Ohlhausen pushes FTC to focus on consumer harm, following the process through

29 March 2017 12:16pm

7 January 2013. By Leah Nylen and Doug Halonen.

Washington – Whenever a decision comes before the five members of the U.S. Federal Trade Commission, Maureen Ohlhausen asks herself one question: How will this impact consumers?

"What we're ultimately trying to do here at the FTC is make consumers better off," Ohlhausen told MLex in an interview at her office one Wednesday morning in December. "Our primary role is law enforcement. But our law enforcement needs to be targeted, it needs to be sensible."

To Ohlhausen, enforcement isn't always the answer. Sometimes a study or a public workshop can accomplish the FTC's goals just as well, she said.

As of this week, Ohlhausen, who joined the commission six months ago, is the most senior Republican on the five-member panel, in which Democrats hold a majority. J. Thomas Rosch, who has served on the panel since 2006, will step down Monday and his replacement, Joshua Wright, is set to join the agency later in the week.

Although new to the commission, Ohlhausen is no stranger to the agency. From 1997 until 2008, she worked as a staffer at the FTC, ultimately rising to become director of the Office of Policy Planning, the agency office charged with competition advocacy and public workshops and reports.

A mother of four, Ohlhausen attended George Mason University Law School at night, back when the fledgling law school was located inside a former department store. U.S. Circuit Judge Douglas Ginsburg, a professor at the school who helmed the U.S. Department of Justice's antitrust division in the late 1980s, piqued her interest in antitrust. After graduation she worked at the U.S. Court of Appeals for the D.C. Circuit, where Ginsburg is a judge, until she joined the FTC.

Ohlhausen later left the agency for private practice at Wilkinson Barker Knauer, where she specialized in FTC issues such as privacy, data protection, and cyber-security. President Barack Obama nominated her in July 2011 at the recommendation of Senate Minority Leader Mitch McConnell. She was confirmed unanimously in March.

Ohlhausen dissents

Since becoming a commissioner in April, Ohlhausen has dissented four times in decisions made by the regulator: first, when the FTC withdrew its policy statement on disgorgement; again over an update to the Children's Online Privacy Protection Act, or COPPA; thirdly in a case involving a merger between Robert Bosch Gmbh and SPX Service Solutions; and, last week, over the agency's consent order with Google involving standard-essential patents.

Ohlhausen said her opposition in those cases was part policy difference and part procedural. In the case of the disgorgement statement, the policy had been created in 2003 after a public comment period.

"I thought we should go through the process again," Ohlhausen said in explaining her dissent at a November event for women antitrust lawyers. "Maybe someone would have told us something we hadn't thought of."

In the more recent Bosch and Google cases, the same concerns applied.

"You need to be right on the merits, but you also need to be right on the process," Ohlhausen said in the interview. "We have to follow the right steps."

In the Bosch case, the company came before the agency to gain clearance for its acquisition of SPX, which makes diagnostic and service tools for use in automotive repairs. While investigating the merger, FTC staff discovered some potentially concerning behavior in SPX's use of standard-essential patents used in air conditioning recycling.

In its consent order approving the merger, the FTC required Bosch to make some divestitures. It also required Bosch to pledge not to seek injunctions on SEPs that are encumbered by commitments to license on fair, reasonable and non-discriminatory, or FRAND, terms.

Ohlhausen dissented from the order in a four-page, toughly worded statement.

"Simply seeking injunctive relief on a patent subject to a [FRAND] license, without more, even if seeking such relief could be construed as a breach of a licensing commitment, should not be deemed either an unfair method of competition or an unfair act or practice under Section 5," she wrote.

While Ohlhausen said she understands the concerns about patent hold-up, the FTC may not be the right entity to resolve the issues concerning injunctions, since many of the patent disputes are already before the U.S. International Trade Commission or federal courts.

"The courts really do, under the eBay factors, have a good tool to protect and address whether they think this injunction being sought is anticompetitive," said Ohlhausen, citing her former employment at the U.S. Court of Appeals for the D.C. Circuit.

"We can identify these factors, but are other entities really best situated to make the final decision?"

