1. Under Internal Revenue Code §§ 22(a), 115(a), (b), upon a reorganization of two corporations into a new corporation, accumulated earnings and profits of the predecessor corporations which are undistributed in the reorganization are deemed to be acquired by the successor corporation and, upon distribution by it, are taxable as income, notwithstanding the participation of new investors in the successor corporation. Pp. 331 U. S. 215-216.
2. To what extent the accumulated earnings and profits of the predecessor corporations have been retained by the successor in this case is for the Tax Court to determine upon a factual analysis. Pp. 331 U. S. 216-217.
The Tax Court sustained the Commissioner's determination of deficiencies in respondents' income taxes. 5 T.C. 108. The Circuit Court of Appeals reversed. 157 F.2d 132. This Court granted certiorari. 329 U.S. 709. Reversed and remanded, p. 331 U. S. 217.
two old corporations which were merged in 1928 to form this new corporation had at that time, and turned over to the new corporation, accumulated earnings and profits sufficient to cover these dividends. One of these old corporations, L. Henderson & Sons, Inc., had about $75,000 in earnings and profits accumulated since 1913; the other, Crandall-McKenzie Company, had about $330,000. Liability of respondents for these deficiencies depends upon whether the new corporation acquired and retained a sufficient amount of these earnings and profits of its predecessors to cover the 1940 dividends.
were satisfied to accept only new corporation stock. When the reorganization was complete, the new corporation stock had been distributed as follows: 14,607 shares to old Crandall-McKenzie stockholders, 9,524 shares to old Henderson stockholders, and 25,869 shares to the general public through the participating underwriters.
predecessors. [Footnote 4] Thus, it was concluded, earnings and profits of the predecessors were not acquired by the new corporation.
We granted certiorari because of an alleged conflict with the Sansome rule. 329 U.S. 709. In the state of the record presented, we find it necessary to decide no more than whether the distinction of the Sansome rule made by the Campbell case is correct.
A basic principle of the income tax laws has long been that corporate earnings and profits should be taxed when they are distributed to the stockholders who own the distributing corporation. See Int.Rev.Code §§ 22, 115(a), (b). The controlling revenue acts in question, however, exempt from taxation distributions of stock and money distributions at least in part, made pursuant to a reorganization such as transpired here in 1928. See Revenue Act of 1928, § 112(b), (c), (i)(1)(A); § 115(c)(h), 45 Stat. 791, 816-818, 822-823. Thus, unless those earnings and profits accumulated by the predecessor corporations and distributed in this reorganization are deemed to have been acquired by the successor corporation and taxable upon distribution by it, they would escape the taxation which Congress intended. See § 112(h), Revenue Act of 1928; Murchison's Estate v. Commissioner, 76 F.2d 641; United States v. Kauffmann, 62 F.2d 1045.
as accumulated earnings and profits have been distributed contemporaneously with the reorganization so as to become taxable to the distributees, they, of course, cannot be said to have been acquired by the successor corporation. But insofar as payments to the predecessor corporations or their stockholders do not actually represent taxable distributions of earnings and profits, those earnings and profits must be deemed to have become available for taxable distribution by the successor corporation.
distinguished from earnings and profits. [Footnote 7] Or the distribution may be found to have constituted a liquidation under § 115 of the Revenue Act of 1928. [Footnote 8] It may be necessary on remand, therefore, for the Tax Court to consider, in the light of §§ 112(c) and 115 of the Revenue Act of 1928, how much, if any, of the 1928 cash distribution to Crandall-McKenzie stockholders represented earnings and profits deductible from the earnings and profits transferred to the new corporation available for the 1940 dividend payments.
The decision of the Circuit Court of Appeals is reversed with directions that the cause be remanded to the Tax Court for proceedings not inconsistent with this opinion.
* Together with No. 675, Commissioner v. Munter, also on certiorari to the same Court.
The Tax Court incorporated by reference a fact stipulation of the parties as its finding of fact. Each of the respondents had bought 10,000 shares of the 38,922 shares of the corporation then outstanding. The dividends declared in 1940 amounted to $35,166.25, of which each of the taxpayers received $12,500.
At one point in the stipulation, it was indicated that the new corporation had "no earnings and profits accumulated from December 4, 1928, to December 31, 1939," and no earnings or profits in the taxable year 1940. But, elsewhere in the stipulation, it appears there may have been some $32,000 earnings and profits accumulated between 1928 and 1940. The Tax Court apparently did not resolve these contradictory statements.
Some of the Crandall-McKenzie stockholders were paid $356.00 plus per share; others were paid $315.53 per share for identical stock.
A part of the old Crandall-McKenzie stock for which cash was paid was bought for $300,000 cash by one old Crandall-McKenzie stockholder from another while the reorganization was being transacted. The stockholder who made this purchase thereupon surrendered his original Crandall-McKenzie holdings, together with his recently purchased shares, to the new corporation in exchange for shares in the new corporation and $300,000 cash. We do not decide whether the sale from one old stockholder to another represents a transaction separate from the reorganization. Whatever may be the ultimate significance of this point, it does not affect the result we reach here.
There were two independent grounds for the decision in the Campbell case. One ground was that the earnings and profits of the predecessor corporation there had actually been distributed in the course of the reorganization. The Circuit Court of Appeals stated expressly that it did not rest its decision in the instant case on this theory.
The Senate Committee recommending adoption of § 115(h) of the Revenue Act of 1936 cited the Sansome case with approval. It described the new section as not changing "existing law." The Committee recommended the amendment only "in the interest of greater clarity." S.Rep. No.1256, 74th Cong., 2d Sess., (1936) 19. See also § 115(h) Revenue Act 1938, 52 Stat. 447; H.R.Rep. 2894, 76th Cong., 3d Sess. (1940) 41; S.Rep. 2114, 76th Cong., 3d Sess. (1940) 25.
U.S.Treas.Reg. 94, art. 115-11 (1936); U.S.Treas.Reg. 103, § 19, 115-11 (1940). See Taft v. Commissioner, 304 U. S. 351, 304 U. S. 357; Helvering v. Winmill, 305 U. S. 79, 305 U. S. 83; Douglas v. Commissioner, 322 U. S. 275, 322 U. S. 281-282; Boehm v. Commissioner, 326 U. S. 287, 326 U. S. 291-292.
"then the gain, if any, to the recipient shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property."
But § 112(c)(2) makes taxable as dividend income that portion of the gain which represents the distributee's share of the distributing corporation's earnings and profits.
Section 115(c) of the Revenue Act of 1928 governs the taxability of distributions in liquidation.


WARNER BROTHERS PICTURES, INC., Third-Party Defendant.
Rehearing Denied July 14, 1959.
John David Rhodes, Pittsburgh, Pa. (Pringle, Bredin & Martin, Pittsburgh, Pa., on the brief), for appellant.
James P. McArdle, Pittsburgh, Pa. (John A. DeMay, Gene K. Lynch, Pittsburgh, Pa., on the brief), for plaintiff-appellee Nicola Panichella.
J. Lawrence McBride, Pittsburgh, Pa. (Dickie, McCamey, Chilcote & Robinson, Pittsburgh, Pa., on the brief), for appellee Warner Bros. Pictures, Inc.
Before McLAUGHLIN, KALODNER and STALEY, Circuit Judges.
The question posed by this appeal is a narrow one. Is a clear and precise release executed by a railroad employee discharging a named party and all other persons, firms and corporations of and from any and all claims, demands, rights and causes of action whatsoever arising by reason of a specific accident effective to bar the employee's action under the Federal Employers' Liability Act (FELA), 45 U.S.C.A. § 51 et seq., against his employer-railroad for damages sustained in the same accident described in the release?
