Case: 25-1372, 08/06/2025, DktEntry: 52.1, Page 1 of 30

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No. 25-1372

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

–––––––––––––––––––––––––––––––––––––––––––––

SURGICAL INSTRUMENT SERVICE

COMPANY, INC.,

Plaintiff-Appellant,

INTUITIVE SURGICAL, INC.,

Defendant-Appellee.

–––––––––––––––––––––––––––––––––––––––––––––

On Appeal from the United States District Court

for the Northern District of California,

No. 3:21-cv-03496 (Hon. Araceli Martinez-Olguin)

–––––––––––––––––––––––––––––––––––––––––––––

BRIEF OF THE FEDERAL TRADE COMMISSION

AS AMICUS CURIAE IN SUPPORT OF NEITHER PARTY

–––––––––––––––––––––––––––––––––––––––––––––

Of Counsel:

GEOFFREY M. GREEN

JOSEPH R. BAKER

JOSEPH CONRAD

ALOK NARAHARI

FEDERAL TRADE COMMISSION

Washington, D.C. 20580

LUCAS CROSLOW

General Counsel

H. THOMAS BYRON III

Deputy General Counsel

MARIEL GOETZ

Attorney

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

(202) 326-2763

mgoetz@ftc.gov

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TABLE OF CONTENTS

TABLE OF AUTHORITIES .......................................................................ii

INTRODUCTION ....................................................................................... 1

INTEREST OF AMICUS ........................................................................... 2

STATEMENT.............................................................................................. 4

ARGUMENT ............................................................................................... 9

THE DISTRICT COURT IMPROPERLY REQUIRED SIS TO PROVE KODAK

FACTORS TO ESTABLISH A RELEVANT MARKET. ................................... 11

A. Where A Defendant Has Market Power In A Foremarket,

Proof Of Kodak Factors Is Not Required To Define A

Relevant Aftermarket. ................................................................. 14

B. The District Court Erred In Requiring SIS To Prove The

Kodak Factors. .............................................................................. 22

CONCLUSION ......................................................................................... 24

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TABLE OF AUTHORITIES

CASES

Avaya Inc., RP v. Telecom Labs, Inc.,

838 F.3d 35 (3d Cir. 2016) .................................................................. 16

Brown Shoe Co. v. United States,

370 U.S. 294 (1962) ....................................................................... 11, 28

Coronavirus Rep. v. Apple, Inc.,

85 F.4th 948 (9th Cir. 2023) ............................................................... 23

Eastman Kodak Co. v. Image Tech. Servs., Inc.,

504 U.S. 45 (1992) ....................................................................... passim

Epic Games, Inc. v. Apple, Inc.,

67 F.4th 946 (9th Cir. 2023) ....................................................... passim

FTC v. Deere & Co.,

No. 25-cv-50017, 2025 U.S. Dist. LEXIS 109177 (N.D. Ill. June

9, 2025) .......................................................................................... 25, 26

Harrison Aire, Inc. v. Aerostar Int’l, Inc.,

423 F.3d 374 (3d Cir. 2005) ................................................................ 16

In re Deere & Co. Repair Serv. Antitrust Litig.,

703 F. Supp. 3d 86 (N.D. Ill. 2023) ............................................... 25, 26

Lambrix v. Tesla,

737 F. Supp. 3d 822 (N.D. Cal. 2024) ........................................... 23, 24

Newcal Indus. v. Ikon Off. Sol.,

513 F.3d 1038 (9th Cir. 2008) ..................................................... passim

Ohio v. Am. Express Co.,

585 U.S. 529 (2018) ....................................................................... 11, 29

United States v. E.I. du Pont de Nemours & Co.,

351 U.S. 377 (1956) ............................................................................. 11

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STATUTES

15 U.S.C. § 1 ........................................................................................... 1, 2

15 U.S.C. § 2 ........................................................................................... 1, 2

OTHER AUTHORITIES

Fed. R. App. P. 29 ....................................................................................... 4

John M. Yun, App Stores, Aftermarkets, & Antitrust, 53 Ariz. St.

