Overview
On January 3, 2022, the Honorable Vince Chhabria of the United States District Court for Northern District of California denied Defendant’s motion to dismiss in its entirety in this consolidated antitrust class action against Intuitive Surgical, Inc.
Plaintiffs allege that Intuitive engages in an anticompetitive scheme pursuant to which it ties the purchase or lease of its da Vinci surgical robot to the additional purchase of da Vinci maintenance and repair services, including the repair and replacement of the surgical system’s EndoWrists—a violation of Sections 1 and 2 of the Sherman Act.
On September 24, 2021, the court appointed Cohen Milstein Interim Co-Lead Counsel.
Case Background
Intuitive dominates the market for minimally invasive surgical robots with its da Vinci robots. Plaintiffs allege that through anticompetitive conduct, Intuitive abuses its dominance to limit competition in two separate markets: (1) the aftermarket for da Vinci service; and (2) the aftermarket for the replacement and repair of EndoWrists, i.e., the costly, limited-use surgical instruments (such as graspers, forceps, and scissors) required to perform surgery with a da Vinci.
Plaintiffs allege that Intuitive conditions the purchase or lease of a da Vinci on acceptance of Intuitive’s service contract. The service contract requires the purchaser to use Intuitive as the sole service provider for all da Vincis and prohibits the purchaser from either servicing the robot itself or hiring an independent repair company (“IRC”) to service the da Vinci.
Intuitive also ties the purchase or lease of a da Vinci to the purchase of replacement EndoWrists from Intuitive. According to the terms of the agreements Intuitive requires for the purchase or lease of the da Vinci (“Sales Agreements”), hospitals cannot hire IRCs to service or repair their EndoWrists (e.g., sharpen them for longer use). Both contractually and technologically, Intuitive also restricts the number of times a purchaser may use the EndoWrists, in most cases to a mere ten uses—without any medical justification. Plaintiffs claim that the sole purpose of this use limit is to enforce the contractual restrictions on repair and artificially inflate the number of EndoWrists hospitals must purchase from Intuitive to perform surgeries. These restrictions cause Plaintiffs and proposed Class members to purchase substantially more EndoWrists than necessary, at supracompetitive prices.
Plaintiffs claim that Intuitive’s conduct with regard to both da Vinci service and EndoWrist repair and replacement is precisely the type of anticompetitive behavior the Federal Trade Commission (“FTC”) condemned in a July 2021 Policy Statement. The FTC specifically noted that “certain repair restrictions may constitute tying arrangements or monopolistic practices—such as refusals to deal, exclusive dealing, or exclusionary design—that violate the Sherman Act.” Intuitive’s scheme has almost completely inhibited competition in the aftermarkets, precluding customers from using IRCs, which deliver the same quality service at lower prices, and increasing costs to Plaintiffs and the Class.
Plaintiffs bring this action on behalf of themselves and a Class of similarly situated direct purchasers to remedy the injuries Intuitive’s scheme has caused.