Plaintiff, Nicola Panichella, brought the action below under the FELA against the defendant-railroad to recover damages for injuries sustained when he fell upon a public sidewalk in Greensburg, Pennsylvania, on December 14, 1950. The railroad filed an answer and joined as third-party defendant Warner Brothers pictures, Inc., the owner-occupant of the property adjoining the sidewalk upon which the accident occurred.
Plaintiff was employed by the railroad as a trackman and on December 13, 1950, reported for work at 7:00 a. m. During the day he was assigned to sweeping switches clean of the snow that covered the area. There had been a recent snowfall that, combined with the accumulation from a severe snow storm of a few weeks earlier, necessitated overtime work. As a result of his seniority, plaintiff was given an opportunity to volunteer for overtime work, which he did. Following his second eight-hour shift, the plaintiff continued to work up until the time the accident occurred at approximately 7:00 a. m. December 14, 1950. The railroad supplied plaintiff an evening meal at the Palace Restaurant and a packaged lunch which he ate during the night of December 13.
The following morning at about 7:00 a. m. plaintiff was directed to return to the same restaurant, about a mile distant from his place of work, for the purpose of having breakfast and bringing back lunch for himself and his foreman. To reach the restaurant he had to walk through a public park and along public sidewalks. While en route plaintiff slipped and fell on the sidewalk abutting the Warner property. The condition of the sidewalk was variously described as rough ice topped with light snow; ice in ridges, wavy-like and a little rough; and as covered with a very thin slush. There had been some overnight snowfall.
The injury sustained by the plaintiff was a transverse fracture of the first lumbar vertabra. Hospitalization for about a month followed, and plaintiff remained in a body cast for twelve weeks. He lost about six months employment as a result of the injury and upon return to his former work claimed residual pain. At the time of trial plaintiff was 65 years of age.
Prior to the institution of the instant action, plaintiff engaged an Irwin, Pennsylvania, attorney to represent him. The attorney negotiated a settlement with The Travelers Insurance Company, liability carrier for Warner. The settlement called for payment of $1,375, and prior to execution of the release it was explained to plaintiff by his attorney. It was executed on October 28, 1952, twenty-two months after the accident. The railroad paid none of the consideration for the release, and was not a party to it, nor in fact was it aware of the settlement until November 4, 1952.
Although the railroad has expressed some doubt as to whether federal or state law should apply in regard to the effect of this release, we agree with the plaintiff that this is a case for the application of federal law. The right was created by federal law, and whether subsequent acts of the plaintiff have extinguished it should be determined by federal law. As the Supreme Court stated when considering this question in South Buffalo Railway Co. v. Ahern, 1953, 344 U.S. 367, 372, 73 S.Ct. 340, 343, 97 L.Ed. 395, "* * * peculiarities of local law may not gnaw at rights rooted in federal legislation." This admonition is especially apropos in considering rights granted to railroad employees by Congress under the FELA. Also see Dice v. Akron, C. & Y. R. R. Co., 1952, 342 U.S. 359, 72 S.Ct. 312, 96 L.Ed. 398.
As the plaintiff readily admits, Section 5 of the Act of April 22, 1908, was never intended to forbid bona fide agreements of release. The Supreme Court considered an attack upon releases per se in Callen v. Pennsylvania R. R. Co., 1948, 332 U.S. 625, 631, 68 S.Ct. 296, 298, 92 L.Ed. 242, and held that "* * * a release is not a device to exempt from liability but is a means of compromising a claimed liability and to that extent recognizing its possibility. Where controversies exist as to whether there is liability, and if so for how much, Congress has not said that parties may not settle their claims without litigation." Accord, South Buffalo Railway Co. v. Ahern, supra; cf. Dura Electric Lamp Co. v. Westinghouse Electric Corp., 3 Cir., 1957, 249 F.2d 5.
The release in question is conceded to be bona fide in and of itself. The plaintiff could hardly contend otherwise, for it was negotiated by his then attorney, for a substantial consideration, twenty-two months after the accident, signed only after a thorough explanation by his attorney and a complete disclosure by Travelers Insurance Company of its contents. There has been no allegation of overreaching and none can be discerned.
However, plaintiff contends that although a bona fide release negotiated and paid for by a railroad is a valid defense in an FELA case, the use of an admittedly bona fide release not obtained by the railroad and not paid for by it is invalid under the terms of Section 5 of the Act of April 22, 1908. He admits that the broad terms of the release would cover the railroad but contends that its use of it, without any connivance or agreement with Warner whatsoever, is a prohibited artifice. We fail to discern the rationality of this argument, for it was the act of the employee who voluntarily, knowingly, and advisedly entered into the release which extinguished his rights and not any act of the railroad. The railroad merely brought the fact of the release to the attention of the court in order to have the law operate thereon. In effect this is no different than the act of the railroad in bringing to the attention of the court a release it had negotiated. Assuming a bona fide release in either case, there is no artifice. It is indeed far-fetched to contend that the mere act of bringing to the attention of a court facts which are relevant to the defense of a suit is an artifice.
The only other case in which this problem has been considered, Falco v. Pennsylvania R. R. Co., 1951, 202 Misc. 769, 109 N.Y.S.2d 279, concluded that since a general release to the employer-railroad is not proscribed, the reasoning underlying that holding is even more cogent when the employer is not a party to the release. For, in the latter case, there is less danger that the disparity of bargaining power will adversely affect the negotiation.
The judgment in the main action will be reversed.
Appeal was also taken by the railroad from the judgment in favor of the third-party defendant. In view of what we have heretofore said, the judgment in favor of Warner Brothers Pictures, Inc., will be affirmed.
"That I, Nicholo Panichelli, residing at 409 White Street, Greensburg, Penna., being of lawful age, for the sole consideration of One thousand three hundred seventy five & no dollars ($1,375.00) to me in hand paid, receipt whereof is hereby acknowledged, have remised, released, and forever discharged, and for my heirs, executors, administrators, and assigns do hereby remise, release, and forever discharge Warner Brothers Pictures, Incorporated and his, her, their, and its successors and assigns, heirs, executors, administrators, and all other persons, firms, and corporations, of and from any and all claims, demands, rights, and causes of action of whatsoever kind and nature, arising from, and by reason of any and all known and unknown, foreseen and unforeseen bodily and personal injuries, damage to property, and the consequences thereof, resulting, and to result, from a certain accident which happened on or about the 14th day of December 1950, for which I have claimed the said Warner Brothers Pictures, Incorporated to be legally liable, which liability is hereby expressly denied.
"IN WITNESS WHEREOF, I have hereunto set my hand and seal the 28th day of October in the year one thousand nine hundred fifty-two (1952).
Address 309 Main St., Irwin Pa.
"On this 28th day of October 1952 before me personally appeared Nicholo Panichelli to me known, and known to me to be the same person described in and who executed the above instrument and he (or she) acknowledged to me that he (or she) executed the same.
"My Commission Expires First Monday in January, 1958"
The difference in spelling of the plaintiff's name in the release and in the caption of the case is of no significance.
"Any contract, rule, regulation, or device whatsoever, the purpose or intent of which shall be to enable any common carrier to exempt itself from any liability created by this chapter, shall to that extent be void: Provided, That in any action brought against any such common carrier under or by virtue of any of the provisions of this chapter, such common carrier may set off therein any sum it has contributed or paid to any insurance, relief benefit, or indemnity that may have been paid to the injured employee or the person entitled thereto on account of the injury or death for which said action was brought." 45 U.S.C.A. § 55.


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The reply brief in Bilski v. Kappos has now been filed. You can read it [Here].
Most people reading this will probably recall that Diamond v. Diehr was the last time that the United States Supreme Court issued a substantive opinion on 35 USC section 101. The case involved method claims and the use of a computer to control a rubber curing process.
I had always assumed that the counsel for the inventor in Diamond v. Diehr was a champion of broad subject matter protection and had argued valiantly for a broad scope of protectable subject matter under section 101, including protection for computer software. Therefore, I was surprised when I listened to the oral argument in Diamond v. Diehr that such was not the case: [Listen] and [Listen].
