Océ North America, Inc. v. MCS Services, Inc.

795 F. Supp. 2d 337, 2011 WL 2443714
CourtDistrict Court, D. Maryland
DecidedJune 14, 2011
DocketCivil Action No. WMN-10-0984
StatusPublished
Cited by6 cases

This text of 795 F. Supp. 2d 337 (Océ North America, Inc. v. MCS Services, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Océ North America, Inc. v. MCS Services, Inc., 795 F. Supp. 2d 337, 2011 WL 2443714 (D. Md. 2011).

Opinion

MEMORANDUM

WILLIAM M. NICKERSON, Senior District Judge.

Pending before the Court are several motions, one of which is potentially dispositive. At this time, the Court will only address Plaintiff Océ North America, Inc.’s motion to dismiss the first amended counterclaims of Defendant MCS Services, Inc., ECF No. 98.1 The parties have fully briefed the motion and it is ripe for review. Upon a review of the pleadings and applicable case law, the Court determines that: (1) no hearing is necessary, Local Rule 105.7; and (2) Océ’s motion to dismiss will be granted in part and denied in part as' set forth below.

/. BACKGROUND

Among other products, Océ manufactures high-speed continuous form printers. Continuous form printers utilize large spools of paper, the pages of which are perforated and later separated only after they are fed through the printer. These printers differ from cut-sheet printers, which utilize individual pages. Continuous form printers are used in commercial applications and are capable of printing hundreds or even thousands of pages per minute. According to MCS, they range in price from $100,000 to more than $1,000,000 and have a life span of approximately twenty years. MCS does not manufacture any high speed printers.

Both Océ and MCS are engaged in the business of providing maintenance services- and selling replacement toner for high speed printers. Océ first filed this lawsuit alleging that MCS misappropriated Océ trade secrets. After a hearing in July 2010, the parties entered into a stipulated preliminary injunction intended to constrain their behavior. Later, MCS filed counterclaims alleging antitrust and tort causes of action, and Océ filed the instant motion to dismiss.

II. MOTION TO DISMISS

MCS’ Counterclaims include the following: monopolization and attempted monopolization of the Océ services aftermarket (Counts I and II respectively); monopolization and attempted monopolization of the Océ toner aftermarket (Counts III and IV respectively); a request for injunctive relief premised upon Counts III and TV (Count V); tortious interference with an existing contract (Count VI); and intentional interference with prospective advantage (Count VII). Océ argues all counts should be dismissed because MCS has failed to state a claim under the relevant pleading standards.

Under Federal Rule of Civil Procedure 8(a)(2), pleadings must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Rule 8 does not require “detailed factual allegations,” but “naked assertions, devoid of further factual enhancement” are insufficient. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)) (internal quotations omitted). Likewise, unadorned accusations and rote recitation of a cause of action’s elements [340]*340fail to meet the requisite pleading standard. Id.

Instead, to survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient factual matter ... to state a claim to relief that is plausible on its face.” Id. In this context, the plausibility standard demands more than the mere possibility of a defendant’s liability. Id. To wit, “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. When evaluating the sufficiency of a pleading, courts are required to construe all facts in the light most favorable to the plaintiff. Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997).

A. The Antitrust Claims

MCS defines two relevant aftermarkets for its antitrust claims. The first aftermarket, to which Counts I and II pertain, is the Service Aftermarket. The second aftermarket is the Toner Aftermarket and it is the subject of Counts III through V.

1. The Service Aftermarket

The Service Aftermarket, as defined by MCS, consists of the market within the United States for maintenance services and parts replacement for Océ high-speed continuous form printers. Océ currently markets such printers under the Variostream brand name but previously used the Pagestream brand name. Both Pagestream and Variostream printers require maintenance services that are unique from services required by other high-speed continuous form printers offered by Océ’s competitors. Thus, the Service Aftermarket is limited exclusively to the servicing of Océ Pagestream and Variostream printers. MCS alleges Océ has a market share in excess of 80% of the Service Aftermarket.

To aid the maintenance of its high-speed printers, Océ created a package of diagnostic tools (Service Tools). The Service Tools include two types of diagnostic software relevant to this dispute: LPMW and CODI. Both LPMW and CODI are used in conjunction with software packages installed on each printer called Bundles. LPMW, which is presumably less sophisticated than CODI, works with Bundles 5 and lower. CODI works with Bundle 6 and above. Bundles 4 and below are installed on Pagestream printers, while Variostream printers use either Bundle 5 or Bundle 7. As a result, Variostream printers can leverage either LPMW, when Bundle 5 is installed on the printer, or CODI, when Bundle 7 is installed.

MCS alleges that both LPMW and CODI decrease the cost of servicing Océ printers thereby enabling enhanced competition. CODI is especially important, so much so that MCS claims it is “extremely difficult to provide maintenance services for Variostream Printers with Bundle 7 without using CODI.” Counterclaim ¶ 18. As such, MCS alleges it cannot effectively compete for new customers or maintain current levels of service to existing customers if it does not have access to CODI. Counterclaim ¶ 18. LPMW, in contrast, is less critical to MCS’ capacity to compete, but MCS is nevertheless handicapped without access to it. Counterclaim ¶ 19. In short, MCS claims that access to CODI and, to a lesser extent, LPMW, is critical to its ability to provide competitive services in the Service Aftermarket.

For several years, MCS utilized Océ’s LPMW software to service Océ printers. MCS claims Océ was aware it was using Océ’s proprietary software, and MCS cites several examples of circumstantial evidence indicating Océ’s alleged indifference to MCS’ use of LPMW. See Counterclaim ¶ 20. Beginning in 2007, MCS and Océ began negotiating a ‘Value Added Reseller and Service Agreement” (VAR Agree[341]*341ment), which would have allegedly documented MCS’ right to use Océ’s Service Tools. According to MCS, Océ demanded in the negotiations that MCS limit its use of the Service Tools to existing MCS customers. MCS refused. Later, Océ filed this lawsuit alleging that MCS misappropriated Océ trade secrets by using Océ software without permission.

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795 F. Supp. 2d 337, 2011 WL 2443714, Counsel Stack Legal Research, https://law.counselstack.com/opinion/oce-north-america-inc-v-mcs-services-inc-mdd-2011.