Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-56119/USCOURTS-ca9-13-56119-0/pdf.json

Parties Involved:
Intamin, Ltd.
Appellee
Magnetar Technologies Corp.
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MAGNETAR TECHNOLOGIES CORP., a

Nevada corporation,

Plaintiff-Appellant/

Cross-Appellee,

v.

INTAMIN, LTD., a Maryland

corporation,

Defendant-Appellee/

Cross-Appellant.

Nos. 13-56119

13-56333

D.C. No.

8:07-cv-01052-

GAF-JCG

OPINION

Appeal from the United States District Court

for the Central District of California

Gary A. Feess, District Judge, Presiding

Argued and Submitted

June 2, 2015—Pasadena, California

Filed September 14, 2015

Before: Milan D. Smith, Jr. and N. Randy Smith, Circuit

Judges and Royce C. Lamberth,* Senior District Judge.

Opinion by Judge Milan D. Smith, Jr.

* The Honorable Royce C. Lamberth, Senior District Judge for the U.S.

District Court for the District of Columbia, sitting by designation.

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2 MAGNETAR TECHS. V. INTAMIN

SUMMARY**

Malicious Prosecution / Antitrust

The panel affirmed the district court’s summary

judgment on claims of (1) malicious prosecution of a patent

infringement action and (2) monopolization in violation of

Section 2 of the Sherman Antitrust Act.

The panel held that under California law, the defendant

did not maliciously prosecute the plaintiff for infringement

of a magnetic braking system patent because a reasonable

attorney could have concluded that the on-sale bar of

35 U.S.C. § 102 did not apply to invalidate the patent.

Affirming the district court’s grant of summary judgment

on the plaintiff’s claim that the defendant, along with its

European affiliate corporations, used the invalid patent to

monopolize the market for magnetic braking systems, the

panel held that the plaintiff failed to establish a causal

antitrust injury stemming from the defendant’s actions.

On cross-appeal, the panel affirmed the district court’s

denial of the defendant’s motion for sanctions under Fed. R.

Civ. P. 37 against the plaintiff for bringing a frivolous

antitrust action.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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MAGNETAR TECHS. V. INTAMIN 3

COUNSEL

Maxwell M. Blecher (argued), Harold R. Collins, Blecher,

Collins, Pepperman, and Joye, P.C., Los Angeles, California,

for Plaintiff-Appellant/Cross-Appellee.

Gerald E. Hawxhurst (argued), Daryl M. Crone, David S.

Harris, Crone, Hawxhurst LLP, Los Angeles, California, for

Defendant-Appellee/Cross-Appellant.

OPINION

M. SMITH, Circuit Judge:

Plaintiff-Appellant/Cross-AppelleeMagnetarTechnologies

Corporation (Magnetar) alleges that DefendantAppellee/Cross-Appellant Intamin Limited (Intamin)

maliciously prosecuted a patent infringement action against

it, asserting U.S. Patent No. 6,062,350 (‘350 Patent). 

Magnetar claims that Intamin prosecuted the action even

though the ‘350 Patent was invalid pursuant to the on-sale bar

of 35 U.S.C. § 102 (on-sale bar). Magnetar also contends that

Intamin, along with its European affiliate corporations, used

the invalid ‘350 Patent to monopolize the market for

magnetic braking systems, in violation of Section 2 of the

Sherman Antitrust Act, 15 U.S.C. §§ 1–7 (Sherman Act).

The district court granted summary judgment to Intamin,

holding that a reasonable attorney could have concluded that

the on-sale bar did not apply to the ‘350 Patent, and that

Intamin thus could not have maliciously prosecuted Magnetar

for patent infringement. The district court also ruled that

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4 MAGNETAR TECHS. V. INTAMIN

Magnetar had offered insufficient evidence to prove an

antitrust injury in its antitrust claims against Intamin.

In its cross-appeal, Intamin contends that the district court

erred by not imposingRule 37 sanctions against Magnetar for

bringing a frivolous antitrust action against Intamin. The

district court denied Intamin’s motion for sanctions,

concluding that Magnetar brought its antitrust claims in good

faith.

We affirm the decision of the district court.

