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IP Litigation

Evidentiary shortfall undermines antitrust market definition

April 23, 2014

IP Litigation

Evidentiary shortfall undermines antitrust market definition

April 23, 2014

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Fed. Cir. affirms summary judgment of no liability on antitrust, tortious interference, and state deceptive trade practices claims.

DSM Desotech Inc. v. 3D Systems Corp., ___ F.3d ___ (Fed. Cir. Apr. 18, 2014) (Moore, SCHALL, Reyna) (N.D. Ill.: Coleman) (3 of 5 stars)

Antitrust: Desotech’s evidence of improper tying was insufficient under Seventh Circuit law for a reasonable jury to find a distinct product market for either stereolithography (“SL”) machines (tying products) or the resins (tied product) used therein.  For the machines, Desotech improperly focused on the Brown Shoe practical indicia without providing complete economic analysis, and even on the economic evidence presented, it could at best prevail on just two of Brown Shoe’s seven factors for assessing the presence of a distinct market.  Desotech’s evidence that SL machines had “distinct prices” from other rapid-prototyping products was insufficient because Desotech only compared SL machines to “some of the cheapest possible substitutes.”  Slip Op. at 15.  Its evidence that customers were insensitive to price changes was insufficient because Desotech supplied testimony from just four of the 268 customers in the alleged market, and did not explain how these were representative of others.

For the resin, Desotech failed to present sufficient evidence that a substantial number of customers were locked in to 3DS’s machines before learning of restrictions on use of aftermarket resins.  3DS restricted the use of unapproved resins via an RFID lock.  It presented evidence that only seven of the 268 customers purchased before learning of the lock.  There was no error in the district court’s conclusion that “seven out of 268 is not substantial.”  Id. at 23.

Tortious interference: Desotech had not created a material fact question as to whether 3DS’s RFID lock was motivated by spite or ill will, as opposed to a desire to maintain 3DS’s own reputation through pre-certification of resins used in its SL machines.

Deceptive trade practices: Statements by 3DS that customers could not use Desotech resins because they were unapproved or unlicensed, if true, did not violate Illinois’ deceptive trade practices statute.  Desotech had raised no material fact question that they were false.

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