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24 November 2020AmericasMuireann Bolger

Philips defeats antitrust claims in ultrasound infringement suit

Philips was not anti-competitive when it refused a medical equipment maintenance company access to its software for ultrasound machines but did misuse its copyright, the US District Court for the Western District of Washington has ruled.

In October 2019, Philips sued Summit Imaging, accusing it of copyright infringement and misappropriation of trade secrets, alleging that the company had infiltrated its systems, and had wrongfully advertised that its software is a “legal alternative” to working with Philips.

On November 16, the court concluded that Summit had failed to plausibly allege that Philips had engaged in monopolisation and attempted monopolisation but found it had sufficiently alleged a counterclaim for misuse of copyright. On Monday, 23 November, the court granted Summit’s motion to amend so it could add minor factual allegations to a number of its defences.

Summit, which provides maintenance, repair and related services for medical equipment, including ultrasound and mammography equipment, had claimed in June that Philips had contravened antitrust law in its refusal to provide access to the software used in its ultrasound machines.

It also sought a declaratory judgment that Philips’ claims for copyright infringement constituted a misuse of copyright, making Philips’ copyrights in the software installed on its ultrasound machines unenforceable.

In its countersuit, Summit explained that it services ultrasound machines manufactured by Philips that require frequent maintenance, repair, and other servicing. In addition to manufacturing and selling its ultrasound machines, Philips provides maintenance and repair services for the machines, and consequently, Philips competes with Summit and other companies in the market for maintenance and repair services, the filing said.

Summit alleged that access to the disputed diagnostic software was “vital to competition” in the market for servicing Philips’ ultrasound machines because it provides access to tools that “are essential for diagnosing, troubleshooting, and correcting technical problems or issues with” the machines.

However, it held that Philips “does not and will not provide access to the diagnostic software” to its competitors in the ultrasound machine service market.

Summit asserted that Philips’ refusal to provide access to the diagnostic software has impaired or prevented Summit and Philips’ other competitors from performing certain maintenance and repair services for their customers.

In an effort to “find ways to work around its lack of access to the...diagnostic software,” Summit developed its own “proprietary software” to enable it to service Philips’ ultrasound machines, the filing stated.

Summit held that its software has a “commercially significant, useful and lawful purpose” and “does not circumvent any purported technological measure that Philips might include in its software, falsify or remove any purported copyright information, or otherwise violate... or infringe” Philips’ copyrights in any way.

“Philips’ refusal to licence its copyrights in the diagnostic software, and its enforcement or threatened enforcement of those copyrights is anticompetitive conduct,” said Summit.

Summit further asserted that Philips’ actions are motivated by its goal to exclude competition in the market for repair and servicing of its ultrasound machines.

On Monday, following its partial dismissal of Summit’s claims, the court granted its motion to amend its defences as it deemed there was no evidence of bad faith on Summit’s behalf.

The court, however, found that Philips’ “strenuous opposition” to Summit’s proposed amendment was disingenuous—especially since the court granted Philips’ request for an extension to the case schedule.

“Philips’ futility arguments also fail to grasp the high bar that a litigant must clear to establish futility. To show futility, Philips must show that no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim or defence,’’ the court said.

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