AVX Corp. v. Cabot Corp.

600 F. Supp. 2d 286, 2009 U.S. Dist. LEXIS 18572, 2009 WL 546661
CourtDistrict Court, D. Massachusetts
DecidedMarch 5, 2009
DocketCivil Action 04-10467-RGS
StatusPublished
Cited by2 cases

This text of 600 F. Supp. 2d 286 (AVX Corp. v. Cabot Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AVX Corp. v. Cabot Corp., 600 F. Supp. 2d 286, 2009 U.S. Dist. LEXIS 18572, 2009 WL 546661 (D. Mass. 2009).

Opinion

MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

STEARNS, District Judge.

This case will (hopefully) bring down the final curtain in this long-running lawsuit brought by plaintiffs AVX Corporation and AVX Limited (collectively AVX) against defendant Cabot Corporation (Cabot). The case arose out of a five-year agreement (the Supply Agreement) that committed AVX to purchase minimum quantities of “flake” and “non-flake” (or “nodular”) tantalum powders from Cabot. 1 The Supply Agreement expired on December 31, 2005.

Over the years, AVX has sought to prosecute its claims in both the state and federal courts without great success. See, e.g., Cabot Corp. v. AVX Corp., 448 Mass. 629, 863 N.E.2d 503 (2007); AVX Corp. v. Cabot Corp., 424 F.3d 28 (1st Cir.2005). Ml but one of AVX’s claims have been pruned or weeded out over time by state and federal decisions. Cabot now moves for entry of summary judgment on AVX’s remaining claim, which alleges a violation by Cabot of the “anti-tying” prohibition of the Sherman Act, 15 U.S.C. §§ 1 and 14. AVX, for its part, moves for partial summary judgment, contending that three of the four elements of its tying claim are undisputed.

To sum up Cabot’s arguments: Cabot contends that AVX’s last, best, and only chance has less to do with the antitrust laws than with buyer’s remorse. From Cabot’s perspective, AVX entered after arms-length negotiations into a long-term contract for the purchase of tantalum, a contract which over time lost its lustre when the market price for tantalum declined (contrary to AVX’s expectations). According to Cabot, AVX is trying to win back in court what it lost fairly at the bargaining table. Additionally, Cabot contends that AVX is unable to show that anything Cabot did caused an “injury in [AVX’s] business or property (in an antitrust sense).” See Wells Real Estate, Inc. v. Greater Lowell Bd. of Realtors, 850 F.2d 803, 815 (1st Cir.1988). Accordingly, Cabot moves for summary judgment.

To understand AVX’s cross-motion: One must begin with the elements of a “tying” claim. “Section 1 of the Sherman Act prohibits a seller from ‘tying’ the sale of one product to the purchase of a second product if the seller thereby avoids competition on the merits of the ‘tied’ product.” See Borschow Hosp. & Med. Supplies, Inc. v. Cesar Castillo, Inc., 96 F.3d 10, 17 (1st Cir.1996).

*288 [T]he essential characteristic of an invalid tying arrangement lies in the seller’s exploitation of its control over the tying product to force the buyer into the purchase of a tied product that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms. When such “forcing” is present, competition on the merits in the market for the tied item is restrained and the Sherman Act is violated.

Id., quoting Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 12, 104 S.Ct. 1551, 80 L.Ed.2d 2 (1984). On the other hand, “[t]here is no tie for any antitrust purpose unless the defendant improperly imposes conditions that explicitly or practically require buyers to take the second product if they want the first one.” 10 Phillip E. Areeda et al, Antitrust Law ¶ 1752b, at 280 (1996).

The United States Supreme Court had historically employed a per se test in antitrust cases, under which certain species of contract in restraint of trade were deemed unreasonable as a matter of law, among them tying arrangements. See Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1178 (1st Cir.1994). In Illinois Tool Works, Inc. v. Indep. Ink, Inc., 547 U.S. 28, 126 S.Ct. 1281, 164 L.Ed.2d 26 (2006), however, the Supreme Court largely eviscerated the per se test by overruling the longstanding presumption that a patent confers market power on a patentee that renders any “tying” of a secondary product with the patented product a per se antitrust violation. In a unanimous opinion by Justice Stevens, the Court held that it valid patent notwithstanding, a plaintiff must prove market power as an affirmative element of its case. In rejecting any presumption of market power, Justice Stevens expressed skepticism about the durability of the anti-tying rule itself, observing that the Court’s “strong [historical] disapproval of tying arrangements has substantially diminished.” Id. at 35, 126 S.Ct. 1281. 2 See Sheridan v. Marathon Petroleum Co. LLC, 530 F.3d 590, 593-594 (7th Cir.2008) (noting that the Supreme Court has not discarded the tying rule but has modified it to require proof that the seller has power in the market for the tying product); Rachel Krevans & Daniel P. Muino, Restoring the Balance: The Supreme Court Joins the Patent Reform Movement, 9 Sedona Conf. J. 15 (Fall 2008) (characterizing the Illinois Tool Works decision as being influenced by the “congressional judgment reflected in the 1988 amendment [to the patent code]” that “tying arrangements involving patented products should not be deemed per se antitrust violations ... ”). See also Gabriel Feldman, The Misuse of the Less Restrictive Alternative Inquiry in the Rule of Reason Analysis, 58 Am. U. L. Rev. 561, 578 (2009) (“The per se test is applied with less rigidity in tying cases, as proof of the tying agreement leads only to a rebuttable presumption of illegality.”).

To prove a tying claim, a plaintiff must produce evidence establishing each of four elements: “(1) the tying and the tied products [here Cabot’s nodular and flake tantalum powders] are actually two distinct products;t 3 ] (2) there is an agreement or condition, express or implied, that *289 constitutes a tying; (8) the entity accused of tying [Cabot] has such economic power in the relevant market over supply of the tying product to distort consumers’ choices with respect to the tied product;[ 4 ] and (4) the tie forecloses a substantial amount of commerce in the market for the tied product.” Data Gen. Corp., 36 F.3d at 1178-1179.

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Bluebook (online)
600 F. Supp. 2d 286, 2009 U.S. Dist. LEXIS 18572, 2009 WL 546661, Counsel Stack Legal Research, https://law.counselstack.com/opinion/avx-corp-v-cabot-corp-mad-2009.