85 F.3d 465 (10th Cir. 1996), 95-1032, Systemcare, Inc. v. Wang Laboratories Corp.

Docket Nº:95-1032.
Citation:85 F.3d 465
Party Name:13 Colo. Bankr. Ct. Rep. 163 SYSTEMCARE, INC., Plaintiff-Counter-Defendant-Appellant, v. WANG LABORATORIES CORPORATION, Defendant-Counter-Claimant-Appellee, v. Michael WRIGHT, Counter-Defendant, United States of America, Amicus Curiae.
Case Date:May 29, 1996
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 465

85 F.3d 465 (10th Cir. 1996)

13 Colo. Bankr. Ct. Rep. 163

SYSTEMCARE, INC., Plaintiff-Counter-Defendant-Appellant,

v.

WANG LABORATORIES CORPORATION, Defendant-Counter-Claimant-Appellee,

v.

Michael WRIGHT, Counter-Defendant,

United States of America, Amicus Curiae.

No. 95-1032.

United States Court of Appeals, Tenth Circuit

May 29, 1996

Rehearing Granted Sept. 6, 1996.

Page 466

Ronald Katz, Coudert Brothers, San Francisco, California (Janet A. Hart and Paul S. Schmidtberger with him on the briefs), for Appellant.

Jerrold J. Ganzfried, Howrey & Simon, Washington, DC (Michael J. Cook, Faegre & Benson, Denver, Colorado, and Florinda J. Iascone, Wang Laboratories, Inc., Billerica, MA, with him on the brief; Robert F. Ruyak and Sheila R. Schreiber, Howrey & Simon, Washington, DC, on the brief), for Appellee.

Anne K. Bingaman, Assistant Attorney General, Diane P. Wood, Deputy Assistant Attorney General, Catherine G. O'Sullivan and David Seidman, Attorneys, U.S. Department of Justice, Washington, DC, on the brief for Amicus Curiae.

Before TACHA, HOLLOWAY, and BRISCOE, Circuit Judges.

TACHA, Circuit Judge.

Systemcare, Inc. ("Systemcare") filed this action alleging that Wang Laboratories, Inc. ("Wang") violated the Sherman Act, 15 U.S.C. § 1, by illegally tying the sale of its software support services to the purchase of its hardware support services. The district court granted summary judgment in favor of Wang based upon this court's opinion in City of Chanute v. Williams Natural Gas Co., 955 F.2d 641 (10th Cir.), cert. denied, 506 U.S. 831, 113 S.Ct. 96, 121 L.Ed.2d 57 (1992). Systemcare, Inc. v. Wang Lab., Inc., 787 F.Supp. 179 (D.Colo.1992). Systemcare appeals, maintaining that (1) we should overrule Chanute, (2) the Supreme Court effectively overruled Chanute in Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992), and (3) Chanute is factually distinguishable. Wang contends that its intervening bankruptcy proceedings left the district court without jurisdiction over this case and that, consequently, we are without jurisdiction to review it on appeal. We hold that the

Page 467

district court did have jurisdiction over the case, and exercise our jurisdiction under 28 U.S.C. § 1291 to affirm.

Background

Wang manufactured "VS" minicomputers, and designed and copyrighted a software system for use with these computers. Wang now offers both hardware and software support services for its computers. The hardware support services involve maintenance and repair of computer equipment. The software support services include software maintenance bulletins, software updates, on-site and telephone technical assistance, remote link assistance, and the right to copy the software. Because Wang owns the copyright on its software, it alone can provide several of these software services.

Systemcare, an independent service organization, services computer equipment that it does not manufacture. Systemcare services Wang computer hardware in Colorado. In doing so, Systemcare competes with Wang in the provision of hardware support services for VS computers.

Beginning in 1985, Wang offered its minicomputer users a package of hardware and software support services called Wang Software Services ("WSS"). Under the WSS contract, the customer must subscribe to Wang's hardware support program in order to obtain Wang's software support services. Many of Wang's customers have entered into WSS contracts with Wang. Systemcare alleges that the WSS contracts involve unlawful tying because Wang forces its customers to purchase its hardware support services in order to obtain its software support services.

Wang responds that customers are not compelled to purchase its hardware services with its software services because both types of service are separately available on a "per incident" basis. Systemcare, however, contends that per incident services are as costly as WSS contract services and that per incident customers do not receive the same quality of software support services as WSS customers. Because of these cost and quality differences, customers usually choose the WSS contract over the software services offered on a per incident basis. Thus, according to Systemcare, Wang uses its market power in the software support industry to eliminate competition in the hardware support industry. Systemcare alleges that Wang's WSS contracts foreclose competition in an otherwise competitive hardware support industry in violation of section 1 of the Sherman Act.

Procedural History

Systemcare filed its complaint against Wang on October 11, 1989, in the United States District Court for the District of Colorado. Wang answered and...

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