Case 8:14-cv-00111-PWG Document 686 Filed 12/01/17 Page 1 of 52
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF MARYLAND
`Southern Division
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`INTELLECTUAL VENTURES I LLC,
`et al.,
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`Plaintiffs/Counter-Defendants,
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`v.
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`CAPITAL ONE FINANCIAL CORP.,
`et al.,
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`Defendants/Counterclaimants/
`Third-Party Plaintiffs,
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`Case No.: PWG-14-111
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`INTELLECTUAL VENTURES
`MANAGEMENT, LLC, et al.,
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`Third-Party Defendants/
`Joined Counter-Defendants.
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`MEMORANDUM OPINION
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`The litigation history between the Intellectual Ventures companies (Plaintiffs, Counter-
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`Defendants, Third-Party Defendants, and Joined Counter-Defendants to this action; collectively
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`referred to as “IV”) and the Capital One companies (Defendants, Counterclaimants, and Third-
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`Party Plaintiffs in this action; collectively referred to as “Capital One”) is protracted, beginning
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`with a patent infringement action that Intellectual Ventures I, LLC and Intellectual Ventures II,
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`LLC (together, “IV I and II”) filed in the Eastern District of Virginia on June 19, 2013. In that
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`case, as well as in this patent infringement action that IV I and II filed on January 15, 2014,
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`Capital One brought antitrust counterclaims. The Virginia court dismissed Capital One’s
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`Case 8:14-cv-00111-PWG Document 686 Filed 12/01/17 Page 2 of 52
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`antitrust claims for failure to state a claim, and IV now seeks summary judgment on very similar
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`claims. ECF No. 656. Because Noerr–Pennington immunity and collateral estoppel both bar
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`Capital One’s antitrust claims, I will grant IV’s motion.
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`Procedural Background
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`IV I and II filed suit in this Court, alleging that Capital One infringed five of their
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`patents. Compl., ECF No. 1. IV I and II ultimately voluntarily withdrew one patent
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`infringement claim and proceeded with the others. ECF Nos. 80, 81. The parties engaged in
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`extensive discovery and agreed to referral to a Special Master highly experienced in patent law,
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`jointly selected by the parties and appointed pursuant to Fed. R. Civ. P. 53. ECF Nos. 134, 136,
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`143. He oversaw additional discovery, following which the parties extensively briefed the patent
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`infringement claims. ECF Nos. 147, 147-1, 169, 169-1, 227, 246, 297, 300, 303. The Special
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`Master issued two reports and recommendations, ECF Nos. 298 and 315, in which he ruled in
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`favor of IV with respect to two of its patents, United States Patent Nos. 7,984,081 and 6,546,002
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`(“the ’081 Patent” and “the ’002 Patent”), and in favor of Capital One on the claims related to
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`United States Patent Nos. 6,314,409 and 6,715,084 (“the ’409 Patent” and “the ’084 Patent”).
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`Both parties challenged the Special Master’s rulings adverse to them, and further briefing
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`ensued. ECF Nos. 307, 311, 312, 313, 319, 324, 325, 330, 335, 336, 344.
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`After reviewing the Special Master’s reports and recommendations and the parties’
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`extensive briefs, I overruled the Special Master with respect to the ’081 Patent and the ’002
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`Patent, finding that they were unenforceable. ECF Nos. 377, 378. I also ruled that collateral
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`estoppel applied regarding the ’409 Patent and the ’084 Patent, barring IV from bringing claims
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`against Capital One for infringement of those patents. ECF No. 382. The net effect of my ruling
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`was that each of the patents that IV claimed Capital One had infringed was unenforceable, two
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`Case 8:14-cv-00111-PWG Document 686 Filed 12/01/17 Page 3 of 52
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`patents because I concluded that they were invalid pursuant to 35 U.S.C. § 101, and two patents
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`because the United States District Court for the Southern District of New York in Intellectual
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`Ventures v. JPMC, Case No. 13-3777-AKH, 2015 WL 1941331 (S.D.N.Y. Apr. 29, 2015),
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`concluded that they were invalid, and issue preclusion barred me from reaching a different
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`conclusion. On those grounds, I entered summary judgment in Capital One’s favor on those four
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`remaining patent infringement claims. ECF Nos. 378, 382. And, finding no just reason for
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`delay, I entered a final judgment in favor of Capital One on the patent infringement claims,
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`making that order immediately appealable. ECF No. 387. The Federal Circuit affirmed my
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`rulings, Intellectual Ventures I LLC v. Capital One Fin. Corp., 850 F.3d 1332 (Fed. Cir. 2017),
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`thereby ending the patent infringement claims against Capital One.
