[00:00:00] Speaker 03: Good morning, Your Honor. [00:00:02] Speaker 03: I represent appellants, in particular the direct purchaser dentists, and my co-counsel, Mr. Pierce, represents the indirect purchasers. [00:00:10] Speaker 03: So this is an appeal from summary judgment granted for the defendant aligned on a Section 2 antitrust claim. [00:00:18] Speaker 03: The trial court, to be clear, reached a conclusion we believe correct, that plaintiffs had provided prima facie evidence sufficient to get to a jury [00:00:30] Speaker 03: that Align cut off dentists from ordering Invisalign aligners through three-shape scanners, and in so doing that Align suffered a short-term loss, the sales of tens of millions of dollars of Invisalign, as well as the loss of Goodwill of dentists, and then long-term gain. [00:00:51] Speaker 03: long-term gained hundreds of millions of dollars of overcharges that it was able to impose on its products as a result of the refusal to deal. [00:01:01] Speaker 03: Where the trial court ruled against us was based on a justification for the refusal to deal that the defendant, Aline, put forward. [00:01:11] Speaker 03: And that justification, the only one it ruled on and that Aline raises on appeal in defense of summary judgment, is that Aline was motivated [00:01:21] Speaker 03: to protect Align's scanner patent rights against three-shape and patent litigation. [00:01:27] Speaker 03: And I want to focus on one primary flaw and two legal consequences of that primary flaw on appeal. [00:01:34] Speaker 03: The primary flaw is that all of the expert evidence, all of it, cuts against Align's position that the refusal to deal strengthened its position in the scanner patent litigation. [00:01:50] Speaker 03: This is not [00:01:51] Speaker 03: a battle of the experts. [00:01:53] Speaker 03: This is a very, very unusual situation in which the experts agree in a way that favors plaintiffs on key issues, and then on the remaining key issues, plaintiffs put forward expert opinion on patent law that supports their position, and defendant's expert, Mr. Stoll, declined to opine on the very issue that he deemed he identified as relevant. [00:02:16] Speaker 02: But before you get further into the facts of this case, could you outline for us your view of what the legal rule is where you have a defendant that refuses to deal in part for anti-competitive reasons and in part for some legitimate business justification? [00:02:36] Speaker 02: How should we analyze that? [00:02:38] Speaker 03: Sure. [00:02:39] Speaker 03: And this was a source of some confusion below. [00:02:42] Speaker 03: Thank you for the opportunity to clarify. [00:02:44] Speaker 03: So two pieces here. [00:02:45] Speaker 03: One is, it is not sufficient that a defendant has a non-pretextual justification for its refusal to deal. [00:02:54] Speaker 03: That justification also must be pro-competitive. [00:02:57] Speaker 03: It could have a sincere but non-pro-competitive justification that is fatal to its position, and that's true under Qualcomm, it's true under the Supreme Court and Ninth Circuit's opinions in Eastman Kodak. [00:03:08] Speaker 03: For a justification for a refusal to deal to succeed, like other Section 2 justifications, it actually has to be [00:03:15] Speaker 03: pro-competitive, and that comes out of two steps in the analysis. [00:03:18] Speaker 03: The first step, which we're bracketing for the moment, is plaintiffs must show anti-competitive effects. [00:03:23] Speaker 03: The trial court said we did that. [00:03:25] Speaker 03: The defendant then must offer a non-pretextual pro-competitive justification, and then in the third stage, plaintiff has to show that the anti-competitive effects outweigh the pro-competitive effects. [00:03:36] Speaker 03: If a defendant does not show pro-competitive effects, and this evidence establishes that a line [00:03:41] Speaker 03: fails, or at least there's a genuine dispute of material fact about any pro-competitive effects, it follows that the justification is inadequate and that in the third step that the anti-competitive effects must outweigh nothing, the pro-competitive effects for which there is no proof on the table. [00:04:00] Speaker 02: Can you clarify what is the metric that we use to evaluate? [00:04:06] Speaker 02: which effect is bigger than the other? [00:04:08] Speaker 03: Yes, that is a very hard question that the court need not address in this case. [00:04:12] Speaker 02: Well, we might need to address it because if it doesn't have a good answer, that might be a reason to think that a rule that requires us to do that is a bad rule. [00:04:25] Speaker 03: So in some instances, I think that these effects are quantifiable. [00:04:31] Speaker 03: And when they are, that's relatively easy. [00:04:33] Speaker 03: For example, in our case, we showed hundreds of millions of dollars. [00:04:36] Speaker 03: We have evidence of hundreds of millions of dollars of overcharges. [00:04:41] Speaker 03: Here, because there's no evidence of a pro-competitive effect, no evidence that aligns refusal to deal with three shapes strengthened its scanner patent rights, the evidence is it actually hurt aligned scanner patent rights, [00:04:54] Speaker 03: That's a very easy weighing. [00:04:57] Speaker 03: It is the law generally that weighing is what takes place in the third step. [00:05:02] Speaker 03: That's what the Ninth Circuit said in Qualcomm. [00:05:05] Speaker 03: I think that in some cases these numbers are indeed quantifiable. [00:05:09] Speaker 01: Who makes that decision? [00:05:11] Speaker 03: So I would say it's the ordinary summary judgment standard applies. [00:05:16] Speaker 01: Let's say you've raised at least a genuine tribal issue of fact maybe on the justification. [00:05:24] Speaker 01: Then it goes to the jury. [00:05:25] Speaker 01: And so the judge instructs the jury that they need to balance? [00:05:31] Speaker 03: Yes. [00:05:32] Speaker 03: That's what the court should do. [00:05:34] Speaker 03: That we have the Seventh Amendment. [00:05:36] Speaker 03: Even in antitrust cases, there's a right to trial by jury. [00:05:39] Speaker 03: And so among one of many challenging issues in an antitrust case, it goes to the jury to assess whether the pro-competitive justifications outweigh the anti-competitive effects or vice versa. [00:05:51] Speaker 03: I do want to emphasize on the second point, though, the justification does at least have to be pro-competitive. [00:05:57] Speaker 03: And there, too, there is evidence sufficient for us to say that a line should not have won summary judgment on that issue, but that at least should have gone to the jury. [00:06:07] Speaker 03: And that's much more straightforward. [00:06:09] Speaker 03: It doesn't require the kind of nuance that balancing does. [00:06:14] Speaker 03: The second thing I would say in terms of the failures that result. [00:06:19] Speaker 03: So I do want to actually, Your Honor, I think I didn't fully respond. [00:06:21] Speaker 03: There is another issue that's raised about mixed motive versus pure motive. [00:06:26] Speaker 03: I think the court below conflated two separate issues, among