Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 1 of 45
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`Bonny E. Sweeney (SBN 176174)
`Seth R. Gassman (SBN 311702)
`HAUSFELD LLP
`600 Montgomery Street, Suite 3200
`San Francisco, CA 94111
`Tel.: 415-633-1908
`Fax: 415-358-4980
`bsweeney@hausfeld.com
`sgassman@hausfeld.com
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`[Additional Counsel Listed on Signature Page]
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`THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`KALEIDA HEALTH, on
`behalf of itself and all others similarly
`situated
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`Plaintiff,
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`v.
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`3:21-cv-05266
`Civil Action No._____________
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`COMPLAINT AND JURY DEMAND
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`Defendant.
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`INTUITIVE SURGICAL, INC.
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`Plaintiff Kaleida Health, on behalf of itself and all others similarly situated, upon
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`knowledge with respect to its own actions and upon information and belief with respect to all
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`other matters, alleges by way of Complaint against Defendant Intuitive Surgical, Inc.
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`(“Intuitive”):
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 2 of 45
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`INTRODUCTION
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`1.
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`This antitrust action, brought under Sections 1 and 2 of the Sherman Act, involves
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`abuse of monopoly power claims, including a tying and monopoly leveraging scheme
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`implemented by Intuitive in the sale of its da Vinci Surgical Robot System (“da Vinci”). Intuitive
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`has obtained patents giving it monopoly power in the U.S. surgical robot market, but unlawfully
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`leveraged that power to restrict competition in the separate (a) da Vinci surgical robot service
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`aftermarket, and (b) da Vinci surgical robot instrument service aftermarket, by, among other
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`things as alleged herein, tying the sale of the da Vinci to the service of the robot and the
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`necessary robot instruments.
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`2.
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`Intuitive conditions the sale or lease of the da Vinci on the purchaser’s acceptance
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`of Intuitive’s mandatory service contract. The service contract requires the purchaser to use
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`Intuitive as the sole service provider for all da Vinci systems, and prohibits the purchaser from
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`either servicing the robot itself or hiring an independent robot repair company (“IRRC”) to
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`service the da Vinci.
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`3.
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`Intuitive also ties the service, including repair and replacement, of da Vinci
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`surgical instruments, sold under the brand name “EndoWrist,” to the sale or lease of its robot
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`system. Intuitive restricts the number of times a purchaser may use the EndoWrist instruments, in
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`most cases to a mere ten uses. This forces Plaintiff and proposed Class members to purchase
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`substantially more EndoWrists than necessary, rather than allowing the EndoWrists to be
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`serviced and repaired for longer use, more in keeping with their useful lives. Intuitive’s service
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`of an EndoWrist instrument typically involves the sale and installation of a new replacement
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`EndoWrist. According to the terms of the da Vinci sales agreements and service contracts,
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`hospitals cannot hire IRRCs to service or repair their EndoWrist instruments (i.e., clean or
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`sharpen them for longer use).
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`4.
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`There are relevant primary markets for (a) surgical robots, (b) surgical robot
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`instruments, and (c) the repair and/or replacement of surgical robots and surgical robot
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`instruments. Additionally, there are relevant aftermarkets for service of (a) da Vinci robots; and
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`(b) EndoWrist instruments (which includes their repair and replacement), which are separate
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`from the primary markets. Intuitive has monopoly power in every relevant market and
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`aftermarket. Intuitive’s abuse of monopoly power scheme illegally exploits its market power in
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`the surgical robot market to foreclose competition in the da Vinci Service and EndoWrist Service
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`Aftermarkets. The scheme is successful and has almost completely inhibited competition in the
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`service aftermarkets for either the da Vinci or EndoWrists, thus precluding customers from using
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`the IRRCs, which deliver the same quality service at lower prices. Intuitive’s conduct has
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`thereby significantly increased costs to Plaintiff and the proposed Class. For example, IRRCs
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`Restore Robotics LLC (“Restore”), Surgical Instrument Service Company, Inc. (“SIS”), Revanix
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`Biomedical (“Revanix”), and Rebotix Repair LLC (“Rebotix”) offer repair services for the da
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`Vinci and EndoWrists by skilled and experienced technicians.