FACTUAL AND PROCEDURAL BACKGROUND

I. Factual Background

A. The Parties

Magnetar is a corporation organized and existing under

the laws of Nevada, with its principal place of business in

California. Magnetar manufactures and distributes magnetic

brakes and braking systems for use on roller coaster rides.

Intamin is a corporation organized and existing under the

laws of Maryland, with its principal place of business in

Maryland. Intamin is affiliated with Intamin AG, located in

Switzerland, and Ride Trade Corp., located in Liechtenstein. 

The three corporations design and build roller coaster rides

for use in amusement parks.

B. The “Hellevator”

On September 14, 1994, Intamin entered into a written

“Ride Manufacture/User Agreement” with Kentucky

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MAGNETAR TECHS. V. INTAMIN 5

Kingdom, an amusement park located in Kentucky,

concerning a ride named the “Hellevator.” The agreement

described the braking system to be installed on the ride as

“fin brakes,” a type of mechanical braking system.

On October 11, 1994, Intamin entered into a written

“Letter Agreement” with KentuckyKingdom that augmented

the September 1994 sales contract. The October 11

agreement required that Intamin deliver the Hellevator to

Kentucky Kingdom during the 1995 amusement park season. 

The agreement also prohibited Intamin from selling the ride

to regional competitors of Kentucky Kingdom until 1997.

On October 19, 1994, Intamin sent a fax to Kentucky

Kingdom providing details about the braking system to be

installed on the Hellevator: “INTAMIN is planning to have

the braking executed by a newly developed magnetic brake

unit which does not physically enter in contact with the

vehicles.” Kentucky Kingdom subsequently issued a press

release stating that the Hellevator would use “an innovating

braking system . . . and does not include the traditional ‘runout’ found in existing free-fall rides.” Unlike mechanical

braking systems, “[m]agnetic brakes create ‘eddy currents’

when a conductor passes through a gap between two sets of

magnets. These eddy currents, in turn, create a magnetic

friction that slows and stops the car attached to the

conductor.” Intamin, Ltd. v. Magnetar Techs., Corp.,

483 F.3d 1328, 1330 (Fed. Cir. 2007) (Intamin II).1

1 The district court entered the judgment at issue in Intamin II on July

19, 2005. Intamin, Ltd. v. Magnetar Techs., Corp., No. 04-0511 GAF

(C.D. Cal.) (Intamin I).

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6 MAGNETAR TECHS. V. INTAMIN

After the execution of the October 11, 1994 contract,

Intamin began work on the Hellevator. Intamin also

continued researching and testing the magnetic braking

system mentioned in its October 19 fax. In his affidavit,

Sandor Kernacs, President of Intamin, stated that Intamin did

not deliver the Hellevator to KentuckyKingdom on time “due

to the extensive testing that the magnetic brake technology

required. For this reason, Intamin was forced to pay

Kentucky Kingdom a substantial penalty.”

In March of 1995, Intamin published a report suggesting

that it was still in the early stages of testing the magnetic

braking system, and that the system was not yet ready for use

on the Hellevator. At several points, the report noted that

experiments were ongoing, and that the final parameters were

not yet known.

One witness testified that the magnetic braking system

was ready as early as October of 1994. In his affidavit,

Ronald H. Berni, General Manager of Operations at Kentucky

Kingdom, stated that “it was never contemplated that the

braking system for the ride would be anything other than an

eddy current magnetic braking system. The braking system

shown on all technical drawings for the Giant Drop Ride will

verify this statement. No details on the technical drawings

ever indicated an intent to install, or a means for installing

mechanical brakes.” On the other hand, Kentucky

Kingdom’s former CEO, Ed Hart, testified that it was

possible for the braking mechanism on the Hellevator to have

been either magnetic brakes or mechanical brakes. In

October of 1995, Intamin completed construction on the

Hellevator, using the magnetic braking system.

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MAGNETAR TECHS. V. INTAMIN 7

C. The ‘350 Patent

On April 12, 1996, Intamin filed an application with the

U.S. Patent and Trademark Office (PTO) for a patent on the

magnetic braking system used in the Hellevator. Intamin’s

application was submitted on behalf of the inventors of the

magnetic braking system, including Patrick Spieldiener, a

director of Intamin. See ‘350 Patent. Intamin contends that

it informed its patent counsel that it had initially proposed the

magnetic braking technology in the Fall of 1994, when it

contracted to provide the Hellevator to Kentucky Kingdom.

