TruePosition, Inc. v. LM Ericsson Tel. Co., CIVIL ACTION No. 11-4574

• Decision Date: 21 August 2012
• Docket Number: CIVIL ACTION No. 11-4574
• Parties: TRUEPOSITION, INC., Plaintiff, v. LM ERICSSON TELEPHONE COMPANY (TELEFONAKTIEBOLAGET LM ERICSSON), QUALCOMM, INC., ALCATEL-LUCENT USA, INC., EUROPEAN TELECOMMUNICATIONS STANDARDS INSTITUTE, and THIRD GENERATION PARTNERSHIP PROJECT a/k/a 3GPP, Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

TRUEPOSITION, INC., Plaintiff,

v. LM ERICSSON TELEPHONE COMPANY (TELEFONAKTIEBOLAGET LM ERICSSON),QUALCOMM, INC., ALCATEL-LUCENT USA, INC., EUROPEAN TELECOMMUNICATIONSSTANDARDS INSTITUTE, and THIRD GENERATION PARTNERSHIP PROJECT a/k/a 3GPP, Defendants.

CIVIL ACTION No. 11-4574

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

Dated: August 21, 2012

MEMORANDUM

ROBERT F. KELLY, Sr. J.

Presently before the Court is the Joint Motion to Dismiss the Amended Complaint of TruePosition, Inc. Filed By Alcatel-Lucent USA, Inc. ("ALU"), LM Ericsson Telephone Company (Telefonaktiebolaget LM Ericsson) ("Ericsson") and Qualcomm, Inc. ("Qualcomm"), (collectively, the "Corporate Defendants"), the response in opposition by Plaintiff, TruePosition, Inc. ("TruePosition"), the Corporate Defendants' Joint Reply, as well as the separate Memoranda by ALU. For the reasons provided below, the Joint Motion to Dismiss will be denied.

I. FACTUAL HISTORY¹

TruePosition describes itself as a "leading innovator in developing and marketing highaccuracy location products that operate over cellular telecommunications networks." (Am. Compl. ¶ 3.) "More than 55 million cellular callers in the United States each year are located by TruePosition's products, assisting police, fire, and ambulance services in saving lives and enabling law enforcement to combat criminal activity and terrorist threats." (Id.) According to regulatory requirements set forth by the Federal Communications Commission ("FCC"), all mobile voice networks must be able to locate 911 callers. (Id.) In order to meet current FCC requirements, TruePosition's positioning technology, known as Uplink Time Difference of Arrival ("UTDOA"),² has been deployed on more than 90,000 cell tower sites in the United States. (Id.) TruePosition's UTDOA technology is implemented through Location Measurement Units ("LMU") that are located at multiple cell towers.³ (Id. ¶ 24.) Multiple LMUs measure the difference in time that they receive signals sent over the cellular network by a handset (referred to as the "uplink" transmission). (Id.) These measurements enable the distance of the handset from each cell tower to be calculated. (Id.) By collecting multiple measurements, the handset location can be narrowed to within FCC requirements. (Id.)

This action stems from the alleged anticompetitive conduct of major players in the international telecommunications market within the context of a Standard Setting Organization ("SSO"). (Id. ¶¶ 1-9.) TruePosition alleges that Ericsson, Qualcomm and ALU conspired to exclude its positioning technology, UTDOA, from standards promulgated by Third Generation Partnership Project a/k/a 3GPP ("3GPP"). (Id.) 3GPP is a non-profit standard settingsorganization of which Plaintiff and the Corporate Defendants are members.⁴ (See Am. Compl.) 3GPP is a not-for-profit SSO whose business is to fairly and impartially create global standards for mobile telecommunications technologies based on objective technical merit. (Id. ¶ 14.) The 3GPP standards are designed to be implemented globally through six regional SSOs, known as Organizational Partners, including Defendant European Telecommunications Standards Institute ("ETSI").⁵ (Id.) This case arises from the alleged exclusion of TruePosition's positioning technology from the 3GPP standard for the newest and most advanced 4G (Fourth Generation) or Long Term Evolution ("LTE") mobile telecommunications networks. (Id. ¶ 2.) Inclusion in the 3GPP 4G LTE standard is vital to the commercial success of TruePosition's UTDOA positioning technology. (Id. ¶ 4.) Notably, "[e]xclusion from the standard guarantees commercial failure and, in most instances, absolute foreclosure from the market." (Id.)

