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• W2060318290 abstract "Suite 105 1424 16th Street N.W. Washington, D.C. 20036Good Morning. My topic this morning is entitled, Legal Implications of Standards.What I would like to do today is try and tie together recent developments in two very diff-erent areas of the law: antitrust, and product liability.While these areas are distinct, I believe that the legal theories used in one area mayvery well become applicable in the other. I will also discuss the extent to which standardsand the standards development process can become a basis for liability for organizationsthat promulgate standards.Let me first turn to the antitrust side. Last summer, the United States Supreme Courtdecided what is without a doubt the most significant court case in the standards and cert-ification field in many a year. In the case of American Society of Mechanical Engineers v.Hydrolevel Corp., the court held that ASME was liable under the anti -trust laws for acts ofits volunteer agents when the acts are committed with the apparent authority of the associ-ation, even though the association's management did not ratify the acts, and even thoughthe non -profit ASME did not benefit from the illegal acts, and in fact was hurt by them.Let me briefly give you the essential facts of the case.The case was brought by Hydrolevel, a manufacturer of boiler pressure regulation equip-ment, after one of its competitors had requested a determination from ASME as to whetherHydrolevel's unique product, designed differently from the prevailing state -of- the -art, con-formed to an ASME standard. Through participation in the pertinent ASME committee, the com-petitor manipulated the ASME's response so that an interpretation of the standard adverse toHydrolevel was made, which the competitor subsequently used to detract from Hydrolevel'scredibility in the marketplace. The lower Court decision called for ASME to pay a total of$7.5 million to Hydrolevel for damages resulting from the unlawful activity, and a separateappeal seeking a reduction of those damages is pending before the Supreme Court. Two com-panies, including Hydrolevel's principal competitor, whose employees had been involved inthe effort to discredit Hydrolevel were also named as defendants in the original suit, andthey paid $825,000 to Hydrolevel in out -of -court settlements.In affirming the decision of the Court of Appeals, the Supreme Court sought to insurethat standard -setting organizations will act with care when they permit their agents tospeak for The Court repeatedly referred to the power that trade and professionalassociations have in affecting the entire economy of the country and noted that ASME wasvirtually an extra- governmental agency, which prescribes rules for the regulation and re-straint of interstate commerce. Justice Blackmun pointed out that associations are rifewith opportunities to violate the antitrust laws. The Court's principal concern was thatASME had failed to implement any meaningful safeguards that would prevent its reputationfrom being used to hinder competition in the marketplace. The Court noted that this anti-trust violation could not have occurred without ASME's promulgation of product standardsand ASME's lax methods of administering them. It stressed that the association was in thebest position to take the precautions necessary to prevent future antitrust violations.Thus the key to the decision is in understanding how the court perceives code -settingbodies. To quote the Supreme Court:ASME can be said to be in reality an extra -governmental body which prescribesrules for the regulation and restraint of interstate commerce.... When it cloaksits subcommittee officials with the authority of its reputation, ASME permitsthose agents to affect the destinies of business and thus gives them the powerto frustrate competition in the marketplace.The question that should now be on the mind of everyone who is involved with Standards andCertification is: What can organizations like ASME do to limit their exposure to tripledamage suits?The Court itself suggested the answer to that question in its decision. That answer:Make the procedures of the organization as tight as possible, with all possible due process" @default.
• W2060318290 created "2016-06-24" @default.
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• W2060318290 date "1983-12-09" @default.
• W2060318290 modified "2023-09-23" @default.
• W2060318290 title "<title>Legal Implications Of Standards</title>" @default.
• W2060318290 doi "https://doi.org/10.1117/12.935665" @default.
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