The opinion of the court was delivered by: RONALD WHYTE, District Judge
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO
Plaintiffs Tele Atlas N.V. and Tele Atlas North America ("Tele
Atlas") have sued defendant NAVTEQ Corporation ("NAVTEQ") for (1)
violation of the Sherman Antitrust Act, 15 U.S.C. §§ 1-2, (2)
violation of the Clayton Act, 15 U.S.C. § 14, (3) violation of
California Business and Professions Code §§ 16720, 16726, 16727,
and 17200, (4) intentional interference with contractual
relations, and (5) intentional interference with prospective
economic advantage. NAVTEQ moves to dismiss Tele Atlas' first
amended complaint ("FAC"). The court has read the moving and
responding papers and considered the arguments of counsel. For
the reasons set forth below, the court grants in part and denies
in part NAVTEQ's motion. I. BACKGROUND
Tele Atlas and NAVTEQ license digital map data to makers of
navigation devices. FAC ¶ 1. According to Tele Atlas, Etak, Inc.
("Etak") introduced the first consumer navigation system in 1985.
Id. at ¶ 29. Etak and NAVTEQ were competitors for about ten
years. Id. at ¶ 30. In 1996, Sony Corporation of America
("Sony") bought Etak. Id. at ¶ 31. Tele Atlas contends that
Sony limited its investment in Etak, causing Etak to lose its
ability to license digital map data effectively and allowing
NAVTEQ to dominate the market. Id. at ¶ 31. Tele Atlas acquired
Etak in 2000. Id. at ¶ 32. Between 2000 and 2002 Tele Atlas
"upgrade[d] Etak's outmoded digital map data so that it would
once again be competitive." Id. at ¶ 33. This effort involved
dispatching field collectors to drive "over roads covering more
than 55% of the populated regions in the United States" and
"image-attribut[ing]" 80% of these areas. Id.
In January 2003 Tele Atlas allegedly introduced the MultiNet
North America: "a map database of North America that supported
routing applications to provide precise, efficient, legal and
physically reliable turn-by-turn directions[,] . . . featured
links to real-time traffic coverage[,] and included a wide range
of `point of interest' such as gas stations, hotels and
airports." Id. at ¶ 34. By early 2004 Tele Atlas' field
collectors had covered 80% of the United States and Tele Atlas'
digital map data "was at least commensurate with and in some
respects superior to the quality of NAVTEQ's digital map data."
Id. at ¶ 35.
However, Tele Atlas alleges, NAVTEQ's anti-competitive conduct
has prevented Tele Atlas from entering the market. Id. at ¶ 22.
Tele Atlas defines the relevant geographic market as the United
States. Id. at ¶ 11. According to Tele Atlas, the relevant
technological market is the "Perspective Navigation Display
Technology Market," which involves "methods for displaying
portions of a topographic map on a personal navigation device
from an apparent perspective [of] outside and above a vehicle."
Id. at ¶ 12. Tele Atlas alleges that NAVTEQ enjoys monopoly
power in this market. Id. at ¶ 13. Tele Atlas contends that
there are three relevant product markets: (1) the "Embedded
Device Market," which "consists of licenses to digital map data
for use in navigation devices that are intended for permanent
installation in automobiles," (2) the "PNV Device Market," which
"consists of licenses to digital map data for use in personal
navigation devices, including handheld devices as well as devices
that may be affixed onto or near a car's dashboard," and (3) the
"Navigation Device Market," which "consists of licenses to
digital map data for use in navigation devices." Id. at ¶¶ 14-17. Tele Atlas
asserts that NAVTEQ's market share is about (1) 95% of the
Embedded Device Market, (2) 70 to 75% of the PNV Device Market,
and (3) 75% of the Navigation Device Market. Id. at ¶¶ 15-17.
Tele Atlas claims that NAVTEQ's "first mover" advantage in the
Embedded Device Market "shield[s its] monopoly power and market
power" because automakers "are generally hesitant to switch to
new products." Id. at ¶ 26. In addition, Tele Atlas contends,
NAVTEQ has entered into contracts with automakers "that
effectively require embedded device makers to license NAVTEQ
data." Id. at ¶ 36. Moreover, Tele Atlas asserts, NAVTEQ locked
up the Automobile Association of America ("AAA") "by literally
giving data away for free to AAA for up to two years. Id. at ¶¶
Tele Atlas also alleges that NAVTEQ has "adopted the same
methods used to exclude Tele Atlas from the Embedded Device
Market to exclude Tele Atlas from the PNV Device Market." Id.
at ¶ 40. Tele Atlas contends that NAVTEQ often requires licensees
to pre-pay in amounts that cover five years or more of service.
Id. at ¶ 41. In addition, according to Tele Atlas, "NAVTEQ
provides free sophisticated and eye-catching PNV device displays"
for retailers who commit exclusively to showcasing PNV devices
that incorporate NAVTEQ's data. Id. at ¶ 42. Tele Atlas also
asserts that NAVTEQ illegally ties Perspective Navigation Display
Technology to the licensing of NAVTEQ's data for use in PNV
devices. Id. at ¶ 44. According to Tele Atlas, NAVTEQ
threatened to sue Navman and TomTom two PNV device makers that
license digital map data from Tele Atlas for infringing U.S.