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`5.
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`Defendant’s anticompetitive scheme has had the effect of driving the majority of
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`Intuitive’s annual revenues: in 2019, Intuitive reported product revenue of $2.621 billion in the
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`U.S. out of a total $3.1 billion in U.S. revenue. Product revenues comprise revenues from the
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`sales of da Vincis, accompanying accessories, EndoWrists and replacement EndoWrists. Most of
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`Intuitive’s U.S. revenue (57%) was attributable to instrument and accessory sales and
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`replacement, and 16% was attributable to service contracts. While the coronavirus pandemic
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`reduced the overall da Vinci-related revenues in 2020, Intuitive’s revenues from its related
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 4 of 45
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`service and repair offerings still exceeded $2 billion in 2020 and represented approximately 77%
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`of its total revenue in the U.S.
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`6.
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`But for Intuitive’s unlawful abuse of monopoly power, IRRCs could service the
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`da Vinci and EndoWrists, which would allow for competitive pricing in the da Vinci and
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`EndoWrist Service Aftermarkets. For example, SIS states it charges its customers approximately
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`30-45% less to clean or repair an EndoWrist than Intuitive charges to replace the same
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`EndoWrist. Restore also estimates that Intuitive charges approximately 30% higher prices on
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`average for EndoWrist replacement as compared to EndoWrist repairs performed by IRRCs.
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`Denying IRRCs the ability to service da Vincis forces Plaintiff and proposed Class members
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`such as hospitals and clinics to pay supracompetitive prices for these services. Likewise, denying
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`IRRCs the ability to service EndoWrists forces Plaintiff and proposed class members to spend
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`thousands of dollars replacing instruments that could be repaired and safely reused throughout
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`those instruments’ useful lives.
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`7.
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`For these reasons and to remedy the injuries that have been caused by Intuitive’s
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`anticompetitive conduct, Plaintiff and the proposed Class seek treble damages.
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`PARTIES
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`8.
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`Plaintiff Kaleida Health is a New York not-for-profit corporation with its
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`principal place of business in Buffalo, New York. During the proposed Class Period (defined in
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`paragraph 104, infra), Plaintiff Kaleida leased da Vinci Xi models directly from Defendant
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`Intuitive, pursuant to written lease agreements, and it paid Defendant Intuitive for service to its
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`da Vincis and EndoWrists. As a result of Intuitive’s antitrust violations, Plaintiff and members of
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`the proposed Class (defined in paragraph 104, infra) have been injured in their business or
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`property.
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 5 of 45
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`9.
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`Defendant Intuitive Surgical, Inc. is a Delaware corporation with its principal
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`place of business at 1020 Kifer Road, Sunnyvale, CA. Intuitive is the creator and manufacturer
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`of the da Vinci, along with its accessories and instruments, including the EndoWrist line of
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`surgical instruments. Intuitive directly sells da Vincis and EndoWrists, along with associated
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`parts and services, to hospitals, clinics and surgical centers throughout the United States,
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`including in the Northern District of California.
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`VENUE AND JURISDICTION
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`10.
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`This complaint is filed under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1
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`and 2. This Court has jurisdiction over the federal antitrust law claims alleged herein under 28
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`U.S.C. §§ 1331, 1337, 2201 and 2202, and 15 U.S.C. §§ 15 and 26.
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`11.
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`Defendant transacts business and is found in this district. Substantial interstate
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`trade and commerce involved and affected by the alleged violations of antitrust law occurs
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`within this district. The acts complained of have had substantial anticompetitive effects in this
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`district. Venue is proper in this district under 28 U.S.C. § 1391 and 15 U.S.C. §§ 15, 22 and 26.
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`12.
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`Intradistrict Assignment. Although antitrust class actions are excluded from Local
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`Rule 3-2(c), Intuitive is headquartered in Sunnyvale, California.