L. J. 1283 (2021) .................................................................................. 15

Nixing the Fix: An FTC Report to Congress on Repair Restrictions,

FTC (May 6, 2021) ................................................................................ 3

iii

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INTRODUCTION

In this antitrust case, plaintiff Surgical Instrument Service

Company (SIS) alleges that Intuitive Surgical (Intuitive) holds a

dominant position in the market for certain surgical robots (the

“foremarket”), and engages in conduct that harms competition in the

markets for replacement and repair of parts for its robots (the

“aftermarkets”). SIS is an independent medical device repair company

that wishes to offer less expensive replacement and repair of Intuitive

surgical robot parts. But SIS alleges that Intuitive has blocked SIS from

competing in these repair aftermarkets through a series of restrictive

practices that SIS claims violate Sections 1 and 2 of the Sherman Act.

15 U.S.C. §§ 1 & 2.

The district court made a critical legal error in its instruction

about what SIS must prove to establish the relevant antitrust markets:

with regard to the alleged aftermarkets, it required SIS to prove

additional “lock-in” factors beyond traditional market definition

principles. There is no need for such proof when the defendant has

market power in the foremarket—as alleged here. The FTC submits

this brief to explain why the district court’s jury instruction was

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improper and why it contravenes precedent from the Supreme Court

and this Court, as well as basic antitrust economics. If not corrected,

this doctrinal error could interfere with effective enforcement of the

antitrust laws, making it more difficult to stop anticompetitive practices

that harm important segments of the economy and raise health care

costs.

INTEREST OF AMICUS

The Federal Trade Commission (FTC) enforces the federal

antitrust laws and has a strong interest in their correct application. The

FTC has a particular interest in ensuring that courts properly analyze

claims arising under the Sherman Antitrust Act, 15 U.S.C. §§ 1–2,

including the claims asserted in this case.

The FTC likewise has a strong interest in protecting consumers’

freedom to repair products they own—often described as a “right to

repair”—and seeks to protect against anticompetitive abuses of market

power in parts and repair aftermarkets. The FTC has studied ways in

which manufacturers limit consumers or independent repair shops from

repairing products, the associated harms, and manufacturers’ professed

justifications; in 2021 the FTC issued a report summarizing its findings.

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See Nixing the Fix: An FTC Report to Congress on Repair Restrictions,

FTC (May 6, 2021). The FTC is committed to vigorously enforcing the

law to combat repair restrictions that violate antitrust or consumer

protection laws. For example, earlier this year, the FTC sued

agricultural equipment manufacturer Deere & Company over its use of

anticompetitive tactics that have driven up equipment repair costs for

farmers and deprived them of the ability to make timely repairs to their

equipment. See, e.g., Compl., FTC v. Deere & Co., No. 3:25-cv-50017

(N.D. Ill. Jan. 15, 2025). That litigation is ongoing.

The FTC also actively works to protect competition in healthcare

markets, where costs have soared—and where far too often,

anticompetitive practices result in higher prices, lower quality, less

innovation, and fewer choices. See, e.g., Compl., FTC v. U.S. Anesthesia

Partners, Inc., No. 4:34-cv-03560 (S.D. Tex. Sept. 21, 2023).

The FTC regularly files amicus briefs addressing the proper

application of the Sherman Act. See, e.g., Br. of FTC as Amicus Curiae,

Costar Grp., Inc. v. Comm. Real Estate Exch., Inc., No. 23-55662 (9th

Cir. Jan. 26, 2024); Br. of FTC as Amicus Curiae, Teva Branded Pharm.

Prods. R&D, Inc. v. Amneal Pharms. of N.Y., LLC, No. 24-1936 (Fed.

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Cir. Sept. 6, 2024); Br. of United States and FTC as Amici Curiae,

Regeneron Pharms., Inc. v. Novartis Pharma AG, No. 22-427 (2nd Cir.

June 17, 2022); Br. of FTC as Amicus Curiae, Applied Med. Res. Corp. v.

Medtronic, Inc., No. 8:23-cv-00268 (C.D. Cal. July 3, 2023).

The FTC files this brief in support of neither party, pursuant to

Federal Rule of Appellate Procedure 29(a)(2). The FTC takes no position

on the merits of the parties’ claims.

