The Eastern District of Virginia recently dismissed SawStop’s suit against a number of table-saw and power-tool manufacturers, finding SawStop failed to sufficiently plead its antitrust and “standards conspiracy” claims.
As you may recall from our February 7, 2014 post, SawStop’s complaint alleged that the manufacturers collectively convinced Underwriters Laboratories, Inc. (“UL”) not to adopt SawStop’s patented table-saw safety technology into its product-safety standards. SawStop had also entered into unsuccessful licensing negotiations with several manufacturers in the early 2000s, including Emerson, Ryobi, and Black & Decker. The complaint further alleged that SawStop suffered economic injury due to the alleged “standards conspiracy” among the defendant manufacturers. Several defendants filed motions to dismiss SawStop’s complaint in May 2014 and the Court granted these motions on July 15.
Lack of Competitive Harm
The Court found that the ”standards conspiracy” allegations were insufficient to support a claim and failed to allege a competitive harm suffered by SawStop. The Court noted that only five of the twenty-or-so defendants actually participated in the relevant standards-setting committee and that there were no allegations that the remaining defendants had any involvement in standards setting:
Nevertheless, Plaintiff lumps their allegations together against the Defendants, failing to state sufficient facts as to each defendant joining the conspiracy and their role within it… Even so, neither mere participation in a standards-setting body nor mere membership in a trade association is sufficient to state an antitrust conspiracy claim… Here, UL did not exclude “SawStop” technology from the market in any way; it merely declined to impose it upon the market.
(Emphasis added). The Court ruled that the manufacturers’ actions are not “per se unlawful” absent a showing of competitive harm. Relying on precedent that a “competitive harm” must harm the competitive process and thereby harm consumers, the Court found SawStop’s allegations insufficient to maintain a cause of action:
Plaintiffs’ allegations of competitive harm ultimately amount to lost sales and profits from UL failing to mandate its safety technology upon the market. This is insufficient in at least two respects: One, ”lost sales” do not amount to competitive harm because AIMT-product users were not “in some way constrained from buying [Plaintiffs'] products,” …and two, failing to mandate Plaintiffs’ proposed safety standard does not thereby harm their market access… The fact that UL safety standards permitted other safety technologies to compete with Plaintiffs’ does not give rise to an antitrust violation.
Permissible Self-Interest in SSO Participation
Addressing SawStop’s allegations that the saw manufacturers corrupted the standard-setting process, the Court found that although SawStop alleged defendants had participated in and dominated the UL standard setting process by voting down the SawStop patented technology, the complaint failed to allege that such participation was either undisclosed or otherwise impermissible. The Court further noted that standards participants need not consider public interests over their own interests when considering standards changes.
The Court also addressed SawStop’s allegation that some of the saw-manufacturers had created joint ventures for promoting new safety technologies to UL, which the Court found did not give rise to antitrust violation. The Court ruled “an antitrust violation is not composed of merely advocating for an industry standard that accords with one’s own economic interest” pointing out that SawStop itself “sought to mandate their technology throughout the table-saw industry and reap the royalties of such widely-imposed technology.”
Finding no support for an inference that defendants had entered into an agreement to boycott SawStop’s product or otherwise restrain trade, the Court dismissed SawStop’s complaint in its entirety.