Where the FTC might want to step in – the "more" situation she envisioned in her dissent – is where companies are abusing the process of seeking an injunction.

"The without more would be deception, like in some of the other cases, like Rambus, or some kind of repetitive petitioning or sham. That is what I would consider what would fall into the without more bucket," Ohlhausen said.

In the Google case, Ohlhausen and her fellow Republican colleague J. Thomas Rosch dissented from the majority. In her dissent, Ohlhausen said her concerns were similar to those she raised in Bosch.

"I disagree with my colleagues about whether the alleged conduct violates Section 5 but, more importantly, believe the commission's actions fail to provide meaningful limiting principles regarding what is a Section 5 violation in the standard-setting context," she wrote.

"I fear the legacy of our actions in this area will be greater uncertainty for patent holders about their contractual obligations, intellectual property protections, and Constitutional rights, as well as conflict between the Commission and other institutions with authority in these matters."

Like in the disgorgement policy statement, Ohlhausen said she had procedural concerns about how the FTC dealt with the Bosch case. It is "problematic" for the FTC to bring non-merger issues into the merger review process, she said. It would be more proper for the agency to begin a separate investigation if it found problematic conduct while investigating a merger.

Ohlhausen said she was concerned about creating too much disparity between how the FTC and the U.S. Department of Justice review mergers.

"What we're saying in cases like the Bosch order is that Section 5 goes beyond the traditional antitrust laws, but only the FTC can apply it," Ohlhausen said. "When you pull those two things together, you start creating this divergence on liability standards based on is the FTC looking at it or is the DOJ looking at it."

"I think that could be highly problematic down the road," she added.

When it comes to protecting privacy, Ohlhausen has demonstrated her skepticism about some regulatory initiatives favored by Democrats, including the agency's recent update of its rules under the Children's Online Privacy Protection Act, or COPPA.

The FTC's COPPA rules generally bar companies from collecting personal information about kids under age 13, without parental notice and consent.

Ohlhausen dissented from the agency's December 19 vote to enhance key provisions of the regulations, because she believes the agency's majority expanded the definition of those subject to the rules beyond the limits authorized by the COPPA legislation, she said.

"I feel that [the FTC's new rules] expands the statutory definition," Ohlhausen said. "I don't think we can add on to that [the statutory definition of those subject to the regulation] to cover entities that aren't themselves collecting children's information or having a third party collect it on their behalf."

Ohlhausen also made clear that she would prefer to keep COPPA's age limits at "under 13"—despite recent vows by U.S. Representative Ed Markey to introduce legislation in 2013 that would raise the bar to include those 15 and under.

"A 15-year-old is very different than a six-year-old or an eight-year-old," Ohlhausen said. "One thing we've seen is that teens have very different issues than younger children."

"COPPA's been pretty effective," Ohlhausen said, adding that she generally supports many of the COPPA regulation's provisions. "I think generally [FTC] staff has done a pretty good job of trying to balance making things more flexible for industry while still preserving the protection of children's information."

In her interview, Ohlhausen also made clear her skepticism about the FTC's March 2012 report urging Congress to consider legislation giving the agency additional power to protect the privacy of consumers.

"What privacy harms are occurring that we can't use our traditional tools to reach?" Ohlhausen said.

"Some consumers feel a lot more comfortable sharing a lot of data than others do," Ohlhausen added.

Ohlhausen said she does support federal legislation to establish uniform notification requirements for alerting consumers when there are breaches in company data-security systems.

"There are numerous state requirements in this area, and I think it would make sense to have a uniform federal standard, both for consumers . . . and for business," Ohlhausen said.

To Ohlhausen, the FTC needs to measure its work not just in quantities of cases brought, rules published and workshops held, but in the impact of the agency's work.

"I'm always trying to step back from a particular case, or a particular rulemaking or a particular activity and say 'How does this fit in the bigger picture of who the FTC is as an institution?'" she said. "One of the things we always have to think about as an agency is not just what we're doing but how we're doing it."

And while Ohlhausen recognizes that it is important for the agency to tackle complex issues, it is not always possible to address everything at once.

"How do you eat an elephant?" she said, sharing one of her mottos at the November event. "One bite at a time."

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