The District Court for the Southern District of New York declined an invitation to rule that multiple lawful competitive acts, when aggregated, could be anticompetitive. Eatoni Ergonomics, Inc. v. Research in Motion Corporation, 2011 WL 6019295 (S.D.N.Y., Dec. 5, 2011).
Eatoni and RIM have disputed for years over the Eatoni patent for a reduced QWERTY keyboard and related software. A reduced QWERTY keyboard is one where multiple letters are assigned to a single key.
The matter began as a declaratory judgment action, progressed to arbitration, mediation, a settlement, failed collaboration on a new product, and finally multi-count litigation. The suit originally alleged breach of contract, fraud, breach of fiduciary duty, patent infringement and antitrust claims. All allegations other than the §2 antitrust claim were later dropped. RIM moved to dismiss for failure to state a claim.
Eatoni alleged that RIM possesses a monopoly for QWERTY smartphones and reduced QWERTY smartphones. It claimed that RIM locked in its market dominance through multiple anticompetitive acts.
It was not disputed that RIM has a monopoly. The issue was whether it engaged in anticompetitive conduct to acquire or maintain the monopoly. As the court noted, monopoly power without anticompetitive conduct is not unlawful.
Eatoni's first argument was that RIM's patent infringement itself was the anticompetitive conduct. The court rejected that. It noted that no prior case has found that patent infringement itself was anticompetitive conduct. Moreover, Eatoni had licensed RIM to use the patent, and in that context had released all claims for infringement.
Eatoni then pointed to the fact that the earlier settlement had called for joint product development, but RIM ultimately rejected the joint design and terminated the joint product development. It alleged this was a refusal to deal. The arbitrator in the earlier arbitration had ruled that RIM did not breach any duties owed to Eatoni. Moreover, a unilateral refusal to deal is not anticompetitive except in very limited circumstances, such as in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 427 U.S. 585 (1985). Here, none of the necessary circumstances in Aspen Skiing were present, and RIM's refusal to deal was lawful.
Eatoni argued that even if the infringement and the refusal to deal were not individually anticompetitive, in combination they were. A course of conduct that impedes a competitor could be unlawful although made up of individually lawful acts, Eatoni argued, based on Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690 (1962). The Supreme Court there held that the evidence should not be compartmentalized, but rather viewed as a whole. While that accurately reflects Continental Ore, it does not stand for the proposition that business conduct that is lawful becomes unlawful if combined with other lawful conduct. Or, as the court put it, zero plus zero is zero.
Finally, Eatoni argued that RIM denied Eatoni of an essential facility by refusing it access to its Blackberry platform. But that is contrary to the inherent right of a patent holder to use the exclusionary power of a patent. RIM had the undeniable right under the patent law to withhold its Blackberry from Eatoni. Further, RIM's products were not "essential" because other companies manufacture smartphones, including Samsung, HTC, Motorola, Sony Ericsson, Nokia and T-Mobile.
