United States District Court, D. Delaware
SZ DJI TECHNOLOGY CO., LTD. and DJI EUROPE B.V., Plaintiffs-Counterclaim Defendants,
AUTEL ROBOTICS USA LLC and AUTEL AERIAL TECHNOLOGY CO., LTD., Defendants-Counterclaim Plaintiffs.
C. Barillare and Amy M. Dudash, MORGAN, LEWIS & BOCKIUS
LLP, Wilmington, DE Willard K. Tom, Jon R. Roelike, Ryan
Kantor, MORGAN, LEWIS & BOCKIUS LLP, Washington, DC
Attorneys for Plaintiff-Counterclaim Defendants
Shea Gaza, Robert M. Vrana, Samantha G. Wilson, YOUNG CONAWAY
STARGATT & TAYLOR, LLP, Wilmington, DE Timothy C.
Bickham, John Caracappa, Jonathan B. Sallet, Scott M. Richey,
Beau M. Goodrick, STEPTOE & JOHNSON LLP, Washington, DC
Michael Flynn-O'Brien, STEPTOE & JOHNSON LLP, San
Francisco, CA Attorneys for Defendants
U.S. DISTRICT JUDGE
Plaintiffs Autel Robotics USA LLC and Autel Aerial Technology
Co., Ltd. (collectively, "Autel") assert, in their
operative Second Amended Answer ("SAA"), antitrust
counterclaims against Plaintiffs-Counterclaim Defendants SZ
DJI Technology Co., Ltd. ("SZ DJI"), DJI Europe
B.V. ("DJI BV"), and DJI Technology Inc. ("DJI
US") (collectively, "DJI"). (D.I. 277) DJI has
moved to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6), contending that Autel has not alleged facts that
plausibly support any of its antitrust counterclaims. (D.I.
282) After reviewing the parties' briefing (D.I. 283,
291, 301), the Court will grant DJI's motion.
August 11, 2016, DJI filed suit against Autel for patent
infringement relating to drone technology and operation.
(D.I. 1) Autel filed an amended answer to DJI's complaint
on May 23, 2018, which included counterclaims for
monopolization in violation of the Sherman Act, attempted
monopolization in violation of the Sherman Act, predatory
pricing in violation of sections 17043 and 17044 of the
California Unfair Practices Act, and predatory pricing in
violation of section 481-3 of the Hawaii Unfair Practices
Act. (D.I. 241 at ¶¶ 211-41) DJI moved to dismiss
these antitrust counterclaims on June 29, 2018 (D.I. 266), to
which Autel responded by filing a second amended answer (D.I.
277) ("SAA"), mooting the earlier motion. DJI filed
the present motion on September 14, 2018. (D.I. 282)
describes a drone as an "aircraft without a human pilot
aboard, controlled by a ground-based operator, with a system
of communications between the two." (D.I. 291 at 2) The
parties agree that DJI holds a powerful, if not controlling,
position in the drone industry. (Id. at 3; D.I. 283
at 6) Autel characterizes its antitrust counterclaims as
relating specifically to the market for "prosumer"
drones, which are "[m]ore than toys and less than
fully-configured professional units," are "easy to
use," "and contain certain 'pro' features,
like improved cameras, navigation software and growing
intelligence." (D.I. 291 at 3) (citing SAA at ¶ 61)
Autel alleges that DJI has captured the majority of the
growth of this market, fueling its monopoly power.
