Health Law Daily Wrap Up, ANTITRUST—9th Cir.: Stipulated judgment entered on faulty jury instruction reversed because Kodak/Epic factors were inapplicable, (Aug 17, 2026)

By Justin Marcus Smith, J.D.

The case presented a standard foremarket/aftermarket tying claim without any need to explore competition in the foremarket based on Kodak/Epic factors because there was no competition in the foremarket.

A Sherman Act case about alleged tying in a surgical robot derivative product aftermarket did not require any exception to the usual antitrust analysis, held a panel of the U.S. Court of Appeals for the Ninth Circuit. The panel accordingly reversed a stipulated judgment entered in favor of the da Vinci robot defendant, where the conceded judgment was an artifact of a faulty jury instruction. Contrary to the jury instruction, the antitrust plaintiff did not need to prove the Kodak/Epic factors. Tying of foremarket equipment to aftermarket derivatives violates the antitrust laws when the manufacturer has monopoly power in the equipment foremarket. In the instant matter, the plaintiff presented evidence at trial that the da Vinci robot defendant had 100% market share in the foremarket. Application of the Kodak/Epic factors to deal with questions about competition in the foremarket did not make sense if there was no competition in the foremarket. The court also found the trial evidence was sufficient for a jury to decide whether or not the da Vinci robot defendant had an illusory process for approving third-party aftermarket products and services. The court reversed judgment and remanded (Surgical Instrument Service Company, Inc. v. Intuitive Surgical, Inc., No. 25-1372 (9th Cir. Aug. 13, 2026)).

Background. Plaintiff Surgical Instrument Service Company, Inc (SIS), an Illinois-based servicer of surgical instruments and equipment, alleged that defendant Intuitive Surgical, Inc. (Intuitive), the maker of the da Vinci surgical robot, leveraged monopoly power and anti-competitive agreements to stop third parties from competing in the aftermarket. SIS said Intuitive wanted to maintain supracompetitive pricing arrangements in the aftermarket. SIS claimed violations of Sherman Act prohibitions on monopoly, attempted monopoly, exclusive dealing and tying, and violation of the Lanham Act.

The SIS complaint withstood an Intuitive motion to dismiss in late 2021. In denying dismissal, the federal district court in San Francisco held that SIS adequately alleged violations of the Sherman Act by identifying a relevant market for refurbished services. The court found it plausible that Intuitive used monopoly power to forbid health care providers from purchasing refurbishment services from other suppliers. The court also held the Food, Drug, and Cosmetic Act (FDCA) did not preclude the Lanham Act unfair competition claim.

The parties went to trial in January, 2025. SIS introduced evidence that Intuitive had more than 99% market share in a foremarket for surgical robots used in minimally invasive soft-tissue (MIST) surgery. SIS also introduced evidence that Intuitive had 100% market share in an aftermarket for robot attachment instruments used in such surgeries. The SIS theory of liability at this point was that Intuitive leveraged its market power in the foremarket to harm competition in the aftermarket for robot attachment instruments. The district court instructed the jury that SIS needed to prove the Kodak/Epic factors to establish the proposed aftermarket as a valid antitrust market. See Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992), Epic Games, Inc. v. Apple, Inc., 67 F.4th 946 (9th Cir. 2023).

After SIS concluded its case-in-chief, Intuitive moved for Fed. R. Civ. P. 50(a) judgment as a matter of law (JMOL) on the basis that SIS failed to present evidence of the Kodak/Epic factors. The district court denied the motion, but as the end of trial approached, the district court “issued several conflicting rulings on whether to include the Kodak/Epic factors in the final jury instructions.”

After the close of evidence, Intuitive renewed its JMOL motion. The district court denied the motion. It also stated it would “leave in Instruction Number 7,” but it later issued a “Final Jury Charge” that omitted it. Intuitive objected, and the district court issued another order tentatively sustaining the objection and stating its intention to include Instruction No. 7.

At length, SIS conceded it did not have enough evidence to prove the Kodak/Epic factors and stipulated to entry of judgment for Intuitive; however, SIS appealed on the ground that the jury instruction was erroneous. In the alternative, Intuitive argued in this appeal that it was entitled to JMOL based on the insufficiency of the trial evidence.

Applying abuse of discretion review to the civil jury instructions and de novo review to whether the challenged instruction correctly stated the law and the grant of judgment, the Ninth Circuit reversed.

Instruction challenge. The appeals court held that the district court erred in instructing the jury that SIS needed to prove the Kodak/Epic factors. The parties agreed that the rule-of-reason applied. Under the rule-of-reason, each SIS claim presented the same question: whether the challenged conduct had a substantial anticompetitive effect that harmed consumers in the relevant market. Defining the relevant market was the threshold step.