Phillips Corporation's U.S. Patent No. 5,151,886 ("the "'886
Patent"). Id. at ¶ 45. Tele Atlas alleges that NAVTEQ, which
licenses the '886 patent, told Navman and TomTom that it would
not sue them if they licensed the '886 patent. Id. at ¶¶ 46-47.
Tele Atlas contends that Navman acquiesced to NAVTEQ's demands.
Id. at ¶ 49. Tele Atlas claims that TomTom agreed to license
the '886 patent from NAVTEQ only after NAVTEQ filed a patent
infringement suit against TomTom. Id. at ¶ 50.*fn1
Dismissal under Rule 12(b)(6) is proper only when a complaint
exhibits either a "lack of a cognizable legal theory or the
absence of sufficient facts alleged under a cognizable legal
theory." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1988).
The court must accept the facts alleged in the complaint as true.
Id. "A complaint should not be dismissed `unless it appears
beyond doubt that the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief.'"
Gilligan v. Jamco Dev.Corp., 108 F.3d 246, 248 (9th Cir. 1997)
(quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
Federal Rule of Civil Procedure 8(a) requires complaints to
contain "a short and plain statement of the claim showing that
the pleader is entitled to relief." "[A]ntitrust pleadings need
not contain great factual specificity" than other complaints.
Portland Retail Druggists Ass'n v. Kaiser Found. Health Plan,
662 F.2d 641, 648 (9th Cir. 1981). "However, the court is not
required to accept legal conclusions cast in the form of factual
allegations if those conclusions cannot reasonably be drawn from
the facts alleged." Clegg v. Cult Awareness Network,
18 F.3d 752, 754-55 (9th Cir. 1994). "Nor is the court required to accept
as true allegations that are merely conclusory, unwarranted
deductions of fact, or unreasonable inferences." Sprewell v.
Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
A. Tele Atlas' Exclusive Dealing Claims
Tele Atlas' first four causes of action allege that NAVTEQ
violated (1) section 1 of the Sherman Act,*fn2 (2) section 2
of the Sherman Act,*fn3 (3) section 3 of the Clayton
Act,*fn4 and (4) California Business and Professions Code sections 16720 and 16726.*fn5 Compl. ¶¶
54-77. NAVTEQ moves to dismiss these claims to the extent they
allege that NAVTEQ engaged in exclusive dealing. According to
NAVTEQ, Tele Atlas has failed to "allege a factual predicate" for
these causes of action, "including the specific customers,
agreements, or products supposedly involved." Mot. Dism. at
Courts occasionally seem to reach divergent results on whether
antitrust claims contain enough detail to survive a motion to
dismiss. Some courts do not require the plaintiff to name the
parties who allegedly entered into an illegal contract with the
defendant. For example, in Virgin Atlantic Airways Ltd. v.
British Airways PLC, 872 F.Supp. 52 (S.D.N.Y. 1994), Virgin
Atlantic Airways ("Virgin") sued British Airways for exclusive
dealing. Virgin alleged that British Airways rewarded travel
agents for selling specified numbers of British Airways tickets
and gave corporate customers rebates "on the condition that they
purchase all or a certain high percentage of their travel
requirements from British Airways." Id. at 56-58. British
Airways moved to dismiss, arguing that "the complaint does not
identify the specific corporations and travel agents with whom
[British Airways] is alleged to have executed illegal
agreements." Id. at 65-66. The court denied the motion,
reasoning that "such specificity is not required when the sources
of proof are clearly within the defendant's control." Id. at
Likewise, in Hewlett-Packard Co. v. Arch Associates Corp.,
908 F.Supp. 265 (E.D. Pa. 1995), the court did not require an
antitrust plaintiff to name the entities that benefitted from the
defendant's allegedly anticompetitive conduct. In that case, Arch Associates
("Arch"), a printer dealership, sued Hewlett-Packard ("HP"), an
electronics manufacturer. Arch alleged that HP assisted a certain
type of dealership by giving them cash rebates without requiring
them to document sales. Id. at 269. However, Arch's complaint
stated only that "HP, in concert with certain members of its
authorized distribution network, . . . unlawfully conspired and
combined in an effort to expand its monopoly and to further
restrain trade." Id. (ellipsis in original). HP moved to
dismiss on the grounds that Arch's allegations involved "unnamed
conspirators" and were "conclusory." Id. at 268. The court
denied the motion, reasoning that the conspirators were "a finite
group whose members can be determined through discovery" and that
"the subject matter of the alleged contracts is sufficiently
identified by the pleading." Id. at 269.
Conversely, in JM Computer Servs., Inc. v. Schlumberger Tech.,
Inc., 1996 WL 241607 (N.D. Cal. 1996), a semiconductor testing
company sued a competitor for exclusive dealing. The complaint
accused the defendant of forming illegal contracts with an
ascertainable class of companies:
[Defendant] entered into exclusive dealing agreements
with the manufacturers of the parts . . . in the
relevant parts markets that Defendant itself did not
manufacture. The purpose of the exclusive agreements
was to harm competition in general in the relevant
markets. These agreements actually did harm
competition in the relevant markets. These exclusive
dealing agreements unreasonably deprived [Plaintiff]
of a needed source of supply and froze out of the
market a significant fraction of the buyers and
JM Computer, 1996 WL 241607 at *4 (ellipsis and second
alteration in original). ...