STATEMENT

1. SIS’s Complaint alleges that Intuitive has been the leading

provider of robotic surgery systems for minimally invasive soft tissue

surgeries since the late 1990s.1 5-ER-1162 ¶ 2 (Compl.).2 A surgeon

using Intuitive’s system remotely operates a multi-arm “da Vinci” robot

from a console that displays video of the surgical site and enables the

surgeon to control surgical tools known as EndoWrists. Id. EndoWrists

are attachments to the robotic arms of the da Vinci robot, such as

forceps and scalpels. Id. The system allows precise multi-axis movement

1 Facts referenced are based on the Complaint’s allegations. The FTC

takes no position on whether evidence supports them.

2 “ER” refers to Appellant’s Excerpts of Record; “Dkt.,” to district court

docket numbers; and “DE,” to appeals court docket numbers, where

applicable.

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of the “wrist” of the surgical tool that is not possible in traditional

surgeries where a surgeon operates directly on a patient. Id. A new da

Vinci system costs more than $2 million. 5-ER-1168 ¶ 24.

SIS alleges that Intuitive has a 99 percent market share in the

worldwide and domestic markets for surgical robots used in minimally

invasive soft tissue surgery. According to SIS, these sorts of robots are

not interchangeable with robots for other types of surgeries, and they

have become critical to modern hospitals—with nearly all top-ranked

U.S. hospitals owning at least one da Vinci system. 5-ER-1173–78

¶¶ 46–61.

2. SIS’s antitrust claims center on Intuitive’s practices regarding

its EndoWrists. EndoWrists have an internal memory chip that counts

the number of times the EndoWrist is attached to a da Vinci robot arm.

5-ER-1170 ¶¶ 30–32. Intuitive programs EndoWrists to become nonoperational after a certain number of uses—typically ten—without

regard to the actual physical condition or functionality of the

EndoWrist. Id. ¶ 32. After the limit is reached, Intuitive requires the

hospital to buy a brand-new replacement EndoWrist from Intuitive at

full price. Id. Intuitive contractually prohibits da Vinci customers from

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using unapproved third-party services to repair or replace EndoWrists.

5-ER-1163 ¶ 4.

SIS, an experienced medical device repair servicer, wishes to offer

repair and refurbishment services for EndoWrists, and created a

program for doing so. 5-ER-1170–72 ¶¶ 34–38. SIS charges 30 to 45

percent less per EndoWrist than what a hospital would have to pay to

buy a replacement EndoWrist from Intuitive. 5-ER-1172 ¶ 39. SIS

secured service contracts with a number of health care providers to

perform these refurbishment services. 5-ER-1171–72 ¶¶ 36–38.

However, once Intuitive became aware of SIS’s program, it pressured

these providers to back out of the program, threatening to disable a

hospital’s da Vinci robots. 5-ER-1172 ¶ 41.

SIS sued Intuitive, asserting violations of Sections 1 and 2 of the

Sherman Act. SIS alleged that Intuitive’s practices constituted unlawful

tying (conditioning sales and servicing of da Vinci robots on customers

buying replacement parts from Intuitive); exclusive dealing (requiring

customers to replace EndoWrists with new EndoWrists sold by

Intuitive, rather than allowing repair or replacement with refurbished

EndoWrists); and monopolization (willfully obtaining and maintaining

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monopoly power in the relevant markets for repair and replacement of

surgical robot instruments). 5-ER-1188–91 ¶¶ 111–21.3

3. The district court held a 15-day jury trial. As pertinent here,

the parties disputed the proper jury instructions regarding the proof

required for SIS to establish that “replacement and repair of EndoWrist

instruments” (the aftermarket) is a relevant antitrust market.

The parties generally agreed that the jury should be instructed

that a relevant product market includes those products that a consumer

believes are reasonably interchangeable or reasonable substitutes for

each other. See Dkt. 274 at ECF pp. 16–18; Dkt. 275 at ECF p. 12; Dkt.

275-1 at ECF pp. 10–11.

Intuitive contended, however, that the court should require

additional proof. Claiming that replacement and repair of EndoWrist

instruments is a “single-brand aftermarket” of the type involved in Epic

Games, Inc. v. Apple, Inc., 67 F.4th 946 (9th Cir. 2023), Intuitive argued

that SIS must prove the four factors outlined in Epic: (1) the challenged

aftermarket restrictions are not generally known when consumers

3 Intuitive also asserted counterclaims against SIS, which are not

relevant here.