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`GENERAL ALLEGATIONS
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`A. Relevant Markets
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`1.
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`The Robotic Surgical Systems Market and Intuitive’s Monopoly Power in
`That Market
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`a. The Robotic Surgical Systems Product Market
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`13.
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`Robotic surgical systems are used for minimally invasive soft tissue surgeries
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`performed between the pelvis and the head. Robotic surgery, like laparoscopic surgery done by
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`hand, makes several incisions in soft tissue for the insertion of small surgical instruments to
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 6 of 45
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`perform a surgical procedure. The surgeon, sitting at a computer, uses hand-controls to
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`manipulate the instruments that are attached to the system by robotic arms with joints.
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`14.
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`Robotic surgeries greatly mirror laparoscopic surgeries that have been performed
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`by hand for decades. However, robotic surgeries have a variety of practical advantages over
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`traditional laparoscopic surgeries, including:
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`i.
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`Stereoscopic high-definition cameras for 3-D visibility;
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`ii. An additional robotic arm that allows the simultaneous use of three
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`instruments;
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`iii. Wrist joints that allow for an expanded range of motion compared to
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`human mobility;
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`iv. The ability to precisely perform small discrete movements with the robotic
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`arms and instruments;
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`v. Minimizing surgeon fatigue; and
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`vi. Decreasing complication rates and reducing the lengths of patient stays.
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`15.
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`There is a relevant product market for robotic surgical systems. Surgical robots
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`have no practical substitute, because although robotic surgery is significantly more expensive
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`and less profitable than traditional laparoscopic surgical procedures, hospitals are expected to
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`offer robotic surgeries.
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`16.
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`In fact, the very characteristics that make surgical robots unique and more
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`expensive – enhanced visualization using high-definition cameras, precise and tremor-free
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`instrument controls, advanced instrumentality, and improved surgeon ergonomics – make robotic
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`surgeries preferable to traditional laparoscopic procedures for surgeons. Notwithstanding the fact
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`that robotic surgery is itself more expensive than traditional laparoscopic surgery, hospitals
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 7 of 45
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`believe that robotic surgery can lower the overall cost to treat per episode by reducing
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`complications, shortening recovery times and hospital stays, and resulting in better long-term
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`health outcomes and higher patient satisfaction than with traditional laparoscopic surgery. Many
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`patients find that robotic surgery reduces pain, scarring, and is safer and more effective than
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`traditional laparoscopic surgeries. Thus, robotic surgery is generally preferable for hospitals and
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`their surgeons and patients.
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`17.
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`There is a very low cross-elasticity of demand between surgical robots and
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`laparoscopic surgery equipment, instruments, and service. A 2017 study estimated that hospitals
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`spent $1,701 on average per surgical robot procedure, which includes purchasing and
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`maintaining the system, an expense that is novel to robotic surgery.1 It also found that the robotic
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`surgical system’s instruments and accessories cost on average $1,866 per procedure.2 By
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`comparison, the study estimated that instruments in traditional laparoscopic surgeries cost less
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`than $1,000 per procedure.3 Further, most insurance plans pay the same amount for minimally
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`invasive robotic surgery and laparoscopic surgery, such that patients pay much more out of
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`pocket for minimally invasive robotic surgery and hospitals have lower (and sometimes
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`negative) margins on minimally invasive robotic surgery. Nevertheless, the estimated procedure
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`volume for robotic surgery increased from 136,000 in 2008 to 877,000 in 2017 for a
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`compounded annual growth rate of 23%.4 Thus, it is apparent that an increase in the cost of a
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`minimally invasive surgical robot, instruments, and service does not lead doctors or patients to
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`choose laparoscopic or traditional surgery equipment instead, nor would a change in the cost of
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`1 Christopher P. Childers and Melinda Maggard-Gibbons, Research Letter: Estimation of the Acquisition and
`Operating Costs for Robotic Surgery, 320 Journal of American Medical Association 835, 836 (August 28, 2018).
