Opinion ID: 2929114
Heading Depth: 2
Heading Rank: 2

Heading: Sherman Act Antitrust Claims

Text: 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. 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). MAGNETAR TECHS. V. INTAMIN 17
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).
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 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 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 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 by Magnetar. 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).
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. MAGNETAR TECHS. V. INTAMIN 21