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3Shape Trios A/S v. Align Technology, Inc.

United States District Court, D. Delaware

August 15, 2019

3SHAPE TRIOS A/S, Plaintiff,



         This is an antitrust case. Plaintiff 3Shape Trios A/S (“3Shape” or “Plaintiff”) filed suit against Defendant Align Technology, Inc. (“Defendant” or “Align”) on August 28, 2018, alleging violations of Section 2 of the Sherman Act, 15 U.S.C. § 2. (D.I. 1.) Align sells the Invisalign system, an orthodontic treatment for straightening teeth without metal braces. It involves the use of custom-made, plastic dental aligners. To make the aligners, Align requires a dental professional to obtain an impression of the patient’s teeth and transmit that impression to Align. One way to take an impression is with a digital intraoral scanner. In September 2015, Align introduced a scanner called the iTero Element, which can be used to order Invisalign from Align. When the iTero Element entered the market, 3Shape was already selling a competing scanner called the Trios. This dispute ensued.

         This case is not the only litigation between these two parties. On November 14, 2017, Align filed four separate patent infringement lawsuits (asserting 26 patents) against 3Shape, all of which relate to 3Shape’s Trios scanner. (Nos. 17-1646, -1647, -1648, -1649 (D. Del.).) 3Shape then filed two patent infringement lawsuits against Align, both of which relate to Align’s iTero Element scanner. (Nos. 18-697, -886 (D. Del.).)

         This case is the parties’ latest dispute in this Court. Here, 3Shape alleges that Align has (1) attempted to monopolize the market for scanners and (2) monopolized the market for aligners. Unlike many antitrust cases filed against patent-wielding competitors, 3Shape does not allege that Align’s infringement suits against 3Shape were baseless or that Align obtained its patents through fraud. Instead, 3Shape points to several actions taken by Align (including patent litigation activity) that, according to 3Shape, together amount to an anticompetitive scheme that violates the antitrust laws.

         Pending before the Court is Align’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Because 3Shape has failed to allege acts that-taken individually or together-constitute anticompetitive conduct, I recommend that Align’s motion be GRANTED.

         I. BACKGROUND [1]

         Defendant Align is a Delaware corporation that sells Invisalign, a system of clear plastic aligners for straightening teeth. (D.I. 1 ¶¶ 13-14.) Align is the leading seller of dental aligners in the United States and has over 80% of the market. (Id. ¶¶ 15, 29-30.) Align originally obtained market dominance as a result of numerous patents covering its Invisalign technology. (Id. ¶¶ 29-31.) Many of those patents have now expired and more will be expiring this year. (Id. ¶ 31.)

         Invisalign aligners are custom made and must be obtained from dental professionals, who order them from Align. (Id. ¶¶ 14, 18.) To order Invisalign, a dental professional must send a digital or physical impression of a patient’s teeth to Align. (Id. ¶ 34.) Align also sells the iTero Element digital intraoral scanner, which can be used to obtain a digital impression for ordering aligners. (Id. ¶ 20.)

         Plaintiff 3Shape is a Danish corporation that designs and manufactures dental equipment and software, including digital intraoral scanners. (Id. ¶¶ 12, 25.) 3Shape sells the Trios digital intraoral scanner, which “can be used for scanning, designing and ordering of clear aligners and a number of other orthodontic treatments or dental products.” (Id. ¶ 25.) 3Shape’s Trios scanner was already on the market when Align introduced the iTero Element scanner in September 2015. (Id. ¶¶ 20, 25-26.)

         According to the Complaint, Align’s iTero Element and 3Shape’s Trios are the only two scanners on the market that can effectively and efficiently be used to order clear aligners. (Id. ¶ 28.) There are other digital scanners on the market, including the 3M True Definition and Sirona CEREC Omnicam. According to the Complaint, those scanners were designed to scan individual teeth for crowns and for other local dental restorative work, and they are not viable options for ordering clear aligners. (Id. ¶¶ 38-39, 42.)