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`Meanwhile, Capital One had sought leave to file three antitrust counterclaims, claiming
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`monopolization and attempted monopolization, in violation of Section 2 of the Sherman Act, 15
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`U.S.C. § 2, and unlawful asset acquisition, in violation of Section 7 of the Clayton Act, 15
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`U.S.C. § 18, as part of its Third Amended Answer, Defenses, and Counterclaims. ECF No. 106.
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`IV I and II opposed the motion. ECF No. 118. I granted Capital One leave to file its
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`counterclaims, ECF Nos. 194, 195, which it did, ECF No. 196; see also Fourth Amended
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`Answer, Defenses, and Counterclaims, ECF Nos. 438 (redacted), 439 (sealed). It also filed a
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`Third Party Complaint against additional Intellectual Ventures companies: Invention Investment
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`Fund II, LLC; Intellectual Ventures Management, LLC; Invention Investment Fund I, L.P. ECF
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`Nos. 228 (sealed), 230 (redacted). Capital One alleges that IV has tried, without success, to
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`license to Capital One its extensive patent portfolio, which includes the patents that IV has sued
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`Capital One, in this suit and the Virginia suit, for infringing. Capital One believes that IV’s
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`repeated claims against it are actionable under antitrust law.
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`Case 8:14-cv-00111-PWG Document 686 Filed 12/01/17 Page 4 of 52
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`I denied IV’s motions to dismiss the counterclaims and Third Party Complaint, ECF Nos.
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`225, 296, finding that Capital One had pled them sufficiently to proceed to discovery. ECF No.
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`328. After another round of extensive (and expensive) discovery regarding liability on the
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`antitrust counterclaims, I attended a tutorial involving the economic experts that the parties had
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`identified. ECF No. 651. Also in attendance was the court technical advisor, Professor John M.
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`de Figueiredo of Duke University Law and Business Schools, whose appointment the parties had
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`confirmed on a status conference call, and who assisted the court in evaluating the economic
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`evidence. ECF Nos. 606, 608.1 At the close of discovery, IV filed the pending Motion for
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`Summary Judgment, which the parties fully briefed.2 In support of their positions, the parties
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`jointly submitted a 13,344 page Joint Record, comprising 286 exhibits in sixteen, 3-inch binders.
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`Having reviewed the parties’ memoranda and exhibits, I now rule.
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`1 Unlike expert witnesses appointed under Rule 706, technical advisors are appointed under the
`court’s inherent authority, and they do not testify at trial (and are not deposed or subject to cross
`examination). Joe S. Cecil & Thomas E. Willging, Court-Appointed Experts in Reference Manual
`on Scientific Evidence 527, 531 (Fed. Judicial Ctr. 1994). Accordingly, Professor de Figueiredo
`did not provide his independent opinion on the issues, but instead helped me understand the
`parties’ experts’ methodology, any assumptions underlying the experts’ opinions, and how the
`methodology applies to the facts of this case. Thus, the purpose of the technical expert was to
`assist me in understanding the economic issues in this litigation and to enhance my ability to
`make an informed ruling on the pending motion. In this regard, Professor de Figueiredo’s
`assistance was invaluable.
`2 The parties fully briefed the motion. ECF Nos. 657 (sealed opening brief), 668 (redacted
`opening brief), 662 (redacted opposition), 664 (sealed opposition), 669 (sealed reply), 671
`(redacted reply). A hearing is not necessary. See Loc. R. 105.6.
`Also pending are motions to seal the opening brief and opposition. ECF Nos. 658, 665. I
`have considered the motions and other filings in this case, included redacted versions of the
`sealed documents, and in the interest of protecting confidential, proprietary, trade secret, and/or
`commercially sensitive information, I will grant the motions to seal.