others. [00:06:33] Speaker 03: What we conceded to the court below was that, for purposes of summary judgment, a mixed motive is sufficient for a line to show non-pretext. [00:06:46] Speaker 03: What we did not concede, and in fact, in our briefs, and I can cite the record, and in oral argument, [00:06:50] Speaker 03: we asserted the opposite was that non-pretext, we said, is not enough by itself, the justification also has to be pro-competitive. [00:06:58] Speaker 03: And because in this case, all of the evidence shows that a line actually hurt [00:07:04] Speaker 03: its scanner patent rights through its refusal to deal. [00:07:07] Speaker 03: Summary judgment should have been denied on that basis and the court did not address that issue below. [00:07:13] Speaker 03: So I think that's a more complete answer. [00:07:15] Speaker 02: So your view, and correct me if I have this wrong, your view is that there has to be a non-pretextual business justification that is pro-competitive [00:07:28] Speaker 02: And once they've presented that, then the trier effect is supposed to weigh whether that effect dominates over the anti-competitive effects. [00:07:36] Speaker 03: And that's what Qualcomm said in a refusal to deal case, I believe, at page 991. [00:07:40] Speaker 03: And this is a consistent view, especially at least with that second piece, with the Supreme Court's decision in Eastman Kodak, where it rejected one potential pro-competitive justification. [00:07:52] Speaker 03: There were three put forward. [00:07:54] Speaker 03: Two, it said the evidence was mixed. [00:07:57] Speaker 03: the jury had to decide whether the justification was nonpretextual, but the third, the free-riding justification, the court said that's not pro-competitive in this context and therefore not legally cognizable. [00:08:08] Speaker 03: And that's here as a matter of evidence rather than as a matter of law is true as well, because here all of the evidence shows that the experts agreed on all material points or their experts refrained from opining [00:08:24] Speaker 03: about the effects of the refusal to deal on a liner scan or patent rights. [00:08:29] Speaker 03: Did you want to reserve? [00:08:31] Speaker 03: I do. [00:08:31] Speaker 03: I would like to reserve the remaining time. [00:08:33] Speaker 03: Thank you very much. [00:08:45] Speaker 02: Mr. Pierce. [00:08:46] Speaker 05: Good morning, Your Honors. [00:08:47] Speaker 05: Rio Pierce on behalf of the Snow Appellants. [00:08:50] Speaker 05: I want to deny limited time to briefly touch on two additional grounds for reversal [00:08:54] Speaker 05: The first is that the District Court acknowledged specifically that there was abundant evidence in the record that a line's refusal to deal was motivated by, at least in part, by anti-competitive malice and that represented a short-term profit sacrifice. [00:09:07] Speaker 05: As the Supreme Court recognized in Trinco, those are hallmarks of what makes refusal to deal anti-competitive. [00:09:13] Speaker 05: One error of the District Court was that it refused to consider the refusal to deal as part of the overall Section 2 claim that was alleged, which was a scheme, a course of conduct to monopolize the market. [00:09:24] Speaker 05: in a long line of Supreme Court cases, including Continental Ore and SWIFT, talk about when you have a conspiracy, when you have an antitrust claim, you have to look at the overall course of conduct. [00:09:34] Speaker 05: That's specifically what this Court said in City of Anaheim as well. [00:09:37] Speaker 05: It is not proper to focus on specific individual acts while ignoring their overall combined effect. [00:09:42] Speaker 05: So in addition to the refusal to deal, which has hallmarks of the kind of refusal to deal that are exclusionary, you also have bundling, where the snow plaintiffs [00:09:50] Speaker 05: presented specific evidence that the aligns fusion bundle resulted in below variable cost pricing, which in Cascade Health, this court specifically talked about, can exclude rivals who can't match the discounts. [00:10:04] Speaker 05: And you have even qualitative evidence in the record from aligned CEO talking about how they're going to crank up the bundling after their rival was harmed by the termination of interoperability because their rival can't match the bundle discount. [00:10:17] Speaker 05: So again, that's [00:10:18] Speaker 05: Classic example of where a bundle discount can be exclusionary. [00:10:22] Speaker 02: Did you preserve a bundling claim as a distinct claim? [00:10:26] Speaker 05: Well, we never have had a separate bundling claim. [00:10:28] Speaker 05: We've always had a single section two claim where we've always said there were multiple types of anti-competitive conduct part of the claim. [00:10:35] Speaker 02: And how do we, or I guess the district court, how is it supposed to evaluate that? [00:10:39] Speaker 02: I mean, if you have a, if you've met the elements of a refusal to deal claim, then you would win on that, I suppose. [00:10:47] Speaker 02: But, so if you haven't, you don't quite have a refusal to deal claim [00:10:52] Speaker 02: You're not asserting an independent bundling claim. [00:10:55] Speaker 02: What's the district court supposed to do with, you know, almost refusal to deal plus almost bundling? [00:11:02] Speaker 05: It's a fair question, Your Honor. [00:11:02] Speaker 05: What I would say specifically on the bundling is that the Ninth Circuit has a specific test on bundling. [00:11:08] Speaker 05: Are you offering your product at a below your variable cost? [00:11:11] Speaker 05: That's the specific test that was enunciated in Cascade Health. [00:11:14] Speaker 05: we put forward specific expert evidence, undisputed and unchallenged by a line, that the bundling represented sales below their average variable cost. [00:11:22] Speaker 05: So there is a specific Ninth Circuit test for when a bundled discount is exclusionary. [00:11:27] Speaker 05: We put forward quantitative evidence from an expert that we satisfied that test, not challenged, not daubed by a line, never addressed by the district court. [00:11:35] Speaker 05: So there is, especially for the bundling, a specific test for when it's exclusionary that we put forward evidence to satisfy. [00:11:43] Speaker 05: that the district court simply didn't address. [00:11:45] Speaker 05: And then in addition, there's the exclusive dealing where you have facially exclusionary contracts that cover approximately 35% of Invisalign orders. [00:11:55] Speaker 05: You have, again, qualitative evidence from a line talking about how the programs are designed to thwart competitors, ward off competitive threat. [00:12:03] Speaker 05: And then stepping back, because again, what we've alleged is a Section 2 claim, [00:12:07] Speaker 05: We put forward evidence from an expert saying that this conduct in the aggregate foreclosed up to 55% of the market and under when you put it all together. [00:12:15] Speaker 05: So I think one way that the district court should have addressed it was look at our specific evidence that this foreclosed up to 55% of the market, which under cases like Twin Cities