`2 Id.
`3 Id.
`4 Id.
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 8 of 45
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`traditional or laparoscopic equipment affect the market for minimally invasive surgical robots,
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`instruments, and service.
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`18.
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`Likewise, instead of using cheaper laparoscopic equipment for surgeries, hospitals
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`are investing millions in replacing their laparoscopic equipment with robotic surgical systems,
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`even at much higher prices. Accordingly, neither laparoscopic surgery nor any other procedure is
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`substitutable with a robotic surgical system, as hospitals will not switch to those procedures even
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`if the price of the robotic surgical system is raised above competitive levels.
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`19.
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`Robotic surgical systems and traditional laparoscopic surgical equipment occupy
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`separate economic markets. The financial and healthcare press refer specifically to the market for
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`surgical robots and competition in surgical robots. Surgeons can specialize in robotic surgery,
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`and there are several professional and trade associations focused on robotic surgery such as the
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`Society for Robotic Surgery and the Clinical Robotic Surgery Association. Surgical robots have
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`very distinct prices.
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`20.
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`Intuitive, founded in 1995, designs, manufactures, and markets the da Vinci
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`directly to its customers in the U.S. The Food and Drug Administration (“FDA”) approved the da
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`Vinci for general laparoscopic surgery in 2000.5 It was the only surgical robot system approved
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`by the FDA for sale in the U.S. market until 2015. It is approved for both adult and pediatric use.
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`21.
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`The da Vinci, pictured below in Figure 1, consists of three main components: the
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`surgeon’s console where the surgeon sits to perform the operation; the patient-side cart which
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`holds the camera and surgical instruments controlled by the surgeon; and the vision system
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`which manages communication between all the system’s component parts and has a view screen
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`that allows the care team to view the surgery in real time.6
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`5 Intuitive (Form 10-K), at 5 (Feb. 10, 2021).
`6 Id. at 6.
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 9 of 45
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`Figure 1: The Da Vinci Surgical System
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`22.
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`There are four generations of Intuitive da Vincis: the latest generation includes the
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`Xi, X, and SP models. The third generation includes the Si model; the second is the S model; and
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`the first-generation system is the ‘standard’ surgical system. The da Vinci SP is the latest system
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`to be launched, in 2018.7 The da Vinci X and Xi systems utilize different surgical instruments
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`than earlier generation systems.
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`23.
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`Intuitive sells the da Vinci directly to hospitals and surgical centers, and also
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`enters lease arrangements directly with certain qualified customers, a practice it started in 2013.8
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`7 Id. at 63.
`8 Intuitive (Form 10-K), at 56 (Feb. 10, 2021). Intuitive also sells the da Vinci directly to leasing companies. When
`hospitals acquire da Vincis through leasing companies, hospitals enter an independent arrangement with the leasing
`company. Id.
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`It has also entered usage-based arrangements with larger customers. Under such arrangements,
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`hospitals are charged for the system and service as the systems are utilized.
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`24.
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`As of December 31, 2020, Intuitive had an installed base of 3,720 da Vincis in the
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`U.S.9 The U.S. installed base has increased by over 45% in the past four years alone: as of
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`December 31, 2016, Intuitive had an installed base of 2,563 da Vincis in the U.S.10 Moreover,
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`despite the coronavirus pandemic, the U.S. installed base grew by over 5% in 2020.11
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`25.
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`The da Vinci is a minimally invasive soft tissue surgical robot and may be used to
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`perform a variety of surgical procedures including general, gynecologic, urologic, cardiothoracic,
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`and head and neck surgeries. While other companies have introduced products in the field of
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`robotic-assisted surgery, most of those machines cannot be used for minimally invasive soft
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`tissue surgeries and none is a significant competitor in the surgical robot market. For example, a
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`natural orifice surgical robot allows a surgeon to insert a flexible scope with a camera into the
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`abdominal cavity via one of the body’s natural orifices. The surgeon may then perform throat,
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`neck, or colorectal surgical procedures. However, the robot can only operate instruments
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`introduced through the tube inserted into the natural orifice. It is also not indicated for pediatric
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`use. The constraints imposed by both the mode of access and the limited availability of tools for
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`use with natural orifice surgical robots pose several challenges for surgeons and preclude it from
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`competing in the surgical robot market. Likewise, orthopedic robots, which are designed for
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`assisting in the removal of bone and aligning prosthetics for knee and hip replacement, are not
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`indicated for use in minimally invasive soft tissue surgery and are not a practical substitute for
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`surgical robots.
