By Linda O’Brien, J.D., LL.M.
Monopolizations claims brought by a small software company against a creator and seller of airport terminal charts were properly dismissed since the chart creator/seller had a valid business justification for its refusal to provide the developer its copyrighted proprietary products, which allow the integration of its terminal charts in third party systems, the U.S. Court of Appeals in Denver has ruled. Thus, the district court’s dismissal of the developer’s antitrust claims was affirmed (SolidFX v. Jeppesen Sanderson, Inc., October 31, 2016, McHugh, C.).
Jeppesen, a subsidiary of the Boeing Company, creates and sells terminal charts that graphically represent details of airports and their surroundings. The charts are used by pilots to navigate and land at a specific airport. SolidFX is a small software company that creates software applications to access, organize, and use critical data. In 2008, it began developing software to display Jeppesen’s charts on an e-book viewer manufactured by iRex Technologies. In 2009, the parties entered into a licensing agreement.
In January 2010, SolidFX requested Jeppesen’s copyrighted Jeppesen Integration Toolkits ("JIT") so that SolidFX could develop an application for the Apple iPad. Jeppesen refused to provide SolidFX the JIT necessary to develop an iPad app and instead created its own iPad app. Upon learning that Jeppensen had developed its own iPad app, SolidFX sued Jeppesen, alleging illegal tying and monopolization in violation of Sections 1 and 2 of the Sherman Act, as well as common law breach of contract and tort claims.
In March 2013, the federal district court in Denver granted partial summary judgment on the antitrust claims, but the remaining claims proceeded to trial. In April 2014, a jury found in favor of SolidFX and awarded damages in excess of $43 million. Jeppensen appealed, challenging the ruling that SolidFX could recover lost profits on its contract claims. SolidFX cross-appealed the summary judgment order on the monopolization claims.
Antitrust claims. The district court properly dismissed the plaintiff’s antitrust claims because Jeppensen had established a valid business justification for its refusal to deal with SolidFX. Although a business acting unilaterally generally can refuse to deal with its competitors, that right is not absolute and exists only if there are legitimate competitive reasons for the refusal, the appellate court explained.
This district court determined that Jeppensen had a legitimate business justification for its refusal to provide SolidFX with the necessary terminal charts and JIT to develop an iPad app and was properly exercising its right to refuse to license its copyrighted work. In the appellate court’s view, when SolidFX requested access to the JIT to create an iPad app, Jeppensen refused, asserting its copyrights and desire to maintain the exclusivity of those rights. Its invocation of intellectual property rights was a presumptively rational business justification.
Furthermore, SolidFX failed to present any rebuttal evidence to show that Jeppensen had acted solely with an anticompetitive motivation. Although Jeppensen refused to grant SolidFX access to the toolkits and the jury determined that Jeppensen had breached the license agreement by its refusal, Jeppensen did not have an independent antitrust duty to share its intellectual property with SolidFX, the appellate court found.
Lost profits. In vacating the jury verdict that awarded damages for lost profits and lost business value, the appellate court concluded that the license agreement unambiguously excluded the recovery of lost profits, irrespective of whether they were direct or consequential damages. Even if the agreement could be read to allow for the recovery of direct lost profits, the lost profits awarded by the jury were consequential damages and therefore not recoverable.
The cases are Nos. 15-1079 and 15-1097.
Attorneys: Shannon Wells Stevenson (Davis Graham & Stubbs LLP) for SolidFX, LLC. Craig S. Primis (Kirkland & Ellis LLP) for Jeppesen Sanderson, Inc.
Companies: SolidFX, LLC; Jeppesen Sanderson, Inc.
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