Applera Corp. v. Mj Research, Inc.

• Decision Date: 22 December 2004
• Docket Number: No. 3:98 CV 1201 JBA.,3:98 CV 1201 JBA.
• Citation: 349 F.Supp.2d 338
• Parties: APPLERA CORPORATION and Roche Molecular Systems, Inc., plaintiffs, v. MJ RESEARCH INC. and Michael and John Finney, defendants.
• Court: U.S. District Court — District of Connecticut

349 F.Supp.2d 338

APPLERA CORPORATION and Roche Molecular Systems, Inc., plaintiffs, v. MJ RESEARCH INC. and Michael and John Finney, defendants.

No. 3:98 CV 1201 JBA.

United States District Court, D. Connecticut.

December 22, 2004.

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Brian M. Poissant, Bruce J. Barker, Pennie & Edmonds, Charles W. Bradley, Jennifer Gordon, Joseph Evall, Robert A. Cote, Stephen J. Lieb, John Josef Molenda, Patrick J. Hoeffner, Sharon Yang, Rita Lynn Berardino, Orrick, Herrington & Sutcliffe, Lawrence B. Goodwin, Chadbourne & Parke, Wendy Schechter, Heller Ehrman White & McAuliffe LLP, David J. Lender, Gianluca Morello, David Greenbaum, Weil, Gotshal & Manges, William J. Hone, Fish & Richardson, PC, New York, NY, Mary L. Azcuenaga, Heller Ehrman White & McAuliffe LLP, David Gersch, Asim Varma, Bertrand R. Lanciault, III, Jean C. Kalicki, Michael J. Klyce, Jr., Arnold & Porter, Washington, DC, James T. Shearin, Aimee Jennifer Wood, Pullman & Comley, Bridgeport, CT, Gwen P. Weisberg, Pullman & Comley, James Sicilian, Mario R. Borelli, Robin L. Smith, Day, Berry & Howard, Hartford, CT, Jennifer K. Lawson, Testa, Hurwitz & Thibeault, Boston, MA, Edward R. Reines, Matthew D. Powers, Paul Ehrlich, Weil, Gotshal & Manges, Redwood Shores, CA, for Plaintiffs.

A. Jason Mirabito, Brett N. Dorny, Geri L. Haight, Ivor R. Elrifi, John A. Harre, Joseph G. Blute, William A. Marino, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., Joseph B. Darby, III, Greenberg & Traurig, Boston, MA, Albert L. Jacobs, Jr., Gerard F. Diebner, Joseph M. Manak, Greenberg Traurig, Christine Cora True-Frost, David A. Hoffman, John E. Beerbower, Latisha Thompson, Radu A. Lelutiu, Rudolf Koch, Cravath, Swaine & Moore, Daniel A. Ladow, Graham & James, Mary Morabito Rosewater, Schulte, Roth & Zabel, New York, NY, C. Allen Foster, David S Panzer, Kevin E. Stern, Timothy C. Bass, Greenberg Traurig, LLP, William C. Brashares, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, Washington, DC, Donna Nelson Heller, Harold Bolton Finn, III, Meghan A. Laganza, Patrick J. McHugh, Finn Dixon & Herling, Stamford, CT, for Defendants.

Ruling on Motion for Summary Judgment of MJ Research, Inc. in Its Favor on The Claims of Monopolization, Attempted Monopolization and Conspiracy to Monopolize [Doc. # 1137] and on Plaintiffs' Cross Motion for Summary Judgment on MJ Research, Inc.'s Claims on Monopolization, Attempted Monopolization, and Conspiracy to Monopolize [Doc. # 1180]

ARTERTON, District Judge.

Plaintiffs/counterclaim defendants Applera Corp. ("Applera")¹ and Roche Molecular Systems, Inc. ("Roche"), and defendant/counterclaim plaintiff MJ Research Inc. ("MJ") have filed cross motions for summary judgment on MJ's claims of monopolization, attempted monopolization, and conspiracy to monopolize. For the reasons discussed below, summary judgment is granted for Applera.