The PTO issued the ‘350 Patent on May 16, 2000. The

inventors listed on the ‘350 Patent were: Alfons Saiko, Peter

Rosner, Reinhold Spieldiener,Robert Spieldiener, and Patrick

Spieldiener. See ‘350 Patent. Intamin acquired exclusive

property rights in the ‘350 Patent on March 18, 2004, when

four of the original five inventors assigned their rights to

Intamin. See Intamin, Ltd. v. Magnetar Techs. Corp., 623 F.

Supp. 2d 1055, 1073 (C.D. Cal. 2009) (Intamin III).

D. The Patent Infringement Action

In 2004, Intamin filed suit against Magnetar, contending

that Magnetar had infringed the ‘350 Patent by selling “Soft

Stop” brakes, a type of magnetic braking system. See Intamin

II, 483 F.3d at 1331. The district court granted summary

judgment to Magnetar, holding that the “Soft Stop” brakes

did not infringe the ‘350 Patent because the components of

the “Soft Stop” brake differed from those in the magnetic

braking system Intamin had patented. Id. at 1332. The

Federal Circuit reversed the grant of summary judgment and

remanded the case to the Central District of California,

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8 MAGNETAR TECHS. V. INTAMIN

concluding that the district court had erred by relying on a

narrow construction of the ‘350 Patent. Id. at 1337.

After remand, the district court again granted summary

judgment to Magnetar, finding in part that Intamin had

“unclean hands” concerning post-issuance assignment of the

‘350 Patent: “[D]espite not having been assigned any rights

in the patent, Intamin began writing letters in 2001 to several

companies claiming those companies had infringed Intamin’s

patent and threatening litigation if the companies did not

compensate Intamin by purchasing a license.” Intamin III,

623 F. Supp. 2d at 1072. The Federal Circuit affirmed the

district court’s second grant of summary judgment, per

curiam. See Intamin, Ltd. v. Magnetar Techs. Corp., 404 F.

App’x 496 (Fed. Cir. 2010) (Intamin IV).

II. Prior Proceedings in this Action

On September 11, 2007, Magnetar filed its complaint in

this action, alleging that Intamin had violated the Sherman

Act by using a fraudulently-obtained patent to establish a

monopoly in the market for magnetic braking systems. On

January 21, 2011, Magnetar filed a Second Amended

Complaint, to add a malicious prosecution claim, based on

Intamin filing suit against Magnetar for patent infringement. 

The malicious prosecution claim is based on California law.

On May 28, 2013, the district court granted summary

judgment to Intamin on both the malicious prosecution and

Sherman Act claims. On the former claim, the court held that

a reasonable attorney could have concluded that the on-sale

bar did not apply to the ‘350 Patent. Because there was a

legitimate dispute as to the applicability of the on-sale bar,

Intamin had probable cause to bring its patent infringement

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MAGNETAR TECHS. V. INTAMIN 9

action. On the latter claim, the district court concluded that

Magnetar’s theory of antitrust injury was unreliable and

speculative, and that Magnetar had not provided an adequate

causal link between Intamin’s purported anticompetitive

conduct and Magnetar’s damages. The district court also

denied Intamin’s Rule 37 motion for sanctions against

Magnetar.

This timely appeal followed.

JURISDICTION AND STANDARD OF REVIEW

The district court had subject matter jurisdiction over

Magnetar’s antitrust claims pursuant to 28 U.S.C. § 1331, and

had supplemental jurisdiction over the malicious prosecution

claim pursuant to 28 U.S.C. § 1337. We have jurisdiction

over this appeal pursuant to 28 U.S.C. § 1291.

We review de novo the district court’s decision to grant

summary judgment to Intamin on the malicious prosecution

and antitrust claims. We consider disputed material facts in

the light most favorable to Magnetar, the non-moving party. 

