Align Technology Inc., the maker of Invisalign clear dental aligners, will again face antitrust claims accusing it of using its position in the dental-aligner business to restrict competition after a federal appeals court overturned a lower-court victory for the company.
The U.S. Court of Appeals for the Ninth Circuit reversed summary judgment for Align in two proposed class actions and sent the litigation back to the district court for further proceedings, according to Bloomberg Law. The publication reported that the appeals court concluded the plaintiffs had produced sufficient evidence for a jury to consider whether Align impeded competition in the markets for clear aligners and intraoral scanners.
The ruling revives cases brought separately by dental practices and consumers. Both groups accuse Align of engaging in conduct intended to preserve its position in the market for clear aligners and in the related business of scanners used by dentists to create digital impressions of patients’ teeth and mouths, according to Bloomberg Law and the court’s opinion.
At the center of the dispute is Align’s relationship with 3Shape, a rival manufacturer whose TRIOS intraoral scanner had been made compatible with Invisalign. Align and 3Shape entered an interoperability agreement in 2015, allowing dentists using TRIOS to send digital scans for Invisalign orders, according to the Ninth Circuit. Align announced in 2017 that it would end that interoperability in the U.S.
The plaintiffs contend that the decision was part of a broader strategy to protect Align from growing competition. Their allegations also encompass discounting and bundling practices involving Align’s iTero scanners as well as agreements containing exclusivity provisions, according to the court record. Align has disputed the antitrust allegations.
Align argued that ending its arrangement with 3Shape was connected to intellectual-property litigation between the companies and was intended to strengthen its position in patent disputes. The lower court had accepted that Align had at least a partly legitimate business reason for its decision and granted summary judgment to the company.
The Ninth Circuit said that analysis did not go far enough.
Under the framework described by the appeals court, plaintiffs alleging an unlawful refusal to deal must first present a prima facie case of anticompetitive conduct. The defendant may then offer a legitimate, nonpretextual competitive justification, after which plaintiffs have an opportunity to challenge that explanation.
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The appellate panel determined that the plaintiffs had cleared the initial hurdle and that Align, in turn, had offered its patent-litigation rationale. But the judges said evidence in the record created factual disputes over whether that justification genuinely promoted competition and whether it was a pretext. Those disputes should not have been resolved through summary judgment, the court concluded.
The litigation traces back to a 2020 lawsuit by dental practices led by Simon and Simon PC, followed in 2021 by a separate consumer case. The plaintiffs allege violations of Section 2 of the Sherman Act, which governs monopolization and attempted monopolization. The consumer case also includes claims under state antitrust laws, according to the appellate opinion.
During the period at issue, Align controlled about 90% of the U.S. clear-aligner market and was also a leading supplier of intraoral scanners through its iTero product, the Ninth Circuit said. The court noted that TRIOS was designed as an open system capable of working with aligners from multiple manufacturers, while Align regarded 3Shape as a principal scanner competitor.
The appeals court’s decision doesn’t determine that Align violated antitrust law. Instead, it means the plaintiffs presented enough evidence for their claims to move forward rather than being resolved in Align’s favor before trial.
Circuit Judge Eric Miller agreed that summary judgment should be reversed but wrote separately to express concern about the majority’s treatment of refusal-to-deal liability. Miller said the plaintiffs had nevertheless produced enough evidence to create a factual dispute over whether Align’s stated justification for terminating interoperability was pretextual.
The cases will return to the U.S. District Court for the Northern District of California, where Judge Vince Chhabria had previously entered summary judgment for Align.
Bloomberg Law first reported the Ninth Circuit’s revival of the antitrust claims on Oct. 5.
Source: Bloomberg Law
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