According to TruePosition, the Corporate Defendants collaboratively manipulated 3GPP's processes and procedures to gain unfair advantages for their preferred location technologies, and to prevent or delay standardization of TruePosition's technology. (Id. ¶ 6.) TruePosition further alleges that 3GPP participated in the conspiracy to exclude UTDOA from its standards by failing in its obligations to ensure that the Corporate Defendants complied with 3GPP Rules. (Id. ¶¶ 114-122.) TruePosition alleges that the direct consequence of the Defendants' conspiracy is that it, the UTDOA technology, and other competitors that marketUTDOA-based products, have been foreclosed from competition for 4G positioning products, and have been harmed in their continued ability to develop and market 2G (Second Generation) and 3G (Third Generation) products that can be upgraded for 4G networks. (Id. ¶ 8.)

II. PROCEDURAL HISTORY

TruePosition filed a Complaint on July 20, 2011. Therein, TruePosition alleged that the conduct described above violated United States antitrust law giving rise to two causes of action: (1) violations of Section 1 of the Sherman Act, 15 U.S.C. § 1; and (2) violations of Section 2 of the Sherman Act, 15 U.S.C. § 2.⁶ TruePosition's Section 1 claim was asserted against all Defendants, while TruePosition's Section 2 claim was only asserted against Ericsson and ALU.

A majority of Defendants moved to dismiss the Complaint. Instead of dismissing the action, we allowed TruePosition to file an amended complaint curing any defects set forth in our January 6, 2012 Memorandum Opinion. TruePosition filed an Amended Complaint on February 3, 2012. (See Am. Compl.) The Amended Complaint contains only one count asserted against all Defendants entitled "Combination Conspiracy in Violation of Section 1 of the Sherman Act (15 U.S.C. § 1)." (Id. ¶¶ 139-153.) TruePosition seeks monetary damages, treble damages, attorneys' fees and costs, prejudgment interest and injunctive relief. (Id. ¶ 154.) The Corporate Defendants filed a Joint Motion to Dismiss the Amended Complaint. (Doc. No. 103.) ALU also filed its own separate Memorandum in Support of the Corporate Defendants' Joint Motion to Dismiss. (Doc. No. 104.) TruePosition responded to the arguments made by the Corporate Defendants and they, in turn, filed their Replies. (Doc. Nos. 106, 107, 110 and 112.) For the reasons set forth below, the Corporate Defendants' Joint Motion to Dismiss TruePosition'sAmended Complaint is denied.

III. LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint may be dismissed for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). When reviewing a motion to dismiss pursuant to Rule 12(b)(6), the complaint must be construed in the light most favorable to the plaintiff. Burtch v. Milberg Factors, Inc., 662 F.3d 212, 220 (3d Cir. 2011) (citing In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 314 (3d Cir. 2010)). Federal Rule of Civil Procedure 8(a)(2) requires "only 'a short and plain statement of the claim showing the pleader is entitled to relief' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

"[A] plaintiff's obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of the cause of action will not do." Twombly, 550 U.S. at 555. In Twombly, the United States Supreme Court "set forth the 'plausibility' standard for overcoming a motion to dismiss and refined the approach in Iqbal." Burtch, 662 F.3d at 220 (citing Twombly, 550 U.S. at 557; Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009)). In other words, Rule 8 requires that a complaint contain factual allegations that, taken as a whole, render the plaintiff's entitlement to relief plausible. West Penn Allegheny Health System, Inc. v. UPMC, 627 F.3d 85, 98 (3d Cir. 2010). "This 'does not impose a probability requirement at the pleading stage,' but instead 'simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element.'" Id. (quoting Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008); Twombly, 550 U.S.at 556). When deciding the sufficiency of a complaint "courts should disregard the complaint's legal conclusions and determine whether the remaining factual allegations suggest that the plaintiff has a plausible - as opposed to merely conceivable - claim for relief." Id. (citing Iqbal, 129 U.S. at 1949-50; Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009)). Under both Twombly and Iqbal, a court must take the following three steps in order to determine the sufficiency of a complaint:

First, the court must take note of the elements a plaintiff must plead to state a claim. Second, the court should identify the allegations that, because they are no more than conclusions, are not entitled to the assumption of truth. Finally, where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement of relief.

Id. (quoting Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010)). "It is, of course, true that judging the sufficiency of a pleading is a context-dependent exercise." West Penn, 627 F.3d at 98 (citing Iqbal, 129 S. Ct. at 1950; Twombly, 550 U.S. at 567-68; Phillips, 515 F.3d at 232).

IV. DISCUSSION

Section 1 of the Sherman Act states that "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal." 15 U.S.C. § 1. Under Section 1 of the Sherman Act, a plaintiff must plausibly allege the following three elements: (1) an agreement; (2) imposing an unreasonable restraint of trade within a relevant product market; and (3) resulting in antitrust injury, that is "injury of the type the antitrust laws were intended to prevent and . . . that flows from that which make defendants' acts unlawful." Ins....