Telecomm Technical Serv. V. Siemens Rolm Commun.

• Decision Date: 17 August 1998
• Docket Number: No. 1:95-CV-694-WBH.,1:95-CV-694-WBH.
• Citation: 66 F.Supp.2d 1306
• Parties: TELECOMM TECHNICAL SERVICES, INC.; Realcom Office Communication; Nova USA Telecommunications Co.; American Telecom Corporation; DD Hawkins Communications, Inc.; CMS Communications, Inc.; Start Technologies Corporation; Olde York Valley Inn, Plaintiffs/Counter-Defendants, v. SIEMENS ROLM COMMUNICATIONS, INC., Defendant/Counter-Plaintiff.
• Court: U.S. District Court — Northern District of Georgia

66 F.Supp.2d 1306

TELECOMM TECHNICAL SERVICES, INC.; Realcom Office Communication; Nova USA Telecommunications Co.; American Telecom Corporation; DD Hawkins Communications, Inc.; CMS Communications, Inc.; Start Technologies Corporation; Olde York Valley Inn, Plaintiffs/Counter-Defendants, v. SIEMENS ROLM COMMUNICATIONS, INC., Defendant/Counter-Plaintiff.

No. 1:95-CV-694-WBH.

United States District Court, N.D. Georgia, Atlanta Division.

August 17, 1998.

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John Kirk Train, III, Michael P. Kenny, John Philip Fry, Patrick J. Flinn, William H. Jordan, Keith Edward Broyles, Alston & Bird, Atlantic, GA, Mark C. Hansen, phv, Michael K. Kellogg, phv, Steven F. Benz, phv, Austin C. Schlick, phv, William B. Petersen, phv, Kellogg Huber Hansen Todd & Evans, Washington, DC, Robert Stephen Berry, phv, James Daniel Leftwich, phv, Gregory Baruch, phv, Berry & Leftwich, Washington, DC, for plaintiffs.

Charles E. Campbell, Long Aldridge & Norman, Atlanta, GA, Keith E. Pugh, Jr., phv, Howrey & Simon, Washington, DC, Otis W. Carroll, Jr., phv, James Patrick Kelley, phv, Office of Otis W. Carroll, Jr., Tyler, TX, Kenneth A. Gallo, phv, Rogers & Wells, Washington, DC, for Rolm Company, Siemans Rolm Communications, Inc., defendants

Keith E. Pugh, Jr., phv, Howrey & Simon, Washington, DC, Otis W. Carroll, Jr., phv, James Patrick Kelley, phv, Office of Otis W. Carroll, Jr., Tyler, TX, Kenneth A. Gallo, phv, Rogers & Wells, Washington, DC, for Rolm Company, counter-claimant.

Patrick J. Flinn, William H. Jordan, Keith Edward Broyles, Alston & Bird, Atlantic, GA, Mark C. Hansen, phv, Michael K. Kellogg, phv, Steven F. Benz, phv, Kellogg Huber Hansen Todd & Evans, Washington, DC, Robert Stephen Berry, phv, James Daniel Leftwich, phv, Berry & Leftwich, Washington, DC, for Telecom Technical Services Inc., Realcomm Office Communication, Inc., Nova USA Telecommunications Co., American Telecom Corp., DD Hawkins Communications, Inc., Sharecom Division of Start Technologies Corporation, CMS Communications, Inc., Olde York Valley Inn, counter-defendants.

ORDER

HUNT, District Judge.

Plaintiffs bring this antitrust action under sections four and sixteen of the Clayton Act, 15 U.S.C. §§ 15 and 26, seeking damages and injunctive relief for violations of sections one and two of the Sherman Act, 15 U.S.C. §§ 1 and 2. Defendant has also asserted a host of counterclaims under federal and state law. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331 and 1367. Before the Court are defendant's motion for summary judgment on plaintiffs' complaint [384], defendant's motion for partial summary judgment on its counterclaims for copyright infringement [385-1] and for permanent injunctive relief [385-2], plaintiffs' motion for partial summary judgment on their claims for monopolization and attempted monopolization [386], plaintiffs' motion for summary judgment on defendant's counterclaims [387], defendant's motion to file surreplies in opposition to plaintiffs' motions for summary judgment [407], and plaintiffs' motion to strike the report and testimony of Miles Alexander [392].

I. BACKGROUND

This case is about the servicing of Rolm-branded private branch exchanges ("PBXs"). A PBX, also known as a "switch," is a combination of hardware and software that allows businesses with multiple telephone lines (typically over 50) to send and receive telephone calls, both internally and externally. Rolm is a major manufacturer of PBXs sold in the United States, but it is not contended that Rolm enjoys a monopoly over the sale of this equipment. The parties all agree that other manufacturers, such as Lucent Technologies, Nortel, and NEC, compete with Rolm in the market for sales of PBXs. However, the parts and software used in the PBXs vary among the different manufacturers, and Rolm possesses intellectual property rights in many of the parts and all of the software incorporated into its PBXs.