(Id.) Autel further alleges that using this market
power, "DJI has repeatedly engaged in predatory pricing
to blunt the advance of new competitors and ultimately drive
them out of the prosumer drone market entirely or, at a
minimum, to its fringes." (Id.) "[N]early
a dozen companies have attempted to bring new and better
'prosumer' drones to American consumers ... [b]ut
each time DJI has perceived a new threat, DJI has used its
dominant market share to maintain and extend its monopoly by
predatorily cutting its prices, below cost, to undercut the
advent of the competitor drone." (Id. at 4)
Autel describes "a continuing pattern of DJI's
anticompetitive conduct," whereby DJI tactically lowers
its price below cost to drive out each new competitor that
enters. (Id. at 4-7)
DJI characterizes its success as stemming from "several
key advantages over its competitors," namely "the
largest research and development team in the industry with a
state-of-the-art R&D infrastructure" and a
"manufacturing facility in Shenzhen, China ... with
direct access to the best supply chain of electronic
components." (D.I. 283 at 6) DJI asserts that, despite
its large market share, it does not have monopoly power, as
shown by allegations Autel included in its SAA, including
that "as many as a dozen companies (including Autel)
introduce[ed] new products to the market over the past few
years at prices comparable to and often lower than those
offered by DJI." (Id. at 7) (citing SAA at
¶¶ 62, 70, 100, 112, 115, 124-26, 149) "Thus,
according to Autel's own allegations, DJI's years of
alleged predatory pricing practices did nothing to deter a
steady onslaught of new and persistent competition."
(Id. at 7) DJI further blames the exit of these
competitors on their own "failure and troubles."
(Id. at 8)
insists that Autel's allegations of below-cost pricing
are "nothing more than speculation," pointing out
that Autel "does not, for example, identify any of DJFs
advertised prices, does not identify any prices offered by
DJI resellers, and does not identify any transactions in
which a purchaser actually paid the prices alleged."
(Id. at 8-9) (citing SAA at ¶¶ 69(a),
127(a), 127(c), 69(b), 127(d), 69(c), 128) DJI provides the
Court with a DJI accounting document that Autel obtained
through discovery (on the pending patent claims) and which
forms the basis of Autel's pricing and cost
allegations. This accounting document provides DJFs
revenue, cost, gross profit, and quantity of drones sold by
DJI for each month in 2016. Autel replies to DJFs analysis of
its accounting document by asking the Court to deny DJFs
motion to allow the parties to ascertain "[t]he real
meaning of DJFs internal financial analysis, produced during
discovery on DJFs patent claims, which Autel contends
demonstrates DJFs predatory pricing." (D.I. 291 at 1)
DJI finds further flaws in Autel's counterclaims,
including Autel's "measure of cost" and whether
DJI had the ability to recoup lost profits.
Rule 12(b)(6) Motion to Dismiss
a motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) requires the Court to accept as true all material
allegations of the complaint. See Spruill v. Gillis,
372 F.3d 218, 223 (3d Cir. 2004). "The issue is not
whether a plaintiff will ultimately prevail but whether the
claimant is entitled to offer evidence to support the
claims." In re Burlington Coat Factory Sec.
Litig., 114 F.3d at 1420 (internal quotation marks
omitted). Thus, the Court may grant such a motion to dismiss
only if, after "accepting all well-pleaded allegations
in the complaint as true, and viewing them in the light most
favorable to plaintiff, plaintiff is not entitled to
relief." Maio v. Aetna, Inc., 221 F.3d 472,
481-82 (3d Cir. 2000) (internal quotation marks omitted).
well-pleaded complaint must contain more than mere labels and
conclusions. See Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007). A plaintiff must plead facts sufficient to
show that a claim has substantive plausibility. See
Johnson v. City of Shelby, 135 S.Ct. 346, 347 (2014). A
complaint may not be dismissed, however, for imperfect
statements of the legal theory supporting the claim asserted.
See Id. at 346.
survive a motion to dismiss, a civil plaintiff must allege
facts that 'raise a right to relief above the speculative
level on the assumption that the allegations in the complaint
are true (even if doubtful in fact).'" Victaulic
Co. v. Tieman,499 F.3d 227, 234 (3d Cir. 2007) (quoting
Twombly, 550 U.S. at 555). A claim is facially
plausible "when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged."
Iqbal, 556 U.S. at 678. At bottom, "[t]he
complaint must state enough facts to raise a reasonable
expectation that discovery will reveal evidence of [each]