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make their foremarket purchase; (2) significant information costs

prevent accurate life-cycle pricing; (3) significant monetary or nonmonetary switching costs exist; and (4) general market-definition

principles regarding cross-elasticity of demand do not undermine the

proposed single-brand market. Dkt. 275 at ECF p. 12 (Disputed

Instruction No. 7); see also Epic, 67 F.4th at 977. Those factors are

derived from the Supreme Court’s decision in Eastman Kodak Co. v.

Image Tech. Servs., Inc., 504 U.S. 451, 473–77 (1992).

SIS opposed the additional instruction requiring proof of these

factors. Kodak and Epic, SIS explained, were premised on “‘a lack of

market power in the foremarket.’” 4-ER-716–18 (Jan. 27, 2025 charging

conference transcript) (quoting Kodak, 504 U.S. at 455); Dkt. 274 at

ECF pp. 18–19 (“The four Epic Games factors derive from concerns

about a lack of market power in the foremarket.”); Epic, 67 F.4th at

976–77. The purpose of evaluating those factors is to determine if

competition present in the foremarket can in fact discipline

anticompetitive behavior in the aftermarket. If so, the aftermarket may

not be a relevant antitrust market.

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SIS’s case, by contrast, alleged that Intuitive had near-total

control in the foremarket (99 percent share), meaning that there was

effectively no competition in the foremarket. In that scenario, SIS

explained, there is no need to assess the additional lock-in factors;

foremarket competition cannot discipline the aftermarket if that

competition simply does not exist. See Dkt. 274 at ECF pp. 18–19.

Rather, ordinary market definition principles—already reflected in the

jury instructions—determine whether the aftermarket is properly

defined. See id.

After initially agreeing with SIS, 2-ER-104, the district court

ultimately sided with Intuitive and ordered the additional instruction

requiring proof of the specific factors. 1-ER-16. Conceding that it lacked

such proof, SIS agreed to entry of judgment as a matter of law on its

antitrust claims. 1-ER-14–15. This appeal followed.

ARGUMENT

In many antitrust cases, a “threshold step” is identifying the

relevant market in which the alleged anticompetitive conduct occurs.

Epic, 67 F.4th at 974. Courts use the relevant market to assess the

defendant’s “‘ability to lessen or destroy competition.’” See Ohio v. Am.

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Express Co., 585 U.S. 529, 543 (2018) (quoting Walker Process Equip.,

Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177 (1965)). A relevant

product market includes those products that are reasonably

interchangeable for the same purposes—i.e., products that customers

would switch to in the event of a price increase or quality decrease. See,

e.g., Brown Shoe Co. v. United States, 370 U.S. 294, 325 (1962) (“The

outer boundaries of a product market are determined by the reasonable

interchangeability of use or the cross-elasticity of demand between the

product itself and substitutes for it.”); United States v. E.I. du Pont de

Nemours & Co., 351 U.S. 377, 404 (1956) (“Th[e] market is composed of

products that have reasonable interchangeability for the purposes for

which they are produced—price, use and qualities considered.”).

The district court departed from these principles by layering on

additional proof requirements (the Kodak or Epic factors) that cannot

be reconciled with fundamental principles of antitrust law in the

circumstances of this case. This Court should correct that legal error

and hold that, when considering an aftermarket as a relevant antitrust

market, analysis of specific lock-in factors is not required where a

defendant has market power in the foremarket.

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THE DISTRICT COURT IMPROPERLY REQUIRED SIS TO PROVE KODAK

FACTORS TO ESTABLISH A RELEVANT MARKET.

A relevant market can be an “aftermarket”—a market “where

demand for a good or service is entirely dependent on the prior

purchase of a durable good in a foremarket.” Epic, 67 F.4th at 976

(discussing Kodak, 504 U.S. at 466–86). The term “aftermarket” often

refers to goods or services related to a product that a consumer already

owns, such as parts for or repairs to durable equipment. The term

“foremarket” (or sometimes “primary market”) refers to the market in

which the consumer initially acquired that durable equipment—like the

surgical robots in this case. See Epic, 67 F.4th at 976.