is clearly enough to show at least at the summary judgment stage to show substantial foreclosure. [00:12:30] Speaker 05: And so there is a lot of evidence in the record to show that we have [00:12:34] Speaker 05: the overall claim shows substantial foreclosure on the market. [00:12:37] Speaker 01: You know, as I read the district court's decision and some of the background, he seemed to focus on the fact that he viewed it as a refusal to deal claim. [00:12:49] Speaker 05: Yes. [00:12:50] Speaker 01: Period. [00:12:50] Speaker 01: And then when he thought about these other two bases for a Section 2 claim, he just said, well, they're not [00:13:00] Speaker 01: Without the refusal to deal aspect of this section two claim, these other two bases just don't cut it. [00:13:08] Speaker 05: Yes. [00:13:10] Speaker 05: It was somewhat mystifying that the district court did take that approach to summary judgment because at the motion to dismiss stage, he specifically said that they all in aggregate constituted a strong overall section two claim. [00:13:22] Speaker 05: I would direct your honors to [00:13:23] Speaker 05: the closely analogous recent Fourth Circuit case, Duke Energy, where again you had an overall scheme that was alleged, just like here, where the district court aired its summary judgment by treating each aspect of the scheme individually, and the Fourth Circuit reversed and found that you need to look at the overall scheme, that the refusal to deal, even if it wasn't independently actionable, had the same hallmarks of anti-competitive conduct that are present here. [00:13:45] Speaker 05: anti-competitive malice, profit sacrifice, and then it should be part of the claim. [00:13:49] Speaker 01: So let me ask you this. [00:13:50] Speaker 01: If we were to agree with him on the refusal to deal aspect, do we need to go on and ask, well, is there a viable... Well, I guess... ...undling claim? [00:14:04] Speaker 05: I think under what this court said in the City of Anaheim, [00:14:08] Speaker 05: you know, even perfectly lawful conduct contribute to a Section 2 claim. [00:14:11] Speaker 05: And so, yes, I think your Honor should go on and look at the overall evidence, even if your Honors find that the refusal to deal is not an independent stand-alone claim, which, again, we never brought an independent stand-alone claim. [00:14:23] Speaker 05: I think you should go forward, look at the evidence that we have on substantial foreclosure, and evaluate the overall claim, just like the Court did in Duke Energy. [00:14:33] Speaker 05: I only have 30 seconds left. [00:14:34] Speaker 01: And if we were to conclude that the district court erred on the refusal to deal aspect, these other two bases just move right along? [00:14:47] Speaker 01: We don't have to give any attention to them? [00:14:50] Speaker 05: Well, I think you should. [00:14:52] Speaker 05: That's an interesting question. [00:14:55] Speaker 05: I mean, I'm not sure the extent to which a line has challenged them. [00:14:59] Speaker 05: If you remanded and found that the court had erred on refusal of the deal, they would be part of the case. [00:15:03] Speaker 05: They're part of the case that we intend to litigate. [00:15:05] Speaker 05: We've always said it's a single section two claim. [00:15:07] Speaker 05: So I had 30 seconds on privilege if I could beg the court's courtesy. [00:15:12] Speaker 05: Very briefly. [00:15:13] Speaker 05: So again, I think the record's pretty clear that the court's privilege record rulings were quite strange, to be honest. [00:15:22] Speaker 05: from an early stage in this case has made clear that they are basically relying on advice of counsel defense. [00:15:27] Speaker 05: Their CEO testified he terminated after he was convinced by advice from counsel that he needed to terminate because of the patent litigation. [00:15:37] Speaker 05: We've repeatedly tried to get that legal advice. [00:15:39] Speaker 05: They blocked discovery into that legal advice. [00:15:41] Speaker 05: They asserted privileges as shield. [00:15:43] Speaker 05: And then when it came to summary judgment in their papers, in their briefing, [00:15:46] Speaker 05: They repeatedly relied on arguments about the content of that advice. [00:15:50] Speaker 05: When you look at Ninth Circuit cases like Bitlani or Chevron, that's air. [00:15:55] Speaker 05: You can't use legal advice as a sword and then deny the opposing party the access to the advice because the opposing party can't adequately dispute the defense. [00:16:03] Speaker 05: So that's an additional specific grounds for reversal that I think has been [00:16:08] Speaker 05: deeply prejudicial to the litigation of the case. [00:16:10] Speaker 05: Thank you. [00:16:11] Speaker 02: Can I just ask you a couple of factual questions about the class? [00:16:14] Speaker 02: I just want to be sure I'm clear on who the members of the class are. [00:16:17] Speaker 02: So you are representing the ultimate consumers and I take it because of Illinois BRIC you don't have a federal damages claim so you're only asserting damages claims under the laws of those states that have not adopted Illinois BRIC [00:16:35] Speaker 05: Yes, Your Honor, that's correct. [00:16:36] Speaker 05: We have an injunctive claim under the federal law, and then we have monetary damage claims for certain states. [00:16:42] Speaker 02: Is the requested injunction is purely prospective? [00:16:46] Speaker 02: That's right, Your Honor. [00:16:47] Speaker 02: So in terms of ultimate consumers who have maybe purchased the product in the past in states other than the states in your complaint, those people are not affected by this case at all? [00:17:00] Speaker 02: That is correct, Your Honor. [00:17:01] Speaker 02: Thank you. [00:17:02] Speaker 02: Thank you very much. [00:17:10] Speaker 02: Mr. Coleman. [00:17:16] Speaker 04: May it please the court, Patrick Coleman on behalf of the United States. [00:17:20] Speaker 04: We're here today because the district court failed to apply the correct legal standard for analyzing business justifications in refusal to deal with rivals cases. [00:17:29] Speaker 04: And I'm going to lay out the correct legal standard and then I'll also talk a little bit about the balancing requirement that the panel asked my colleagues. [00:17:39] Speaker 04: After a plaintiff challenging a refusal to deal establishes a prima facie case, the defendant must proffer a valid and sufficient business justification. [00:17:49] Speaker 04: That's what the Supreme Court held in Kodak, and that's what this court has required. [00:17:53] Speaker 04: The district court, however, applied a different overly lax standard, one that did not require sufficiency. [00:18:01] Speaker 04: So the first Kodak requirement, validity, requires that a justification be pro-competitive in nature and non-protectual. [00:18:09] Speaker 04: The second Kodak requirement, sufficiency, requires that the justification have actual pro-competitive effect and then that actual pro-competitive effect outweighs the anti-competitive harm. [00:18:22] Speaker 04: The district court erred by asking instead whether the refusal to deal was based