It’s no surprise that the Solicitor General also argued against the patentability of software during the oral argument. Previously, the government had argued for a narrow scope of protection under section 101 in Diamond v. Chakrabarty, Parker v. Flook, and Gottschalk v. Benson. The Solicitor General’s argument in Diamond v. Diehr was no different — although it took some prodding from Justice White for him to address the issue directly: [Listen].
This Court has long recognized that the distinguishing feature of a technological process is that it concerns a particular machine or apparatus or effects a transformation of matter to a different state or thing. See, e.g., Diehr, 450 U.S. at 184; Cochrane v. Deener, 94 U.S. 780 (1877). That understanding of the term “process” in Section 101 continues to provide an appropriate framework for distinguishing methods that involve technology—including claims concerning software and other modern technologies—from those that do not.
See page 9 of Respondent’s Brief in Bilski v. Kappos.
In any event, the machine-or-transformation test contemplates that many forms of “software” inventions are patent-eligible. As with many types of technology, the patent-eligibility of software cannot be resolved as a categorical matter. Rather, the eligibility of a claimed software invention depends on the content of that invention and the form in which it is sought to be patented.
See Respondent’s Brief at pages 38-39 in Bilski v. Kappos.
You can listen to the entire oral argument in Diamond v. Diehr here: [Listen].
You can read the Supreme Court’s opinion in Diamond v. Diehr here: [Read].
Since a large percentage of high-stakes patent cases are appealed to the Federal Circuit, I thought it might be of use to in-house counsel to list at least one person’s view of the top oral advocates for patent cases at the Federal Circuit. This first list is from cases decided during the year 2006. (Because I typically listen to the recordings of the oral arguments in my car on my drive to and from work, please take note that my impressions can be influenced by how frustrating traffic is on any particular day.) Generally, these advocates were knowledgeable of patent law, articulate, zealous, and persuasive.
Stay tuned for the lists for 2007, 2008, and 2009.
My colleagues Cara Crowley-Weber, Ph.D. and Kathy Lobel-Rice, Ph.D. have launched a new patent blog at www.patentdivas.com. Not only are these two biotech patent attorneys two of the nicest people you will ever meet; but, they’re really sharp, too. I’m sure they’ll have some interesting topics for discussion — so, check it out.
The meaning of “each” ….
I posted a few weeks ago about the case In re Skvorecz in which there was a discussion about the meaning of “each” when used to refer back to a plurality of items. [LINK] I stumbled across an oral argument from 2006 where the panel again was trying to understand what “each” meant in this context.
Ultimately, the court did not address the meaning of “each” in its opinion since the patent was found invalid. But, if one has to argue about the meaning of “each” for six minutes of an oral argument, I would question whether “each” indeed has a common and ordinary meaning.
I find it pretty tough to read too much out of the oral argument in i4i v. Microsoft. It was strange that Judge Schall did not ask many questions during the oral argument — which might be an indicator of his positions on the issues. And, I found it strange that the panel did not have many questions for i4i’s counsel about the claim construction issues raised by Microsoft’s counsel. Instead, the panel seemed to focus more on the damages issues when questioning i4i’s counsel.
The fact is that Your Honors have focused correctly on Figure 9. You can also focus on Figure 7, which also shows that the user has access at the same time to both the mapped content and the metacode map. And you can also look at the very top, oval 132, input device for creating content and selecting metacodes. The user has access to both, and it’s not only the Figure 9 statement that has the statement about updating. But, if you look at column 6, lines 14 and 15, the mapped content area and metacode map is updated as changes are made.
As you can see, figures 7 and 9 utilize blocks with the “means for” language contained in the blocks. There appears to be no structure identified in the figures for at least some of the “means for” blocks. Furthermore, the detailed description linked to these blocks appears to describe these blocks with the same “means for” language used inside the blocks (e.g., col. 14, lines 26-28 “compiles the selected metacodes using the means for selecting, locating, and addressing metacodes represented in Box 144”). Hence, one might argue that not all of the “means” elements in the claims are linked to any structure in the specification or drawings and thus would fail to meet the requirements of section 112, paragraph 6. See Default Proof Credit Card Systems, Inc. v. Home Depot U.S.A., Inc., 412 F.3d 1291 (Fed. Cir. 2005) (“A structure disclosed in the specification qualifies as ‘corresponding’ structure only if the specification or prosecution history clearly links or associates that structure to the function recited in the claim . . . . This duty to link or associate structure to function is the quid pro quo for the convenience of employing section 112, paragraph 6”).
In Automotive Technologies International, Inc. v. BMW of North America, Inc., 501 F.3d 1274 (Fed. Cir. 2007), the Federal Circuit applied a full scope of enablement theory. The court noted that the mere boxed figure of an electronic sensor and a few lines of description fail to apprise one of ordinary skill how to make and use an electronic sensor.
was not sufficiently enabled to perform the steps of “selecting” and “analyzing” a predefined character image in a movie or “integrating” or “substituting” an image in movies.
Taken to its extreme, one wonders whether under the “full scope of enablement” theory an insufficiently enabled means plus function element would necessarily require that a corresponding step (or act) in a method claim be deemed insufficiently enabled. Thus, for example, if the claim element “means for compiling said metacodes of the menu by locating, detecting and addressing the metacodes in the document to constitute the map and storing the map in the metacode storage means” in claim 1 had been found to be insufficiently enabled, would it necessarily mandate that the corresponding claim element “compiling a map of the metacodes in the distinct storage means, by locating, detecting and addressing the metacodes” in claim 14 was insufficiently enabled.
Here’s an opportunity for you to be the judge. Microsoft has appealed the permanent injunction imposed by Judge Davis of the Eastern District of Texas in i4i v. Microsoft. Importantly, the permanent injunction would apply to any continuing infringement of US patent 5,787,449 by Microsoft’s Word product. Judge Davis also approved $240 million in damages to i4i for infringement by Microsoft. The Federal Circuit has issued a temporary stay of the permanent injunction pending a decision on the appeal.
The oral argument at the Federal Circuit before Judges Schall, Prost, and Moore was conducted on September 23, 2009. The court has not yet issued a decision. Hence, you can decide how you would resolve this appeal.
You can listen to the oral argument below. The oral argument was over an hour; so, I’ve divided it into three segments (1) Microsoft’s argument; (2) i4i’s argument; and (3) Microsoft’s rebuttal argument.
Supporting documents including briefs and a link to the patent can be found at [Link].
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This agreement sets out the contracting parties’ data protection obligations resulting from the activities undertaken by the Contractor for the Client in accordance with the General Data Protection Regulation (EU GDPR). It applies to all activities in which the Contractor or its agents process personally identifiable information for the Client.
From the effective date, this agreement replaces any previous agreements between the Client and the Contractor for order data processing in connection with the use of etracker services.
If the Client uses the etracker services in the name of or on behalf of a third party, it shall ensure and be responsible for its being fully entitled to act in the name of and on behalf of the third party and that pursuant to this contract, it shall commit the third party to compliance with all obligations of the Client under the processing relationship and especially compliance with all obligations of the Client under this contract. In this case, the Client further confirms that it possesses all rights, consent and approvals that may be required for the agreed-upon data processing. Prohibitions, restrictions and approval requirements in relation to the use of the Contractor’s services for third parties remain unaffected, as do the consequences of a related breach of contract.
The object and duration of the data processing are specified in the contract on the use of etracker services by the customer (hereafter: main contract).
The Contractor processes personally identifiable information for the Client pursuant to Art. 4 (2) and Art. 28 EU GDPR on the basis of this contract.
The contractually agreed service is provided exclusively in a member state of the European Union or in a state party to the Agreement on the European Economic Area. Any transfer of the service or partial work to a third country requires the prior consent of the Client and may only take place if the special conditions of Art. 44 (ff.) EU GDPR are fulfilled (e.g. adequacy decision by the Commission, standard data protection clauses, approved rules of conduct).