The federal antitrust laws have long protected competition in

aftermarkets. See Kodak, 504 U.S. 451. In Kodak, the plaintiffs claimed

that Kodak used its market power in an aftermarket for Kodak copier

equipment parts to monopolize and restrain trade in an aftermarket for

repair services for Kodak copier equipment. The foremarket—copier

equipment—was deemed competitive. 504 U.S. at 465 & n.10. The

antitrust claims required Kodak to have market or monopoly power in

aftermarkets for replacement parts and service. Id. at 464, 480–82

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(discussing Sherman Act claims for tying under § 1 and monopolization

under § 2).

In response, Kodak argued that it could not “actually exercise the

necessary market power for a Sherman Act violation” because once

customers realized that their (aftermarket) service costs were

increasing, Kodak would suffer a “loss in profits from lower equipment

sales” in the foremarket. Id. at 465–66. These lost sales would make it

unprofitable for Kodak to exercise aftermarket power. Id. Therefore,

Kodak asked the Court to hold as a matter of law that “competition in

the equipment market cannot coexist with market power in the

aftermarkets.” Id. at 471; see also id. at 470.

The Court rejected Kodak’s argument, recognizing that a singlebrand aftermarket may be a separate antitrust market where

competition in the foremarket, though present, does not in fact

discipline the exercise of market power in the aftermarket.4 Kodak, 504

4 While Kodak framed the issue as one of market power, the Court

recognized that “[w]hether considered in the conceptual category of

‘market definition’ or ‘market power,’ the ultimate inquiry is the same—

whether competition in the equipment market [the foremarket] will

significantly restrain power in the service and parts markets [the

aftermarket].” Kodak, 504 U.S. at 469 n.15.

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U.S. at 477–78. Kodak defined single-brand aftermarkets based on

traditional economic principles—looking to the “‘commercial realities’

faced by consumers,’” id. at 482—rather than adopting “[l]egal

presumptions that rest on formalistic distinctions,” id. at 466–67. The

Court held that even with a competitive foremarket, market

imperfections such as a change in policy, unavailability of information,

or customer lock-in may support the existence of a single-brand

aftermarket. See id. at 473–77, 486. In such cases—where the

foremarket is competitive—a fact-bound analysis of market conditions

is needed. But the premise of the analysis in Kodak is that there is

effective competition in the foremarket. Otherwise, there would be no

need to determine whether competition in that market could constrain

aftermarket conduct.

The market imperfections that enable market power in the

aftermarket despite a competitive foremarket have become known in

this Court as “Kodak factors,” and courts have considered them in

numerous antitrust cases involving single-brand aftermarkets. See, e.g.,

Epic, 67 F.4th at 976–80; Newcal Indus. v. Ikon Off. Sol., 513 F.3d 1038,

1049 (9th Cir. 2008); Avaya Inc., RP v. Telecom Labs, Inc., 838 F.3d 354,

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398–404 (3d Cir. 2016); Harrison Aire, Inc. v. Aerostar Int’l, Inc., 423

F.3d 374, 384 (3d Cir. 2005). But they have no role to play when there is

no meaningful competition in the foremarket.

A. Where A Defendant Has Market Power In A Foremarket,

Proof Of Kodak Factors Is Not Required To Define A

Relevant Aftermarket.

A court is not always required to assess the Kodak factors when

the relevant product market is an aftermarket that consists of a single

brand’s products. Where a defendant has sufficient market power in the

foremarket, foremarket competition could not constrain aftermarket

practices regardless of whether the specific Kodak factors are satisfied.

In that instance, antitrust doctrine and precedent require only that the

plaintiff demonstrate a lack of reasonable substitutes in the

aftermarket.

1. The factual predicate underlying the Kodak analysis is a

competitive foremarket. If there is robust competition in the

foremarket, examining Kodak factors may well be required to ascertain

whether the defendant can profitably exercise market power in the

aftermarket—i.e., whether the aftermarket is a proper antitrust

market. See Kodak, 504 U.S. at 469–71. With a competitive foremarket,

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economic theory suggests that customers may be able to discipline a

defendant’s aftermarket conduct by making choices in the foremarket.

But whether competitive forces actually can have that effect in any

given market can turn on the presence or absence of the Kodak factors.

