Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Mich.: Software training school operator’s antitrust counterclaim against software developer fails, (Dec 5, 2014)

By Linda O’Brien, J.D., LL.M.

In an action by a French computer software developer against an operator of a software training school for copyright and trademark infringement, the school operator was unable to state an antitrust counterclaim against the developer for allegedly filing sham litigation, the federal district court in Port Huron, Michigan has ruled (Dassault Systemes, S.A. v. Childress, December 3, 2014, Zatkoff, L.).

French corporation Dassault Systemes is a developer of a computer software design program known as CATIA. Dassault has held a registered trademark with the U.S. Patent and Trademark Office (USPTO) on its CATIA software in certain classes since 1984. CATIA software requires a license and target ID to execute the software on a computer. Until 2005, all sales of CATIA licenses in the United States were handled by IBM or its network of business partners. Keith Childress, a design engineer, began operating a school in the metropolitan Detroit area and provided instruction in the use of CATIA software.

In 2001, Childress bought one CATIA V5 license and was assigned a corresponding target ID for that license. Under a business arrangement with an IBM business partner, Childress’s school and students were supplied with CATIA software and temporary licenses. In 2005, Dassault began to offer CATIA training and took over CATIA licensing responsibilities from IBM. The company required schools, such as Childress’ school to join its education training program in order to receive CATIA licenses with which to train students.

In 2009, Dassault filed a complaint against Childress, alleging that by cloning its software and target IDs onto 20 computers, he infringed on Dassault’s copyright on the CATIA software, engaged in unfair competition, infringed Dassault’s trademark rights, and violated the state consumer protection statute. Childress responded by filing several counterclaims, including allegations that the plaintiff’s lawsuit against the school was sham litigation in violation of Section 2 of the Sherman Act. Dassault moved for dismissal of the counterclaims.

The court determined that Dassault has a reasonable basis for bringing its copyright and trademark infringement lawsuit. In order to show that a lawsuit constitutes “sham litigation,” a plaintiff must establish that the lawsuit was objectively baseless and concealed an attempt to directly interfere with the business relationships of a competitor. In this case, Childress did not allege that the plaintiff had a specific intent to monopolize or had a dangerous probability of achieving monopoly power. Moreover, he failed to allege how the plaintiff engaged in the willful acquisition or use of that power by anticompetitive means or for anticompetitive purposes.

The defendant’s allegations that Dassault filed its lawsuit or enforced its CATIA registration with the USPTO were insufficient to support a claim for a Sherman Act violation. The plaintiff had a legal right to file and prosecute the lawsuit, and to enforce its registered CATIA trademark, according to the court. Thus, dismissal of the Sherman Act counterclaim was warranted.

The case is No. 09-10534.

Attorneys: Douglas P. LaLone (Rader, Fishman & Grauer PLLC) for Dassault Systemes, SA. Keith Childress, pro se.

Companies: Dassault Systemes, SA

Cases: Antitrust MichiganNews