Summary judgment is appropriate if no genuine issue of

material fact exists, and Intamin is entitled to judgment as a

matter of law. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett,

477 U.S. 317, 322 (1986).

We review for an abuse of discretion the district court’s

decision not to sanction Magnetar under Rule 37. See

Comeaux v. Brown & Williamson Tobacco Co., 915 F.2d

1264, 1268 (9th Cir. 1990).

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10 MAGNETAR TECHS. V. INTAMIN

DISCUSSION

I. Malicious Prosecution

Magnetar contends that Intamin maliciously prosecuted

the patent infringement action, because Intamin brought the

action despite knowing that the ‘350 Patent was invalid

pursuant to the on-sale bar of 35 U.S.C. § 102. To prevail on

a claim of malicious prosecution, Magnetar must show that

the patent infringement action: (1) was commenced by or at

the defendant’s direction and terminated in plaintiff’s favor,

(2) was brought without probable cause, and (3) was initiated

with malice. See Freeman v. City of Santa Ana, 68 F.3d

1180, 1189 (9th Cir. 1995); see also Sheldon Appel Co. v.

Albert & Oliker, 765 P.2d 498, 501 (Cal. 1989) (quoting

Bertero v. National General Corp., 529 P.2d 608, 613 (Cal.

1974)).

Whether probable cause exists in a malicious prosecution

case is a legal question resolved by the court. Wilson v.

Parker, Covert & Chidester, 50 P.3d 733, 736 (Cal. 2002). 

The court’s “inquiry is objective,” Estate of Tucker v.

Interscope Records, Inc., 515 F.3d 1019, 1031 (9th Cir.

2008), asking whether a “reasonable attorney would have

thought the claim tenable.” Sheldon Appel Co., 765 P.2d at

511.

In this case, we ask whether a “reasonable attorney would

have thought” the on-sale bar did not apply to the ‘350 Patent. 

See id. “[T]he on-sale bar applies when two conditions are

satisfied before the critical date. First, the product must be

the subject of a commercial offer for sale. . . . Second, the

invention must be ready for patenting.” Pfaff v. Wells Elecs.,

Inc., 525 U.S. 55, 67 (1998).

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MAGNETAR TECHS. V. INTAMIN 11

With regard to the ‘350 Patent, a reasonable attorney

could have determined that the on-sale bar did not apply due

to the genuine dispute concerning whether the magnetic

braking system had been (1) offered for sale before the

critical date; and (2) was ready for patenting before the

critical date. We address each of these issues in turn.

A. Offered for Sale More than One Year Prior

The on-sale bar of 35 U.S.C. § 102 provides that “no

person is entitled to patent an ‘invention’ that has been ‘on

sale’ more than one year before filing a patent application.” 

Pfaff, 525 U.S. at 57. Although our court has not delineated

the precise boundaries of the “on sale” prong of 35 U.S.C.

§ 102 after the Supreme Court’s controlling decision in Pfaff,

the Federal Circuit has held that “[o]nly an offer which rises

to the level of a commercial offer for sale, one which the

other party could make into a binding contract by simple

acceptance (assuming consideration), constitutes an offer for

sale under § 102(b).” Grp. One, Ltd. v. Hallmark Cards, Inc.,

254 F.3d 1041, 1048 (Fed. Cir. 2001). We are persuaded by

the Federal Circuit’s reasoning, and apply its holding here. 

We conclude that a reasonable attorney could have

determined that the magnetic braking system was not part of

Intamin’s contract with Kentucky Kingdom and that the

magnetic braking system was not commercially offered for

sale more than one year prior to April 12, 1996. See Pfaff,

525 U.S. at 67.

1. The “Ride Manufacture/User’s Agreement”

The September 14, 1994 contract between Intamin and

Kentucky Kingdom did not constitute a commercial offer to

sell the magnetic braking system described in the ‘350 Patent. 

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12 MAGNETAR TECHS. V. INTAMIN

The contract specified that passengers on the Hellevator

would be stopped by a “braking zone where they are stopped

by a series of permanently closed fin brakes.” Fin brakes are

a form of mechanical brakes. The September contract further

states elsewhere that “mechanical brakes” would be used.

