Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Microsoft shakes antitrust, unfair competition claims over 3D camera, (Aug 28, 2014)

By Greg Hammond, J.D.

Antonio Medina—the owner of a three dimensional camera and range finder patent—was unable to make anticompetitive and unfair practices claims stick against software company Microsoft Corporation. In dismissing Medina’s Sherman Act, California Cartwright Act, California Unfair Competition Law (UCL), and California Unfair Practices Act (UPA) claims, the federal district court in San Francisco determined that the pro se patent holder failed to state a claim upon which relief could be granted (Medina v. Microsoft Corp., August 25, 2014, Seeborg, R.).

Background. In January 1992, Medina obtained a patent for his invention of a 3D camera and range finder. He also established Multivision Research, a company focused on the development, manufacture, and sale of the patented camera and range finder. Medina alleged that, in 2008, defendant 3DV Systems, Inc. began making and selling devices that infringed on his patent and, after various negotiations, sold the infringing products to Microsoft. Consequently, Medina contacted Microsoft regarding the software company’s infringement on his patent, but was told that the technology did not fit in Microsoft’s current business needs. Microsoft subsequently sold its 3D camera at what Medina called a “subsidized, below cost price,” and “destroyed Multivision’s competition and impeded commercialization and sale of Dr. Medina’s 3D camera.” After Multivision went out of business, Medina filed suit, alleging: (1) patent infringement; (2) violations of the Sherman Act and UCL; and (3) violations of the UPA. Microsoft moved to dismiss Medina’s second amended complaint with regard to the Sherman Act, UCL, and UPA claims.

Unfair competition, antitrust. In support of his UCL claims, Medina alleged that Microsoft and 3DV “unfairly, unreasonably and unlawfully” conspired to mislead him and impede competition in the 3D camera market by eliminating Multivision as a competitor. In addition, to satisfy the “unlawful” prong of the UCL—which requires a predicate violation of some other law, Medina alleged that the defendants conspired to restrain trade and posed a unilateral threat of monopolization in violation of the Sherman Act and the Cartwright Act.

The court did not find either argument persuasive. Specifically, with regard to the conspiracy to restrain trade argument, the court determined that Medina failed to allege facts sufficient to support a theory that the defendants formed an actual conspiracy, as there were no allegations of a “joint undertaking,” a “meeting of the minds,” or of any unlawful collusion among the defendants. The threat of monopolization claim was also found to be vague and conclusory, as (1) assertions that Microsoft sold its 3D camera below cost and later to Xbox One for an overall profit after acquiring two other 3-D camera companies, without more, was insufficient to support an inference that Microsoft “threatens actual monopolization” of the 3D camera market under the “unlawful” prong of the UCL; (2) Medina failed to demonstrate “substantial” consumer injury under the “unfair” prong of the UCL; and (3) he alleged no facts to support a claim for fraudulent conduct under the UCL. Consequently, his unfair competition claims under the UCL and the Sherman Act were dismissed with prejudice.

The UPA claim was also dismissed for failure to allege “sales price, costs in the product, and cost of doing business,” as required under the statute. However, he was granted leave to amend the UPA claim.

The case number is C 14-0143 RS.

Attorneys: Antonio Medina, pro se. Judith Bond Jennison (Perkins Coie, LLP) for Microsoft Corp.

Companies: Microsoft Corp.; 3DV Systems, Inc.

Cases: Antitrust CaliforniaNews