         The Complaint describes the following categories of conduct that, 3Shape contends, demonstrate Align’s anticompetitive scheme to monopolize the scanner and aligner markets. (D.I. 17 at 6-8, 10-12.) The first category includes Align’s patent litigation activities. (D.I. 1 ¶ 64.) Align filed patent infringement suits against OrthoClear and SmileDirectClub, two smaller aligner manufacturers. (Id. ¶¶ 65-66.) The OrthoClear case settled in 2006, resulting in OrthoClear going out of business. (Id. ¶ 65.) The SmileDirectClub case settled in 2016, resulting in SmileDirectClub going into business with Align. (Id. ¶ 66.) Subsequently, in November 2017, Align sued 3Shape for infringement of Align’s scanner technology. (Id. ¶ 50.) The Complaint alleges that these lawsuits were designed to drive Align’s competitors out of business. But it does not allege that any of the litigations were objectively baseless or that Align’s patents were obtained through fraud.

         The second category relates to Align’s unsuccessful attempts to enter into business deals with 3Shape. From 2015 to 2017, Align repeatedly asked 3Shape to configure its Trios scanners to send scans exclusively to Align (and not to other clear aligner manufacturers). (Id. ¶¶ 44-49.) 3Shape refused. (Id.) In 2016, Align asked 3Shape to enter into a joint business venture, but 3Shape again refused. (Id.)

         The third category of conduct relates to the execution and termination of a 2015 agreement between Align and 3Shape, which the parties refer to as the “Interoperability Agreement.” Prior to the agreement, 3Shape’s Trios scanners were incapable of sending digital scans directly to Align. (Id. ¶ 35.) Under the agreement, Trios scanners could (but were not required to) send scans directly to Align, and Align agreed to accept Invisalign orders directly from Trios scanners. (Id. ¶ 35.) The parties signed the agreement in December 2015, and Align “certified” the Trios scanner to send scans directly to Align beginning in October 2016. (Id.) Between October 2016 and January 2018, dental professionals sent over 40,000 Invisalign orders using Trios scanners. (Id. ¶ 36.)

         In December 2017, the month after Align filed four patent infringement lawsuits against 3Shape relating to the Trios scanner, Align notified 3Shape that it was terminating the Interoperability Agreement. (Id. ¶¶ 50-53.) Since the termination, which became effective in January 2018, Align no longer accepts scans sent directly from Trios scanners. (Id. ¶¶ 53, 59.) Align still has interoperability agreements with two other scanner manufacturers, 3M and Sirona. (Id. ¶ 38.) But Align told 3Shape in November 2017 that it “will not validate any additional intraoral scanners for use with Invisalign.” (Id. ¶ 60.)

         The fourth category of conduct relates to Align’s introduction of the iTero Element Scanner in 2015. (Id. ¶ 20.) Align designed the iTero Element with the capability to send digital scans directly to Align for orders of Invisalign. (Id. ¶ 22.) The iTero Element cannot send scans directly to Align’s competitors in the aligner market. (Id. ¶¶ 22-23.) However, a dental professional can send iTero Element scans to other aligner manufacturers by taking additional “steps” and paying Align a “fee.” (Id. ¶ 23.) The Complaint does not provide any further information about the additional steps or the fees.

         The fifth and final category of conduct involves Align’s offering of price discounts. Around the time it terminated the Interoperability Agreement with 3Shape, Align launched a discount program for its iTero Element scanner. (Id. ¶ 57.) Under the program, owners of 3Shape’s Trios scanners received a “steep” discount on the purchase of an iTero Element scanner, conditioned on the purchaser meeting a “target” number of Invisalign orders over three years.[2](Id.) The Complaint contains no further details about the size of the discount or the target number.

