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Simon and Simon, PC v. Align Technology, Inc.

United States District Court, D. Delaware

October 15, 2019



          Honorable Jennifer L. Hall United States Magistrate Judge.

         This is 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.

         A 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.

         Pending 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.

         I. BACKGROUND[1]

         Defendant 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.)

         Invisalign 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. ¶ 48.)

         Plaintiff 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.)

         The 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. ¶ 68.)

         Alternatively, 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”).[2] (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.).)

         Align 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.)

         The 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.

         According 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.)

         City 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.)

         Align 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. __”.)


         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. 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 cases.”).


         Section 2 of the Sherman Act, 15 U.S.C. § 2, makes it unlawful to “monopolize” or “attempt to monopolize.”[3] 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). A private plaintiff (as opposed to a government plaintiff) must also demonstrate that it suffered injuries caused by the defendant's anticompetitive conduct. Br ...

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