`Intellectual Ventures also has filed objections to the Joint Record Exhibits, ECF No. 674
`(redacted), 675 (sealed), as well as a motion to seal its objections, ECF No. 676. Its motion to
`seal is granted for the same reasons that the summary judgment briefings are sealed. However,
`the objections are overruled. And, although I relied on the sealed briefings for this
`Memorandum Opinion, its contents do not justify sealing it, because the public’s interest in a
`public ruling outweighs the parties’ interest in sealing information related to this case.
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`Parties’ Arguments
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`The essence of Capital One’s antitrust claim is that IV is a “patent troll,”3 and not just any
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`patent troll, but a veritable Dovregubben.4 Capital One asserts that IV’s business practice is to
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`acquire a vast portfolio of thousands of patents that purportedly deal with technology essential to
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`the types of services offered by commercial banks (such as ATM transactions, mobile banking,
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`on-line banking, and credit card transactions). It then employs an aggressive marketing scheme
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`whereby it makes an “offer” for banks to license (Capital One really would prefer to say
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`“extorts” banks to license) its entire portfolio for a period of years at a jaw-droppingly high
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`price. But, Capital One insists, when the banks ask for details about the patents covered in the
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`portfolio in order to determine whether their services infringe them, IV refuses to disclose
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`sufficient information to enable them to make an intelligent decision about whether they should
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`agree to the license. And, if the bank balks at licensing the entire portfolio at IV’s take-it-or-
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`leave-it price, IV then threatens to file a patent infringement claim against the bank regarding
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`only a few of the patents in the portfolio. Adding insult to injury, IV then makes it clear that
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`should it lose the patent infringement case, it will simply file another (and if needed, another, and
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`so on) regarding a different set of its patents, until the prospect of endless high-cost litigation
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`forces the bank to capitulate and license the entire portfolio.5
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`3 A “patent troll” is an individual or company “who acquires by purchase or application to the
`Patent and Trademark Office a patent that he uses not to protect an invention but to obtain a
`license fee from, or legal judgment against, an alleged infringer.” Carhart v. Carhart-Halaska
`Int’l, LLC, 788 F.3d 687, 691 (7th Cir. 2015). “Patent trolls are also known [as] ‘patent assertion
`entities’ (PAEs), [and] ‘non-practicing entities’ (NPEs).” In re Packard, 751 F.3d 1307, 1325
`(Fed. Cir. 2014).
`4 Dovregubben was the Troll King in Henrik Ibsen’s 1867 play Peer Gynt.
`5 Capital One is not the first to make these claims about IV’s business practices. E.g., Robin
`Feldman & Tom Ewing, The Giants Among Us, 2012 Stan. Tech. L. Rev. 1, 2–15 (2012).
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`Capital One characterizes IV’s business model as comprised of three components:
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`accumulate a vast portfolio of patents purportedly relating to essential commercial banking
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`services, conceal the details of those patents so that the banks cannot determine whether their
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`products infringe any of IV’s patents, and serially litigate to force the banks to capitulate and
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`license the portfolio at exorbitant cost. This conduct, Capital One insists, constitutes
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`monopolization under § 2 of the Sherman Act, 15 U.S.C. § 2, attempted monopolization under
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`§ 2 of the Sherman Act, and unlawful asset acquisition under § 7 of the Clayton Act, 15 U.S.C.
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`§ 18.
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`Nonsense, IV indignantly responds. It counters Capital One’s charges by arguing that it
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`legitimately purchased or otherwise acquired its large portfolio of patents that relate to multiple
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`technology markets. It then offers to license its portfolio to banks (and other types of
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`businesses), beginning its negotiation with an opening offer, and expecting the bank to
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`counteroffer, thereby initiating a back-and-forth exchange that it hopes will result in a mutually-
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`agreeable licensing fee. IV vehemently denies that it conceals the details of its individual patents
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`or that Capital One could not determine what they relate to by reviewing publicly available
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`information. As IV sees things, when Capital One declined to make a counter offer to its
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`opening bid, it then selected a number of its patents and brought suit against Capital One, first in
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`the Eastern District of Virginia, and then, when that suit was unsuccessful, in this Court, with
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`respect to a different set of patents. Moreover, IV claims that Capital One is, in essence, an
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`“efficient infringer”—an entity that engages in its business without care for whether it infringes
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`on patents held by others, with the knowledge that a patent infringement case is expensive to
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`bring, and many patent holders lack the funds to do so to protect their rights. As such, Capital
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`One can play the odds, infringing patents with near impunity until the rare patent holder with the
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`resources to sue does so, and then negotiate a favorable license fee.
