Upate January 2010: The Ninth Circuit has again ruled in favor of Tyco in a putative class action filed by Applied Orthopedic Appliances alleging that Tyco had sought to monpolize the medical device market. The appellate court affirmed summary judgment in favor of Tyco.
In Masimo Corp. v. Tyco Health Care Group LP et al., Ninth Circuit Court of Appeals vacated a jury’s finding of liability as to Tyco Health Care Group LP’s bundling agreements, giving Tyco another boost in its battle with Masimo Corp. over alleged market manipulation of pulse oximetry products. The Court held that because Masimo hadn’t alleged anti-competitive tying or pricing, Tyco’s bundled discounts could not, as a matter of law, violate Section 2 of the Sherman Act. The Ninth Circuit also shot down Masimo’s argument that it was entitled to a new trial to prove that Tyco’s bundling practices failed the discount attribution test established in Cascade Health Solutions v. PeaceHealth – that the only bundled discounts condemned as exclusionary are those that would exclude an equally efficient producer of the competitive products. The Court held that 1) application of the discount attribution test may be inappropriate “outside the bundled pricing context, for example in tying or exclusive dealing cases,” and 2) even if the jury could have concluded that certain bundling contracts were exclusive dealing arrangements, the evidence in the trial record concerning the pervasiveness and effects of Tyco’s varied bundling arrangements was insufficient to support a finding that the arrangements foreclosed competition in a substantial share of the relevant market.
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