in part on legitimate business reasons and that's standards wrong because at the very least it does not require sufficiency. [00:18:35] Speaker 04: Under that standard, a very slight pro-competitive benefit [00:18:39] Speaker 04: or an illusory pro-competitive benefit would just, would excuse even massive harm to the economy. [00:18:46] Speaker 04: And as the Seventh Circuit rightly observed in via media, that would be an absurd outcome. [00:18:52] Speaker 04: Additionally, it's possible that a justification would be, that a refusal deal would be based in part on a justification even if that justification played only a negligible role in the decision. [00:19:02] Speaker 04: But this court's Kodak-Romand decision, under this court's Kodak-Romand decision, such a justification [00:19:09] Speaker 04: would be protectual because that justification did not in any real sense actually motivate the conduct. [00:19:19] Speaker 02: Can I ask you to elaborate on the sufficiency requirement that you're taking from Kodak? [00:19:24] Speaker 02: Because I agree Kodak uses the word sufficient, but it was not clear to me that they necessarily meant it in the sense that you're using it here. [00:19:36] Speaker 02: So can you [00:19:37] Speaker 02: Can you explain how you get that requirement out of Kodak? [00:19:40] Speaker 04: Sure. [00:19:41] Speaker 04: Kodak evaluated both aspects of sufficiency. [00:19:47] Speaker 04: So the inventory cost justification, the court held that there was a genuine issue of material fact as to whether that justification was sufficient because there was evidence that the plaintiffs presented that, in fact, it didn't actually save Kodak any [00:20:07] Speaker 04: inventory costs. [00:20:09] Speaker 04: And as to the balancing step, on page 486 the court stated that at trial it may turn out that the jury would find that the pro-competitive benefits outweigh the anti-competitive harms. [00:20:25] Speaker 04: And this court has looked at sufficiency as well, too, in the Oahu gas case. [00:20:30] Speaker 04: There the court found that the justification was sufficient [00:20:34] Speaker 04: because it had the actual pro-competitive benefit of preventing an economic inefficiency. [00:20:43] Speaker 04: And the court asked about balancing. [00:20:46] Speaker 04: Balancing is a weapon. [00:20:46] Speaker 01: Before we get to balancing, let me just ask you one question. [00:20:49] Speaker 01: The framework you just laid out, you primarily take from Kodak, right? [00:20:56] Speaker 04: Uh, from Kodak and from this court's refusal to deal precedent, the Wahoo gas, the Kodak remand decision. [00:21:02] Speaker 01: So the framework you lay out, you, you, you believe is based on a view of all the relevant cases. [00:21:09] Speaker 01: Is that correct? [00:21:10] Speaker 01: Yes. [00:21:12] Speaker 01: In other words, you're not, you don't contend the government doesn't suggest in our cases that they're somehow for some reason, or they're off base or. [00:21:23] Speaker 04: No, no, no. [00:21:25] Speaker 04: What we think. [00:21:25] Speaker 04: No. [00:21:26] Speaker 04: Kodak, the Kodak decisions, the Oahu gas decision, Qualcomm, they're all consistent with the Supreme Court's Kodak decision. [00:21:35] Speaker 01: Okay. [00:21:36] Speaker 04: Okay, thank you. [00:21:38] Speaker 04: Yeah, and I can explain, look, you know, it's just one example. [00:21:40] Speaker 04: In Oahu gas, I've mentioned the sufficiency requirement. [00:21:43] Speaker 04: The court also said that the justification must be legitimate, which is another way of saying valid. [00:21:52] Speaker 04: Then in the Kodak-Raman decision, this court stated that the justification must be non-protextual and it must legitimately promote competition. [00:22:01] Speaker 04: If a justification doesn't have any actual pro-competitive benefits, it hasn't actually promoted competition. [00:22:07] Speaker 04: Likewise, if the justification doesn't have actual pro-competitive benefits that outweigh the anti-competitive harms, it hasn't promoted competition. [00:22:17] Speaker 04: You were going to say something about balancing, so please. [00:22:20] Speaker 04: I'll just try to be very brief, but balancing is well established in refusal to deal jurisprudence. [00:22:25] Speaker 04: I mentioned the Kodak decision. [00:22:27] Speaker 04: I mentioned the seven circuits via media decision there explains the important function that the balancing step addresses, and in Qualcomm this court [00:22:41] Speaker 04: indicated that the standard burden-shifting framework for Section 2 cases, which includes the requirement that there be pro-competitive effects and a balancing step, applies in refusal to deal cases. [00:22:56] Speaker 01: I asked the question of plaintiff's counsel. [00:23:00] Speaker 01: The jury gets to make that decision? [00:23:03] Speaker 04: Yes, assuming there's a genuine issue of material fact. [00:23:07] Speaker 01: How do you instruct the jury on that? [00:23:09] Speaker 04: The jury would be instructed it should determine whether the principle tendency of the conduct is to promote competition or to restrain competition, what the net effect of the restraint is, whether it's net pro-competitive, net anti-competitive. [00:23:29] Speaker 01: Okay. [00:23:31] Speaker 04: Thank you. [00:23:31] Speaker 04: And we ask that the court correct the legal errors [00:23:34] Speaker 04: In the district court's analysis, the business justification, we thank the court for the opportunity to present our views. [00:23:40] Speaker 04: Thank you very much. [00:23:45] Speaker 02: Mr. Shanmugam. [00:23:47] Speaker 00: Thank you, Judge Mellinger. [00:23:48] Speaker 00: Ken and Shanmugam apologize for aligned technology. [00:23:52] Speaker 00: May it please the court, in this case, Judge Chabria correctly granted summary judgment to align on plaintiff's refusal to deal and other claims. [00:24:00] Speaker 00: As to the refusal to deal claims, Align terminated interoperability for an unquestionably legitimate business reason, namely protecting its patent rights. [00:24:10] Speaker 00: Align offered ample evidence that its termination was based on its concerns about defenses that ThreeShape could and, in fact, did assert in the ongoing patent litigation. [00:24:22] Speaker 00: Now, plaintiffs primarily argued that that justification was pretextual. [00:24:27] Speaker 00: But the district court correctly concluded [00:24:29] Speaker 00: that plaintiffs presented no evidence of pretext, and plaintiffs were not entitled to pierce the attorney-client privilege solely because a line relied on that patent-related justification. [00:24:41] Speaker 00: Instead, I think what we've heard this morning is that plaintiffs and the government are really arguing for an expansive interpretation of the standard for refusal to deal claims, and that standard should be rejected. [00:24:54] Speaker 00: Now, I'll put aside for the moment [00:24:56] Speaker 00: plaintiffs' other claims and their efforts to aggregate those claims, because I want to focus first on this question of the legal standard for refusal to deal claims. [00:25:05] Speaker 00: And Judge Pius, to go