Antitrust Law Daily Developers of RFID ski gate system unable to pursue antitrust claims against market incumbents
Monday, November 4, 2019

Developers of RFID ski gate system unable to pursue antitrust claims against market incumbents

By Jeffrey May, J.D.

Aspen Skiing does not save claims over rejection of new ski lift management technology.

In a dispute between companies that provide the technology used by ski resorts to ensure that access to ski slopes is restricted to valid resort ticket holders, the U.S. Court of Appeals in New York City has upheld dismissal of antitrust claims brought by developers of a new gate-scanning product that was incompatible with the existing software of the two leaders in the ski resort management software market—Siriusware, Inc. and Active Network, LLC. Claims under Secs. 1 and 2 of the Sherman Act were properly dismissed (Charych v. Siriusware, Inc., November 4, 2019, per curiam).

The plaintiffs developed a Radio Frequency Identification (RFID) ski gate system that, they claimed, offered superior features and a lower price point than the existing systems marketed by defendants Axess AG and Skidata, Inc. The plaintiffs contended that they were unable to market their system due to an unwillingness by Accesso Technology Group, PLC, along with its subsidiary Siriusware, and Active Network to render their existing systems compatible for integration of the plaintiffs’ products or to provide interface information to allow plaintiffs to effect such integration. Active Network had already partnered with the Skidata defendants to offer these products to its ski resort customers, and Accesso Technology had made joint efforts with the Axess defendants to provide a unified RFID solution to their customers.

A magistrate judge recommended dismissal, and judgment was entered in favor of the defendants by the federal district court in Central Islip, New York. The appellate court agreed that the plaintiffs failed to state a claim under the Sherman Act.

The appellate court explained that the relevant technology used by the ski resorts required two components: (1) management software and (2) an RFID gate scanning product. Every ski resort that used Skidata’s gate products also used Active’s management software, and every ski resort that used Axess’s gate products used Siriusware’s management software. The plaintiffs’ product was incompatible with Active’s and Siriusware’s existing software, and potential ski resort customers stopped considering the plaintiffs’ product after being told by their respective software management company that developing such an interface would be costly.

For purposes of the Sherman Act, Sec. 2 claim, the defendants’ purported conduct was not anticompetitive because the complaint merely alleged that defendants were "simply unwilling to bear the costs of developing an interface without reimbursement," the appellate court explained. The narrow exception, enunciated in Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985), to the general rule that a private business is free to exercise its own independent discretion as to parties with whom it will deal did not apply. "Unlike in Aspen Skiing, there was no allegation here that defendants voluntarily withheld a service they were already providing, or could easily have provided, absent substantial time and cost," the court noted.

Tying claim. The appellate court also rejected a claim that the software companies engaged in tying in violation of Sec. 2 by conditioning the sale of their product on customers also purchasing the gate products of other defendants. While Active and Siriusware indisputably recommended the products of other defendants to ski resorts, there was no allegation that either company ever refused to sell to a ski resort unless it also purchased the product of another defendant.

Conspiracy claim. As for the Sec. 1 claim, the "implied" vertical agreements that the plaintiffs alleged were insufficient to demonstrate a conspiracy, and the plaintiffs failed to exclude the possibility that the alleged actions by Siriusware and Active represented independent business actions. Further, the nature of the product at issue supported the district court’s conclusion that defendants’ agreements represented rational business decisions and not anticompetitive conduct. The court pointed out that Siriusware’s and Active’s preference for working with vendors whose gate products were compatible with their software was easily explained by a desire to provide a workable product and satisfy customers.

The case is No. 18-3191-cv.

Attorneys: Robert G. Leino (Robert G. Leino, Attorney at Law) for Harold Charych and Mountain Pass Systems, LLC. Gaspare J. Bono and John W. Lomas, Jr. (Dentons US LLP) for Siriusware, Inc. and Accesso Technology Group, PLC. Matthew Solum (Kirkland & Ellis, LLP) for Active Network, LLC f/k/a Resort Technology Partners, LLC and Vista Equity Partners, LLC. Daniel L. Brown (Sheppard, Mullin, Richter & Hampton LLP) and Natalie C. Segall (Segall & Banko) for Axess North America, LLC and Axess International, AG. Douglas F. Broder (K&L Gates LLP) and Anthony P. Badaracco (Dorsey & Whitney LLP) for Skidata, Inc. and Skidata AG.

Companies: Mountain Pass Systems, LLC; Siriusware, Inc.; Accesso Technology Group, PLC; Active Network, LLC f/k/a Resort Technology Partners, LLC; Vista Equity Partners, LLC; Axess North America, LLC; Axess International, AG; Skidata, Inc.; Skidata AG

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