In view of the contractual order processing, the Client may terminate the contract at any time without observing a period of notice if the contracting party has violated data protection regulations or the terms of this contract, if the Contractor cannot or does not intend to execute a contractual instruction of the Client, or if the Contractor refuses the Client’s inspection rights. In particular, non-compliance with the obligations agreed in this contract and derived from Art. 28 EU GDPR constitutes a serious infringement.
With the help of the utilised etracker services, data, properties and activities of users with regard to the use of websites, applications or other media products and services offered by the Client are recorded, processed or stored in accordance with the main contract.
The Client alone is responsible (“responsible person” pursuant to EU GDPR Art. 4 (7)) for assessing the admissibility of the data processing in accordance with Art. 6 (1) EU GDPR as well as for the protection of data subjects’ rights pursuant to Art. 12 to 22 EU GDPR.
The Client is obliged to transmit to etracker or record only such data that are lawfully collected in accordance with Art. 6 (1) EU GDPR and further processed appropriately. The Client is also obliged to preserve the rights of the persons concerned and to meet in particular duties to inform and to allow the persons concerned to exercise their rights of objection.
Changes of the subject of the data processing must be jointly agreed between Client and Contractor and documented in writing or in an electronic format.
The Client usually issues all orders, partial orders and instructions in writing or in a documented electronic format. Oral instructions must be confirmed by the Client immediately in writing or in a documented electronic format.
The Client is entitled, at its own expense as described under Point 5 of this contract, to seek assurances prior to the commencement of data processing and subsequently on a regular basis of the Contractor’s compliance with the technical and organisational measures and the obligations laid down in this contract.
The Client shall inform the Contractor immediately if it finds errors or irregularities when performing audits of order outcomes.
The Client is obliged to treat confidentially all knowledge acquired within the framework of the contractual relationship of the Contractor’s business secrets and data security measures. This applies in particular to the representation of the security measures in Annex 1. This obligation remains even after the end of this contract.
The Client shall specify a person authorised to issue instructions. The person authorised by the Client to issue instructions shall be specified in the etracker user account as the main user. The person authorised to issue instructions is entitled to exercise the Client’s rights under this contract to issue instructions. These instructions are attributable to the Client.
In the event of a change or a longer-term absence or inability of the counterpart to carry out their duties, the contracting partner shall be informed immediately, in writing or electronically, about their successors or deputies. The current contact details for the Contractor’s data protection officer are readily available on the Contractor’s website (www.etracker.com/en/). The instructions are to be kept for their period of validity and subsequently for three full calendar years.
The Contractor shall process personally identifiable information exclusively within the framework of the agreements met and pursuant to instructions given by the Client, unless it is obliged to any other data processing by the law of the Union or of the Member States to which the data processor is subject (e.g. investigations by law enforcement or state protection authorities); in such a case, the order processor shall before processing inform the party responsible of these legal requirements, unless the law in question prohibits such communication because of substantial public interest (Art. 28 (3), clause 2, lit. a EU GDPR).
Copies or duplicates of the personally identifiable information thus processed shall not be created by the Contractor without the knowledge of the Client. This does not include backup copies, to the extent necessary to ensure proper data processing, or data required to comply with statutory retention requirements.
The Contractor assures the contractual processing of all agreed measures for order-based processing of personally identifiable information. It warrants that the data processed for the Client shall be strictly separated from other databases both technologically and organisationally.
In the compliance with the rights of data subjects under Art. 12 to 22 EU GDPR by the Client, in the preparation of directories of processing activities, and for required data protection impact assessments by the Client, the Contractor must cooperate to the extent necessary and the Client must provide support as far as reasonably possible (Art. 28 (3), clause 2, lit. e and f EU GDPR). It shall forward the information required to that end to a European Union-based body designated by the Client.
The Contractor shall inform the Client without delay if, in its opinion, an instruction issued by the Client violates statutory provisions (Art. 28 (3), clause 3 EU GDPR). The Contractor is entitled to suspend the execution of the relevant instruction until it is confirmed or amended by the Client’s officer subsequent to audit. The Client is responsible for the legal admissibility of it instructions. The Contractor is not subject to an obligation to perform audits.
The Contractor shall correct, delete or limit the processing of personally identifiable information resulting from the contractual relationship if the Client so requests by means of a directive and the legitimate interests of the Contractor do not conflict with this. Should such an instruction lead to additional expenses beyond the service contract, the Client bears the costs.
The Contractor may only disclose personally identifiable information relating to the contract to third parties or to the data subjects subject to prior instruction or approval by the Client.
The Contractor agrees that the Client is entitled to audit in the appropriate and necessary scope compliance with the regulations on data protection and data security and with the contractual agreements, in particular by obtaining information and inspecting the stored data and the computer programs and by performing audits and on-site inspections (Art. 28 (3), clause 2, lit. h EU GDPR). The audit rights are exercised by appointment and with a lead time of at least ten working days. The efforts for an inspection are generally limited to one day per calendar year for the Contractor.
The Client is obliged to keep confidential the information of the Contractor, in particular details of the technical and organisational measures that it has come to know in the context of or on occasion of such an audit and not to disclose said information to third parties or to make it accessible to third parties if this does not occur as part of the contractual service relationship between the Client and the Contractor.
The Client shall have the right to have an inspection carried out by an auditor it nominates in writing on a one-off basis at least ten days before the inspection, if the Contractor agrees to such an external audit. The Contractor shall not unreasonably refuse its consent. In particular, the Contractor is entitled to refuse the auditor if the auditor is in a competitive relationship with the Contractor. External auditors are obliged to conclude a written confidentiality agreement with the Contractor and to only then carry out the audit. The Client’s authorisation to conduct audit remains unaffected.
The processing of data in private homes (telework or home work by the Contractor’s employees) is permitted only with the consent of the Client. As far as the data are processed in a private dwelling, access to the employee’s home must be contractually secured for the employer’s audit purposes. Measures according to Art. 32 EU GDPR are to be ensured also in this case.
The Contractor confirms that it is familiar with the data protection regulations of EU GDPR relevant for order processing. It undertakes to observe other secrecy protection rules relevant to this order and as are also the responsibility of the Client (e.g. bank secrecy, telecommunications secrecy, social secrecy, professional secrets according to Art. 203 of the German Criminal Code, etc.), if and to the extent that this is agreed at the time of or subsequent to conclusion of the contract. The Client shall inform itself about the special secrecy rules to which it is subject and is responsible for their inclusion in the contractual obligations.
The Contractor undertakes to maintain confidentiality in the orderly processing of the Client’s personally identifiable information. This shall continue after the end of the contract.
Prior to commencement of the activities, the Contractor warrants that it shall familiarise the employees entrusted with the work with the data protection provisions relevant to them. It shall also bind them to secrecy in an appropriate manner for the duration of their activity, as well as after the end of the employment relationship (Art. 28 (3), clause 2, lit. b and Art. 29 EU GDPR). The Contractor monitors compliance with the data protection regulations within its company.
The Contractor’s designated data protection officer upon conclusion of the contract is Ms Elke Hollensteiner, +49 40 55 56 59 52, privacy@etracker.com.
The current contact details for the Contractor’s data protection officer are readily available on the Contractor’s website (www.etracker.com/en/).
The Contractor shall immediately notify the Client of any disruptions or violations committed by the Contractor or persons it employs or against data protection provisions or the stipulations made in the order, as well as of any suspicion of data breaches or irregularities in the processing of personally identifiable information. This applies in particular with regard to any reporting and notification obligations to which the Client is subject pursuant to Art. 33 and 34 EU GDPR. The Contractor undertakes to provide the Client with appropriate support in its duties pursuant to Art. 33 and 34 EU GDPR (Art. 28 (3) , clause 2, lit. f EU GDPR). Notifications according to Art. 33 or 34 EU GDPR for the Client may only be carried out by the Contractor subject to prior instructions pursuant to Point 4 of this contract.