to your question, let me explain how we think this should operate. [00:25:10] Speaker 00: Leaving aside the question of whether the plaintiffs have made a prima facie case, which is not before this court, we believe that the next step of the analysis is this question of whether or not there was a legitimate business justification. [00:25:23] Speaker 00: And as my colleagues on the other side have conceded, [00:25:26] Speaker 00: They conceded below, and I think that the law makes clear that where you have mixed motives, both an intent to harm a competitor, which is courts have recognized is essentially omnipresent in refusal to deal with claims cases, but also a legitimate justification, that legitimate justification is sufficient. [00:25:46] Speaker 01: Why isn't that, you know, one thing that troubled me about the district court's decision is he just seemed to say that the [00:25:54] Speaker 01: Strength of the evidence was sufficient for him to conclude as a matter of law That the just you know that even though there may have been other motives What was offered was sufficient to defeat their refusal to deal clear? [00:26:08] Speaker 01: It struck me when I looked at the record here that there was on that issue at least at a minimum There's a genuine dispute of fact about what happened [00:26:19] Speaker 00: So I don't think that there was a genuine dispute of fact on the issue of pretext, but let me sort of frame this the way that I think it is supposed to operate, because I do think that the plaintiffs have sought to inject a number of other considerations into this that we think are legally irrelevant. [00:26:35] Speaker 00: So the legitimate justification on which we relied was this justification concerning our patent rights. [00:26:43] Speaker 00: Now, what has this court said about that justification? [00:26:46] Speaker 00: I would point the court first to its decision on remand in the Kodak case. [00:26:51] Speaker 00: That's the 125 F3rd decision. [00:26:54] Speaker 00: And what the court said there, and I'm quoting, is that a firm's desire to exclude others from its intellectual property is a presumptively valid business justification. [00:27:04] Speaker 00: And the court went on to say that that must be presumed to be legitimately pro-competitive. [00:27:09] Speaker 00: Now, how can that presumption be rebutted? [00:27:11] Speaker 00: The court said that there were two ways. [00:27:12] Speaker 00: First, if the defendant acquired its IP rights in an unlawful manner, which is not an issue here, or if the business justification is pretextual. [00:27:21] Speaker 00: So note that the court said that that justification is presumptively pro-competitive. [00:27:28] Speaker 00: The court did not countenance any subsequent question concerning whether or not, in a particular case, the conduct of the defendant had pro-competitive [00:27:40] Speaker 00: benefits, and we point to this court's decision in Qualcomm, Freeman, and the ABA's model jury instructions themselves as supporting the proposition that you don't have to have an independent inquiry into that. [00:27:52] Speaker 00: Now, I want to leave aside for the moment the question of whether you have to then go on to balance pro-competitive benefits against anti-competitive effects. [00:28:00] Speaker 00: That's a separate legal question. [00:28:02] Speaker 01: But my point, Judge Piaz, is simply... Well, what do you do with the expert here that they offered that said, well, you know, the reason they gave the need to protect their patent litigation is questionable because, really, the defenses that might be raised in that patent litigation, the expert said, actually help the defendant. [00:28:24] Speaker 01: This justification just doesn't cut it. [00:28:27] Speaker 01: Why doesn't that raise a genuine fact, a tribal issue of fact over, you know, whether it was a legitimate justification? [00:28:37] Speaker 00: I don't think that it does, and I think that Judge Chabria appropriately considered all of this in concluding that there was no genuine issue of material fact on pretext. [00:28:46] Speaker 00: And so that is the question that we're now discussing, is was there evidence that our stated justification was pretextual? [00:28:53] Speaker 00: And as I noted at the outset, there was abundant evidence that that was our stated justification at the time. [00:29:00] Speaker 00: And so then the question becomes, what evidence was there of pretext? [00:29:03] Speaker 00: There was no subjective evidence of pretext. [00:29:06] Speaker 00: There was no evidence that we believed that this patent justification was a ruse. [00:29:13] Speaker 00: There was no such evidence whatsoever. [00:29:15] Speaker 00: So then you're left with the expert testimony. [00:29:17] Speaker 00: And there was, in fact, a battle of the experts on this question of whether or not [00:29:22] Speaker 00: the termination of interoperability would have benefits in rebutting the defenses that Three Shape asserted. [00:29:30] Speaker 00: And I would note, parenthetically, Judge Paez, that there's no dispute about the fact that Three Shape had asserted the existence of interoperability as a basis for those equitable defenses. [00:29:42] Speaker 00: I would point the court to volume two of the Snow, excerpts of record of 193 and 198 to 199. [00:29:48] Speaker 00: Now, it is true. [00:29:50] Speaker 00: that our expert did not opine on the ultimate legal question of the relevance of those defenses. [00:29:57] Speaker 00: And as we point out in our brief, that was entirely appropriate because of the familiar rule that experts can't testify on legal conclusions. [00:30:03] Speaker 00: But my broader point is that this expert testimony, in some sense, was not particularly relevant. [00:30:09] Speaker 00: This was evidence as to the strength of the argument that this termination affected the patent defenses, to be sure. [00:30:16] Speaker 00: But the ultimate question here is, [00:30:17] Speaker 00: Was this pretextual? [00:30:19] Speaker 00: Was this, in fact, not our justification? [00:30:21] Speaker 02: But isn't the strength of the defense? [00:30:24] Speaker 02: I mean, it seems like it's at least circumstantial evidence, right? [00:30:27] Speaker 02: If it is, in fact, true that ending interoperability did not improve your position in the litigation, that might be a reason from which one could infer that you didn't really have that motive, right? [00:30:42] Speaker 00: I actually don't really agree with that with respect, Judge Miller, for the simple reason [00:30:47] Speaker 00: You know, you could have a situation where even if there was the most marginal impact on the patent defenses because of the importance of the patent litigation to the company, the company could nevertheless say, we're going to do everything in our power to strengthen our patent case. [00:31:06] Speaker 00: And so I actually don't think that the strength of the arguments is really direct evidence of that. [00:31:11] Speaker 00: Now, maybe if you had a situation where somebody said, you know, this is completely frivolous, [00:31:17] Speaker 00: It might be different, but I don't think this is