Background
Align Technology makes Invisalign clear aligners and the iTero intraoral scanner. In 2015, Align agreed to make Invisalign interoperable with 3Shape’s competing TRIOS scanner, an open system capable of ordering aligners from multiple manufacturers. Align terminated U.S. interoperability in 2017, shortly after suing 3Shape for patent infringement and as important Invisalign patents approached expiration, but continued accepting TRIOS scans outside the United States and maintained interoperability agreements with other scanner makers.
Dental practices and individual Invisalign purchasers filed class actions alleging that Align sought to monopolize the aligner and scanner markets through the 3Shape termination, a program bundling Invisalign and iTero, and exclusive contracts. The district court granted Align summary judgment, reasoning that terminating interoperability was based at least partly on the legitimate objective of strengthening Align’s position in its patent litigation against 3Shape.
The Court’s Holding
The Ninth Circuit reversed and remanded. It clarified that a Section 2 refusal-to-deal claim follows a three-step framework: the plaintiff must establish a prima facie case of anticompetitive conduct; the defendant may offer a procompetitive, nonpretextual business justification; and the plaintiff may rebut that justification by showing it is not legitimately procompetitive or is pretextual. If the plaintiff cannot rebut it, the plaintiff must show that the conduct’s anticompetitive harm outweighs its procompetitive benefit.
The panel held that the plaintiffs established a prima facie case because Align ended a voluntary and profitable course of dealing, sacrificed retail-price Invisalign sales through TRIOS, and singled out 3Shape while continuing comparable arrangements with others. Although Align met its burden by invoking its patent-litigation strategy, the plaintiffs produced enough expert and circumstantial evidence for a jury to find that terminating interoperability weakened rather than strengthened Align’s patent position and that the patent rationale was pretextual. Internal statements—including that cutting off 3Shape “really worked” and eliminated “primary competition”—also supported a triable inference of anticompetitive motive.
The court further held that Align impliedly waived attorney-client privilege by relying on its CEO’s testimony that patent-enforcement concerns drove the termination while withholding the related legal advice. If Align continues relying on that testimony on remand, the district court should reopen discovery and order production within the waiver’s scope. The panel left the district court to determine which broader anticompetitive-scheme claims were preserved. Judge Miller concurred only in the judgment, agreeing that pretext presented a factual dispute but rejecting the majority’s rule-of-reason balancing standard for refusal-to-deal claims.
Key Takeaways
- A Section 2 refusal-to-deal plaintiff may rebut a defendant’s business justification by showing either that it does not legitimately promote competition or that it is pretextual.
- If the justification is not rebutted, the Ninth Circuit permits proof that the refusal’s anticompetitive harm outweighs its procompetitive benefit.
- A party cannot rely on an executive’s account of privileged legal advice to establish its business justification while using attorney-client privilege to prevent examination of that advice.
Why It Matters
The decision clarifies the Ninth Circuit’s framework for the narrow category of monopolization claims based on a refusal to deal and confirms that a defendant does not automatically prevail merely by identifying one arguably legitimate reason for its conduct. Evidence challenging the reason’s competitive value or authenticity can require a trial.
The ruling also creates a significant disagreement within the panel over whether courts may balance competitive harms and benefits after a defendant establishes a genuine procompetitive justification. That issue may affect technology companies and other dominant firms whose products depend on interoperability with competitors.