2. “Letter Agreement”

The October 11, 1994 letter agreement similarly does not

support Magnetar’s position that the magnetic braking system

was sold by Intamin to Kentucky Kingdom. This document

augments the September 14 contract, but it says nothing about

the use of magnetic brakes on the Hellevator.

3. October 19, 1994 Letter from Intamin AG

The October 19, 1994 letter from Patrick Spieldiener

specified that magnetic brakes could be used on the

Hellevator: “Contrary to previous descriptions INTAMIN is

planning to have the braking executed by a newly developed

magnetic brake unit which does not physically enter in

contact with the vehicles.” Nevertheless, a reasonable

attorney could have determined that this letter does not

constitute “a commercial offer for sale” of magnetic brakes. 

Pfaff, 525 U.S. at 67.

The language in the letter does not require that magnetic

brakes be used on the Hellevator. Rather, Patrick Spieldiener

states that Intamin is “planning” to use the magnetic brakes,

which implies at least some uncertainty. Because the original

contract stated that mechanical brakes would be used, the

letter suggests only that Intamin would attempt to replace the

mechanical brakes with magnetic ones.

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MAGNETAR TECHS. V. INTAMIN 13

Moreover, an attorney analyzing all the facts could

determine that the original contract to provide mechanical

brakes had not been modified by the October 19 letter. The

parties do not dispute that Kentucky law applies to the

contract because Kentucky is the place of performance, and

Kentucky Kingdom is located in that state. Under Kentucky

law, a modification is subject to the same requirements as the

contract itself; namely, offer, acceptance, and consideration. 

See Energy Home, Div. of S. Energy Homes, Inc. v. Peay,

406 S.W.3d 828, 834 (Ky. 2013).

It is unclear whether the contract modification discussed

in the letter was complete. “For the terms [of a modification]

to be considered complete they must be ‘definite and certain’

and must set forth the ‘promises of performance to be

rendered by each party.’” Id. (quoting Kovacs v. Freeman,

957 S.W.2d 251, 254 (Ky. 1997)). Here, the letter does not

refer to the original agreement nor does it clearly state that it

is meant as an amendment to the original contract. The

alleged modification was signed by Patrick Spieldiener, who

did not state he was signing on behalf of Intamin Ltd., the

party to the original contract. Patrick Spieldiener was also an

officer of Intamin AG. In light of these facts, a reasonable

attorney could have concluded that the letter did not modify

the original contract, and that Intamin had only contracted to

sell mechanical brakes to Magnetar.

B. Experimentation Exception

Even if we were to decide that a commercial offer for sale

of the magnetic brakes was contained in the October 19 letter,

a reasonable attorney could still have concluded that the

magnetic braking system was not “ready for patenting” when

the Hellevator was sold to Kentucky Kingdom. An invention

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14 MAGNETAR TECHS. V. INTAMIN

is “ready for patenting” if it has been “reduc[ed] to practice

before the critical date . . . [or if] prior to the critical date the

inventor had prepared drawings or other descriptions of the

invention that were sufficiently specific to enable a person

skilled in the art to practice the invention.” Pfaff, 525 U.S. at

67–68.

The Federal Circuit has described “reduction to practice”

as “proof that an invention will work for its intended

purpose.” See EZ Dock, Inc. v. Schafer Sys., Inc., 276 F.3d

1347, 1352 (Fed. Cir. 2002). The Federal Circuit also held

that ongoing experiments on an invention after the critical

sale date can show that the invention had not been reduced to

practice. Id. at 1352–53. We are persuaded by the reasoning

of the Federal Circuit, and we adopt its holding on this issue.

There is ample evidence in the record showing that

experiments on the magnetic brakes continued after the

critical sale date. According to a report issued in March

1995—just one month before the critical date—the magnetic

brake technology was still being studied, and the final

parameters were unknown. Sandor Kernacs, President of

Intamin, testified that experiments on the magnetic brake

technology continued into June and July of 1995.

