Servicetrends v. Siemens Medical Systems, Inc.

Decision Date21 March 1994
Docket NumberCiv. A. No. 1:93-CV-299-JTC.
Citation870 F. Supp. 1042
PartiesSERVICETRENDS, INC., Plaintiff, v. SIEMENS MEDICAL SYSTEMS, INC., Defendant.
CourtU.S. District Court — Northern District of Georgia
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Martin J. Elgison, John Kirk Train, III, Michael P. Kenny, Alston & Bird, John R. Lowery, Jane F. Thorpe, Pursley, Howell, Lowery & Meeks, Atlanta, GA, for plaintiff.

Chilton Varner, King & Spalding, Atlanta, GA, Kenneth A. Gallo, Edward Han, Keith E. Pugh, Jr., Howrey & Simon, Washington, DC, for defendant.

ORDER OF THE COURT

CAMP, District Judge.

This is a complex antitrust case consisting of Plaintiff's eighteen count Complaint and Defendant's eleven counterclaims. The matter is presently before the Court on Defendant Siemens Medical Systems, Inc.'s ("SMS") Motion for Summary Judgment # 139; Plaintiff Servicetrends, Inc.'s ("Servicetrends") Motion for Summary Judgment on Counterclaims # 147; and Plaintiff's Motion to Add Defendants #50. For the following reasons, Defendant's motion for summary judgment is GRANTED in part and DENIED in part. Plaintiff's motion for summary judgment on Defendant's counterclaims is GRANTED. Plaintiff's motion to add Defendants is DENIED.

                                         TABLE OF CONTENTS
                  I. Background                                          1049
                 II. Summary Judgment Standard                           1050
                III. Defendant's Motion for Summary Judgment             1051
                     A. Monopolization and Attempted Monopolization      1051
                        1. The Evils of Monopoly Power                   1052
                        2. The Relevant Product Markets                  1054
                        3. Monopolistic Conduct                          1054
                           (a) The Essential Facilities Doctrine         1055
                           (b) Monopoly Leveraging                       1057
                           (c) Price Discrimination                      1057
                        4. Conclusion                                    1059
                     B. Tying Arrangements                               1059
                     C. Predatory Pricing Claims                         1062
                     D. Exclusive Dealing & Concerted Refusal to Deal    1064
                        1. Exclusive Dealing                             1064
                        2. Concerted Refusal to Deal                     1066
                     E. Disparagement and Tortious Interference          1067
                        1. The Legal Effect of Disparagement             1067
                        2. Tortious Interference                         1068
                     F. Damages                                          1069
                 IV. Plaintiff's Motion for Judgment on Counterclaims    1069
                     A. Supplemental Facts and Analysis                  1069
                        1. Geographic Market                             1069
                        2. Product Market                                1070
                        3. Market Power                                  1070
                        4. Antitrust Injury                              1071
                     B. Defendant's Antitrust Counterclaims              1071
                        1. Section 7 of the Clayton Act                  1071
                        2. Conspiracy to Monopolize                      1072
                        3. Monopolization and Attempt                    1072
                    C. Defendant's Business Tort Counterclaims           1073
                       1. Disparagement & Unfair Trade Practices         1073
                       2. Misappropriation of Confidential Info.         1073
                       3. Tortious Interference                          1074
                       4. Unjust Enrichment                              1076
                  V. Plaintiff's Motion to Add Defendants                1076
                 VI. Summary                                             1076
                
I. BACKGROUND

Siemens Medical Systems, Inc. is the American subsidiary of the German conglomerate Siemens Aktiengesellschaft ("Siemens AG"). Siemens AG manufactures the "Lithostar," a non-invasive medical device known as a lithotripter, which dissolves kidney stones by projecting high energy shock waves into the human body. The Lithostar is one of several brands of lithotripters available from different manufacturers. The Lithostar costs about $1.5 million, is durable and long lasting, but requires frequent maintenance and periodic replacement of parts. Defendant SMS is the exclusive distributor of the Lithostar in the United States, providing sales, service and maintenance contracts after installation. Of the total 378 lithotripters currently in use in this country, 80 are Siemens Lithostars. SMS has contracts with equipment owners to service 67 or 68 Lithostars, amounting to about 85% of the total number of installed Lithostars but only 18% of the total lithotripters in the U.S.