actually that situation. [00:31:21] Speaker 00: And the best evidence of that, of course, is the fact that 3Shape had asserted interoperability in support of its patent defenses here. [00:31:30] Speaker 00: And of course, all of this was before Judge Chabria, and Judge Chabria ultimately reached the conclusion that there was simply no evidence of pretext here. [00:31:39] Speaker 00: Now, I do think that there's a lot of back and forth about, you know, is this an objective standard or a subjective standard? [00:31:46] Speaker 00: Before the district court, we made the more ambitious argument that this standard is really a standard of conceivability. [00:31:53] Speaker 00: If you have a conceivable rationale, that is sufficient. [00:31:56] Speaker 00: And Judge Chabrier rejected that. [00:31:58] Speaker 00: But then we, of course, also were content with a standard that is a subjective standard, a standard under which you look to the intent of the party. [00:32:08] Speaker 00: We were very careful in articulating our arguments. [00:32:12] Speaker 00: not to do anything that would put the advice that we had gotten from counsel into play. [00:32:17] Speaker 00: And those are the statements. [00:32:18] Speaker 02: I'm sorry to interrupt. [00:32:19] Speaker 02: But before you get further into the advice of counsel question, in terms of the standard that you're advocating, so if you imagine a situation where the refusal to deal is motivated in significant part by the desire to harm the competitor, and there's a big harm to the competitor, and that's a main part of the reason they're doing it. [00:32:41] Speaker 02: But they are also motivated in part by some legitimate pro-competitive reason. [00:32:47] Speaker 02: And that's a genuine reason, but it's a fairly small one. [00:32:52] Speaker 02: So you have big anti-competitive effect. [00:32:56] Speaker 02: That's most of the reason, and then this little other reason. [00:32:59] Speaker 02: I guess your view is that there's no claim in that situation? [00:33:02] Speaker 00: Yes. [00:33:03] Speaker 00: I think that there are three points of potential legal disagreement. [00:33:06] Speaker 00: And the first is the one that you have mentioned, which is the primary argument that I understand the government to be making. [00:33:11] Speaker 00: which is this sort of predominant or primary purpose test. [00:33:15] Speaker 00: Now, I would submit first that I don't think that that test has any footing in the refusal to deal context. [00:33:21] Speaker 00: I don't think that this court or the Supreme Court has said anything to a support and approach where you try to determine which purpose was the driving purpose. [00:33:30] Speaker 00: I would also say that I'm not sure that that standard is a terribly administrable one, and I think it is a standard that would, you know, almost of necessity require [00:33:39] Speaker 00: a jury to try to make that sort of determination. [00:33:42] Speaker 00: But I think quite to the contrary, the case law, and we would rely primarily on this court's decision in Oahu Gas, which I think is the primary authority that addresses so-called mixed motive cases directly, it contains no support for this notion that you are weighing the strength of the purposes. [00:33:59] Speaker 00: Instead, it simply says, consistent with the Supreme Court's case law, that where you have a legitimate justification, that is sufficient. [00:34:08] Speaker 00: Now, I really understand the plaintiffs to be making two different legal arguments. [00:34:14] Speaker 00: And I want to make clear the points of disagreement so that we can fully vet them. [00:34:18] Speaker 00: The first is this notion that once you articulate the justification, you've got to make an independent showing as a defendant that that justification has pro-competitive benefits in a particular case. [00:34:29] Speaker 00: And again, I'm content to rely on what this court has said about this particular justification as being presumptively pro-competitive in Kodak and also [00:34:38] Speaker 00: cases like Qualcomm and Freeman, which I think stand for the broader proposition that once you have a legitimate business justification, you don't do that. [00:34:47] Speaker 00: But then I do want to address the third point of legal disagreement, which is this notion that you engage in balancing in refusal to deal cases. [00:34:56] Speaker 00: We would submit that there is no support for that. [00:34:58] Speaker 00: I would point the court not only to this court's decisions in Freeman and high tech careers and the Kodak remand decision at Oahu Gas, but also to Arita and Hovenkamp. [00:35:08] Speaker 00: the leading antitrust treatise for the proposition that that sort of balancing should not take place in a Section 2 refusal to deal case. [00:35:17] Speaker 00: Now, why not? [00:35:18] Speaker 00: I think that the best explanation for why that doesn't take place is what the Supreme Court said in its most recent pronouncement on refusals to deal in Trinco, which is that, of course, refusal to deal liability is an exception. [00:35:31] Speaker 00: It's an exception to the familiar rule that businesses are free to choose the parties with whom they will deal. [00:35:38] Speaker 00: And precisely because the Aspen skiing exception is at or near the outer boundary of Section 2 liability, it operates somewhat differently. [00:35:47] Speaker 00: And to the extent that the other side has pointed to anything in the case law to try to get a foothold for this, the two cases on which they rely are this court's decision in Qualcomm, and then today Mr. Kuhlman also cited the final paragraph of the Supreme Court's majority opinion in Kodak. [00:36:05] Speaker 00: Both of those are cases. [00:36:07] Speaker 00: where the court simply stated the general principle that you have this three-step framework in antitrust rule of reason cases, the third step of which is balancing. [00:36:17] Speaker 00: But those were both cases in which the court did so either in an introduction or in a conclusion in cases where there were both section one and section two claims, and where you therefore had a broad array of different types of antitrust theories. [00:36:32] Speaker 00: With regard to refusal to deal claims specifically, the other side doesn't point to any case [00:36:37] Speaker 00: either from the Supreme Court or from this court, where the court has engaged in that sort of analysis once you have a legitimate business justification. [00:36:45] Speaker 02: So I take the point that under Trinko, this is a very narrow category of claims, but it seems like under your test, I'm having trouble imagining how any plaintiff would ever get past summary judgment, because it seems like you practically always have some [00:37:04] Speaker 02: legitimate business justification that you can articulate. [00:37:07] Speaker 02: And as long as, you know, it doesn't matter under your test if the pro-competitive effects were big or small, it doesn't matter if it was a big part of your reasoning or not, you know, unless they can come up with some evidence that, like, it's just a lie and you weren't thinking about that at all, the defendant