Magnetar argues that when an invention is reduced to

practice, the applicability of the experimentation exception to

the on-sale bar is negated. We agree that this is legally

correct. See, e.g., Weatherchem Corp. v. J.L. Clark, Inc., 163

F.3d 1326, 1332 (Fed. Cir. 1998). In the present case,

however, Magnetar needed to show that every reasonable

attorney would have thought that the magnetic braking

system had been reduced to practice, and thus, would have

thought that the on-sale bar applied. Because Magnetar has

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MAGNETAR TECHS. V. INTAMIN 15

not made such a showing, it cannot prove that Intamin lacked

probable cause to bring the patent infringement action against

Magnetar.

II. Sherman Act Antitrust Claims

We next turn to Magnetar’s antitrust claims. Section 2 of

the Sherman Act, 15 U.S.C. § 2, makes it illegal to

“monopolize, or attempt to monopolize, or combine or

conspire with any other person or persons, to monopolize any

part of the trade or commerce among the several States, or

with foreign nations.” The Sherman Act “prohibits efforts

both to restrain trade by combination or conspiracy and the

acquisition or maintenance of a monopoly by exclusionary

conduct.” Image Tech. Servs., Inc. v. Eastman Kodak Co.,

125 F.3d 1195, 1214 (9th Cir. 1997).

Magnetar asserts three related antitrust claims based on

Section 2 of the Sherman Act. First, it contends that Intamin,

together with its European affiliates Intamin AG and Ride

Trade Corp., obtained the ‘350 Patent through fraud on the

PTO, and then entered into a conspiracy to eliminate

competition in the market for magnetic braking systems. 

Intamin and its European affiliates purportedly eliminated

competition by forcing other market participants to pay

licensing and registration fees to Intamin, and threatening to

file lawsuits based on the ‘350 Patent. Second, Magnetar

claims that, by fraudulently obtaining the ‘350 Patent and

subsequently using the ‘350 Patent to drive out competitors

from the magnetic braking market, Intamin attempted to

monopolize the magnetic braking market. Third, Magnetar

contends that Intamin actually monopolized the business of

manufacturing, selling, and distributing magnetic braking

systems.

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16 MAGNETAR TECHS. V. INTAMIN

All three of Magnetar’s alleged causes of action require

it to show a causal antitrust injury.

2 We recognize that

Intamin’s conduct relating to the ‘350 Patent is problematic. 

A final decision of a district court concluded that “Intamin

filed with the PTO fraudulent, back-dated assignments twice,

once in 2005 and again in 2007, each of which purported to

assign Intamin the rights to the ‘350 patent in 1997.” Intamin

III, 623 F. Supp. 2d at 1072. The present case, however,

involves Magnetar’s claims that Intamin knew the ‘350 Patent

was invalid based on the on-sale bar, but then used the

purportedly fraudulent ‘350 Patent to establish market power

in the market for magnetic braking systems. Considering this

specific set of claims only, we affirm the district court’s

decision granting summary judgment to Intamin because

Magnetar has not alleged sufficient facts to show a causal

antitrust injury stemming from Intamin’s actions.

2 To prove a conspiracy claim, Magnetar must demonstrate: “(1) the

existence of a combination or conspiracy to monopolize; (2) an overt act

in furtherance of the conspiracy; (3) the specific intent to monopolize; and

(4) causal antitrust injury.” Paladin Assocs., Inc. v. Mont. Power Co.,

328 F.3d 1145, 1158 (9th Cir. 2003). To prevail on a claim of an attempt

to monopolize, Magnetar must prove: (1) specific intent by Intamin to

control prices or destroy competition; (2) predatory or anti-competitive

conduct directed toward accomplishing that purpose; (3) a dangerous

probability of success; and (4) causal antitrust injury. See Image Tech.

Servs., Inc., 125 F.3d at 1202. Finally, to hold Intamin liable for the actual

monopolization of the market in magnetic braking systems, Magnetar has

to show: (1) Intamin’s possession of monopoly power in the relevant

market; (2) the willful acquisition or maintenance of that power; and

(3) causal antitrust injury. See Allied Orthopedic Appliances Inc. v. Tyco

Health Care Grp. LP, 592 F.3d 991, 998 (9th Cir. 2010).