That’s not the case when meaningful competition is absent in the

foremarket. When a company has market power in the foremarket,

consumers lack the ability to use their foremarket purchase decisions to

discipline the company’s conduct in an aftermarket—regardless of

factors such as information costs and switching costs. See John M. Yun,

App Stores, Aftermarkets, & Antitrust, 53 Ariz. St. L. J. 1283, 1296

(2021) (recognizing that “when there is already market power in the

primary market,” consumers “have limited options—irrespective of the

degree of lock-in”). Market power is the ability to “‘force a purchaser to

do something that he would not do in a competitive market.’” Kodak,

504 U.S. at 464 (quoting Jefferson Par. Hosp. Dist. No. 2 v. Hyde, 466

U.S. 2, 14 (1984)). When a company has that power in the foremarket,

the central predicate of Kodak drops away, and with it, the need to

consider the Kodak factors.

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2. This Court should hold that the Kodak factors are not required

to establish an aftermarket as a relevant market where a defendant has

market power in a foremarket. That outcome is consistent with the

reasoning of Kodak, Ninth Circuit precedent, economic theory, and

decisions from two district courts squarely addressing the question.

a. The two key Ninth Circuit decisions applying Kodak to

antitrust aftermarkets both involved a lack of market power in the

relevant foremarket. See Epic, 67 F.4th at 970 (proposed foremarket

included Apple and Google); Newcal, 513 F.3d at 1049 (foremarket for

copier equipment leases was “indisputably competitive”). Both cases

support the FTC’s position here.

i. Epic. In Epic, the Ninth Circuit affirmed the dismissal of Epic’s

antitrust claims against Apple, including because Epic failed to

establish its proposed market. Epic, 67 F.4th at 978–81. Epic had

expressly framed its market as a Kodak-style aftermarket, and accepted

that the court would evaluate the Kodak factors in determining the

relevant market. See, e.g., Epic Opening Br. at ECF pp. 31, 70–71 (DE

41); Epic Reply Br. at ECF pp. 79–82 (DE 163) (arguing that “this is a

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classic single-brand product aftermarket case” and that the Kodak

factors show “persistent lock-in”).

This Court held that in those circumstances—where the

foremarket was understood to be competitive—Epic must show that,

when purchasing the foremarket product, consumers lacked knowledge

of the aftermarket restrictions at issue and that switching costs were

significant (two Kodak factors). Epic, 67 F.4th at 976–79. The Court

found that Epic failed to show, as a factual matter, a lack of consumer

knowledge. Id. at 980 (stating that “the main thrust of Epic’s marketdefinition argument” on appeal was that Epic “is entitled, as a factual

matter, to a finding in favor of its proposed aftermarkets”). This “failure

of proof” doomed its proposed market. Id.

Epic did not address whether Kodak applies in the same way in

the situation alleged here—where the defendant has market power in

the foremarket. Epic accepted the Kodak framework and did not dispute

that the Kodak factors should apply. The salient question in this appeal

thus was not presented—much less decided—in Epic. Epic’s recitation

of the factors a plaintiff “must show” to “establish a single-brand

aftermarket,” Epic, 67 F.4th at 977, therefore must be understood in the

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context of a competitive foremarket, id. at 978 (describing Kodak factors

as applicable in the context of “competitive” foremarkets). Indeed, this

Court in Epic purported to straightforwardly apply Kodak, not extend it

to a new situation—i.e., where a defendant has market power in a

foremarket. See id. at 976–77, 979.

ii. Newcal. This Court’s other key case applying Kodak likewise

involved a “competitive” foremarket in which the defendant “ha[d] no

significant market power.” Newcal, 513 F.3d at 1049. The Newcal

plaintiffs alleged Sherman Act violations in aftermarkets for upgrade

copier equipment and copier repair services, with a foremarket for

copier equipment leases. That foremarket was “indisputably

competitive,” id.; the plaintiffs did not allege that the defendant “holds

power in the primary market,” id. at 1050. Against that backdrop, the

Newcal Court held that plaintiffs had plausibly alleged a single-brand

aftermarket under Kodak and standard market definition principles. Id.

at 1049–51.