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`9 Id. at 10 (Feb. 10, 2021).
`10 Intuitive (Form 10-K), at 9 (Feb. 6, 2017).
`11 Intuitive (Form 10-K), at 10 (Feb. 7, 2020) (3,531 systems in the U.S. as of December 31, 2019).
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`26.
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`In 2020, approximately 876,000 procedures were performed using the da Vinci in
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`the U.S.12
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`27.
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`The da Vinci ranges in price from $500,000 to $2.5 million. Intuitive reported
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`$830.7 million in revenue from da Vinci sales in the U.S. in 2019, accounting for 61.7% of
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`systems sales worldwide.13
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`28.
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`Intuitive sells all necessary robot service, and over 80 different types of surgical
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`instruments for use with the da Vinci under the EndoWrist brand. As shown in Figure 2, below,
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`EndoWrist instruments are modeled after the human wrist and offer a greater range of motion
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`than the human hand. Figure 3, below, demonstrates the variety of EndoWrists available to
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`Figure 2: EndoWrist modeled after human hand14
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`12 Intuitive (Form 10-K), at 60 (Feb. 10, 2021).
`13 Intuitive (Form 10-K), at 87 (Feb. 7, 2020).
`14 Palep J. H. (2009). Robotic assisted minimally invasive surgery. Journal of minimal access surgery, 5(1),
`1–7. https://doi.org/10.4103/0972-9941.51313; Intuitive; and Longmore, S. K., Naik, G., & Gargiulo, G. D. (2020).
`Laparoscopic Robotic Surgery: Current Perspective and Future Directions. Robotics, 9(2), 42.
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`Figure 3: Variety of EndoWrists available for use with the da Vinci
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`29.
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`Intuitive sells a variety of EndoWrist instruments with customizable tips for
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`various surgical procedures including forceps, scissors, scalpels, and clamps. The da Vinci was
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`designed to work exclusively with instruments manufactured and sold by Intuitive. Thus,
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`EndoWrists are the only instruments compatible with the da Vinci and the only instruments
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`approved by the FDA for use with the da Vinci.
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`30.
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`As derivative markets of the da Vinci system, the demand for da Vinci and
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`EndoWrist service is directly linked to the installed base of da Vincis and how often those
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`systems are used.
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`31.
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`Intuitive installs a programmable memory chip inside each instrument that limits
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`the number of times the instrument may be used. A majority of EndoWrists have a maximum
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`usage limit of 10.
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 13 of 45
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`b. The Geographic Market for Surgical Robot Systems
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`32.
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`There is a national geographic market for surgical robot systems in the U.S. The
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`FDA regulates the approval of all medical equipment in the U.S., including surgical robot
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`systems. Manufacturers who wish to sell surgical robot systems in the U.S. must obtain FDA
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`approval before doing so.
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`33.
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`The surgical robot systems approved for use in the U.S. are not substitutable;
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`hospitals cannot import or operate non-approved surgical robot systems.
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`34.
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` U.S. hospitals are thus unable to buy surgical robot systems from suppliers in
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`other countries, even if Intuitive raises its surgical robot system prices above competitive levels.
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`c. Intuitive Has a Monopoly in the U.S. Market for Surgical Robots.
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`35.
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`Intuitive has monopoly power in the U.S. market for the sale of minimally
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`invasive soft tissue surgical robots and, as a result, can and does exclude competition and
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`maintain supracompetitive prices for the da Vinci.