In addition to manufacturing PBXs, Rolm is also in the business of providing parts and service to end users of Rolm PBXs. Plaintiffs are independent service organizations¹ ("ISOs") that are also in the business of servicing Rolm PBXs. Thus, they compete with Rolm for the business of end users.² However, because Rolm possesses patents on a number of proprietary parts and copyrights on its software, the ISOs are at a competitive disadvantage in this market. They contend that this competitive disadvantage is an "antitrust injury" for which they are entitled to treble damages under the Sherman Act.

Rolm denies that any of its conduct violates the federal antitrust laws. In addition, it contends that plaintiffs are liable to it for unlawfully infringing on Rolm's federally protected intellectual property rights and under principles of state law.

II. DISCUSSION

A. Procedural Motions

Before addressing those motions that deal with the merits of the parties' claims, the Court will first resolve the procedural matters that are before it. First, defendant has moved for leave to file surreplies in opposition to plaintiffs' motions for summary judgment on the ground that plaintiffs raised new arguments in their reply briefs. After considering the record before it, including plaintiffs' opposition to the motion, the Court finds that defendant should be permitted to file its surreplies. Accordingly, defendant's motion [407] is GRANTED, and the Court will consider its surreplies in ruling on plaintiffs' motions for summary judgment.

The other procedural matter before the Court is plaintiffs' motion to strike the expert report and testimony of Miles Alexander [392]. Through this motion, plaintiffs raise objections to the Court's consideration of the opinions offered by Miles Alexander in support of defendant's motion for summary judgment on plaintiffs' antitrust claims. However, the Court notes that rather than filing a motion to strike under Federal Rule of Civil Procedure 12, the proper method for challenging the admissibility of such evidence is to file a notice of objection to the challenged testimony. Morgan v. Sears, Roebuck and Co., 700 F.Supp. 1574, 1576 (N.D.Ga.1988). Accordingly, plaintiffs' motion is DENIED. Nonetheless, in ruling on defendant's motion for summary judgment, the Court will assess the admissibility of the statements in Alexander's report and will consider the objections raised by plaintiffs.

B. Plaintiffs' Claims

The complaint that is presently before the Court — the Revised Second Amended Complaint — is the fourth formulation of claims presented by plaintiffs in this action. It has been considerably streamlined and only contains claims for monopolization and attempted monopolization under section 2 of the Sherman Act.³ Although these are distinct claims, plaintiffs essentially are pursuing a single theory of recovery. As plaintiffs' expert economist Dr. Roger Noll states, "this case is about Rolm's exploiting its control over parts and software to monopolize the service market." Report of Roger Noll at 31, Defendant's Motion for Summary Judgement, Ex. 8.

Plaintiffs' monopolization claim consists of two elements: 1) the possession by Rolm 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). Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 481, 112 S.Ct. 2072, 2089, 119 L.Ed.2d 265 (1992). Plaintiffs' attempted monopolization claim consists of three elements: 1) predatory or anticompetitive conduct engaged in by defendant; 2) specific intent to monopolize; and 3) a dangerous probability of achieving monopoly power in the relevant market. Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 459, 113 S.Ct. 884, 892, 122 L.Ed.2d 247 (1993). Both of these claims are premised on a theory of "monopoly leveraging" — the use of market power in one market to gain market share in another market other than by competitive means. Key Enterprises of Delaware, Inc. v. Venice Hosp., 919 F.2d 1550, 1566 (11th Cir. 1990).

Plaintiffs' contend that "Rolm has acquired market power in service by denying competitors access to proprietary parts and software."⁴ Defendant does not dispute the validity of this theory of recovery in the abstract. It maintains, however, that the facts of this case do not support such a recovery.

1. Defendant's Motion for Summary Judgment

Under Federal Rule of Civil Procedure 56, a court shall grant a motion for summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). Where the nonmoving party bears the burden of proof at trial, the moving party must demonstrate to the Court that "there is an absence of evidence to support the nonmoving party's case," Celotex v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986), or must put forth affirmative evidence negating an element of the nonmoving party's case, Fitzpatrick v. Atlanta, 2 F.3d 1112, 1116 (11th Cir.1993). It is then the responsibility of the nonmoving party, by revealing evidence outside of the pleadings, to show that evidence supporting its case does exist or that the element sought to be negated remains a genuine issue of material fact to be tried. Id. Essentially, this requires the nonmoving party to come forward with evidence sufficient to withstand a directed verdict on this issue at trial. Id. at 1116-17.

The nonmoving party is not required to carry its burden of proof at the summary judgment stage. In analyzing the case, the Court views the facts in the light most favorable to the nonmoving party and makes all factual inferences in favor of that party. Hairston v. Gainesville Sun Publishing Co., 9 F.3d 913, 918 (11th Cir. 1993). "The court must avoid weighing conflicting evidence or making credibility...