gets summary judgment, right? [00:37:29] Speaker 00: Well, Judge Miller, and this goes back to the point I was making to Judge Piaz, [00:37:34] Speaker 00: You know, we pushed for our sort of rational basis type standard, where having a conceivable justification was sufficient. [00:37:40] Speaker 00: And we relied on this court's decision in Aerotech. [00:37:43] Speaker 00: Judge Chabrier rejected that and instead said, you've got to come forward as a defendant with evidence that you, in fact, possess this justification. [00:37:51] Speaker 00: And the good news for us was that we had abundant such evidence. [00:37:55] Speaker 00: You know, we had evidence, going back to our original announcement at the time that we terminated, that we were doing it [00:38:02] Speaker 00: due to Three Shape's infringing conduct and resulting litigation. [00:38:06] Speaker 00: That's a 2025 of the Snow record excerpts. [00:38:09] Speaker 00: Three Shape itself acknowledged that the reason why a line had terminated was in order to raise the patent case with the ITC. [00:38:18] Speaker 00: That's at 1664. [00:38:20] Speaker 00: And it's a very familiar thing for plaintiffs to rebut justifications with evidence of pretext. [00:38:27] Speaker 00: The plaintiffs here had extensive discovery. [00:38:29] Speaker 00: They had access to all sorts of communications [00:38:32] Speaker 00: to PowerPoints and the like. [00:38:35] Speaker 00: They relied on those to show an intent to harm competitors. [00:38:39] Speaker 00: But they couldn't point to anything to suggest pretext. [00:38:43] Speaker 00: And at the summary judgment hearing, Judge Chabria repeatedly pressed the plaintiffs in this regard. [00:38:48] Speaker 00: And the most they could come up with was their expert testimony, which again, I think, is a very thin read to create a genuine issue of material fact, when the ultimate question is not [00:39:00] Speaker 00: how strong was the patent case. [00:39:02] Speaker 00: This is not a case within a case situation, but rather what was our intent in conducting the termination. [00:39:08] Speaker 00: And I would say, just to sort of close the loop on this issue of pretext, that with regard to the attorney-client privilege, on which my friends on the other side briefly relied at argument today, I think the key point is that we did not put the advice of counsel into play. [00:39:26] Speaker 00: in the familiar way that you have to in order to give rise to piercing the privilege. [00:39:31] Speaker 00: The most they can rely on is a statement made by the CEO that he was supplied with information that he should terminate interoperability because of the patent litigation. [00:39:40] Speaker 00: But we consistently made clear that we were not relying on that advice, that we were not relying on subjective evidence as to the strength of the merits of the patent claims in proceedings before the district court. [00:39:54] Speaker 00: Instead, we simply were relying on [00:39:56] Speaker 00: evidence, including contemporaneous evidence, as to why we terminated, and particularly in a context where it was clear that the others... I'm sorry to interrupt you, but your time is running out. [00:40:09] Speaker 01: I just want to interject a question in your point there. [00:40:13] Speaker 01: I'm sure the plaintiffs will get to tell the story. [00:40:18] Speaker 01: Sure, you may have terminated the interoperability arrangement [00:40:26] Speaker 01: But that was a losing proposition for them. [00:40:30] Speaker 01: They lost tons of money. [00:40:34] Speaker 01: And if you look at that and you look at our expert, this whole reason they're given about terminating or raising to protect their patent litigation, it's just a hoax. [00:40:49] Speaker 01: Why wouldn't that be enough for a jury to say, yeah, you look at all the evidence and there's a factual dispute here and it's all just a hoax. [00:40:57] Speaker 01: They just wanted to get rid of free magic. [00:41:02] Speaker 00: I think there are sort of two critical points in response to that, Judge Paias. [00:41:04] Speaker 00: The first is that to the extent that they point to evidence of losses, that is to establish their prima facie case, which is that we forwent short-term benefits to reduce long-term competition. [00:41:18] Speaker 01: When you talk about, I'm just thinking about how this would play out at a trial, right? [00:41:25] Speaker 01: I mean, people think it in terms of prima facie and what not. [00:41:27] Speaker 01: They have the burden at trial to prove that there was a section two violation. [00:41:32] Speaker 01: Correct. [00:41:33] Speaker 01: You know, that's their burden. [00:41:34] Speaker 01: They got to come forward with evidence at trial. [00:41:36] Speaker 01: They got to really put it forward, right? [00:41:40] Speaker 00: Correct. [00:41:41] Speaker 00: And, you know, once they have carried their initial burden, and I think, [00:41:45] Speaker 00: Judge Shabria could not have been clearer about this because he addresses it in, you know, the second paragraph of his opinion. [00:41:52] Speaker 00: At that point, you know, where you have a refusal to deal that is based in part on legitimate business reasons, it does not violate the antitrust laws even if it is also motivated by the desire to harm competitors or does, or does in fact harm competitors. [00:42:08] Speaker 00: Now where am I taking that quote from? [00:42:10] Speaker 00: That's actually from the ABA's model jury instructions. [00:42:13] Speaker 00: And while the government disparages the ABA in this context, I think it accurately reflects the case law, including in this circuit, where we have Oahu gas, which literally rejected a jury instruction that said that it's an either-or proposition, where if you have an intent to harm competitors, that is sufficient. [00:42:31] Speaker 00: And I really do want to just underscore one thing, which is that the case law is sort of replete with statements about the fact [00:42:40] Speaker 00: that an intent to harm competitors is not enough. [00:42:43] Speaker 00: I would point the court to, among other things, the Sixth Circuit's decision, Judge Sutton's decision in the St. [00:42:48] Speaker 00: Luke's case, which makes the point that every shrewd businessperson intends to beat her competitors. [00:42:54] Speaker 00: And that's precisely why we have a legal standard that says, if you can identify a legitimate business justification that you, in fact, possessed, that is sufficient. [00:43:04] Speaker 00: And then when you get to the question of pretext, again, that's a familiar question from all sorts of contexts across the law. [00:43:11] Speaker 00: It is the plaintiff's burden to come forward with evidence that you did not, in fact, possess that justification. [00:43:18] Speaker 00: And I see that my time is very short. [00:43:20] Speaker 00: So I think the last thing I would say is that to the extent that the plaintiff, well, I would say two things very quickly. [00:43:25] Speaker 00: The first is that I do want to just reiterate the fact that we make the point that this is a case in which we were not selling interoperability in an existing