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Resin Manufacturer's Antitrust Claims Fail, Fed Cir. Rules

By Gabriella Khorasanee, JD on April 25, 2014 | Last updated on March 21, 2019

The Federal Circuit recently had the chance to hear an appeal involving antitrust issues. When we saw that, our ears perked up, as we can only take so much patent and veterans' appeals (sorry). How exactly did the Federal Circuit have jurisdiction to hear the appeal anyway?

The initial claims involved an allegation of patent infringement. Though the parties stipulated to the dismissal of the patent infringement claim, because the district court entered final judgment and dismissed the claim with prejudice, the Federal Circuit retained jurisdiction.

Now, let's get to the heart of the matter.

Antitrust Claims

Plaintiff Desotech manufactures resins for use in stereolighography ("SL") machines, while defendant 3D Systems ("3DS") manufactures SL machines and resins for use in the machines. In 2005, 3DS began making machines with wireless technology that would detect whether a 3DS-approved resin was being used. If a 3DS-approved resin was not used, the machine would shut off. 3DS has approved two of Desotech's resins for use in its machines, but negotiations to approve further resins broke down. When that happened, Desotech sued.

Desotech filed a complaint with nine counts: five antitrust claims, and four alleged violations of Illinois law. The district court granted summary judgment to 3DS; the only claims that remained on appeal were the antitrust claims and two state law claims. For purposes of this post, we only discuss the antitrust claims alleging violations of Sections 1 and 2 of the Sherman Act, and Section 3 of the Clayton Act.

Relevant Market

At the outset, the Federal Circuit noted that it would apply the law of the Seventh Circuit to analyze the antitrust claims. Here, it stated that the determination of whether a relevant market existed was dispositive for four of the five antitrust claims.

Even when viewing the evidence in Desotech's favor, the court found that "a reasonable jury could not find an independent market for SL machines." It added that "Desotech failed to satisfy the stringent demand for economic data and analysis required by the Seventh Circuit ... [and] failed to prove an independent market for SL machines."

Locked-In Aftermarket

Next, Desotech argued that 3DS locked-in customers in the aftermarket by requiring the use of 3DS-approved resins. The court did not agree. Because the majority of customers knew that the machines had to use 3DS-approved resins before they purchased the machines, they were not "locked-in." Rather, they had made the decision to use the 3DS machine; if they didn't want to be "locked-in" they could have bought a different machine.

Though applying the law of the Seventh Circuit, this case is a lesson in forum shopping. If your client's litigation includes a patent claim, the disposition of that claim may affect which circuit court will hear the appeal. Though the Federal Circuit is adept at applying the law of other circuits, it may be preferable to have a home-circuit advantage.

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