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`IV points out that each of its patents is presumptively valid, and that it has an absolute
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`right to file litigation to enforce them. And, in IV’s view, if enforcing its patents through
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`litigation has any monopoly effect (which IV denies it does), it has immunity under the Noerr–
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`Pennington doctrine.6 Moreover, IV argues that Capital One is barred by both claim and issue
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`preclusion from asserting its antitrust counterclaims because it brought virtually the exact claims
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`in the Eastern District of Virginia suit, lost, and elected not to appeal. Further, IV challenges
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`Capital One’s definition of the relevant market for purposes of antitrust analysis, insisting that its
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`portfolio consists of numerous distinct technology markets, not some monolithic “financial
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`services portfolio” as claimed by Capital One.
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`IV also asserts that Capital One’s antitrust theory is fundamentally flawed, because no
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`liability can attach unless Capital One can prove that IV exercises monopoly power within a
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`relevant market. “Monopoly power is the power to control prices or exclude competition.”
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`United States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 391 (1956); see Eastman Kodak
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`Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 481 (1992) (quoting E.I. du Pont); United States v.
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`Grinnell Corp., 384 U.S. 563, 571 (1966) (same). IV insists that it does neither, because the
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`correct market definition would recognize that what IV owns is a series of patents that relate to
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`multiple, distinct technology markets. And IV could exercise monopoly power only if Capital
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`One can show that its patents include those affecting alternative substitute technologies that
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`6 Under the Noerr–Pennington doctrine, “[t]hose who petition government for redress,”
`including by filing suit in court, “are generally immune from antitrust liability.” Prof’l Real
`Estate Inv’rs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 56, 57 (1993) (citing E. R.R.
`Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961); United Mine Workers of
`Am. v. Pennington, 381 U.S. 657 (1965)).
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`Capital One otherwise could turn to in order to avoid having to license IV’s patents. Capital One
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`has not made this showing, IV contends, entitling it to summary judgment.
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`Antitrust Analysis and Economic Theory
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`Underlying the legal issues in this case are two important but competing policies. On one
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`hand, we value innovation that leads to new inventions that advance science and technology,
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`protecting that creative effort by issuing patents. A patent, by its very nature, vests its owner
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`with a type of legal monopoly, which it can enforce against anyone who infringes the patent.
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`Enforcing a patent through litigation protects this monopoly, even though in other circumstances
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`we view monopolies as harmful.
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`The other important policy implicated by this case, of course, is the strong desire to
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`ensure vigorous competition in the marketplace, so that consumers (whether businesses or
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`individuals) can purchase at the lowest possible price. To promote the benefits of robust
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`competition, antitrust law aims to prevent a company from having the ability to control the price
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`of its product or exclude competitors to the extent that it can charge sustained supracompetitive
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`prices (prices substantially above what a competitive price would be if consumers could simply
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`buy a close substitute product from a competitor at lower cost).
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`The exercise of monopoly power with regard to a single patent (or even a few patents)
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`usually does not offend antitrust law. But it is another matter to acquire a vast portfolio of
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`patents that are essential to technology employed by an entire industry and then to compel its
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`licensing at take-it-or-leave-it prices because it is not economically feasible to determine if
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`alternative technologies, not covered by the accumulation of patents, are available. This
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`acquisition and compelled licensing could amount to the ability to exercise monopoly power on
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`an entirely different scale.
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`In a very real sense, antitrust law is founded on economic theory about how efficient
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`markets should operate. In an ideally competitive market where there are no barriers to entry or
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`exit by competing businesses, the availability of the same product (or a close substitute) from
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`many sources will tend to drive the price downwards to a point slightly above the cost to make
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`the product—the so-called “competitive price.” Think of pizzerias. There are lots of them, and
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`entry and exit from this business is relatively free and unrestricted. If one restaurant decides to
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`charge too much for a slice of pizza, there are many others nearby where the consumer can buy
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`at a lower cost. The ready supply of close substitutes keeps costs competitive—slightly above
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`the cost of making the pizza.
