United States District Court, D. Delaware
REPORT AND RECOMMENDATION
Honorable Jennifer L. Hall United States Magistrate Judge.
an antitrust case. Plaintiff Simon and Simon, PC d/b/a City
Smiles (“City Smiles” or “Plaintiff”)
filed this class action suit against Defendant Align
Technology, Inc. (“Align” or
“Defendant”) on March 14, 2019, 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.
City Smiles purchased Align's iTero Element scanner in
December 2016 and has prescribed Invisalign to its patients.
previous antitrust lawsuit against Align was also before this
Court, 3Shape Trios A/S v. Align Technology, Inc.,
C.A. No. 18-1332-LPS (D. Del.). On August 15, 2019, I
recommended that the other case be dismissed without
prejudice, and, on September 26, 2019, the Court adopted my
Report and Recommendation. 3Shape Trios A/S v. Align
Technology, Inc., C.A. No. 18-1332- LPS, 2019 WL
3824209, at *10-12 (D. Del. Aug. 15, 2019), adopted
by 2019 WL 4686614 (D. Del. Sept. 26, 2019). Similar
facts and legal theories are at issue in this case.
before the Court is Align's motion to dismiss under
Federal Rule of Civil Procedure 12(b)(6) or, in the
alternative, to transfer the case to the Northern District of
California. Because City Smiles has failed to allege acts
that-taken individually or together-constitute
anticompetitive conduct, I recommend that Align's motion
to dismiss be GRANTED.
Align is a Delaware corporation that sells Invisalign, a
system of clear plastic aligners for straightening teeth.
(D.I. 1 ¶¶ 31, 40.) As of September 2018,
Invisalign's share of the United States aligner market
was over 80%. (Id. ¶ 41.)
aligners are custom made and must be obtained from dental
professionals, who order them from Align. (Id.
¶¶ 43-45.) To order Invisalign, a dental
professional must send an impression of a patient's teeth
to Align. (Id. ¶¶ 50-51.) In 2015, Align
introduced the iTero Element digital intraoral scanner, which
can be used to obtain a digital impression for ordering
aligners. (Id. ¶¶ 49-50.) The iTero
Element scanner is another market leader, accounting for over
80% of the scanner market in the United States in 2017.
(Id. ¶ 71.) Non-party 3Shape Trios A/S is a
Danish corporation that produces the Trios, another digital
intraoral scanner that can be used to order aligners.
(Id. ¶¶ 32, 53.) 3Shape started selling
the Trios in the United States in 2012. (Id. ¶
City Smiles is a dental practice in Chicago, Illinois that
prescribes aligners to its patients. (Id. ¶
30.) City Smiles purchased an iTero Element scanner from
Align in 2016 and purchased Invisalign for multiple patients
between 2015 and 2018. (Id.)
Complaint takes issue with two categories of conduct by Align
that, Plaintiff contends, amount to an anticompetitive scheme
to monopolize both the scanner and the aligner markets. The
first relates to the criteria under which Align accepts
orders for Invisalign. (Id. ¶ 80.) A dental
professional can order Invisalign by sending Align a physical
impression of a patient's teeth, for example, by creating
a silicone mold. The Complaint alleges that silicone molds
“are burdensome and inefficient and not an acceptable
substitute for a proper Scanner.” (Id. ¶
a dental professional can order Invisalign by using the iTero
Element scanner and sending Align a digital impression.
(Id. ¶ 52.) For a fifteen-month period in 2016
to 2018, Align also accepted digital scans sent directly from
3Shape's Trios scanners, pursuant to an agreement between
Align and 3Shape (the “Interoperability
Agreement”). (Id. ¶¶ 55-56, 58,
64-65.) Pursuant to the Interoperability Agreement, Trios
scanners were used to place over 40, 000 Invisalign orders.
(Id. ¶ 56.) In January 2018, shortly after
Align filed four patent infringement lawsuits against 3Shape
relating to the Trios scanner, Align terminated the
Interoperability Agreement and stopped accepting scans sent
directly from Trios scanners. (Id. ¶ 16;
see Nos. 17-1646, -1647, -1648, -1649 (D. Del.).)
also accepts digital scans from scanners made by two other
manufacturers: 3M's True Definition and Dentsply
Sirona's CEREC Omnicam. (D.I. 1 ¶¶ 50, 57,
94-95.) According to the Complaint, however, those scanners
are designed to scan individual teeth and are unsuitable for
making aligners. (Id.) Thus, according to the
Complaint, a scanner is the only “acceptable” way
to order aligners, and Align's iTero Element and
3Shape's Trios are the only “suitable”
scanners. (Id. ¶ 68.) Since Align no longer
accepts Invisalign orders from Trios scanners, the only
“viable” way to order Invisalign-brand aligners
is to use Align's iTero Element. (Id.)
second category of challenged conduct relates to the design
of the iTero Element. (Id. ¶ 81.) Align
designed the iTero Element with the capability to send
digital scans directly to Align for orders of Invisalign.
(Id. ¶ 52.) The iTero Element cannot send scans
directly to Align's competitors in the aligner market. If
a dental professional wants to send a scan taken by the iTero
Element to another aligner manufacturer, the dental
professional must pay a fee to Align to convert the scan into
another format. (Id.) The Complaint does not provide
any further information about the fees.
to City Smiles, those two categories of conduct by Align-(1)
Align's refusal to accept scans from the Trios scanner
for Invisalign orders and (2) the design of Align's
scanner- operate as “a de facto bundle by making it
impracticable for Dental Practices to sell Invisalign without
an iTero Scanner, or for Dental Practices with an iTero
Scanner to sell other Aligners.” (Id.
¶¶ 103, 107, 117.) City Smiles alleges that
Align's actions have harmed competition in the scanner
and aligner markets, “resulting in higher prices,
reduced competition, and reduced product choice.”
(Id. ¶¶ 82-83.) According to City Smiles,
it was injured as a direct result of its purchase of an iTero
Element scanner in 2016 and the numerous Invisalign orders it
made between 2015 and 2018, all at “artificially
inflated” prices. (Id. ¶¶ 10, 30.)
Smiles' 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
monopolization of the market for scanners for orthodontic
treatment under Section 2 of the Sherman Act (Count 2).
(Id. ¶¶ 104-123.) City Smiles seeks treble
damages and injunctive relief under Sections 4 and 16 of the
Clayton Act, respectively. (Id.)
filed the pending motion to dismiss on April 5, 2019 (D.I.
6), and the parties completed the briefing on May 10, 2019.
(D.I. 7, 12, 13.) Align requested oral argument (D.I. 14),
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. Single-serve
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). A private plaintiff (as opposed to a
government plaintiff) must also demonstrate that it suffered
injuries caused by the defendant's anticompetitive
conduct. Br ...