The rights of persons affected by the data processing must be asserted against the Client. If a data subject contacts the Contractor directly for information, rectification, deletion or blocking of the data concerning them, the Contractor shall forward this request to the Client in a timely manner.
In the event that a data subject asserts their data protection rights, the Contractor shall support the Client with appropriate technical and organisational measures in the fulfilment of these claims to the extent reasonable and necessary for the Client, insofar as the Client cannot respond to these claims without cooperation of the Contractor.
The Contractor shall enable the Client to correct, delete or block the personally identifiable information processed in the order or, at the request of the Client, to rectify, erase or block the request itself, if and to the extent that this is impossible for the Client.
Costs incurred by the Contractor in compliance the obligations under this Section 7, which go beyond the scope of services agreed upon in accordance with the main contract, shall be paid by the Client appropriately and in accordance with the Contractor’s usual remuneration rates.
The Contractor is only permitted to commission subcontractors with the processing of Client data subject to the Client’s consent, Art. 28 (2) EU GDPR, which must take place by means of one of the above named communication channels (Point 4), with the exception of verbal permission. Approval can only be granted if the Contractor informs the Client of the name, address and intended activity of the subcontractor. In addition, the Contractor must ensure that it selects the subcontractor carefully with due regard to the suitability of the technical and organisational measures taken by the subcontractor pursuant to Art. 32 EU GDPR. The relevant test documents are to be made available to the Client on request.
Commissioning of subcontractors in a third country may only take place if the special requirements under Art. 44 (ff) EU GDPR are fulfilled (e.g. adequacy decision by the Commission, standard data protection clauses, approved rules of conduct).
The Contractor must ensure by contract that the regulations agreed between Client and Contractor also apply to subcontractors. In the contract with the subcontractor, the details must be specified in such a way that the responsibilities of the Contractor and the subcontractor are clearly distinguished from each other. If several subcontractors are employed, this also applies to the responsibilities between these subcontractors. In particular, the Client must be entitled, if necessary, to carry out appropriate checks and inspections (including on site) at subcontractors or have them carried out by third parties instructed by it.
The contract with the subcontractor must be in writing. This can also be done in an electronic format (Art. 28 (4) and (9) EU GDPR).
The transfer of data to the subcontractor is only permitted if the subcontractor has fulfilled its obligations under Art. 29 and Art. 32 (4) EU GDPR with regard to its employees.
The Contractor must verify compliance with the obligations on the part of the subcontractor(s). The results of the verifications shall be documented and made available to the Client on request.
The Contractor shall be liable to the Client for ensuring that the subcontractor complies with the data protection obligations contractually imposed by the Contractor in accordance with this section of the contract.
Third-party services which the Contractor makes use of as an ancillary service to assist in the execution of the order are not to be understood as subcontracting within the meaning of this agreement. This includes, for example, telecommunications services, cleaning staff, auditors and the disposal of data media – if they do not contain personally identifiable information.
The processor shall inform the person responsible of any intended change in relation to the addition or replacement of existing subcontractors, thereby giving the Client the opportunity to object to such changes (Art. 28 (2), clause 2 EU GDPR).
Prior to commencing the order processing, the Contractor shall document the implementation of the necessary technical and organisational measures set out prior to the award of contract, in particular with regard to the concrete implementation of the order, and pass this to the Client for inspection upon request.
The Contractor must ensure security pursuant to Art. 28 (3), lit. c, 32 EU GDPR, especially in connection with Art. 5 (1), (2) EU GDPR. Overall, the actions to be taken are data security measures to ensure a level of protection appropriate to the level of risk with regard to the confidentiality, integrity, availability and resilience of the systems. In this context, the state of technology, the implementation costs and the nature, scope and purpose of the processing as well as the varying probability and severity of the risk for the rights and freedoms of natural persons within the meaning of Art. 32 (1) EU GDPR must be taken into consideration. Details of the measures taken can be found in Annex 1.
The technical and organisational measures are subject to technical progress and further development. In this respect, the Contractor is permitted to implement alternative adequate measures. In so doing, the security level of the measures set out may not be breached. Significant changes must be documented.
Upon completion of the order processing (or sooner at the request of the Client), the Contractor must immediately delete the personally identifiable information it has processed on behalf of the Client. The cancellation is to be confirmed to the Client upon request. Impossibility or restriction of the service due to a deletion requested by the Client prior to the end of the contract does not affect the claims and rights of the Contractor arising from the order relationship.
For the processing activities carried out under this contract, the Contractor shall receive remuneration in accordance with the main contract. subject to the following provisions, no separate remuneration is due for compliance with the obligations arising from this agreement. However, the Contractor is entitled to demand reasonable compensation in accordance its usual rates for expenses arising from the implementation of instructions or other measures requested by the Client, insofar as such measures go beyond the scope of services agreed in the main contract or contain activities deviating from those in the main contract. Any additional efforts shall be notified to the Client in advance, subject to the deadlines set by the Client.
Attention is drawn to Art. 82 EU GDPR. Liability limitations and exclusions of the main contract shall apply in the relationship between the parties in accordance with the contractual agreements.
The Client is obliged to reimburse the Contractor for damages and expenses incurred as a result of violations of data protection law for which the Client is responsible, in particular non-compliance with data protection requirements by the Client or the contractual implementation of the Client’s instructions.
This agreement ends automatically with the end of the contractual relationship between the parties resulting from the main contract, without the need for termination. An isolated orderly termination of this agreement by the Contractor is excluded.
The Client and the Contractor have the right to demand the amendment of this agreement to the applicable legal provisions, provided that their further development or application justifies such a requirement. The right of termination for important reasons remains unaffected.
Ancillary agreements must be in written form or a documented electronic format. This agreement as to the format cannot be waived orally.
This agreement does not affect the existence of the other agreements concluded by the parties. However, the provisions of this agreement shall take precedence over any conflicting provisions and requirements of all other agreements concluded by the parties.
Should individual parts of this agreement become ineffective, this shall not affect the validity of the remainder of the agreement.
This agreement becomes effective upon confirmation by the Client and is binding for both parties.
A comprehensive data backup concept was implemented at the contractor’s (etracker GmbH) that takes the required precautions from a structural, personnel-related, organisational and technical standpoint to ensure the security of buildings and databases, to guarantee secure operation with regard to data protection and data security, and to protect the rights of affected individuals in an optimal manner.
The computer centre of etracker GmbH is run on behalf of etracker by IPHH Internet Port Hamburg GmbH, a company based at Wendenstrasse 408, Hamburg, Germany 20537. IPHH provides access to the Internet and to etracker servers that are physically stored in racks (server racks). The racks are kept on the premises of IPHH and are rented by etracker. The server hardware is procured, configured, installed in racks, maintained and disposed of solely by etracker. As a result, housing is the only service from IPHH that etracker uses.
The contractor shortens the IP addresses provided as part of the services to make personal identification as difficult as possible.
To ensure that processing is as anonymous as possible, the client is obligated not to allow any additional personal data to be transferred to etracker when etracker solutions are used.
The processing of personal data in such a way that the personal data can no longer be associated with the specific person to which it relates without additional information, provided this additional information is specially protected and subject to technical and organisational measures.
Guidelines and regulations for access control.
Secured areas are clearly defined and few access channels are available.
Access to sensitive areas is secured by an electronic access control system with multifactor authentication and logging.
Measures for securing buildings are suitably designed; entry doors, window screens, etc. are burglar-resistant for example.
All areas are secured with a burglar alarm (VdS approved) and are redundantly connected to a permanently manned location; alarm notifications are also sent to IPHH security.
All critical areas are monitored using vandalism-resistant video cameras.