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`But, if circumstances are such that one pizzeria can exclude competition or control prices
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`by charging more than a competitive price because consumers are unable to avoid paying it by
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`turning to lower-priced alternatives, then it has the ability to exercise market power. And the
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`power to control prices or exclude competitions is the essence of monopoly power. See Grinnell
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`Corp., 384 U.S. at 571. Antitrust law is designed to prevent the acquisition and exercise of
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`monopoly power. See id.; 15 U.S.C. § 2.
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`Each of the above important competing policies is at play in this case. Capital One
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`argues, through its highly credentialed and impressive economic expert, Professor Fiona Scott
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`Morton of Yale University, that IV possesses monopoly power in connection with its large
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`financial services patent portfolio, which touches on essential technologies that commercial
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`banks have heavily invested in and cannot realistically design around to avoid the reach of IV’s
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`patents. Because of the size of this portfolio (between 7,725 and 35,000 patents, depending on
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`whether Capital One or IV’s expert is correct),7 IV is able to charge supracompetitive prices to
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`license the portfolio. And IV’s concealment of the details regarding the patents leaves Capital
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`One unable (without incurring ruinous cost) to ferret out the particulars of each patent and assess
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`whether it infringes any patents. Also at play is IV’s aggressive policy of threatening (and
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`bringing) expensive serial patent infringement suits. IV’s aggregation of such a large portfolio,
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`combined with its concealment and aggressive litigation strategies will, according to Capital
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`One, eventually force it to capitulate and pay IV’s supracompetitive price to license the entire
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`portfolio.
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`As Professor Scott Morton sees it, antitrust analysis commonly used to determine
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`whether a proposed merger will result in anticompetitive effects, simply does not work for the
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`facts of this case. That is because merger analysis is ex ante, focusing on whether, if the merger
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`is approved, the new entity will be able to charge a small but significant non-transitory increase
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`in price (referred to as “SSNIP”)8 that it could maintain over time without competition from
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`others making that price increase unsustainable. Put differently, SSNIP analysis is best done
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`before the entity of interest has acquired monopoly power. Scott Morton reasons that this case
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`requires ex post analysis because Capital One already had incurred significant costs to acquire
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`the technology to compete with other commercial banks in essential services such as on-line
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`7 According to Professor Scott Morton, IV has approximately 40,000 patents, 7,725 of which are
`financial services patents. Scott Morton Report ¶¶ 96 n.59, 170 n.136. Professor Gilbert asserts
`that “the portfolio that Intellectual Ventures initially offered to license to Capital One includes a
`much larger number of patents. Capital One’s complaint characterizes Intellectual Ventures’
`offer as covering 35,000 patents.” Gilbert Report ¶ 40 (citing Third-Party Compl. ¶ 40).
`8 See U.S. Dep’t of Justice & Fed. Trade Comm’n, Horizontal Merger Guidelines § 4.1.1 (Aug.
`19, 2010), available at https://www.justice.gov/atr/horizontal-merger-guidelines-08192010
`(discussing SSNIP).
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`banking, remote banking, and ATM and credit card transactions when IV began licensing its
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`massive financial services patent portfolio. In other words, IV already had acquired monopoly
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`power when it approached Capital One to license its patents. Because Capital One already had
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`incurred substantial sunk costs in the technology in which it had invested, it was unable to design
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`around IV’s enormous portfolio to adopt non-infringing technologies the way it could have done
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`if it knew of the breadth and scope of IV’s patents before it incurred the cost of the technologies
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`it adopted.
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`Under her proposed ex post analysis, it is IV’s conduct after having acquired monopoly
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`power that is critical to antitrust scrutiny. Through its trio of patent aggregation, concealment and
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`litigation, IV has acquired insurmountable bargaining power enabling it to exercise “hold-up”
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`power by demanding take-it-or-leave-it supracompetitive prices to license its financial services
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`portfolio. And even though it has resisted doing so to date, eventually Capital One will be forced
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`to capitulate to the threat of exorbitantly expensive patent litigation to purchase a license that it
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`does not want, despite the fact that IV’s singular lack of success in prosecuting any of its patent
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`suits against IV (or other banks) suggests that its massive portfolio is in truth composed of
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`nothing more than an amalgamation of weak patents. And, but for IV’s practice of
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`accumulation, concealment and litigation, it could never command a price to license its portfolio
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`of weak patents at anything near the supracompetitive price it sought from Capital One.