Plaintiff Servicetrends is an independent service company incorporated in July, 1992, to provide maintenance for lithotripters. The company's sole business is servicing the Siemens Lithostar and its competitors, such as the Dornier HM-3.1 Servicetrends does not operate lithotripters for patient treatment. To date, Servicetrends has secured service contracts on 12 or 13 Lithostars, approximately 16% of the potential Lithostar service contracts available in the United States. Servicetrends also has 27 contracts to service the Dornier HM-3.

The Lithostar is composed of numerous parts, among them the shocktube, the spark gap, and the shockwave generator. Plaintiff' labels these "replacement parts." Replacement parts are modular units made up of several components. Siemens AG is Defendant's sole source of replacement parts, and Defendant is the sole distributor of Lithostar brand replacement parts in the United States. SMS provides replacement parts to its own service personnel for use in servicing equipment, and sells the same replacement parts to equipment owners and independent service organizations, including Servicetrends. SMS services Lithostars at the modular replacement part level only and does not sell or service the individual components that make up the replacement parts.

Although Lithostar parts are not interchangeable with parts produced by other lithotripter manufacturers, components made by independent manufacturers ("OEM's") can be purchased separately and used to repair the Lithostar without buying Siemens' modular replacement parts. For example, Servicetrends buys the spark gap and the shockwave generator components from OEM's and uses these components to service a customer's Lithostar on site. However, Servicetrends can buy the shocktube replacement part only in its modular form and only from SMS.2

Plaintiff says that SMS forces Lithostar buyers to use SMS parts and repair services, thereby precluding Servicetrends from competing in the market for replacement parts and service contracts. In an extensive eighteen count complaint, Servicetrends alleges a wide variety of antitrust and business tort claims. Servicetrends contends that SMS engages in illegal tying arrangements, monopolization and attempted monopolization of markets for service and parts for lithotripters and Lithostars, exclusive dealing, concerted refusal to deal, violations of the Lanham Act and the Georgia Unfair Trade Practices Act, and tortious interference. Plaintiff seeks relief as provided under the Shenman and Clayton Acts — treble damages, injunctive relief, and attorneys' fees.

II. SUMMARY JUDGMENT STANDARD

Rule 56(c), Fed.R.Civ.P., defines the standard for summary judgment: Courts should grant summary judgment when "there is no genuine issue as to any material fact ... and the moving party is entitled to judgment as a matter of law." The general rule of summary judgment in the Eleventh Circuit states that the moving party must show the court that no genuine issue of material fact should be decided at trial. Clark v. Coats & Clark, Inc., 929 F.2d 604 (11th Cir.1991). "Unless the movant for summary judgment meets its burden under Rule 56, the obligation of the opposing party does not arise even if no opposing evidentiary material is presented by the party opposing the motion." Id.

While all evidence and factual inferences are to be viewed in a light most favorable to the nonmoving party, Rollins v. Tech-South, Inc., 833 F.2d 1525, 1529 (11th Cir. 1987); Everett v. Napper, 833 F.2d 1507, 1510 (11th Cir.1987), "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). An issue is not genuine if it is unsupported by evidence, or if it is created by evidence that is "merely colorable" or is "not significantly probative." Id. at 249, 106 S.Ct. at 2511. Similarly, a fact is not material unless it is identified by the controlling substantive law as an essential element of the nonmoving party's case. Id. at 248, 106 S.Ct. at 2510.

Where neither party can prove either the affirmative or the negative of an essential element of a claim, the movant meets its burden on summary judgment by showing that the opposing party will not be able to meet its burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). In Celotex, the Supreme Court interpreted Rule 56(c) to require the moving party to demonstrate that the nonmoving party lacks evidence to support an essential element of its claim. Thus, the movant's burden is "discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Id.

In either situation, only when the movant meets this burden, does the burden shift to the opposing party, who must then present evidence to establish the existence of a material issue of fact. Id. The nonmoving party must go beyond the pleadings and submit evidence in the form of affidavits, depositions, admissions and the like, to demonstrate that a genuine issue of material fact...

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