MacDermid Printing Solutions LLC v. Cortron Corp.
2016 U.S. App. LEXIS 14662
| 2d Cir. | 2016Background
- MacDermid and DuPont were the only sellers in the thermal flexographic processor market; DuPont held a dominant share. MacDermid contracted with Cortron to develop and manufacture MacDermid’s LAVA processors.
- DuPont sued Cortron for alleged infringement of its ’454 patent; Cortron and DuPont settled in June 2008. Under the settlement Cortron ceased manufacturing and support for LAVA and transferred technical information to DuPont. Cortron thereafter ceased operations.
- MacDermid switched suppliers to OLEC after learning of the litigation/settlement; OLEC reverse‑engineered needed specifications, delaying new LAVA units about nine months and costing MacDermid roughly $29,970. MacDermid testified it always had inventory and never failed to fill a customer order.
- MacDermid sued Cortron (and alleged DuPont involvement) asserting federal and Connecticut antitrust claims (Sherman Act §1), CUTSA (trade secrets), CUTPA, computer‑crime violations, breach of contract, and spoliation; a jury returned verdicts for MacDermid and awarded substantial damages.
- District Court denied Cortron’s post‑verdict JMOL on antitrust claims and entered a judgment (including trebled antitrust damages and other awards) totaling about $64.7 million. Cortron appealed.
- The Second Circuit reversed as to the federal and Connecticut antitrust claims for failure to prove harm to competition, affirmed the remaining rulings (including admission of certain late‑produced evidence and CUTSA damages), and remanded for recalculation of damages consistent with the opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MacDermid proved an adverse effect on competition under the rule of reason (Sherman Act §1) | MacDermid: market power plus the settlement/press release reduced consumer choice and likely diverted sales to DuPont — sufficient indirect proof of competitive harm | Cortron: MacDermid produced no evidence of higher prices, reduced output available to consumers, or market‑wide harm; at most MacDermid showed injury to a competitor | Court: Reversed antitrust verdicts — MacDermid failed to prove harm to competition (no actual price/output/quality harm; alleged misleading press release did not deprive consumers of choice) |
| Whether district court abused its discretion by admitting evidence (patent‑advice material) previously withheld as privileged after waiver in related NJ litigation | MacDermid: waiver in NJ caused late disclosure; district court permitted supplemental discovery; admission was appropriate and not prejudicial | Cortron: late disclosure should have been excluded under Rule 37(c)(1); admission prejudiced Cortron | Court: No abuse of discretion. MacDermid acted without bad faith after NJ ruling; Cortron had opportunity for follow‑up discovery and declined expert/continuance; any error was not shown prejudicial |
| Whether CUTSA damages were excessive (remittitur/new trial) | MacDermid: damages based on a reasonable‑royalty/hypothetical negotiation supported by expert testimony about development costs and market evidence | Cortron: Levinsohn’s hypothetical negotiation is speculative; resale value to DuPont (or reverse‑engineering cost) would have been far lower | Court: Affirmed; expert estimate was based on record evidence and within reasonable bounds under Connecticut law |
| Whether antitrust damages were duplicative / whether new trial required on other alternative grounds | MacDermid: jury awards appropriate and distinct across claims | Cortron: awards duplicative; other preserved Rule 50 grounds (e.g., press release as commercial speech, statistically insignificant expert proof) merit new trial or JMOL | Court: Did not reach the duplicative‑award or many alternative arguments after granting JMOL on antitrust for failure to prove competitive harm; other arguments not necessary to decide |
Key Cases Cited
- Tops Mkts., Inc. v. Quality Mkts., Inc., 142 F.3d 90 (2d Cir. 1998) (discusses direct vs. indirect proof of adverse effect on competition under rule of reason)
- Capital Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., Inc., 996 F.2d 537 (2d Cir. 1993) (requires market power for indirect proof and contemplates need for additional grounds showing potential adverse effects)
- K.M.B. Warehouse Distribs., Inc. v. Walker Mfg. Co., 61 F.3d 123 (2d Cir. 1995) (market power alone insufficient; plaintiff must show other grounds that conduct will harm competition)
- Virgin Atl. Airways Ltd. v. British Airways PLC, 257 F.3d 256 (2d Cir. 2001) (definition of market power and standards for showing adverse effects)
- Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519 (U.S. 1983) (coercive activity that prevents free choice can be inherently anticompetitive)
- Brunswick Corp. v. Pueblo Bowl‑O‑Mat, Inc., 429 U.S. 477 (U.S. 1977) (antitrust laws protect competition, not competitors)