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`36.
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`The number of procedures performed using the da Vinci has typically increased at
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`least 14% year-over-year since 2017, with a 1% decrease in procedures performed in 2020 due to
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`the ongoing Coronavirus pandemic.15
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`37.
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`In its most recent Annual Report, Intuitive states that it faces competition in the
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`fields of “existing open surgery, conventional MIS [minimally invasive surgery], drug therapies,
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`radiation treatment, and emerging interventional surgical approaches” and robotic-assisted
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`surgery.16 Intuitive does not cite any competition in the robotic surgical system market. A
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`company called Asensus (formerly known as TransEnterix) received FDA approval for
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`15 Intuitive (Form 10-K), at 60 (Feb. 10, 2021).
`16 Id. at 12.
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 14 of 45
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`
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`commercial sale of its surgical robot in the U.S. in 2017,17 shown below in Figure 4. Sold under
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`the Senhance brand name, the robot is approved to perform gynecological, colorectal, and
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`cholecystectomy surgeries, and inguinal hernia repair. It cannot perform certain surgeries, such
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`as cardiothoracic or urological surgeries, making it less functional than the da Vinci. Nor is it
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`approved for pediatric use. Asensus reported just $90,000 in revenues from system sales in 2019
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`in the U.S. and has had “limited commercial success to date” in the U.S.18
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`Figure 4: Senhance Surgical Robot19
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`38.
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`Asensus’ de minimis market share in the surgical robot market is due to Intuitive’s
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`long established presence in U.S. hospitals, the amount of experience U.S. surgeons have with
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`the da Vinci, and the number of da Vincis installed in the U.S. versus Senhance robots. Thus,
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`17 Asensus (f.k.a. TransEnterix) (Form 10-K), at 4 (March 16, 2020).
`18 Id. at 13.
`19 TransEnterix, Inc. Unveils New Brand Identity for Robotic Surgical System: Establishes Senhance™ to
`Communicate New Era in Robotic Surgery, BusinessWire (Sept. 7, 2016),
`https://www.businesswire.com/news/home/20160907005187/en/TransEnterix-Inc.-Unveils-New-Brand-Identity-for-
`Robotic-Surgical-System.
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 15 of 45
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`neither Senhance, nor any other company, is a significant competitor in the surgical robot
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`market.
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`39. While other companies have introduced products in the field of robotic-assisted
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`surgery, these machines are not part of the surgical robot market and thus are not competitors of
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`Intuitive’s da Vinci. For example, a company called Medrobotics received clearance for a natural
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`orifice surgical robot on July 23, 2015. However, the robot, sold under the Flex system brand
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`name, can only operate instruments introduced through the tube inserted into the natural body
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`orifice. Thus, due to its design limitations, it is only indicated for a limited range of procedures
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`and is not a direct competitor to the da Vinci. And Asensus’ Senhance system is not intended for
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`most other procedures that the da Vinci may perform.
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`40.
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`Prior to FDA approval of the Senhance system for minimally invasive robotic
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`surgeries, Intuitive maintained a 100% market share for surgical robots. Even after Senhance and
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`Medrobotics entered the robotic surgery market, Intuitive still maintains at least a 98% market
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`share in the market for surgical robots because neither company has been able to gain sufficient
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`U.S. market share to pose a meaningful threat to Intuitive’s market dominance. While Intuitive
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`shipped 728 da Vincis throughout the U.S. in 2019, Asensus did not ship any Senhance systems
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`domestically and Medrobotics shipped fewer than 10 Flex robot systems worldwide.
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`41.
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`External literature characterizes Intuitive as possessing monopoly power in the
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`robotic surgical system market. For example, one 2017 study in the Journal of Minimal Access
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`Surgery noted that Intuitive’s da Vinci was “the only commercially available robotic equipment”
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 16 of 45
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`
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`at the time.20 Similarly, a 2019 study on robotic surgery noted that Intuitive “[e]ffectively
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`[possessed] a monopoly” in the robotic surgery industry.21
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`42.