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MAGNETAR TECHS. V. INTAMIN 17

A. Causal Antitrust Injury

Magnetar contends that Intamin caused two antitrust

injuries: (1) lost profits resulting from Intamin’s patent

infringement lawsuit and other attempts to force Magnetar to

pay licensing fees to Intamin, and (2) litigation costs

Magnetar incurred in defending the patent lawsuit. Magnetar,

however, does not provide an estimate of the amount of

damages that can be attributed to Intamin’s anticompetitive

conduct nor does it show that Intamin’s conduct caused these

damages. See City of Vernon v. S. Cal. Edison Co., 955 F.2d

1361, 1371 (9th Cir. 1992); McGlinchy v. Shell Chemical Co.,

845 F.2d 802, 808 (9th Cir. 1988).

1. Lost Profits

To survive a motion for summary judgment, Magnetar

must “provide evidence such that the jury is not left to

‘speculation or guesswork’ in determining the amount of

damages to award.” McGlinchy, 845 F.2d at 811 (quoting

Dolphin Tours, Inc. v. Pacifico Creative Serv., Inc., 773 F.2d

1506, 1509–10 (9th Cir. 1985)). Magnetar does not carry this

burden. It has not submitted “expert witnesses or designated

documents providing competent evidence from which a jury

could fairly estimate” its lost profits. McGlinchy, 845 F.3d at

808 (citing Rickards v. Canine Eye Registration Found., Inc.,

704 F.2d 1449, 1452 (9th Cir. 1983), cert denied, 464 U.S.

994 (1983)).

Magnetar’s principal expert, Karl J. Schulze, did not

provide an accurate estimate of the damages Magnetar

suffered. His expert calculation did little more than examine

the difference between Magnetar’s projected revenue,without

considering the effects of Intamin’s lawsuit, and Magnetar’s

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18 MAGNETAR TECHS. V. INTAMIN

actual revenue, after the prosecution of the lawsuit. Put

differently, Schulze only compared Magnetar’s “actual

[results] versus their business plan[, which] showed that they

did not achieve their business plan.” Schulze did not delve

into the merits of the projected results. Instead, he took as a

“base assumption” the projections Magnetar provided, and

assumed that they were accurate. Accordingly, the district

court correctly found that there was no “independent

assessment of the validity of Magnetar’s projected revenues.”

After being deposed, Schulze submitted an affidavit in

which he stated that he had reviewed the merits of Magnetar’s

projected business plan. For example, he stated, “I reviewed

in detail Magnetar’s prior operating history to ascertain

performance and trends in revenue, gross margin and costs,

as well as to confirm that Magnetar had significant

experience in the industry and line of business in which it

planned to continue operating.” Even if we accept the

affidavit as true, neither Schulze’s deposition testimony, nor

his affidavit, estimated the portion of Magnetar’s overall

losses that could be attributed to the patent lawsuit. Several

other factors could have contributed to Magnetar’s losses,

such as the decline in profits in the amusement ride business,

or the decline of the U.S. economy generally. These

alternative causes would have exacerbated the loss of profits

purportedly caused by the patent litigation.

Second, Magnetar’s evidence does not segregate the

losses . . . caused by acts which were not antitrust violations

from those that were. See City of Vernon, 955 F.2d at 1372. 

Because Schulze similarly did not make an effort to separate

the losses suffered as a result of Intamin’s conduct from the

total losses suffered by Magnetar, it would have been

impossible for a jury to estimate the lost profits attributable

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MAGNETAR TECHS. V. INTAMIN 19

to Intamin’s conduct. See id. at 1373 (“[T]here is no

indication of what part of that $80,000 loss of savings was

due to proper interruptions of service and what part to

improper ones, or for that matter, due to other factors

entirely.”).

Finally, Magnetar has not proven “in a reasonable manner

the link between the injury suffered and the illegal practices

of the defendant.” Id. at 1371 (quoting MCI Commc’ns Corp.

v. Am. Tel. & Tel. Co., 708 F.2d 1081, 1161 (7th Cir. 1983)). 

None of Magnetar’s expert witnesses established this causal

link. As noted supra, Schulze’s expert testimony made no

effort to separate the damages attributable to the patent action

from other possible causes of losses. Similarly, Mark

Hanlon, an industry expert with an engineering background,

did not address the issue of causation. He only testified

concerning the types of braking systems used in amusement

park rides, and the engineering features of magnetic brakes.

