v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701 (1977); see also Centrig Indus. Contracting Corp. v. Anheuser-Busch Co., Inc., No. 89-2744, 1991 WL 4719, at *1–2, 1991 U.S. Dist. LEXIS 458, at *4 (S.D.N.Y. Jan. 16, 1991); Berman v. Riverbay Corp., No. 89-5538, 1990 WL 116765, at *2, 1990 U.S. Dist. LEXIS 3372, at *5 (S.D.N.Y. March 29, 1990).
Taking Peacock’s allegations as true, and construing them in the light most favorable to Peacock as we must on a motion to dismiss, Peacock appears to have stated claims under either theory. Turning to the monopolization claim first, Peacock has alleged that the relevant market is diamond-cut gold charms, and that MAJ holds 70% of that market (¶ 154). Peacock has also alleged that MAJ obtained its position in the market through a concerted pattern of exclusionary conduct, including the copying of competitors’ charms, the fraudulent procurement of copyright protection, and the maintenance of sham litigation to protect its monopoly over those designs.[1] Finally, Peacock has asserted that it suffered an “antitrust injury” by virtue of the deflection of its customers to MAJ and the costs of defending against this sham copyright litigation. Peacock’s attempted monopolization claim is adequately pleaded for essentially the same reasons: MAJ’s 70% market share and continued efforts to strengthen its position through sham copyright litigation pose a “dangerous probability” of successful monopolization, and MAJ has engaged in such action “with the specific goal of securing a monopoly position in the market for diamond cut gold charms in the United States” (¶ 162).
Despite the facial adequacy of Peacock’s allegations, MAJ proffers a number of reasons why the antitrust counterclaim should be dismissed. Specifically, MAJ contends that Peacock: (1) has not asserted a plausible relevant market; (2) has not demonstrated its exclusionary power; and (3) has not demonstrated an antitrust injury. In addition, MAJ argues that (4) Peacock’s sham litigation claim is foreclosed by the Noerr–Pennington doctrine; and, finally, (5) that the allegations of fraud underling the antitrust claims are not pleaded with particularity. Each of these arguments is taken up below.
The Relevant Market.
MAJ’s first objection to the amended pleading targets Peacock’s definition of the relevant market. While Peacock defines that market as comprised of diamond-cut gold charms, MAJ proposes a broader definition including non-diamond-cut gold charms or at least other inexpensive charms made of silver.
This Court does not dispute MAJ’s contention that in determining the relevant market for the purposes of a monopolization claim, our definition must include “alternative sources of, and substitutes for, [a] defendant’s product which reflect commercial realities.” Theater Party Assoc., Inc. v. Shubert Organization, Inc., 695 F.Supp. 150, 155 (S.D.N.Y.1988); see also Twin City Sportservice, Inc. v. Charles O. Finley & Co., 512 F.2d 1264, 1271 (9th
- ↑ Peacock has also alleged that MAJ obtained and maintained its monopoly by offering unlawful inducements to its customers and employees. MAJ argues that such acts, even if prohibited under some other body of law, are not cognizable under the antitrust laws. See MAJ’s Supplemental Memorandum in Support of Motion to Dismiss at 8 (citing Data General Corp. v. Grumman Sys. Support Corp., 761 F.Supp. 185, 189 (D.Mass.1991)) (While illegal and unscrupulous acts are “of concern,” they “have minimal connection to the monopolist’s exercise of exclusionary powers.”); see also 3 P. Areeda & D. Turner, Antitrust Law ¶ 737b, at 278 (1978) (In considering whether business torts are actionable under the antitrust laws, “[t]he antitrust court must … insist on a preliminary showing of significant and more-than-temporary harmful effects on competition (and not merely upon a competitor or customer) before considering a tort as an exclusionary practice…. In general, we doubt the wisdom of giving much § 2 attention to most of these [immoral or unethical] practices …, except in rare and gross cases.”) (emphasis in the original).
As we discuss in Section 2 infra, Peacock’s allegations with respect to the unlawful inducements are inadequate, and we have granted Peacock leave to replead them. Because we do not rely on them to sustain the antitrust claims in any event, we need not address at this time MAJ’s argument that they may not constitute exclusionary conduct under the antitrust laws.