In this case, SIS alleged a tying arrangement, the use of market power in one product market to extend market power to a distinct product market. SIS also asserted a claim for exclusive dealing premised on a similar theory that Intuitive contractually required its da Vinci customers to buy EndoWrists exclusively from Intuitive. Alleged foreclosure of competition was common to both claims. SIS also asserted Sherman Act Section 2 claims for willful and attempted monopolization. Again, monopoly power was an element in common with the tying, exclusive dealing, and willful monopolization claims, albeit monopoly power was merely relevant to attempted monopolization.

As Kodak and subsequent decisions interpreting it have made clear, the Kodak/Epic factors only apply in cases where the plaintiff cannot show that the defendant has market power in the competitive foremarket and instead seeks to bring an antitrust claim alleging abuse of market power in a downstream, single-brand aftermarket. This is because the Kodak/Epic factors “clarify whether the competition and information available in the foremarket is sufficient to discipline anticompetitive conduct in the aftermarket.”

Trial evidence suggested there was essentially no competition in the instant Intuitive foremarket. SIS alleged and presented evidence at trial that Intuitive had essentially 100% market share in the foremarket for MIST surgical robots and used that to obtain and maintain 100% market share in the aftermarket for EndoWrists. Accordingly, the district court erred when it concluded SIS had to prove the Kodak/Epic factors.

The Ninth Circuit said the disputed jury instruction was based on a misconstrual of the case law as requiring proof of the Kodak/Epic factors “anytime” an antitrust plaintiff wants to define a single-brand aftermarket. The Supreme Court expressly confined Kodak to situations in which the defendant lacks market power in the primary equipment foremarket, and it also declined to consider the instant situation where the defendant has market power in the foremarket.

The Ninth Circuit said SIS brought a standard foremarket/aftermarket tying claim like the claim as in International Business Machines Corp. v. United States (IBM), 298 U.S. 131 (1936). As cases like IBM illustrated, the Ninth Circuit said antitrust market definition principles apply “without any need for proving the additional Kodak/Epic factors.” Aftermarkets are treated the same as every other separate market.

It does not make sense to require proof of the Kodak/Epic factors in the context of defendant market power in the foremarket, and this case showed why. The first Kodak/Epic factor requires the plaintiff to show that the challenged aftermarket restrictions are generally unknown when consumers make their foremarket purchase. In the instant matter, buyers had no meaningful foremarket alternatives. Knowledge of aftermarket restrictions made no difference. The second factor, significant information costs that prevent accurate life-cycle pricing, was likewise immaterial in the absence of any choice in the foremarket. The third factor, significant monetary or non-monetary switching costs, was “logically incoherent” in the instant context where there was no alternative for a switch.

Sufficiency of evidence. The Ninth Circuit panel rejected Intuitive’s alternative argument for affirming entry of judgment based on putative insufficiency of the trial evidence. Intuitive made two arguments. First, Intuitive said SIS failed to show Intuitive had market power before 2019. Second, Intuitive said SIS failed to show that the Intuitive process for approving third-party products and services was illusory.

The first Intuitive argument failed, first of all, because Intuitive waived the argument because the initial and renewed JMOL motions did not assert that SIS failed to prove Intuitive’s pre-2019 market power. Second, even without that waiver, the trial evidence formed a legally sufficient basis for a reasonable jury to find Intuitive had market power before SIS entered the market in 2019. Among other things, Intuitive’s own expert confirmed that Intuitive was the only firm selling MIST surgical robots in the U.S.

As to whether the Intuitive third party approval process was illusory, the parties disputed who would have the burden of proof. However, the burden did not matter because the Ninth Circuit held the evidence was sufficient to support a reasonable jury finding either way, that Intuitive either did or did not have a process for approving third-party services for EndoWrists such that any prospect of approval might be illusory. Intuitive relied on, among other things, evidence that it approved dozens of third party services for use with the da Vinci robot before 2020. SIS pointed to, among other things, testimony to the contrary. The Ninth Circuit said SIS had presented a “paradigm” fact question.

The Case is No. 25-1372.

Judge: Koh, L.

Attorneys: Edwina Bullard Clarke (Zimmer, Citron & Clarke, LLP) for Surgical Instrument Service Co., Inc. William Michael (Paul, Weiss, Rifkind, Wharton & Garrison, LLP) for Intuitive Surgical, Inc.

Companies: Surgical Instrument Service Co., Inc.; Intuitive Surgical, Inc.

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