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`Scott Morton analogizes IV’s financial services patent portfolio to a “cluster market” that
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`IV promotes as a single product (for which there are no close substitutes) at a supracompetitive
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`price. And she asserts that IV exercises monopoly power, despite the fact that no bank (including
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`Capital One) has agreed to purchase a license to the entire portfolio, and IV has yet to prevail in
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`any of its patent suits against banks.
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`Pure humbug, counters IV, through its equally well-credentialed and impressive
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`economic expert, Professor Richard Gilbert from the University of California, Berkley. He
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`challenges Professor Scott Morton’s market definition, arguing that the proper definition is not a
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`“cluster” of financial services patents constituting a single product, but rather a collection of
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`patents that relate to multiple distinct technology markets. Professor Gilbert relies on the
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`Antitrust Guidelines for the Licensing of Intellectual Property issued jointly by the U.S.
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`Department of Justice and the Federal Trade Commission (“Guidelines”). See U.S. Dep’t of
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`Justice & Fed. Trade Comm’n, Antitrust Guidelines for the Licensing of Intellectual Property
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`(Jan. 12, 2017), available at https://www.justice.gov/atr/guidelines-and-policy-statements-
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`0/2017-update-antitrust-guidelines-licensing-intellectual-property.
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` The Guidelines
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`state,
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`relevantly, that “[a]lthough the intellectual property right confers the power to exclude with
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`respect to the specific product, process, or work in question, there will often be sufficient actual
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`or potential close substitutes for such product, process, or work to prevent the exercise of market
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`power.” Id. § 2.2, at 4. The flaw in Capital One’s antitrust analysis, according to Professor
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`Gilbert, is its failure to analyze the distinct technology markets for which IV does have patents to
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`determine whether there are alternative close substitutes that Capital One could turn to in order
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`to avoid having to license from IV.
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`As Professor Gilbert sees it, IV’s patents touch on a large number of distinct technology
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`markets, each of which must be analyzed using SSNIP analysis, which Professor Scott Morton
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`failed to do. Thus, he strongly disagrees that IV’s patent portfolio can be analyzed as a cluster
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`market at all. And, even more fundamentally, he challenges Professor Scott Morton’s
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`conclusions, arguing that proper market definition and analysis requires looking at actual prices
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`(competitive price, market price and monopoly price). Here, he insists, there are no prices at all
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`because IV’s licensing offer was only an opening bid in a negotiation, not a take-it-or-leave-it
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`supracompetitive monopoly ultimatum. The negotiation did not progress to a point where a final
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`demand was reached because Capital One refused to engage by making a counter-offer. Indeed,
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`at least as of the time that discovery closed in this case, IV had not succeeded in selling a single
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`license to its banking-related patents to Capital One or any other bank.
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`As IV and Capital One agree, the essential first step in analyzing the antitrust claims in
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`this case is to define the relevant market by product(s) and geography. See United States v.
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`Marine Bancorporation, Inc., 418 U.S. 602, 618 (1974); Brown Shoe Co. v. United States, 370
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`U.S. 294, 324 (1962); Buccaneer Energy (USA) Inc. v. Gunnison Energy Corp., 846 F.3d 1297,
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`1319–20 (10th Cir. 2017). “[M]arket definition is a deeply fact-intensive inquiry . . . .” E.I.