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`Switching surgical robot systems is not feasible. First, surgical robot systems
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`require significant capital investment in not only the system itself, but also the necessary surgical
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`instruments and, in many cases regarding the da Vinci, an agreement by Intuitive’s customers not
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`to purchase competing robots. Further, operating a robotic surgical system requires many hours
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`of training. Switching surgical robot systems would not only be costly, as surgical robots have an
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`average sales price of $1.5 million and many of Intuitive’s U.S. customers have at least 2
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`systems representing significant capital investment, but would also require substantial time to
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`retrain surgeons and supporting staff to operate the new system, during which time a hospital
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`may not be able to offer robotic surgical services.
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`43.
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`In addition, Intuitive incentivizes hospitals to upgrade their existing da Vincis by
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`offering them the opportunity to trade in their older da Vincis for a credit towards the purchase
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`of a newer generation system.22
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`44.
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`There are significantly high barriers to entry into the surgical robot market. The
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`cost to develop a surgical robot is substantial, especially because Intuitive maintains an extensive
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`portfolio of patents that block the development of competing surgical robot systems.
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`Furthermore, clearance by regulatory agencies, such as the FDA, is an extensive and uncertain
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`process. Penetrating the market is also challenging; surgeons already have significant training
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`and experience with the da Vinci, not to mention the already sizeable installed base of da Vincis
`
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`20 Gkegkes, I. D., Mamais, I. A., & Iavazzo, C. (2017). Robotics in General Surgery: A Systematic Cost
` Assessment. Journal of Minimal Access Surgery, 13(4), 243–255. Https://Doi.Org/10.4103/0972-9941.195565
`21 Perez, R. E. & Schwaitzberg, S. D., Robotic Surgery: Finding Value in 2019 and Beyond, Ann. Laparosc. Endosc.
`Surg. 2019; 4:51.
`22 Intuitive (Form 10-K), at 89 (Feb. 10, 2021).
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 17 of 45
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`throughout the U.S. Furthermore, according to ¶ 23 of a complaint IRRC Restore filed against
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`Intuitive on March 29, 2021, Intuitive has agreements with its customers that they will not
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`purchase robotic surgery systems from competing manufacturers.
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`45.
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`Further, Intuitive enjoys a first mover advantage in the market because the da
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`Vinci was the first robotic surgery system approved by the FDA in 2000. Consequently, many
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`surgeons received extensive training to use the da Vinci during their residency, so hospitals
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`wishing to attract surgeons who can perform robotic surgeries (and consequently the patients
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`who wish to receive robotic surgery) are disincentivized from installing other robotic surgery
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`systems. This also limits the extent to which other robotic systems can compete effectively in the
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`2.
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`The da Vinci Service Aftermarket and Intuitive’s Monopoly Power in That
`Aftermarket
`
`a. The Da Vinci Service Aftermarket
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`46.
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`There is a relevant aftermarket in the U.S. for the service of da Vincis (the “da
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`Vinci Service Aftermarket”). The robotic surgery equipment manufacturing industry generates
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`about $3.8 billion in revenues per year in the U.S. and is expected to grow by 4.9% per year
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`between 2020 and 2025.23 In addition, the medical equipment repair and maintenance services
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`industry is a $3.3 billion market in the U.S. and is expected to grow by 1.5% per year between
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`2020 and 2025.24
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`47.
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`After the da Vinci is installed, it requires regular maintenance and service. The
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`primary aspects of the da Vinci Service Aftermarket are the routine maintenance of the da Vinci
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`and the repair of the da Vinci when necessary.
`
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`23 Thomas Crompton, “Robotic Surgery Equipment Manufacturing”, IBIS World, Dec 2020, at 7.
`24 Jack Curran, “Medical Equipment Repair & Maintenance Services,” IBIS World, June 2020, at 7.
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`Case 4:21-cv-05266-KAW Document 1 Filed 07/08/21 Page 18 of 45
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`48.
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`Recognizing this need for regula