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Penn Law's Center for Technology, Innovation and Competition Receives $600,000 Research Grant Arising from Old Antitrust Case

January 19, 2011
Christopher Yoo, Professor of Law, Communication, and Computer and Information Science; Director, Center for Technology, Innovation, and Competition
The University of Pennsylvania Law School’s Center for Technology, Innovation and Competition (CTIC) has received a three-year $600,000 grant from the New York Bar Foundation to explore policy issues surrounding the Internet. The grant is the unexpected by-product of a decades-old settlement of a major antitrust class action, City of Detroit v. Grinnell Corp.
Founded in 2007, CTIC engages in research designed to inform and reshape the way legislators, regulators and scholars think about technology policy. The grant will fund vital faculty research as well as support a visiting scholars program, innovative new courses, and student activities and scholarships.   
“Penn Law and CTIC are grateful for the opportunity to honor and extend the legacy of the Grinnell litigation,” said Penn Law Professor and CTIC Founding Director Christopher Yoo. “The grant will allow us to launch several new initiatives to study the policy issues raised by the Internet, which is the modern successor to the alarm monitoring technologies at issue in Grinnell.”
In 1971, prominent Philadelphia attorney and Penn alumnus David Berger C’32, L’36 reached a $10 million settlement of private antitrust suits brought in the aftermath of the federal government’s successful prosecution of a number of alarm monitoring companies for price fixing. The Grinnell litigation would eventually become a landmark in the history of U.S. competition policy and class actions and was one of the earliest examples of how antitrust class actions can protect consumers. The alarm monitoring companies that were the defendants in these cases used telephone lines to gather information collected by a large number of burglar, fire and residential alarm systems. This rudimentary use of telephone technology to transmit data represents an important precursor to modern information services, such as the Internet.
Most of the settlement funds were distributed to class members. About $100,000 in funds remained after all distributions were made to class members who could be located. In the late 1970s the funds were deposited in an interest bearing account and continued to accrue interest for nearly 40 years, reaching a total of approximately $850,000.
Berger’s son, Daniel Berger, a shareholder at his father’s old law firm, Berger & Montague, discovered the funds after his father’s death in 2007. He enlisted Howard Shecter L’68, a partner with Reed Smith and a past president of the Penn Law Alumni Society, to help him identify and research appropriate charitable organizations that would satisfy legal guidelines for disbursing money left undistributed in class action settlements.
“Dan Berger and I worked very hard for more than a year to find a suitable project that would satisfy the cy pres doctrine,” said Shecter. “We are grateful to Michael Fitts, dean of the University of Pennsylvania Law School, for identifying CTIC to us as a potentially qualifying donee.” 
The grant was approved last month by Chief Judge Loretta A. Preska of the U.S. District Court for the Southern District of New York under the cy pres doctrine, which gives judges discretion to apply residual class action funds to a charitable use related to the case. Chief Judge Preska had requested that Shecter and Berger collaborate with the New York Bar Foundation’s Cy Pres Committee chair, Lesley Friedman Rosenthal, on the proposed selection of recipients for the funds.

In addition to the $600,000 awarded to CTIC, $250,000 of the residual funds will be awarded to Syracuse University Business School’s Entrepreneurship Bootcamp for Veterans with Disabilities.