United States District Court, D. Delaware
REPORT AND RECOMMENDATION
JENNIFER L. HALL, UNITED STATES MAGISTRATE JUDGE.
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
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.).)
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.
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.
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. ¶
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.)
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.)
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.)
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
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.)
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.)
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.)
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.
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.(Id.) The Complaint contains no
further details about the size of the discount or the target
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.)
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). (D.I. 1
¶¶ 87, 96, 104.)
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. __
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.
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
2 of the Sherman Act, 15 U.S.C. § 2, makes it unlawful
to “monopolize” or “attempt to
monopolize.” 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
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.
argues that the Complaint fails to plausibly allege
anticompetitive conduct. I agree.
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