San Francisco office threatened to confiscate the business and personal assets of Mark and Marianne Hershiser if they did not sign a false confession and surrender the revenues from their small herb and herbal remedy business, according to documents published in connection with the Hershisers' First Amendment lawsuit against the FTC.
In a letter dated March 28, 2008, Erika Wodinsky, the FTC's western regional assistant director, announced her office had conducted a "non-public investigation into advertising claims" made by Native Essence Herb Company, which the Hershisers co-own, and that she "has determined that there is reason to believe that Native Essence has violated the FTC Act by making false and/or unsubstantiated claims" regarding several Native Essence products.
Wodinsky cited no consumer complaint or evidence of actual fraud. Nor did the enclosed draft of a threatened federal lawsuit specify any consumer injury. Merely because mid-level FTC staff lawyers disagreed with the content of Native Essence's website, Wodinsky said she would recommend the FTC "proceed against Native Essence in court," unless the Hershisers agreed to a "negotiated settlement" -- which in fact meant signing an enclosed order that would permanently censor the Hershisers and force them to forfeit any revenue earned through lawful sales. (Mark Hershiser has said he earned less then $90,000 last year in gross sales.) If the Hershisers could not afford to pay that amount, Wodinsky said they would have to provide detailed personal and corporate financial disclosure to the FTC.
And while Wodinsky said that "signing a settlement with the FTC would not constitute an admission . . . that you or the company have violated the law," the FTC routinely disregards its own settlements and issues public statements declaring that a party is guilty and harmed consumers, even when there is no evidence to support such a claim.
Wodinsky never interviewed the Hershisers or gave them advance notice before issuing her demand letter. The letter itself only gave the couple ten days to respond. Failure to meet this arbitrary deadline would result in a lawsuit against Native Essence and the Hershisers personally. Wodinsky threatened to appoint a receiver to "exercise control over [Native Essence] while this matter is pending" and to freeze the couple's assets, which would deprive them of the ability to defend themselves in any FTC proceeding.
In its proposed lawsuit, the FTC argues that, "consumers throughout the United States have suffered and continue to suffer substantial monetary loss as a result of Defendants' unlawful acts and practices." This statement is false, because the FTC never interviewed Native Essence customers or conducted any investigation beyond looking at the company's website. The FTC's "enforcement" program against companies like Native Essence consists primarily of trolling the internet for small companies that are unlikely to challenge the staff's demand for "negotiated settlements." (In this sense, FTC staff lawyers like Wodinsky are not unlike pedophiles who troll Internet chat rooms for underage sexual partners.)
On a website established by the Hershisers to defend their business, dozens of customer e-mails received in the aftermath of Wodinsky's letter plainly contradict the FTC's false and misleading statements. One customer, identified as J.A., wrote:
"I have been a customer of the Native Essences Herb Co. for 15 years. I have never known them to prescribe or even suggest in anyway that their products will cure all or any diseases or disorders. They have always been full of integrity in dealing with me and have never made any claims. I have used many of their products and have always been more than satisfied. I feel they provide a much needed service, but that is what it is, a service. They have a disclaimer posted on their website, it is up to the individual to take responsibility for themselves and do the research. I am saddened to think that someone would want to find blame with Native Essence or any herb company just because they are too lazy to take responsibility for their own health and well being and do their own research. Native Essence is in no way to blame, they have made NO claims at any time. They have been careful to only quote OTHERS research on individual herbs or herbal formulas. And even in quoting others they have never stated that it is the absolute truth, only that this is what has been found in the research, not claimed."
Another customer, identified as V.M., said she had been dealing with Native Essence and Mark Hershiser for 14 years and was never the victim of any deceptive or fraudulent acts:
"Not only is Mark's traditional information and practice NOT deceptive, it isn't even different from data that I've found from other sources when I cross reference the information. In fact, Mark has even suggested books so I could do my own research.
"Mark is one of the kindest and most caring people I know. Many times he didn't even charge me for an item. He is not a mercenary, but instead truly intends to help improve people's lives and the world we live in.
"By providing high quality herbal products that we, as his customers, can rely on, Mark is filling a genuine need in our society. Vast amounts of traditional healing information and knowledge are being lost. Mark is helping us by researching the data, bringing it together, and offering some excellent traditional herbal products for those of us who prefer to follow tradition.
"To fine or threaten to sue Native Essence Herb Co. and it's owners in an effort to 'redress injury to consumers' is to threaten and cause injury to those very consumers the FTC is imagining it is redressing. I will not be as well off without the web site and other data from Mark. All sources of data about traditional healing practices are available. Any threat which inhibits the free flow of information and knowledge about traditional healing practices undermines our constitutionally guaranteed freedom of speech."
The FTC remains steadfastly opposed to free speech when the speaker happens to be a commercial business. The agency's lawyers maintain that they -- not consumers -- are the best judge of the "scientific" validity of information presented in public forums. The Hershisers' lawsuit could go a long way to restoring the First Amendment protections of businesses and their consumers, so that they may exchange information free from threats of government violence. You can download Wodinsky's demand letter (and supporting documents) to Native Essence at this link. You can view the Hershisers' legal defense website at this link. If you found this article useful, please consider making a contribution to the Voluntary Trade Council. |
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Last Updated ( Saturday, 05 July 2008 14:27 )
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Suggested Reading
Antitrust: The Case for Repeal
Dominick T. Armentano
2nd ed. 1999
Purchase from Mises.org ...................................... 
Markets Don't Fail!
Brian P. Simpson
2005
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The Antitrust Religion
Edwin S. Rockefeller
2007
Purchase from Cato.org
Read the review ...................................... 
Winners, Losers & Microsoft
Liebowitz & Margolis
1999
Purchase from Independent Institute
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