The Court assumes the reader's familiarity with the facts of this case from prior rulings. See infra n. 2. The offense of monopolization under Section 2 of the Sherman Act has two elements: "(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident." United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966). Monopoly power is defined as "the power to control prices or exclude competition," and "may be inferred from the predominant share of the market." Id. (citation and internal quotation marks omitted). Possession of monopoly power violates the Sherman Act if it is obtained through exclusionary conduct, which is defined as that which "not only (1) tends to impair the opportunities of rivals, but also (2) either does not further competition on the merits or does so in an unnecessarily restrictive way." Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 605 n. 32, 105 S.Ct. 2847, 86 L.Ed.2d 467 (1985) (quoting 3 P. Areeda & D. Turner, Antitrust Law 78 (1978)). "The purpose of the [Sherman] Act is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself." Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 458, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993). A claim of attempted monopolization requires the plaintiff to prove "(1) that the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power." Tops Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90, 99-100 (2d Cir.1998) (quoting Spectrum Sports, Inc., 506 U.S. at 456, 113 S.Ct. 884). The offense of conspiracy to monopolize "requires proof of (1) concerted action, (2) overt acts in furtherance of the conspiracy, and (3) specific intent to monopolize." Volvo N. Am. Corp. v. Men's Int'l Prof. Tennis Council, 857 F.2d 55, 74 (2d Cir.1988) (citing United States v. Consolidated Laundries Corp., 291 F.2d 563, 573 (2d Cir.1961)).

Thus, for each of the claimed Section 2 violations, MJ must prove that Applera had or was "dangerously close" to achieving monopoly power over the market, and that it engaged in exclusionary conduct, either alone or in concert with Roche. Addressing first the exclusionary conduct prong, MJ has identified the following conduct as improperly exclusionary: Applera adopted the thermal cycler "authorization" requirement in order to leverage its monopoly from PCR into the thermal cycler market; Applera's "authorization" requirement from 1992 through mid-1994 constituted illegal tying; Applera induced competitors to join its Supplier Authorization Program ("SAP") beginning in 1994, raising prices in the thermal cycler market in an unlawful price fixing conspiracy; the SAP imposed an unlawful total sales royalty; Applera refused to allow MJ to buy at retail prices "authorizations" to sell to its customers; Applera refused to license the PCR process to MJ's affiliates; Applera refused to unbundle Applera's apparatus patents from the PCR process patents; Applera disparaged MJ within the industry; and Applera's suit for contributory and induced infringement was a sham.

Much of the conduct MJ challenges as exclusionary has been raised in separately filed summary judgment motions or motions in limine, and addressed in prior rulings.² The conduct challenged as exclusionary that has not yet been addressed includes Applera's claimed disparagement of MJ, its refusal to deal, its leveraging, and the conduct from 1992 through mid-1994 that is challenged as illegal tying. MJ also makes new arguments regarding its claim of sham litigation. The Court will address each claim in turn.

A. Sham Litigation

MJ devotes a large portion of its memorandum of law to its argument that Applera threatened MJ with sham claims of contributory infringement and induced infringement, an issue that was decided in this Court's February 5, 2004 decision, see [Doc. # 883], and on which MJ has never moved for reconsideration. Since the issuance of the Court's February 5 decision, the jury has returned its verdict that MJ willfully induced infringement of Applera's process patents, a circumstance that should have put to rest MJ's assertion that Applera's infringement suit was a sham. MJ now argues, however, that "[b]ut for the requirement that end users must use `authorized' thermal cyclers to perform PCR in Applera's fields, the allegations of induced infringement would not exist." Memorandum of MJ Research, Inc. in Support of its Motion for Summary Judgment [Doc. # 1139] at 20. It is a patent that gives rise to an infringement claim, not a license. A license merely makes the use of the patented technology lawful. A patent holder has significant freedom to choose to license or not to license, to set the royalty rates for the license, and to determine the manner in which the technology is licensed. The evidence presented at trial provided ample grounds for the jury's verdict.

MJ also argues that the fact that Applera's contributory infringement claim was found to lack merit renders Applera's threats of litigation improper. The test for sham litigation includes first that "the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits." Prof'l. Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993) (emphasis added). As this Court's February 5, 2004 decision found, "in light of the fact that Applera's core claims against MJ remain in this suit, MJ's attempt to segregate individual claims as baseless is perplexing." See [Doc. # 883] at 6 n. 10. More particularly, Applera's contributory infringement claim relied on the same process patents as its inducement claim. To this extent, MJ's reliance here on Intel Corp. v. Via Tech, Inc., No. C-99-03062 WHA, 2001 WL 777085, at * 5 (N.D.Cal. Mar.20, 2001), is unavailing, because unlike in Intel, all of Applera's patents remained in the case, and Applera's core infringement claims regarding these patents were ultimately found meritorious.

B. Disparagement

To prove monopolization based on disparagement, or misleading advertising and publicity, MJ must "overcome a presumption that the effect on competition of such a practice was de minimis. The presumption is based on the perception that, while `[t]here is no redeeming virtue in deception, ... there is a social cost in litigation over it,'" largely because the "the likelihood of a significant impact upon the opportunities of rivals is so small in most observed instances — and because the prevalence of arguably improper utterance is so great...." National Ass'n of Pharm. Mfrs., Inc....