Authenticom, Inc. v. CDK Global, LLC
874 F.3d 1019
7th Cir.2017Background
- CDK and Reynolds supply dealer-management systems (DMS); some DMS designs allowed third-party "scraping" of dealer-originated data (open), others forbade it (closed).
- Authenticom, a third-party data integrator, collected DMS data for app vendors by scraping; CDK historically allowed scraping but switched to a closed system in 2015. Reynolds historically prohibited scraping.
- After CDK’s switch, CDK and Reynolds entered three 2015 agreements (Data Exchange, 3PA, RCI) governing access during a wind-down and reciprocal access for in-house integrators; defendants did not agree to block all third-party access in those contracts.
- Authenticom sued under Sherman Act § 1 alleging the 2015 agreements unlawfully restrained trade and harmed its business; the district court granted a preliminary injunction allowing Authenticom access to defendant systems using dealer-provided credentials.
- The Seventh Circuit reviewed the interlocutory appeal and concluded the district court’s injunction improperly forced defendants to deal with Authenticom beyond simply enjoining the challenged agreements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2015 agreements are per se illegal group-boycott restraints under § 1 | The agreements were designed to eliminate competition in the data-integration market and drive out independents like Authenticom | Agreements were procompetitive or neutral (security/legitimate business choice); nothing required defendants to block third parties; no group boycott fits facts | Court did not decide merits but assumed likelihood of success for injunction analysis; key point was remedy scope, not holding agreements per se illegal |
| Whether preliminary injunction was appropriate to prevent Authenticom’s alleged irreparable harm | Authenticom: loss of access threatened company survival; injunction needed to preserve plaintiff pending trial | Defendants: injunction imposes serious operational and security burdens; they have legitimate security interests and no duty to deal | Court assumed, for argument, plaintiff met irreparable-harm and likelihood prongs but found injunction overbroad on balance of equities |
| Proper scope of equitable relief for an alleged § 1 violation | Authent.: defendants should be forced to permit dealer-provided logins and access to maintain business (mandatory relief) | Defs.: § 1 remedy should dissolve unlawful agreements, not compel affirmative dealing; forced dealing conflicts with Trinko/Linkline limits | Held: Preliminary injunction improperly ordered defendants to do business with Authenticom; remedy should target the alleged agreements (break them) rather than create a duty to deal |
| Whether antitrust law requires a duty to deal or tying remedy that compels access | Authenticom: tie of DMS to integration and exclusive license terms functionally foreclose competition and require access relief | Defs.: participation at two market levels not tying; no duty to assist competitors; security concerns justify exclusion | Court: skeptical of duty-to-deal and tying theories here; even if tying claim existed, remedy would be to enjoin the tie, not mandate dealing |
Key Cases Cited
- Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, 540 U.S. 398 (2004) (limits on judicially imposed duty to deal under antitrust law)
- Pacific Bell Telephone Co. v. Linkline Commc’ns, Inc., 555 U.S. 438 (2009) (distinguishing vertical participation from unlawful tying; limits on antitrust duty to aid rivals)
- Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985) (recognized narrow exception permitting duty-to-deal relief under § 2 in extraordinary circumstances)
- In re Microsoft Corp. Antitrust Litig., 333 F.3d 517 (4th Cir. 2003) (equitable relief in antitrust must flow from the conduct proscribed; cautions against mandatory injunctions ordering affirmative dealing)
- Olympia Equip. Leasing Co. v. Western Union Telegraph Co., 797 F.2d 370 (7th Cir. 1986) (even dominant firms are not generally required to assist competitors)
- Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) (standard for preliminary injunctions: likelihood of success, irreparable harm, balance of equities, and public interest)