Individuals are only provided with access to areas that they have to enter to do their jobs.
Guidelines regulating the chaperoning and identification of guests throughout the building.
Access to the office’s internal server room is secured by a PIN.
A keycard, a PIN and a biometric feature (fingerprint) are required to access the computer centre; access points may only be managed by employees who are part of the on-call service.
The system racks located in the server room are locked individually using locking cylinders.
Secured entry for deliveries and supplies (monitoring of entry to the access points).
Regulation of user authorisations (administration, including assignment of rights, assignment of special rights, withdrawal of authorisations, periodic reviews).
Password guidelines (secure passwords, periodic changes, periodic reviews).
Assignment of identification keys (SSH keys).
Use of encryption routines for mobile data carriers (for example, laptops, mobile telephones).
Authentication of users with remote access (cryptographic techniques, VPN solutions).
Commitment to data confidentiality in accordance with Art. 28.3(b) EU GDPR.
Controlled destruction of data carriers.
Measures ensuring that individuals authorised to use data processing procedures can only access personal data in accordance with their access authorisations, and that personal data cannot be read, copied, modified or deleted by unauthorised persons when being processed or used or after being stored.
Regulation of access authorisations in the etracker back office (differentiated authorisations via profiles, roles).
The front end can only be accessed at the client’s premises with authentication (user name/password).
Suitable functions provided for authentication.
Recording and evaluation of logs (successful and unsuccessful authentication attempts in the application).
Guidelines for pseudonymisation of personal data.
Data collected for different purposes is stored separately in the data processing system.
Data is processed on dedicated systems belonging to etracker GmbH.
Measures ensuring that personal data cannot be read, copied, modified or deleted by unauthorised persons when it is transported, transferred electronically or stored on data carriers.
All data remains within the data processing system and is not transferred to third parties.
Data transfer between the etracker and the computer centre takes place solely via encrypted channels.
The client’s front-end websites are made available via an encrypted connection.
Measures ensuring it is possible to subsequently check and determine whether and by whom personal data was entered, modified or deleted in data processing systems.
Logging of entries (in etracker back office).
Logging of data usage (in etracker back office).
Commitment on the part of all employees involved in data processing to maintain confidentiality and to process data as directed (data confidentiality).
Regulated process for safeguarding the business operations.
Comprehensive monitoring of all services.
Regular backups in accordance with a backup plan.
Protection of the systems against database malfunctions, service-level agreements with IT service providers.
Order control: No processing of order data as defined in Art. 28 EU GDPR unless authorised by the client.
Rigorous selection of service provider.

matches:
Art. 4
Art. 28
Art. 44
Art. 28
Art. 4
Art. 6
Art. 12
Art. 6
Art. 12
Art. 32
Art. 203
Art. 29
Art. 33
Art. 33
Art. 33
Art. 28
Art. 32
Art. 44
Art. 29
Art. 32
Art. 28
Art. 5
Art. 32
Art. 82
Art. 28
Art. 28


In a case decided by the Court of Appeals Eighth District of Appeals El Paso, Texas (“Appellate Court”) on December 9, 2016, the Appellate Court held that the trial court did not abuse its discretion in finding that the plaintiff’s expert in her Texas medical malpractice case was qualified to render an expert report in her case and that the expert’s report was sufficient as to causation, thereby affirming the judgment of the trial court that allowed the plaintiff’s Texas medical malpractice case to proceed.
The Texas Medical Liability Act (“TMLA”) that was passed in 2003 requires all plaintiffs bringing healthcare liability claims in Texas, including malpractice claims against doctors, to submit an expert report confirming the viability of their claims within 120 days after filing suit or else face dismissal. TEX.CIV.PRAC.&REM.CODE ANN. § 74.351(a)-(b)(2)(West Supp. 2015). A valid expert report under the TMLA must provide: (1) a fair summary of the applicable standards of care; (2) the manner in which the physician or health care provider failed to meet those standards; and (3) the causal relationship between that failure and the harm alleged. TEX.CIV.PRAC.&REM.CODE ANN. § 74.351(r)(6). The report or an attached curriculum vitae must also establish the expert’s qualifications in the relevant subject matter area. TEX.CIV.PRAC.&REM.CODE ANN. § 74.351(a).
If a plaintiff’s initial expert report is deficient, but the trial court finds it was a good faith attempt to comply with the TMLA’s requirements, the trial court will grant one thirty-day extension so the plaintiff can file a supplemental report curing any deficiencies. TEX.CIV.PRAC.&REM.CODE ANN. § 74.351(c). Failure to timely file a compliant report that cures a previous report’s deficiencies results in dismissal of the plaintiff’s claim with prejudice. TEX.CIV.PRAC.&REM.CODE ANN. § 74.351(b)(2) & (c).
The purpose of the TMLA’s expert report requirement is both to place healthcare providers on notice of what specific conduct is at issue in a particular case, and to provide judges who may have no medical training or knowledge of healthcare administration with the information needed to determine whether a healthcare liability claim is wholly frivolous.
In the case the Appellate Court was deciding, the Texas medical malpractice plaintiff had been treated by the defendant dermatologist who had performed two biopsies on her lower left leg after which the plaintiff complained that the biopsy site on her leg had expanded, that she was in extreme pain, and that a bad smell was emanating from the biopsy wound. Four days later, the plaintiff was diagnosed with a severe infection and was administered antibiotics. Because the infection was located deep in her skin, she subsequently had surgery to remove the infected tissue.
The plaintiff alleged in her Texas medical malpractice lawsuit that the defendant dermatologist was medically negligent in his failure to administer antibiotics to the plaintiff at the time of her last visit with the defendant. The plaintiff timely served on the defendant an expert report and curriculum vitae from her expert (an internist) that relied on the defendant’s medical records and photographs of the biopsy site before and after surgery to conclude that the defendant dermatologist negligently failed to administer antibiotics during the plaintiff’s last visit, opining that infections left untreated become harder to treat with antibiotics as time goes on and that if the defendant had administered antibiotics during the plaintiff’s last visit, she more likely than not could have avoided surgery. The plaintiff’s expert further stated that he was board certified in internal medicine, that he had previous experience diagnosing and treating skin infections with antibiotics under similar circumstances, and that the standard of care for treating infections was the same for dermatologists and internists.
The plaintiff subsequently filed with the court a supplemental report concerning her medical expert’s qualifications in which he stated that he had education and training for the diagnosis and treatment of skin infections as a result of biopsies, under the same or similar circumstances as in this case; that skin infections as a result of biopsies such as in this case are diagnosed and treated the same by internists and dermatologists; and, that the diagnosis and treatment of skin infections as a result of biopsies under the same or similar circumstances as in this case are equally developed in dermatology and internal medicine.
The defendant argued that the plaintiff’s expert report and supplemental report were deficient because the expert failed to establish that he is qualified to opine on the standard of care and causation issues applicable to skin infections: specifically, the expert is incapable of judging the defendant’s actions because the expert was an internist and never averred that he had experience working with dermatologists, never averred that he had treated patients with erythema nodosum or other skin conditions, never identified the specific infection or specific antibiotics necessary to treat the plaintiff’s infection, and never explained why the antibiotics the plaintiff received four days after last visiting the defendant were ineffective, thereby indicating the expert’s lack of qualifications.
The plaintiff argued that her case is not about the treatment of erythema nodosum but rather the treatment of a post-biopsy infection. Therefore, her expert is qualified to opine on the defendant’s actions because her expert has practical experience dealing with biopsy follow-up care and because the standard of care for treating infections is common to all medical subspecialties and applies equally to internists and dermatologists.
With regard to the defendant’s argument that the plaintiff’s medical expert’s report is defective because it fails to logically and in sufficient detail link the lack of antibiotics given by the defendant with the surgery the plaintiff subsequently required, the Appellate Court stated that it considers two factors in assessing whether a statement on causation is sufficient: (1) whether the expert established a logical, complete chain between a negligent act and the plaintiff’s injury; and (2) whether the report gave the trial court sufficient medical details to allow the court to decide if the case was frivolous.
