Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Water-bottle filing station developer's attempted monopolization claims washed up, (Feb 25, 2015)

By Jeffrey May, J.D.

In a dispute between developers of outdoor water-bottle filling stations, the federal district court in Chicago has dismissed the Sherman Act, Section 2 claims of the now-defunct, defending developer, which were based on the plaintiff's patent practices. The defending developer failed to adequately allege that the plaintiff had a dangerous probability of achieving monopoly power for purposes of fraudulent patent procurement and bad faith enforcement counts. Moreover, claims of sham litigation were immune from attack under the Noerr-Pennington doctrine (GlobalTap, LLC v. SmartTap, LLC, February 24, 2015, Pallmeyer, R.).

GlobalTap, LLC sued SmartTap, LLC for allegedly stealing GlobalTap's concept and design for a bottle filling product after a relationship between the companies soured. SmartTap, contending that it was driven out of business by GlobalTap's lawsuit and misrepresentations to SmartTap customers, filed antitrust counterclaims against GlobalTap and a third-party antitrust complaint against the company's founder.

The court has now granted dismissal of the antitrust claims against GlobalTap and its founder. A state-law claim of tortious interference with its prospective economic advantage was, however, permitted to proceed. GlobalTap's remaining claims against SmartTap for trade secret misappropriation and trade dress infringement were not at issue.

Patent procurement, enforcement. SmartTap asserted two theories of attempted monopolization: (1) fraudulent procurement of a patent and (2) bad faith enforcement of that patent. However, SmartTap's allegations did not plausibly establish a dangerous probability of monopolization, the court decided. SmartTap made only conclusory statements about GlobalTap's exclusionary power within a proposed relevant market defined as the U.S. market for outdoor water bottle filling stations. Moreover, the court rejected SmartTap's suggestion that GlobalTap's patent by itself supported a finding of market power. SmartTap did not allege that GlobalTap's design patent precluded other manufacturers from entering the market. The complaint also lacked information regarding GlobalTap's market share, GlobalTap's ability to control prices, and barriers to entry in the market. The fact that SmartTap itself had been injured did not satisfy the requirement that SmartTap plead the actual or threatened possession of monopoly power, the court also noted.

Sham litigation. Claims that GlobalTap and its founder pursued litigation to drive SmartTap out of business also were rejected. SmartTap did not plead facts to support the conclusion that the litigation was objectively baseless and, therefore, within the “sham litigation” exception to Noerr-Pennington immunity for litigation activities. In fact, the court concluded that, while the validity of patent and other claims might have been questionable at the time of filing, GlobalTap's trade secret claim was not objectively baseless in light of “allegations that could lead a reasonable litigant to believe a trade secret claim had a chance to succeed.”

The case is No. 13 C 5322.

Attorneys: Peter A. Cantwell (Cantwell & Cantwell) for GlobalTap LLC. Earnest Jason Burke (Faegre Baker Daniels LLP) for Smart Tap LLC.

Companies: GlobalTap LLC; Smart Tap LLC

Cases: Antitrust IllinoisNews