Edward M. Pribonic, President of Magnetar, also failed to

provide evidence that Intamin caused Magnetar to lose

profits. He only testified conclusorily that, “[a]fter Intamin

Ltd. filed its malicious lawsuit for patent infringement against

Magnetar, Magnetar’s business and reputation were severely

damaged. Magnetar struggled on for three years, at first

trying to maintain its growth, but as time went on, just trying

to survive. The enormous expense of the litigation defense

crippled Magnetar’s efforts to continue product development

or marketing.” At best, Pribonic’s testimony only showed a

correlation between the beginning of the patent litigation and

losses suffered by Magnetar.

Magnetar also submitted affidavits from potential

customers, which stated that they were wary of “potential

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20 MAGNETAR TECHS. V. INTAMIN

litigation” and therefore, decided not to purchase magnetic

brakes from Magnetar. Such evidence does not provide a

clear causal link to losses suffered byMagnetar. We note that

companies such as Magnetar’s customers routinely confront

“potential litigation,” especially when someone in the

industry applies for a patent.

We affirm the district court’s decision granting summary

judgment to Intamin on the issue of lost profits. Magnetar

fails to prove a “direct causal connection between the alleged

violation and the alleged injury,” as required by the Sherman

Act. Hairston v. Pac. 10 Conference, 101 F.3d 1315, 1322

(9th Cir. 1996).

2. Litigation Costs

Magnetar next contends that the litigation expenses it

incurred defending itself against the patent litigation

constitute an antitrust injury. See Rickards, 783 F.2d at

1334–35; Handgards, Inc. v. Ethicon, Inc., 601 F.2d 986,

988–89 (9th Cir. 1979). We agree with Magnetar that, unlike

lost profits, its litigation expenses are not speculative. 

However, to succeed in an antitrust claim based on litigation

expenses, Magnetar must show that the patent lawsuit was a

sham, based on the clear application of the on-sale bar to the

‘350 Patent. See Rickards, 783 F.2d at 1335. As we

determined supra, a reasonable attorney could have

determined that Intamin’s patent lawsuit was viable and that

the on-sale bar did not apply to the ‘350 Patent.

The district court did not err in granting summary

judgment to Intamin on the antitrust claims because Magnetar

has not submitted sufficient evidence of a causal antitrust

injury.

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MAGNETAR TECHS. V. INTAMIN 21

III. Rule 37 Sanctions

On cross-appeal, Intamin contends that the district court

erred in denying its request for attorney’s fees and costs under

Rule 37. Intamin claims that Magnetar should be sanctioned

because it could not prove antitrust injury and damages.

Although Intamin served requests for admission on Magnetar,

including requests to admit that it had not been “injured in its

business or property” by antitrust violations, Magnetar did

not admit these facts.

Fed. R. Civ. P. 37(c)(2) states that “[i]f a party fails to

admit what is requested under Rule 36 and if the requesting

party later proves a document to be genuine or the matter

true, the requesting party may move that the party who failed

to admit pay the reasonable expenses, including attorney’s

fees, incurred in making that proof.” Here, the issue is not

whether Magnetar prevailed in the litigation but whether it

acted reasonably in believing that it might prevail. See Wash.

State Dept. of Transp. v. Nat. Gas Co., 59 F.3d 793, 805–06

(9th Cir. 1995).

The district court did not sanction Magnetar because it

concluded that Magnetar had reasonable grounds to bring the

antitrust action. We agree with the district court. Although

we hold that Magnetar did not offer enough evidence to

establish a causal antitrust injury, we recognize that

potentially valid arguments could have been made on both

sides of this issue. Accordingly, we conclude that Magnetar

proceeded in good faith in not admitting facts related to the

antitrust injury.

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22 MAGNETAR TECHS. V. INTAMIN

IV. Conclusion

We affirm the district court’s decision granting summary

judgment to Intamin on the malicious prosecution and

Sherman Act claims. We also affirm the district court’s

ruling denying Rule 37 sanctions against Magnetar.

Each party shall bear its own costs on appeal.

AFFIRMED.

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