The opinion of the court was delivered by: Magistrate Judge Boyd N. Boland
This matter arises on Jeppesen Sanderson, Inc.'s Motion to Stay Antitrust Discovery [Doc. # 21, filed 8/3/2011] (the "Motion to Stay"), which is DENIED.
SOLIDFX is a software company that develops software applications that allow customers to access, organize, and use critical data. In 2009, SOLIDFX and Jeppesen entered into a five year license agreement that "provided that Jeppesen and SOLIDFX would cooperate to allow SOLIDFX to develop and sell software applications ('apps') that would allow pilots to access Jeppesen's terminal charts electronically." Scheduling Order [Doc. # 17] at p. 3.
SOLIDFX asserts that Jeppesen breached its contract with SOLIDFX and violated Sections 1 and 2 of the Sherman Act through the following conduct:
On May 26, 2010, after several months of stalling, Jeppesen finally informed SOLIDFX that it would not allow others, including SOLIDFX, to develop an app for the iPad. Jeppesen further informed SOLIDFX that Jeppesen was developing its own iPad app and that '[d]irect competition with a Jeppesen offerings [sic] will generally be avoided.' In subsequent meetings, Jeppesen confirmed that its decision to deny SOLIDFX the right to develop an iPad app was motivated by its desire to exclude competition.
Jeppesen later denied SOLIDFX the right to develop apps for other hardware platforms and operating systems. Upon information and belief, Jeppesen has denied access to the market to other potential competitors and currently controls nearly 100% of the market for apps that display Jeppesen terminal charts.
With respect to the antitrust claims, Jeppesen defends its conduct as follows:
First, federal copyright law grants Jeppesen a legal monopoly over its copyrighted material, including how to display and distribute that material. Put simply, Jeppesen has the statutory right to choose how to distribute its copyrighted charts, and case law is clear that antitrust law does not prohibit the exercise of that exclusivity.
Second, SOLIDFX cannot make out a claim for illegal tying because the allegedly tied product (Jeppesen's charts) is not distinct from the tying product (the App)--the App is simply another way for Jeppesen's subscribers to view a product (the charts) that they have already purchased.
Third, SOLIDFX's antitrust claims are divorced from the competitive realities of the charts market. SOLIDFX has defined the market as a single product--Jeppesen's own charts--and its claims are premised on Jeppesen having monopoly power over this single product. But any company has monopoly power over a market that is defined as the company's own product. In reality, Jeppesen faces significant competition in aviation charts and iPad applications. With regard to charts, Jeppesen competes with both commercial chart providers and governmental entities, the latter of which make their charts available to pilots at little to no cost. With regard to applications, a recent New York Times article reported that there are more than 250 aviation Apps for the iPad, and pointed to a chart application called ForeFlight--which directly competes with Jeppesen's App--as one of the top grossing Apps on iTunes.
Jeppesen has moved to dismiss all of SOLIDFX's claims. Motion to Dismiss [Doc. # 14]. In the meantime, the Motion to Stay seeks an order staying all antitrust discovery pending a ruling on Jeppesen's motion to dismiss.
The Federal Rules of Civil Procedure presume that discovery may proceed despite the filing of a motion to dismiss, absent special provisions such as those provided in the Private Securities Litigation Reform Act or in connection with a motion seeking dismissal based on qualified immunity. See Rio Grande Royalty Co., Inc. v. Energy Transfer Partners, L.P., 2008 WL 8465061 *1 (S.D. Tex. August 11, 2008). Although Jeppesen relies heavily on the Supreme Court's decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), that decision does not "erect an automatic, blanket prohibition on any and all discovery before an antitrust plaintiff's complaint survives a ...