Antitrust Law Daily Wrap Up, ANTITRUST—D. Md.: Temperature therapy products maker fails to state Sherman Act claims against competitor, (Sep 29, 2014)

By Linda O’Brien, J.D., LL.M.

In an action by a manufacturer of hot and cold temperature therapy products against a competitor for allegedly filing sham litigation to eliminate competition, the manufacturer failed to adequately allege a relevant product market to pursue its Sherman Act claims, the federal district court in Baltimore has decided (Therapearl, LLC v. Rapid Aid Ltd., September 25, 2014, Blake, C.).

Background. Therapearl and Canada-based Rapid Aid both manufacture and market hot and cold therapy products which consist of packs that can be heated or cooled to provide hot or cold temperature therapy. In 2012, Therapearl agreed to provide Shoppers Drug Mart, a large drug store chain in Canada, with Therapearl branded and private label products supplied by Therapearl. Rapid Aid filed suit against Therapearl in Canada, asserting Therapearl’s use of the words “patent pending” on its products was unlawful since Therapearl had no Canadian patent pending. Subsequently, Shoppers suspended its private label agreement with Therapearl.

While the Canadian litigation was ongoing, Therapearl filed suit against Rapid Aid, alleging violations of Section 2 of the Sherman Act, among other claims. Therapearl alleged that Rapid Aid’s Canadian suit was filed to eliminate Therapearl as a competitor. Rapid Aid moved to dismiss the complaint.

Product market. The court determined that Therpearl failed to adequately allege a product market. To maintain a claim under Section 2 of the Sherman Act, a plaintiff must allege the product market subject to monopoly power or at risk of being monopolized. Although Therapearl made conclusory allegations that the relevant market consisted of hot and cold therapy packs, Therapearl failed to allege that Rapid Aid acted to limit availability of its hot and cold therapy packs at Shoppers or any other outlet, or that Shoppers cased carrying Therapearl brand products after Rapid Aid filed the Canadian suit, according to the court.

Additionally, Therapearl failed to plausibly explain why the relevant market should be limited to hot and cold therapy packs and exclude potential substitute products. Since Therapearl made no allegations concerning the “reasonable interchangeability of use or the cross-elasticity of demand between hot and cold therapy packs and substitutes for it,” its failure to define the proposed relevant market justified dismissal, the court concluded.

The case is No. 1:13-cv-02792-CCB.

Attorneys: Matthew Aaron Pequignot (Pequignot and Myers LLC) for Therapearl, LLC. Donald W. Hawthorne (Axinn Veltrop and Harkrider LLP) for Rapid Aid Ltd.

Companies: Therapearl, LLC; Rapid Aid Ltd.

Cases: Antitrust MarylandNews