Instructional Systems Development Corporation v. Aetna Casualty and Surety Company and Doron Precision Systems, Inc.

817 F.2d 639, 1987 U.S. App. LEXIS 5254
CourtCourt of Appeals for the Tenth Circuit
DecidedApril 22, 1987
Docket82-2105
StatusPublished
Cited by45 cases

This text of 817 F.2d 639 (Instructional Systems Development Corporation v. Aetna Casualty and Surety Company and Doron Precision Systems, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Instructional Systems Development Corporation v. Aetna Casualty and Surety Company and Doron Precision Systems, Inc., 817 F.2d 639, 1987 U.S. App. LEXIS 5254 (10th Cir. 1987).

Opinion

*642 SEYMOUR, Circuit Judge.

Plaintiff Instructional Systems Development Corporation (ISDC) brought an antitrust action against Aetna Casualty and Surety Company (Aetna) and Doron Precision Systems, Inc. (Doron). ISDC alleged, inter alia, that Aetna and Doron had conspired to violate sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (1982), and that Doron individually had violated section 2. The district court granted summary judgment in favor of both defendants on the two conspiracy claims, and in favor of Doron on the section 2 claim. 1 On appeal, ISDC contended that the court erred in granting summary judgment because genuine issues of fact exist on all three claims. In our original opinion we agreed with ISDC’s position, and reversed.

Defendants Doron and Aetna have petitioned for rehearing and rehearing en banc. We grant the petition for rehearing in part to address their contention that, in reversing the summary judgment entered below on the claim under section 1 of the Sherman Act, we employed a standard inconsistent with the one recently applied by the Supreme Court in Matsushita Electronic Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). We find no ground for disturbing our panel opinion on the basis of this argument. See infra Part IIB. We also grant rehearing because we believe our prior opinion misstated the nature of ISDC’s claim. We have modified our original opinion accordingly. No active member of the court having requested a poll of the en banc court, defendants’ request for rehearing en banc is denied.

I.

BACKGROUND

In deciding whether summary judgment is appropriate, the evidence must be viewed in the light most favorable to the party against whom the judgment is sought, National Aviation Underwriters, Inc. v. Altus Flying Service, Inc., 555 F.2d 778, 784 (10th Cir.1977), and factual inferences tending to show triable issues must be resolved in favor of the existence of those issues, Luckett v. Bethlehem Steel Corp., 618 F.2d 1373, 1377 (10th Cir.1980). When the evidence is viewed in this light, the record shows the following.

Aetna is the developer of driving simulation, a driver education system in which students experience simulated driving conditions in the classroom using simulator equipment and a series of filmed driving situations. Driving simulator systems are primarily used by high schools and colleges and are sold throughout the United States and Canada. Aetna has a long history of involvement in driver education and has developed a reputation as a leader in this field. Through its Driver Education Division and its regional representatives, Aetna has marketed nationwide a number of driver education materials, including driving simulator films used in the simulator hardware. Although Aetna does not manufacture any simulator devices, it holds a number of patents on simulators and owns the trademark “Aetna Drivotrainer.”

Since 1956, Aetna has licensed a series of manufacturers to produce,, driving simulators under its trademark; Under these licensing agreements, the manufacturer was primarily responsible for selling a completed simulator system, although Aetna provided marketing assistance to the manufacturer and produced promotional films. After a series of assignments over the years, Visual Educom, Inc. (VEI) began manufacturing the hardware in 1970. In 1974, VEI announced it was getting out of the business, and Aetna and VEI began to search for a replacement. Aetna identified two potential manufacturers, Doron, and *643 James Hall, who had founded ISDC in 1974.

Until 1973, Doron had been a distributor of other manufacturers’ driving simulator equipment. One of these manufacturers was Singer, which produced simulators for Allstate. Doron acquired Singer’s production capabilities and a library of Allstate films in 1973. It produced simulators for Allstate until 1974, when Allstate terminated its driving simulation program and stopped producing films.

In 1974, Doron met with Aetna to discuss film purchases and to explore the possibility of replacing VEI as Aetna’s hardware manufacturer. Hall and Aetna were also discussing Hall’s potential acquisition of VEI, but Hall was unable to obtain financing. Doron subsequently acquired all of the assets of VEI, and Doron and Aetna then began negotiations resulting in a written agreement between the two in 1975. At the time Doron and Aetna were negotiating, ISDC had not begun production of a simulator and Doron was the only active manufacturer of simulator equipment in the United States. Although both Doron and Aetna marketed simulator films, the record indicates that Doron merely marketed the Allstate films it had acquired from Singer, and that Aetna was the only active film producer.

In July 1975, Aetna and Doron executed what was styled as a joint venture agreement. 2 Under the terms of this agreement, Doron was to build equipment bearing the Aetna Drivotrainer trademark, to service and provide parts for Drivotrainer systems, to contribute engineering services for continued development of the system, and to undertake primary responsibility for marketing the system. The contract also required Doron to replace the films it owned and marketed with films produced by Aetna, and provided that Doron would purchase all of its films from Aetna except those films which Doron requested and Aetna declined to produce. Aetna granted Doron an exclusive license to use the Aetna Drivotrainer trademark and also agreed to provide certain promotional services to Doron. Aetna specifically agreed: (1) to provide six pieces of advertising a year in national educational publications; (2) to refer to Doron all simulator systems sales leads developed through advertising, exhibits, personal contact, or other sources; (3) to participate jointly with Doron in five national educational conferences a year; (4) to provide teacher training to Doron in conjunction with the sale of new systems sold with Aetna films; and (5) to provide systems software expertise to Doron on key sales activity. The agreement permitted Aetna to sell its films to other companies, and did not expressly prohibit Aetna from providing the aforementioned promotional assistance to others. Doron and Aetna operated under this agreement from 1975 to 1980.

In December 1975, Hall approached Aetna with a request to buy films for use in ISDC’s development and production of a similar system. Aetna provided the films. In April 1976, ISDC submitted simulator system bids to three school districts and at the same time entered into an agreement with Aetna which permitted ISDC to acquire and sell Aetna simulator films. ISDC and Doron were both actively engaged in simulator systems sales until ISDC ceased operation in 1978. During this period, although Aetna provided ISDC with some assistance, it refused to assist ISDC in promotions or sales as it did Doron under the written agreement.

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Bluebook (online)
817 F.2d 639, 1987 U.S. App. LEXIS 5254, Counsel Stack Legal Research, https://law.counselstack.com/opinion/instructional-systems-development-corporation-v-aetna-casualty-and-surety-ca10-1987.