market. [00:43:34] Speaker 00: And this was not a case in which there was an extensive course of dealing in the way that there was in cases such as Aspen skiing. [00:43:41] Speaker 00: Those are factors that we believe also point in the direction of a conclusion that there was no invalid refusal to deal here. [00:43:49] Speaker 00: But then in my remaining four seconds, I would say that with regard to the remaining claims here, the bundling claim and the exclusive dealing claim, we don't think that those claims can permissibly be aggregated with the refusal to deal claim. [00:44:02] Speaker 00: And so if this court concludes, [00:44:04] Speaker 00: Judge Chabria got it correct in saying that there was not a standalone refusal to deal claim. [00:44:10] Speaker 00: We don't think that the other theories can be added together, both because any freestanding claims on those theories were forfeited and because we don't believe that the plaintiffs can meet the requirements for freestanding claims. [00:44:23] Speaker 00: And I think that this court has made clear that it is not possible to aggregate those sorts of claims in the way that the Fourth Circuit recently suggested in the Duke Energy case [00:44:33] Speaker 00: that plaintiffs potentially could. [00:44:35] Speaker 02: So I meant to ask you about Duke Energy. [00:44:36] Speaker 02: So your view is that the circuit has already rejected the approach taken in that case? [00:44:43] Speaker 00: Our view is that this court has rejected that approach. [00:44:47] Speaker 00: But at a minimum, if there is any context in which that approach is appropriate, I would say that it's in a context in which you can appropriately aggregate anti-competitive effects. [00:44:59] Speaker 00: And precisely because a refusal to deal claim [00:45:03] Speaker 00: does not turn on the existence of anti-competitive effects, because it does not have a balancing component. [00:45:09] Speaker 00: We don't think that that can be aggregated with other theories. [00:45:12] Speaker 00: And I would point this court to Judge Boesberg's decision, which we cite in the Facebook case, which I think very loosely lays that out. [00:45:20] Speaker 02: And what's the best case from this circuit that you think reflects a different approach? [00:45:26] Speaker 00: Well, I actually think that this court's decision in Anaheim actually helps us, and it doesn't help the other side. [00:45:32] Speaker 00: because I think at most this court recognized that aggregation might be appropriate in a context where anti-competitive effects are relevant on multiple theories, and of course there the court ultimately rejected the claim. [00:45:47] Speaker 00: Thank you. [00:45:48] Speaker 00: Great. [00:45:48] Speaker 00: Thank you. [00:45:53] Speaker 02: Your bottle. [00:45:54] Speaker 03: Thank you, Your Honors. [00:45:55] Speaker 03: I'm going to try to go very quickly because there's much to cover and much that I think has been mischaracterized. [00:46:02] Speaker 03: On the pretext issue, below, completely rewritten now, what Align in fact argued was it was not going to rely on subjective evidence of its own beliefs, it was going to rely on only two sources. [00:46:15] Speaker 03: One, evidence from ThreeShape, and two, objective evidence from experts. [00:46:19] Speaker 03: So, and that's at 6 Simon ER 1348. [00:46:24] Speaker 03: As to ThreeShape, Align ignores the actual evidence from ThreeShape, which is copious, where it explicitly said repeatedly after [00:46:32] Speaker 03: this conference of orthodontists, we're aligned and said we had to do this because we had to cut off 3Shape because of the patent litigation regarding scanners. [00:46:42] Speaker 03: 3Shape was furious and said that is absolutely not true. [00:46:46] Speaker 03: There is no basis, no basis for Align to have to cut off interoperability. [00:46:52] Speaker 03: That alone should give rise to genuine dispute of material fact. [00:46:55] Speaker 03: What about the other issue, the experts? [00:46:58] Speaker 03: There is no, I cannot, this is an extraordinary case. [00:47:01] Speaker 03: I have been doing this sort of work for decades. [00:47:04] Speaker 03: Our experts agree on the pertinent issues and to the extent they don't, their expert chose not to opine. [00:47:10] Speaker 03: In paragraph 67 of Mr. Stoll's expert report, he says, the quote unquote relevant inquiry, end quote, is the effect of the refusal to deal on Align's scanner patent rights. [00:47:24] Speaker 03: In paragraph 56, he says, I express no opinion on that issue. [00:47:28] Speaker 03: They've tried to repackage that as some sort of appropriate restraint. [00:47:31] Speaker 03: He identified the relevant issue, and he did not opine on it. [00:47:35] Speaker 03: Our expert agreed on the relevant issue and then walked through all the elements of the various equitable defenses and explained why it's not that there's debatable. [00:47:43] Speaker 03: There's no grounds whatsoever to say that the refusal to deal strengthened a line's patent position. [00:47:49] Speaker 03: Now, I don't have time to walk through those, but I want to point out below, we walked through those elements and explained it. [00:47:54] Speaker 03: A line never touched them. [00:47:55] Speaker 03: In their briefs, they've never explained it. [00:47:57] Speaker 03: In their brief on appeal, they mention by name on pages 10 and 28 of their brief two equitable defenses. [00:48:03] Speaker 03: Not once did they ever say, here are the elements of the equitable defense, and here's why it is non-frivolous to say, [00:48:11] Speaker 03: that the refusal to deal actually strengthened Align's scanner patent rights. [00:48:16] Speaker 03: And today, we didn't hear a wisp of it either. [00:48:18] Speaker 03: Smoke and mirrors. [00:48:19] Speaker 03: Now, why does that matter? [00:48:21] Speaker 03: If we are right and all the evidence does, in fact, point in our direction, two things follow from it. [00:48:25] Speaker 03: First of all, one thing that follows is there are no pro-competitive effects here. [00:48:30] Speaker 03: It is not enough to say, oh, well, we believe this issue. [00:48:34] Speaker 03: Empty Head Pure Heart is not a defense for an anti-competitive refusal to deal. [00:48:38] Speaker 03: And I want to take the words, because we've traveled so far from the actual law, [00:48:41] Speaker 03: I'm going to take the words from the Ninth Circuit in Eastman Kodak. [00:48:44] Speaker 02: Briefly, please. [00:48:45] Speaker 03: Yes. [00:48:45] Speaker 03: A plaintiff may rebut an asserted business justification by demonstrating either that the justification does not legitimately promote competition. [00:48:55] Speaker 03: In other words, it doesn't have pro-competitive effects. [00:48:57] Speaker 03: That is what we are showing, or that it's pre-textual. [00:49:00] Speaker 03: And we have done both. [00:49:02] Speaker 03: So as a result, summary judgment was wholly inappropriate in this case, and the court never addressed those relevant issues. [00:49:10] Speaker 03: Thank you very much. [00:49:11] Speaker 02: We thank all counsel for their helpful arguments and the case is submitted.