The Appellate Court held that the plaintiff’s medical expert’s report established the causal chain by clearly explaining that infections that are left untreated become more difficult to treat with antibiotics as time passes, and that the defendant’s failure to administer antibiotics to the plaintiff was a substantial cause of the infection in her leg advancing to the point where surgery was required. In terms of logic, the expert’s report seamlessly links the defendant’s alleged breach of the standard of care to the plaintiff’s eventual need for surgery.
The Appellate Court further held that the plaintiff’s medical expert’s report section with regard to causation was sufficiently detailed to allow the trial court to assess whether the claim is wholly frivolous.
Source Simpson v. Barton, No. 08-16-00076-CV.
If you or a family member may have been injured as a result of medical negligence by a dermatologist in the United States, you should promptly find with a medical malpractice attorney in your U.S. state who may investigate your medical malpractice claim for you and represent you in a medical malpractice case against a dermatologist, if appropriate.
Click on the “Contact Us Now” tab to the right, visit our website, or call us toll-free in the United States at 800-295-3959 to be connected with medical malpractice lawyers in your state who may assist you with your dermatologist medical negligence claim.
This entry was posted on Saturday, January 21st, 2017 at 5:07 am. Both comments and pings are currently closed.


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Since the signing of the Treaty of Rome in 1957, the letter of the law governing competition within the Common Market of the European Union has remained unchanged. However, the Court of Justice of the European Union (“CJEU”, “ECJ”, or, the “Court”) has modified – as Advocate General Cosmas put it in 1997 – the “legal classification” or “spirit of the rules on competition,” throughout more than a half-century of the Court’s Judgments.
Within that case law, court decisions have established precedents and carved out exceptions. Consten and Grundig v Commission (1966) (“C&G”), was the first judgment by the ECJ to acknowledge the existence of six separate offences prohibited under Article 101. Simply, the Court held that the drafters of Article 101 included three distinct acts, i.e., “agreements”, “decisions”, and “concerted practices”, and each act could be coupled with either an anticompetitive “object”, or an anticompetitive “effect”. This necessarily meant that there were six separate violations caught by Article 101. More precisely, the Court held that “for the purpose of applying Article (1), there is no need to take account of the concrete effects of an agreement once it appears that it has as its object the prevention, restriction or distortion of competition.” See Grundig, Joined Cases 56 and 58/64, E.C.R. 299 at 342 (1966). Once it had been established that a violative act had an anticompetitive object, analysis of whether the act had an anticompetitive effect on the market was irrelevant and unnecessary.
C&G is an essential decision pertaining to the legal classification of a concerted practice with an anticompetitive object. While the case’s merits did not involve concerted practices, the Court’s decision fundamentally established Article 101 violations by object, and thus, requires that there be some legal distinction between concerted practices with anticompetitive objects, and concerted practices with anticompetitive effects.
At the time of the C&G decision, July 1966, Article 101 concerted practices had never been subjected to judicial scrutiny. The first Article 101 concerted practice case the Court had to consider was ICI v Commission (1972) (“ICI”). In his preliminary discussion, the Court’s Advocate General (“AG”) Mayras stated, “Up till now, the Court has only had to consider the application or interpretation of Article  in relation to agreements”) (emphasis in original). See Imperial Chem. Indus. v. Comm’n, Case 48/69, 18 E.C.R. 619, at 669 (1972).
In relevant part, ICI involved the investigation of ten dyestuffs producer-distributors, who then controlled approximately eighty percent of the European dyestuffs market. There were three uniform price increases occurring in the internal dyestuffs market between January 1964 and October 1967, culminating in the European Commission’s Decision imposing fines on the undertakings for the violation of today’s equivalent of Article 101(1). See Id. passim.
Factually, the Commission established that in October 1967, representatives of the undertakings met at the headquarters of Sandoz SA, in Basel, Switzerland. AG Mayras found, “We clearly do not have the verbatim report of the meeting, but one thing is certain: [J. R. Geigy SA]’s representative announced the intention of that undertaking to increase prices of soluble dyestuffs based on aniline before the end of the year, and it appears from the documents on the Court file that this intention was stated in precise terms: there was to be an increase of 8% with effect from 16 October 1967.” It was also established that representatives of two other undertakings at the meeting “were also considering an increase.” See Id. at 679. What followed the 1967 meeting was, in fact, a general and uniform price increase in the Common Market on those products.
Ultimately, and upon the recommendation of AG Mayras, the ECJ held that “although parallel conduct in respect of prices may well have been an attractive and risk free objective for the undertakings concerned, it is hardly conceivable that the same action could be taken spontaneously at the same time, on the same national markets and for the same range of products.” See Imperial Chem. Indus. v. Comm’n, Case 48/69, 18 E.C.R. 619, at ¶ 109 (1972). Thus, a concerted practice to increase prices existed, and the undertakings were found in violation of Article 101.
What is most essential about the ICI decision is that the Court established the first legal standard pertaining to what evidence is required to demonstrate a concerted practice either exists or had existed.
In his 1972 Opinion, AG Mayras introduced a concept related to the legal classification of concerted practices that future Advocate General, AG Vesterdorf, would call: the doctrine of attempt. AG Mayras established that, “an objective criterion, which is basic to the concept of a concerted practice […] is that the participating undertakings must in fact have acted in the same way.” See Imperial Chem. Indus. v. Comm’n, Case 48/69, 18 E.C.R. 619, at 671 (1972). This factor would remain a requirement of law for almost twenty years, but progressively, the Court would dismiss it as an incorrect application of Article 101.
Surely, Advocate General Mayras deserves the benefit of doubt, so to speak, as not only was ICI the first European Community case pertaining to concerted practices, but also, the deliverance of his Opinion in ICI was Mayras’ first before the Court. See Imperial Chem. Indus. v. Comm’n, at 622 (1972).
A distinguished justice, AG Mayras seems to contradict himself throughout his opinion while attempting to merge the precedent established in C&G with the concept of illicit concertation amongst undertakings. When AG Mayras attempted to announce precisely when a violation of Article 101 occurs, the AG established that two factors must be evidenced to demonstrate a concerted practice: (1) there must be actual, or de facto parallel conduct; and (2) “origin of and reasons for the parallel conduct.” AG Mayras states that the second element may be established by “the existence of a certain common will.” See Imperial Chem. Indus. v. Comm’n, Case 48/69, 18 E.C.R. 619, at 673 (1972).
Perhaps what was troubling to AG Mayras was that without requiring that de facto parallel conduct be established, an undertaking could potentially be fined for anticompetitive conduct simply by coming in contact with information that could potentially distort free market competition. In other words, the AG may have thought it overly restrictive to permit a violation to be established without requiring a demonstration that undertakings, in fact, acted in some way.
As alluded to above, in 1991, AG Vesterdorf would become the first member of the Court to review the doctrine proposed by AG Mayras almost 20 years prior. In his Rhône-Poulenc v Commission (1991) (“R-P”) Opinion, AG Vesterdorf analyses Article 101 relating to an appeal of a disputed Commission Decision that imposed heavy fines on fifteen chemical industry undertakings. The undertakings in R-P were alleged to have “formed a price cartel and introduced quota arrangements and other measures supporting the price cartel.” See Rhône-Poulenc v. Comm’n, Case T-1/89, E.C.R. at 875 (1991).
AG Vesterdorf began his review of the Court’s precedent stating, “Mr. Advocate General Mayras tries to introduce a doctrine of attempt into the concept of concerted practice […]. However, the theory ventured by him has not been supported or commented upon in later judgments of Court of Justice or its Advocates General”). See Id. at 934.
