Advanced Tech. Corp. v. Instron, Inc.
| Decision Date | 26 February 2013 |
| Docket Number | Civil Action No. 12–10171–JLT. |
| Citation | 925 F.Supp.2d 170 |
| Parties | ADVANCED TECHNOLOGY CORPORATION, INC., Plaintiff, v. INSTRON, INC., Tinius Olsen International Co., and MTS Systems Corporation, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
OPINION TEXT STARTS HERE
Timothy M. Cornell, Mueller Law Group, PLLC, Austin, TX, for Advanced Technology Corporation, Inc.
Jill M. Brannelly, Kevin C. Cain, Harvey Weiner, Peabody & Arnold LLP, Jane E. Willis, Ropes & Gray LLP, Boston, MA, for Tinius Olson International Co.
Mark S. Popofsky, Ropes & Gray, Washington, DC, for Instron, Inc.
Robert E. Toone, Jr., Lisa C. Wood, Foley Hoag LLP, Boston, MA, for MTS Incorporated.
Plaintiff Advanced Technology Corporation (“ATC”) developed an innovative technique for measuring the tensile properties of metallic materials, called Automated Ball Indentation (“ABI”). ATC alleges that its competitors—Defendants Instron Inc. (“Instron”), Tinius Olsen International Co. (“Tinius Olsen”), and MTS Systems Corporation (“MTS”)—conspired to maintain their dominance in the market for mechanical testing equipment, in violation of § 1 of the Sherman Act and Mass. Gen. Laws ch. 93A, § 11. ATC alleges that Defendants did so by using their positions on national and international standards organizations to discredit ATC's ABI technique and prevent ATC from obtaining a standard for ABI. All three defendants moved for dismissal under Federal Rule of Civil Procedure 12(b)(6). ATC subsequently filed a motion to amend its complaint.
For the reasons set forth below, MTS's and Tinius Olsen's Motions to Dismiss [# 19, # 21] are ALLOWED as to all Counts. Instron's Motion to Dismiss [# 23] is ALLOWED as to Counts I and II and DENIED WITHOUT PREJUDICE as to Count III. Plaintiff ATC's Motion to Amend [# 37] is ALLOWED as to Count III against Instron and otherwise DENIED. This action survives as a claim for commercial disparagement against Instron.
In the late 1980s, Fahmy Haggag developed the ABI technique for testing the tensile properties of metallic materials, such as pipelines and bridges. 2 In 1989, Haggag patented the equipment that performs ABI and started ATC.3 ATC's principal business is manufacturing the Stress–Strain Microprobe System, the only equipment that employs ABI technology.4
Defendants also manufacture tensile, impact, and hardness testing equipment. 5 In fact, they command a 70% share of the United States market for mechanical testing equipment.6 Defendants' equipment relies on a conventional, destructive test method, which requires shutting off pipe flow and cutting out a sample of pipe to be tested in a laboratory.7
ATC's ABI technique has two advantages over Defendants' method: (1) ABI is nondestructive and allows testing of in-service pipes, and (2) ABI testing is faster.8 As a result, ABI threatened Defendants' dominance in the market for mechanical testing equipment.9
The heart of ATC's claim is that Defendants participated in a fifteen year conspiracy to prevent ATC from obtaining a standard for ABI from the American Society for Testing and Materials (“ASTM”) between 1997 and 2007, and from the International Standards Organization (“ISO”) between 2009 and 2011. Defendants' employees occupied positions on both ASTM and ISO and used these positions to block an ABI standard.10 In furtherance of this conspiracy, Defendants attempted to discredit ABI by falsely claiming that ABI was duplicative of Defendants' technologies, including Instrumented Indentation Testing (“IIT”).11
ATC alleges that the individuals involved in the conspiracy include Edward Tobolski of Instron, Earl Ruth of Tinius Olsen, and Jennifer Hay of MTS. The complaint also contains allegations regarding Sam Low, of the National Institute of Standards and Technology (“NIST”), and Randy Nanstad, of Oak Ridge National Laboratory.12 At a hearing before this court, ATC clarified that it does not allege that Low and Nanstad, both federal employees, participated in this conspiracy. As a result, their conduct cannot be attributed to the conspiracy.
