Magnetar Technologies Corp. v. Intamin Ltd.

Addressing antitrust issues in connection with a dismissed patent infringement lawsuit, the U. S. Court of Appeals for the Ninth Circuit affirmed a grant of summary judgment dismissing antitrust and malicious prosecution claims despite labeling the defendant-appellee’s purportedly anticompetitive behavior “problematic.” Magnetar Technologies Corp. v. Intamin Ltd., Case Nos. 13-56119, -56333 (9th Cir., Sept. 14, 2015) (Smith, J.).

Intamin builds and designs roller coaster rides. In 1994 Intamin agreed to build a new ride, called the “Hellevator,” for the Kentucky Kingdom amusement park. The Hellevator ride contract called for use of a mechanical brake system. However, Intamin had also started work on a new magnetic braking system at around the same time. Shortly after signing the contract with Kentucky Kingdom, Intamin informed Kentucky Kingdom that it was planning to use its new magnetic brake technology in the Hellevator ride. Intamin completed construction on the Hellevator in 1995, and the ride included the new magnetic braking system. In 1996, Intamin filed a patent application for its new magnetic brakes, and the application issued as a patent in 2001. Intamin then filed a patent infringement lawsuit against Magnetar, a company that also manufactures and distributes magnetic braking systems for use on roller coasters. The district court granted summary judgment of invalidity in Magnetar’s favor based on a statutory (on-sale) bar and dismissed the lawsuit.

After Intamin’s infringement suit was dismissed, Magnetar filed its own lawsuit against Intamin. According to Magnetar, Intamin violated the Sherman Act by using a fraudulently obtained patent to establish a monopoly in the market for magnetic braking systems. Magnetar also claimed that Intamin maliciously prosecuted the patent infringement action, because Intamin brought the action despite knowing that the patent was invalid pursuant to the on-sale bar. Intamin moved for summary judgment, and the district court granted Intamin’s motion for both claims. With respect to the antitrust claim, the district court concluded that Magnetar’s theory of antitrust injury was unreliable and speculative, and that Magnetar had offered insufficient evidence to prove an antitrust injury. The district court also concluded that a legitimate dispute existed with respect to the applicability of the on-sale bar, and therefore Intamin had probable cause to bring its patent infringement action. Magnetar appealed to the 9th Circuit.

With respect to the malicious prosecution claim, the 9th Circuit concluded that a reasonable attorney could have thought that Intamin’s claim in the first proceeding was tenable. Specifically, the court noted that the original 1994 contract between Intamin and Kentucky Kingdom called for mechanical breaks, and that the subsequent communications between Intamin and Kentucky Kingdom did not rise to the level of an “offer for sale,” as required to render the patent invalid under 35 U.S.C. § 102(b).

As for the antitrust claims, the 9th Circuit found Intamin’s conduct to be “problematic,” but found that Magnetar had not alleged sufficient facts to show a causal antitrust injury stemming from Intamin’s actions. The court criticized the expert opinions offered by Magnetar as conclusory and found that the expert did not take into account factors that might have come to bear on the damages estimates that were not caused by Intamin’s conduct. The 9th Circuit also explained that, even if Magnetar’s expert could correctly establish Magnetar’s damages, the expert failed to establish how those losses could be reasonably linked to Intamin’s allegedly anticompetitive conduct.