Epic and Newcal reinforce the conclusion that analysis of Kodak

factors is appropriate in cases where a defendant lacks market power in

the foremarket. Both emphasize that Kodak was premised on the

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existence of competition in the foremarket. See Epic, 67 F.4th at 976–

77; Newcal, 513 F.3d 1038. Moreover, both recognize that in Kodak, the

Supreme Court “folded aftermarkets into the framework for assessing

markets generally,” which examines reasonable substitutability for the

product at issue. Epic, 67 F.4th at 976; see also Newcal, 513 F.3d at

1045, 1051 (discussing standard market definition principles). And both

embrace the idea that single-brand aftermarkets may be appropriate

where foremarket competition will not discipline anticompetitive

conduct in the aftermarket. See Epic, 67 F.4th at 976–77; Newcal, 513

F.3d at 1050 (“Competition in the initial market, therefore, does not

necessarily suffice to discipline anticompetitive practices in the

aftermarket.”). This case simply presents another scenario where that

disciplining effect necessarily is absent—making a single-brand

aftermarket definition proper without the need for considering Kodak

factors.5

5 Coronavirus Rep. v. Apple, Inc., 85 F.4th 948 (9th Cir. 2023), is

consistent with the FTC’s position. There, this Court affirmed dismissal

of plaintiffs’ Sherman Act claims for failure to allege a plausible

relevant market, remarking that plaintiffs pleaded fifteen relevant

markets in a “scattergun fashion.” Id. at 954–57. The Court considered

whether plaintiffs’ allegations of downstream markets amounted to a

(Continued…)

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b. In well-reasoned decisions, two district courts have concluded

that evaluation of Kodak factors is unnecessary when (as here) a

defendant has market power in the foremarket.

In Lambrix v. Tesla, 737 F. Supp. 3d 822 (N.D. Cal. 2024)

(“Tesla”), plaintiffs alleged that electric vehicle manufacturer Tesla

monopolized aftermarkets for Tesla repair parts and services. Plaintiffs

further alleged that Tesla had market power (65 to 80 percent share) in

the foremarket for electric vehicles. Id. at 841. After closely analyzing

Kodak, Epic, and Newcal, the district court concluded that the Kodak

factors “derive from concerns about a lack of market power in the

foremarket,” and thus “do not apply” when the defendant allegedly has

market power in the foremarket—as Tesla did. Tesla, 737 F. Supp. 3d

at 840. The court observed:

From a practical perspective, the relevance of information costs,

switching costs, and general knowledge of restrictions [Kodak

factors] is reduced where a defendant has market power in the

foremarket. . . . Consumers in a foremarket within which a

company has market power have minimal ability to discipline the

single-brand aftermarket but held that plaintiffs had not demonstrated

consumers’ lack of awareness or significant switching costs. Id. at 956–

57. In contrast to this case, however, there were no plausible allegations

of market power in the foremarket, and the court of appeals never

considered whether Kodak factors must be assessed in that scenario.

See id. at 954–57.

Case: 25-1372, 08/06/2025, DktEntry: 52.1, Page 25 of 30

company’s conduct in aftermarkets, regardless of information

costs, switching costs, and general awareness of restrictions.

Id. at 841. The court found plaintiffs properly alleged relevant

aftermarkets without reference to the Kodak factors, and denied Tesla’s

motion to dismiss.

The Northern District of Illinois reached a similar conclusion in a

pair of antitrust cases against agricultural equipment manufacturer

John Deere—including one case brought by the FTC and one multidistrict class action. In both, Deere was alleged to have market power in

the equipment foremarket. See In re Deere & Co. Repair Serv. Antitrust

Litig., 703 F. Supp. 3d 862, 896 (N.D. Ill. 2023) (“Deere MDL”) (citing

allegations of 55 to 63 percent market share); FTC v. Deere & Co., No.

25-cv-50017, 2025 U.S. Dist. LEXIS 109177, at *8 (N.D. Ill. June 9,

2025) (citing allegations that Deere is the “leading manufacturer” and

holds a “dominant” position in the tractor foremarket). The district

court emphasized that the Supreme Court’s Kodak decision was

premised on Kodak “lack[ing] market power in the primary equipment

market.” Deere MDL, 703 F. Supp. 3d at 891, 896 (“Notably, in Kodak,

there was an absence of market power . . . .”), 897 (“In Kodak, it was

agreed Kodak had no market power in the primary market.”); FTC v.

Case: 25-1372, 08/06/2025, DktEntry: 52.1, Page 26 of 30

Deere, 2025 U.S. Dist. LEXIS 109177, at *8. The court thus

“‘question[ed]’ whether Kodak even applies in this situation,” citing

Tesla. FTC v. Deere, 2025 U.S. Dist. LEXIS 109177, at *8–11 (noting

that the district court, in its prior decision in the MDL, had analyzed

Kodak “identically” to the Tesla court); see also Deere MDL, 703 F.