         According to the Complaint, Align’s conduct has harmed 3Shape’s scanner business. Dental professionals have stopped buying 3Shape’s Trios scanner because it cannot send scans directly to Align. (Id. ¶¶ 68-69.) For the same reason, 3Shape has experienced some order cancellations and returns of the Trios scanner, and 3Shape lost a bid to supply scanners to a large Dental Service Organization. (Id. ¶¶ 68, 70.)

         3Shape’s Complaint sets forth the following claims: monopolization of the clear aligner market under Section 2 of the Sherman Act, 15 U.S.C. § 2 (Count 1); and attempted monopolization of the market for scanners for orthodontic treatment under Section 2 of the Sherman Act (Count 2).[3] (D.I. 1 ¶¶ 87, 96, 104.)

         Align filed the pending motion to dismiss on October 17, 2018 (D.I. 11), and the parties have completed the briefing. (D.I. 12, 17, 18.) Both parties requested oral argument (D.I. 19, 20), and I heard oral argument on August 1, 2019. (“Tr. __ ”.)


         A defendant may move to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face when the complaint contains “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A possibility of relief is not enough. Id. “Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at 557). In determining the sufficiency of the complaint under the plausibility standard, all “well-pleaded facts” are assumed to be true, but legal conclusions are not. Id. at 679.

         “[W]hen the allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic deficiency should be exposed at the point of minimum expenditure of time and money by the parties and the court.” Twombly, 550 U.S. at 558 (internal marks omitted). “Antitrust claims in particular must be reviewed carefully at the pleading stage because false condemnation of competitive conduct threatens to ‘chill the very conduct the antitrust laws are designed to protect.’” In re Keurig Green Mt. Singleserve Coffee Antitrust Litig., 383 F. Supp. 3d 187, 218 (S.D.N.Y. 2019) (quoting Verizon Commc’ns., Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 414 (2004)). However, the same Twombly plausibility standard applies. W. Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 98 (3d Cir. 2010) (“[I]t is inappropriate to apply Twombly’s plausibility standard with extra bite in antitrust and other complex cases.”).


         Section 2 of the Sherman Act, 15 U.S.C. § 2, makes it unlawful to “monopolize” or “attempt to monopolize.”[4] It does not prohibit monopolies. Indeed, the possession of monopoly power is not only legal, “it is an important element of the free-market system.” Trinko, 540 U.S. at 407 (“The opportunity to charge monopoly prices-at least for a short period-is what attracts ‘business acumen’ in the first place; it induces risk taking that produces innovation and economic growth.”).

         A Section 2 plaintiff must therefore do more than just prove a monopoly. To succeed on a monopolization claim, the plaintiff must demonstrate both (1) the defendant’s possession of monopoly power in a relevant market and (2) anticompetitive conduct. Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 307 (3d Cir. 2007). To establish attempted monopolization, the plaintiff must show (1) anticompetitive conduct, (2) a specific intent to monopolize, and (3) a dangerous probability of achieving monopoly power in a relevant market. Phila. Taxi Ass’n, Inc. v. Uber Techs., Inc., 886 F.3d 332, 339 (3d Cir. 2018). Importantly, both types of claims require “anticompetitive conduct.” See Id. at 338 (“Anticompetitive conduct is the hallmark of an antitrust claim.”). A private plaintiff (as opposed to a government plaintiff) must also demonstrate that it suffered injuries caused by the defendant’s anticompetitive conduct. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977); ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254, 281 (3d Cir. 2012).

         Align argues that the Complaint fails to plausibly allege anticompetitive conduct. I agree.

         Anticompetitive conduct is “generally defined as conduct to obtain or maintain monopoly power as a result of competition on some basis other than the merits.” Broadcom, 501 F.3d at 308. On the other hand, “[c]onduct that merely harms competitors, . . . while not harming the competitive process itself, is not anticompetitive.” Id.; W. Penn, 627 F.3d at 108 (“The line between anticompetitive conduct and vigorous competition is sometimes blurry, but distinguishing between the two is critical, because the Sherman Act ‘directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself.’”). ...

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