Stereolithography (SL) Resin Maker Desotech Fails to Prove Antitrust Claims
3D Systems (DDD) won a second legal battle against DSM Desotech Inc. (Desotech) primarily regarding antitrust claims pertaining to resins used in additive manufacturing or 3D printing, specifically stereolithography (SL). Last month, the Appeals Court for the Northern District of Illinois affirmed the summary judgment granted by the District Court for defendant, 3D Systems.
3D Systems is the only supplier of SL machines in the United States, and is one of a handful of makers and sellers of resins for use with these machines. Desotech is also a seller of SL resins. About a decade ago, 3D Systems began implementing Radio Frequency Identification (RFID) technology into its SL machines, such that only incorporation of approved resins enabled operation of the SL machines. Before the lawsuit, 3D Systems and Desotech had negotiated licensing deals for 2 Desotech resins to be useable on the RFID stereolithography machines. However, upon unsuccessful negotiations to expand this resin set, Desotech filed suit against 3D Systems, in effect alleging an illegal bottlenecking of the SL resin industry.
Specifically,
Desotech alleged multiple antitrust violations by 3DS, including tying under § 1 of the Sherman Act (Count 1); tying under § 3 of the Clayton Act (Count II); unreasonable restraint of trade under § 1 of the Sherman Act (Count III); attempted monopolization under § 2 of the Sherman Act (Count IV); and antitrust violations under the Illinois Antitrust Act (Count V). Additionally, Desotech alleged a state law claim for violation of the Illinois Uniform Deceptive Trade Practices Act (Count VI). It also alleged state law claims for Tortious Interference with Prospective Economic Advantage (Count VII) and for Tortious Interference with Contractual Relations (Count VIII). Finally, Desotech asserted a claim of patent infringement (Count IX).
Desotech cited two rules to argue its claims of unlawful tying: the “per se rule” and the “rule of reason”. To prove tying, the per se rule requires a business action to be clearly anticompetitive in nature. Similarly, proper application of the rule of reason requires that a particular business practice imposes an “unreasonable restraint on competition”. A more detailed description of the factors comprising use of the per se rule and rule of reason can be found within the Appellate Court’s opinion.
Following a series of testimonies attesting to the practical substitutability (or lack thereof) of other rapid prototyping methods for stereolithography, 3D Systems was granted summary judgment on not only the tying claims, but each of the antitrust claims as well. In effect, the Appeals Court affirmed the District Court’s dismissal of Desotech’s antitrust claims on account of viable alternatives existing to stereolithography that sufficiently loosened 3D Systems’ alleged industry bottleneck, as it were. Specifically, the Court stated that “Desotech failed to prove an independent market for SL machines.”
Desotech advanced one last argument that, too, proved unconvincing to both the District and Appeals Courts: that stereolithography resin was itself a separate market being unfairly monopolized by 3D Systems. Both Courts argued that because only a very small minority of SL customers purchased SL machines without prior knowledge that future resin purchases would be RFID-locked, that such customers would have easily been able to select a different rapid prototyping machine wherein the selling company avoided such a policy.
In summation, the Court “affirm[ed] the grant of summary judgment on Desotech’s antitrust claims, its tortious interference claim, and its UDTPA claim.” Even if only just a small consolation, Desotech at least avoided being saddled with 3D Systems’ attorney’s fees. Further appeal of the decision is presently unknown.
Remick Stahl
Law Clerk at
JAFARI LAW GROUP®