In 2000, ASTM formed an ABI task group, subcommittee E28.06.14. Subcommittee members and visitors routinely met to discuss issues and voting before every formal vote. Under ASTM regulations, a single negative vote will stop the progress of any draft standard.14
In December 2002, ATC's proposed ABI standard received its first formal ballot in subcommittee E28.06.14. Twenty-one members voted for the ABI proposal and three voted against it. Tobolski of Instron,Ruth of Tinius Olsen, and Low of NIST cast the negative votes. Hay of MTS voted negative as a non-voting member. These individuals provided different reasons for their negative votes. Hay explained her vote on the ground that there were several commercially available alternative technologies, including MTS's own product. Tobolski suggested changing all references to ABI to IIT in the proposal. Ruth voted against the ABI proposal because it did not include precision values from a round robin study.15
In 2003, ATC completed a round robin study for ABI. Tinius Olsen, MTS, Instron, and Frontics of Korea did not attend. After the round robin, Ruth proposed deleting the analytical procedure and precision statement sections of the study, both of which are required sections.16
In January 2006, Ruth again voted against the ABI proposal. His negative vote prevented an ABI standard from moving forward and disbanded the ABI task group. In doing so, Ruth explained, 17
Also in 2006, Tobolski sent Haggag an email stating that he could salvage the ABI proposal if Haggag agreed to some changes. Tobolski proposed changing the name to IIT, deleting precision values, and replacing the analytical equations with a reference to the vendor's manual. Haggag refused these proposals because he believed that they would discredit ABI.18
Instead, Haggag took his ABI proposal to ASTM subcommittee E10.02 on nuclear structural materials, chaired by Nanstad. Nanstad, who is not alleged to be part of the conspiracy, delayed voting on ABI until 2007. He then declined to ballot the ABI proposal when Haggag refused to change references to ABI to Instrumented Ball Indentation.19
In February 2009, Tobolski co-authored an article entitled “Advances in Hardness Testing.” In the article, Tobolski erroneously renamed ABI to “Representative Stress Strain (RSS).” He then stated that “RSS is part of Instrumented Indentation Testing (IIT) of Frontics of Korea described in the ISO Report TR/29381,” a misleading technical report.20
After the ABI proposal did not pass in two ASTM subcommittees, ATC turned to the ISO. At the ISO, every country is represented by an organization. ASTM subcommittee E28.94 represents the United States in the area of mechanical testing.21
In 2006, Tobolski told Haggag that he would help get a standard from the ISO at the 2006 meeting in Seoul, Korea. Tobolski's efforts resulted in the submission of a proposal to the ISO, but the proposal failed when balloted. 22
In 2010, Haggag requested that Low, who is not alleged to be part of this conspiracy, submit a new ABI proposal to the ISO. Without polling voters, Low responded that his subcommittee was not interested in ABI.23
Haggag next approached Ruth. Ruth submitted the ABI proposal for a vote in ASTM subcommittee E28.94, the United States representative at the ISO. By a two-thirds majority, the subcommittee members voted to submit the ABI proposal to the ISO for an international ballot.24
At the ISO, the first two requirements for obtaining a standard are: (1) approval by a majority of member countries, and (2) agreement of five countries to participate in draft development. At the international ballot, a majority of countries approved the ABI proposal, but only two countries (United States and China) agreed to participate in draft development.25
After the ABI proposal did not attract the requisite support at the international ballot, Haggag contacted the ISO to request an equipment demonstration in order to show the difference between ABI and IIT and clarify the proper subcommittee for ABI. The ISO acknowledged that a joint meeting was appropriate to resolve jurisdictional disputes.26
Haggag then contacted Ruth to schedule an equipment demonstration. Instead of scheduling a demonstration, Ruth unilaterally put out two ballot items for a vote in ASTM subcommittee E28.94. The first ballot item asked whether to continue ABI activity. The second ballot item asked, if so, whether to schedule an ABI demonstration. Ruth should not have balloted the first item because the subcommittee had already voted in support of the ABI proposal by a two-thirds majority.27
ASTM conducted this ballot from July 27, 2011 to August 26, 2011. At the conclusion of the vote, Ruth reported the results as: two votes to continue ABI activity, four votes to discontinue ABI activity, and ten abstentions. Haggag requested the names of the negative voters from ASTM Staff Manager Joe Koury, but ASTM never posted the official results and names of voters, as required.28
On September 5, 2011, Haggag reviewed the ballot results on the ASTM website and noticed that MTS had two voting members. Each producer, however, is only allowed one vote. After Haggag pointed out this error, ASTM changed the voting status of one MTS member to remove the redundancy. Haggag “suspects” that Instron, Tinius Olsen, and MTS voted to discontinue ABI activity.29
On January 30, 2012, ATC filed its complaint. Later that same day, ATC filed an amended complaint....
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