`
`DuPont de Nemours & Co. v. Kolon Indus. Inc., 637 F.3d 435, 443 (4th Cir. 2011) (quoting Todd
`
`v. Exxon Corp., 275 F.3d 191, 199 (2d Cir. 2001)). In determining the relevant market, the Court
`
`must consider “the ‘commercial realities’ faced by consumers.” Eastman Kodak Co. v. Image
`
`Tech. Servs., Inc., 504 U.S. 451, 482 (1992). Where the facts are hotly disputed, as here,
`
`defining relevant market is “generally a question for the trier of fact.” ABA Section of Antitrust
`
`Law, Antitrust Law Developments 627–30 (ABA 8th ed. 2017), Ex. 127, Jt. Rec. 9557; see also
`
`Fineman v. Armstrong World Indus., Inc., 980 F.2d 171, 199 (3d Cir. 1992) (“[T]he
`
`determination of a relevant product market or submarket . . . is a highly factual one best allocated
`
`to the trier of fact.”). The burden of proof lies with the antitrust plaintiff to prove relevant
`
`market. Spectrum Sports, Inc. v. McQuillian 506 U.S. 447, 455–56 (1993); Berlyn Inc. v. The
`
`Gazette Newspapers, Inc., 73 F. App’x 576, 582 (4th Cir. 2003); Satellite Television &
`
`Associated Res., Inc. v. Cont’l Cablevision of Va., Inc., 714 F.2d 351, 355 (4th Cir. 1983). When
`
`the parties proffer competing economic experts on the proper definition of relevant market,
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`Case 8:14-cv-00111-PWG Document 686 Filed 12/01/17 Page 14 of 52
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`summary judgment is inappropriate as long as each expert’s views could be found by the trier of
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`fact to be reasonable. Sprint Airlines, Inc. v. Nw. Airlines, Inc., 431 F.3d 917, 945 (6th Cir. 2006)
`
`(“‘[I]ntellectual disagreement’ among the parties’ experts creates material factual disputes on the
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`relevant market . . . so as to preclude an award of summary judgment.” (quoting record));
`
`Thompson v. Metro. Multi-List, Inc., 934 F.2d 1566, 1573–74 (11th Cir. 1991) (“The parameters
`
`of a given market are questions of fact, and therefore summary judgment is inappropriate if there
`
`are material differences of fact.” (internal citations omitted)).
`
`IV does not dispute this authority, but contends that it is entitled to summary judgment
`
`despite the substantial disagreement between Professor Scott Morton and Professor Gilbert on
`
`the definition of relevant market (as well as other antitrust elements) because the methodology
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`used by Professor Scott Morton is so far removed from commonly employed antitrust analysis
`
`that it must be rejected as unreasonable as a matter of law. It is true that Professor Gilbert’s
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`analysis of relevant market is firmly grounded in commonly used antitrust analysis, as evidenced
`
`by its reliance on the Department of Justice and Federal Trade Commission’s Antitrust
`
`Guidelines for the Licensing of Intellectual Property. But, in support of their alternative
`
`analysis, Capital One and Professor Scott Morton have cited authority for the application of
`
`cluster market analysis to the definition of a relevant antitrust market. See United States v. Phila.
`
`Nat’l Bank, 374 U.S. 321, 355–56 (1963) (citing Brown Shoe); United States v. Grinnell Corp.,
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`384 U.S. 563, 572–73 (1966) (citing Brown Shoe); Brown Shoe, 370 U.S. at 324–25; and Fed.
`
`Trade Comm’n v. Staples, Inc., 190 F. Supp. 3d 100, 116–17 (D.D.C. 2016) (citing Brown Shoe);
`
`see also Ian Ayres, Rationalizing Antitrust Cluster Markets, 95 Yale L. J. 109 (1985). And,
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`Professor Scott Morton has noted that the Department of Justice Horizontal Merger Guidelines
`
`that Professor Gilbert referenced do recognize that “[e]vidence of competitive effects can inform
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`Case 8:14-cv-00111-PWG Document 686 Filed 12/01/17 Page 15 of 52
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`market definition, just as market definition can be informative regarding competitive effects.”
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`Horizontal Merger Guidelines § 4.
`
`With respect to cluster markets, Professor Ayres, one of the early scholars to study such
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`markets in antitrust law, was critical of the courts’ failure to articulate “a sound justifying
`
`theory” of when cluster analysis is appropriate, opting instead for a series of “ad hoc” standards.
`
`He noted:
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`The lack of a justifying theory apparent in Philadelphia National Bank and
`Grinnell has left lower courts virtually unconstrained to develop additional
`criteria for cluster definitions. Lower courts have based cluster definitions on the
`existence
`of
`trade
`associations;
`census
`classifications;
`functional
`complementarity; common technology, distribution or marketing; a unique
`product group; and other market characteristics. While courts have a plethora of
`standards from which to choose, they currently have no basis for distinguishing
`the good from the bad (and the ugly). In sum, while some cluster markets have
`been defined correctly, the lack of a sound justifying theory has led courts to
`adopt conflicting and ad hoc standards. In a world in which antitrust defendants
`are usually multiproduct firms, the problem of deciding when to clust