AG Vesterdorf progresses his analysis in a way that still requires de facto subsequent conduct, while also introducing new language to the legal standard for evidencing concerted practices by object. He wrote, “In my opinion, it can therefore be maintained that in principle concertation will automatically trigger subsequent action on the market that will be determined by the concertation, whether the undertakings do one the thing or the other with regard to their market policy[.]” See Id. at 941. Though the case would later be adjudicated on other grounds, AG Vesterdorf began the elimination of the doctrine of attempt. In other words, the 1991 Court was starting to announce that actual conduct might not be necessary to establish an Article 101 concerted practice by object violation.
In 1993, the Court again decided a case regarding concerted practices, this time pertaining to the exchange of pricing information within the woodpulp market, and again the Court began to remove the factor of de facto identical conduct. Ahlström Osakeyhtiö and Others v Commission (1993) (“AO&O”), involved a European Commission Decision issuing fines to more than twenty producer-supplier undertakings within the bleached sulphate woodpulp market.
In his opinion, AG Darmon advanced AG Vesterdorf’s announcement from two years earlier, writing, “[…] to take the view that de facto identical conduct forms part of the concept of concerted practices would lead to a particularly restrictive conception of the Treaty, which is contrary to Article .” The case would ultimately be decided on factors relating to the structure of the woodpulp market. In AO&O, substantial and compelling expert testimony of economists established that the natural, and necessarily occurring transparent woodpulp market structure, made the fines against the undertakings inappropriate. More importantly for European competition law, the 1972 Mayras legal standard of an Article 101 violation by concerted practice by object was amended by another subsequent decision.
In Commission v ANIC (1999) (“ANIC”), the Court decided a case precisely on the merits of an Article 101 concerted practice by object violation. See Comm’n v Anic Partecipazioni SpA., Case C-49/92 E.C.R. 1999 at I-4125 (1999). ANIC, concernedly, again involved the polypropylene market. The case pertained to an appeal lodged by the European Commission seeking the dismissal of a Court of First Instance (“CFI” or “trial court”) Judgment that declared invalid a portion of a Commission Decision that determined Anic Partecipazioni SpA (“Anic”) was engaged in a concerted practice of exchanging commercially sensitive information and effectively fixing prices with ten other producers within the internal polypropylene market. See Id. passim. In a prevailing argument before the trial court, Anic claimed that the Commission had not established the requisite legal standard for a violation because the Commission did not evidence Anic’s attendance at various meetings. Putting the argument another way, Anic claimed that because they did not attend certain meetings during a five-year period, the Commission’s evidence was too weak to sustain a claim against them during the later periods of the anticompetitive concerted practice. See Id. at ¶22.
AG Cosmas went about his review of the CFI’s judgment methodically. In an opinion the Court would later endorse, AG Cosmas effectively determined that a concerted practice by object was, and effectively still is, a violation when the spirit of the rules on competition are offended.
First, he recognized that, “[the legal classification of concerted practices by object] ha[d] been dealt with only peripherally by the Court, in Opinions of its Advocate Generals.” Then, using more pointed language, he wrote, “In those Opinions it appears that initially the view was taken that de facto joint conduct in the market was a sine qua non of concertation for an infringement of Article  of the Treaty to be established. […] However, in recent years there has been a discernable distancing from that position as is highlighted by the Opinion of AG Darmon in the Woodpulp cases.” See Id. at ¶21.
It what might be an effort to justify fines on the basis of primarily presumptive facts, AG Cosmos wrote, “What constitutes a concerted practice whose ‘object’ is anticompetitive must in the end be determined on the basis of a reading of Article  as a whole which is such as to safeguard the rational coherence of that provision and, above all, with reference to the objective which the rules on competition seek to serve both generally and with specific regard to Article  (systematic and teleological interpretation).” See Id. at ¶23.
In what is today, the substantive standard of an Article 101 violation by concerted practice with an anticompetitve object, AG Cosmas announced, “Consequently, the spirit of the rules on competition [are] broken once there has been contact between undertakings with a view to disclosure of the course of conduct which they contemplate adopting on the market.” See Id. at ¶23.
Perhaps pleonastically, AG Cosmas elaborated, adding, “At that point one is faced with a breakdown of the free-competition model upheld by the Community provisions under which each undertaking individually plans the policy which it will adopt on the market following its own appraisal of market conditions.” See Id.
Not surprisingly, the Court’s judgment in ANIC eradicated the requirement of de facto parallel conduct from the requisite legal standard for establishing a violation of an Article 101 concerted practice.
However, in T-Mobile Netherlands BV and Others (2009) (“T-Mobile”), the Court expanded the already very restrictive standard above, holding that undertakings actually do not need to contemplate an anticompetitive adaptation on the market to violate Article 101.
T-Mobile involved five mobile telephone network operators in the Netherlands. Representatives of the five operators held a lawful meeting on 13 June 2001. At that meeting they discussed, inter alia, the reduction of standard dealer remunerations for postpaid subscriptions, which were to take effect in September 2001. “In those circumstances[,]” the Press Service of the CJEU summarized, “what matters most is [if undertakings have had] the opportunity to take account of the information exchanged with their competitors in order to determine their conduct on the market in question and knowingly substitute practical cooperation between them for the risks of competition.” Press Release 47/09, Judgment of the Court of Justice in Case C-8/08, 4 June 2009.
Currently, all that an undertaking need do to violate Article 101 is engage in anticompetitive contact that “has the potential to have a negative impact on competition.” See T-Mobile Netherlands BV and Others, Case C-8/08 at ¶31 (2009). The Court, referencing the Opinion of AG Juliane Kokott, wrote, “as pointed out by the [AG,] in order for a concerted practice to be regarded as having an anti-competitive object, it is sufficient that it has the potential to have a negative impact on competition. In other words, the concerted practice must simply be capable […] of resulting in the prevention, restriction or distortion of competition within the common market. Whether, and to what extent, in fact, such anticompetitive effects result can only be of relevance for determining the amount of any fine[.]” (Emphasis added). See Id. at ¶31.
The Court went on to further announce, “this requirement of independence […] does […] strictly preclude and direct or indirect contact between such by which an undertaking may influence the conduct on the market of its actual or potential competitors or disclose to them its decisions or intentions concerning its own conduct on the market where the object or effect of such contact is to create conditions of competition which do not correspond to the normal conditions[.]” See Id. at ¶33.
In a world where information seems ubiquitous, it is hardly conceivable that, as a standard of law, an undertaking can be fined for indirectly coming in contact with anything that could potentially distort the free market. Or is it?
Prior to evaluating deterrence initiatives, it is essential to recognize the distinction between criminal antitrust violations in the United States, and the civil nature of punishments for Article 101 violations under European Competition Law.
A violation of Section 1 of the Sherman Antitrust Act, the analogous American statute to Article 101, will carry harsh, federal prison sentences, intended to deter very easily concealable, and often highly lucrative crimes. Additionally, the distortions of free market conditions often have broad reaching reciprocal effects, which threaten to exploit unknowing and vulnerable consumers. See United States v. Archer Daniels Midland Co. and Minn. Corn Processors LLC, 272 F.Supp2d 1 (2003)(a case made infamous by pop culture, involving international price fixing in the animal-feed-additive-lysine market, over $105 million in criminal fines, and decade long federal prison sentences).
Today, to enforce a Commission Decision imposing a fine for violation of Article 101 contact between competitors that is merely capable of an anticompetitive result is essentially all that is required to be demonstrated. See Id. Put more elaborately, any contact between competitors that may influence decisions or intentions on the market, and any contact that is capable of distorting normal market conditions, is presumptively violative as matter of European Union Law.
The contact need not even be inchoate, or in anticipation of an anticompetitive result. If contact is merely capable of an anticompetitive result, those undertakings in contact may be fined. Everything else, that is all other facts and circumstances and actual effects, are to be taken into consideration when determining the amount of the fine. See Id. at ¶ 31.

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