Dsm Desotech Inc. v. 3D Systems Corporation
749 F.3d 1332
Fed. Cir.2014Background
- Desotech sued 3D Systems (3DS) alleging antitrust claims (tying, unreasonable restraint, attempted monopolization) plus state-law claims and patent infringement after 3DS used RFID-based software locks to prevent unapproved resins from operating in certain SL machines.
- 3DS is the sole U.S. supplier of stereolithography (SL) machines; SL machines compete with other rapid-prototyping technologies (e.g., laser sintering, fused deposition, 3D printing) with overlapping performance and price ranges across models.
- Desotech alleged two alternative relevant product markets: SL machines (foremarket) and SL resin (aftermarket), claiming 3DS’s RFID lock created a technological tie and customer lock-in.
- After discovery, the district court granted summary judgment for 3DS on all antitrust counts and on two state-law counts (UDTPA and tortious interference with prospective advantage); remaining claims were later dismissed by stipulation.
- On appeal, the Federal Circuit affirmed, holding Desotech failed to present the necessary economic evidence to define an independent product market for either SL machines or SL resin (insufficient market-definition proof and insufficient proof of customer lock-in).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SL machines constitute a relevant product market | SL machines are a distinct market because they uniquely produce parts of particular size and precision and purchasers are insensitive to small price increases | Other rapid-prototyping technologies are reasonable substitutes; plaintiff lacked economic evidence and relied on sparse customer testimony | Court: No. Plaintiff failed to provide the required economic analysis or sufficient customer evidence to show a distinct SL-machine market; summary judgment affirmed |
| Whether SL resin constitutes an aftermarket (relevant market) via "lock-in" | Customers are locked into 3DS resins because switching costs and machine dependency make alternatives unusable | Only a tiny fraction of customers purchased machines before RFID activation; most purchasers knew of restrictions beforehand, so no substantial preexisting lock-in | Court: No. Only seven customers purchased before RFID awareness—insufficient to infer substantial lock-in; summary judgment affirmed |
| Whether 3DS’s RFID/approval policy constituted tortious interference with prospective economic advantage under Illinois law | RFID lock and refusal to approve resins intentionally interfered with Desotech’s expected business relationships | 3DS acted to further legitimate business interests (protecting machine performance/reputation); competitor’s privilege applies absent sole motive of spite | Court: No genuine dispute of motive; 3DS protected its business—privilege applies; summary judgment affirmed |
| Whether 3DS violated the Illinois UDTPA by stating resins were unapproved/unauthorized | Statements that resins were "unapproved/untested" implied falsehoods about quality and were deceptive; injunctive relief is available for ongoing practices | Statements were truthful descriptions of licensing/authorization and UDTPA covers only false statements and injunctive relief for ongoing conduct; plaintiff offered no evidence of falsity or ongoing violation | Court: No genuine issue of falsity or ongoing practice; statements were nonactionable general licensing statements; summary judgment affirmed |
Key Cases Cited
- Reifert v. S. Cent. Wis. MLS Corp., 450 F.3d 312 (7th Cir. 2006) (economic evidence required to define product market)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (per se vs. rule-of-reason framework in restraints of trade)
- Menasha Corp. v. News Am. Marketing In-Store, Inc., 354 F.3d 661 (7th Cir. 2004) (market-power requirement under rule of reason)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (summary judgment in antitrust cases where plaintiff fails to raise a genuine factual issue)
- Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451 (1992) (aftermarket/lock-in doctrine and importance of customers purchasing before awareness of restrictive policies)
- Brown Shoe Co. v. United States, 370 U.S. 294 (1962) (practical indicia for defining submarkets)
- United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377 (1956) (definition of relevant product market based on reasonable interchangeability)