Supp. 3d at 896. In both cases, the court found that the complaints

sufficiently alleged aftermarkets, either because Kodak did not apply

since Deere was alleged to have market power in the foremarket, or, in

the alternative, because the Kodak factors were satisfied. FTC v. Deere,

2025 U.S. Dist. LEXIS 109177, at *9–11; Deere MDL, 703 F. Supp. 3d at

888–99.

The Tesla and Deere cases thus provide persuasive reasoning that

further supports the FTC’s position.

B. The District Court Erred In Requiring SIS To Prove The

Kodak Factors.

The district court below misapprehended these legal principles

and wrongly required SIS to prove Kodak-style lock-in factors. This

Court should correct that legal error and hold that proof of such factors

is not necessary where, as alleged here, the defendant has market

power in the relevant foremarket.

Case: 25-1372, 08/06/2025, DktEntry: 52.1, Page 27 of 30

SIS contended below that “Intuitive’s da Vinci surgical robot does

not have any real competitors in the primary market” and that Intuitive

in fact controls more than 99 percent of that market. Dkt. 274 at ECF

pp. 18–19. As a matter of economic logic and common sense, evaluating

Kodak factors is pointless in such a scenario because those factors are

designed to ascertain whether competition in the foremarket can

constrain anticompetitive conduct in the aftermarket. See Epic, 67

F.4th at 976–77; Newcal, 513 F.3d at 1050. If there is no meaningful

competition in the foremarket, as SIS alleged here, the very reason to

undertake a Kodak analysis is absent. Cf. Newcal, 513 F.3d at 1050

(point of analyzing Kodak factors is to ascertain whether “[c]ompetition

in the initial market” may not “discipline anticompetitive practices in

the aftermarket”); Epic, 67 F.4th at 976–77 (same). Whether consumers

are locked-in to the aftermarket because of switching costs, information

barriers, or a change in policy—i.e., the Kodak factors—plainly does not

matter if consumers have no alternatives in the foremarket anyway. An

absence of competition in the foremarket “necessarily results in the

inability to discipline competition in the aftermarket.” Dkt. 274 at ECF

p. 19.

Case: 25-1372, 08/06/2025, DktEntry: 52.1, Page 28 of 30

Forgoing analysis of the Kodak factors here comports with the

Supreme Court’s repeated emphasis that courts deciding antitrust cases

should avoid “formalistic distinctions” in favor of case-by-case

assessment of “actual market realities.” Kodak, 504 U.S. at 466–67; see

also Brown Shoe, 370 U.S. at 336 (the definition of a relevant market

must “‘correspond to the commercial realities’ of the industry”); Am.

Express Co., 585 U.S. at 542–44 (same). Where market realities reflect a

lack of competition in the foremarket, the market definition inquiry

appropriately focuses on conditions in the proposed aftermarket—i.e.,

“which products have a reasonable interchangeability of use or

sufficient cross-elasticity of demand with each other.” Epic, 67 F.4th at

975 (cleaned up). The district court should have allowed the jury to

undertake that assessment, unhindered by the erroneous instruction

requiring additional proof.

CONCLUSION

This Court should correct the district court’s error and hold that

SIS need not prove the Kodak factors where SIS alleged that Intuitive

had monopoly power in the foremarket.

Case: 25-1372, 08/06/2025, DktEntry: 52.1, Page 29 of 30

Respectfully submitted,

LUCAS CROSLOW

General Counsel

H. THOMAS BYRON III

Deputy General Counsel

/s/ Mariel Goetz

MARIEL GOETZ

Attorney

August 6, 2025

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, N.W

Washington, D.C. 20580

mgoetz@ftc.gov

(202) 326-2763

Of Counsel:

GEOFFREY M. GREEN

JOSEPH R. BAKER

JOSEPH CONRAD

ALOK NARAHARI

FEDERAL TRADE COMMISSION

Washington, D.C. 20580

Case: 25-1372, 08/06/2025, DktEntry: 52.1, Page 30 of 30

UNITED STATES COURT OF APPEALS

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