UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
May 28, 1993
ORTHO DIAGNOSTIC SYSTEMS, INC, Plaintiff,
ABBOTT LABORATORIES, INC., Defendant.
The opinion of the court was delivered by: LEONARD B. SAND
By Order dated May 26, 1993, this Court denied a preliminary injunction and briefly deferred the filing of this Opinion to enable the parties to examine the Opinion for the sole purpose of advising the Court if any material contained herein is regarded as being confidential. In this Opinion we have set forth our reasons for the denial of preliminary injunctive relief.
This case is before the Court on a motion by plaintiff, Ortho Diagnostic Systems, Inc. ("Ortho") for a preliminary injunction, seeking to enjoin implementation of a contract entered into between defendant Abbott Laboratories, Inc. ("Abbott") and the Council of Community Blood Centers ("CCBC") on the ground that the contract violates various provisions of the antitrust laws. Because we find that plaintiff has not demonstrated a likelihood that it will suffer irreparable harm if the contract is not enjoined, we must deny the preliminary injunction. However, in recognition of the significant interests at stake, both private and public, we have set a date for trial on the merits of November 15, 1993.
Plaintiff filed its complaint on April 22, 1993. On April 23, 1993, this Court signed an order to show cause in which plaintiff requested expedited discovery and a hearing on the preliminary injunction. The Court heard argument on the order to show cause on April 27, 1993, and granted the motion, providing for certain limited expedited discovery. At that argument, the Court scheduled a hearing on the preliminary injunction for May 20 and 21, 1993. On April 30, 1993, the Court heard argument on a motion by defendant to transfer the case to the Northern District of Illinois. That motion was denied. On May 21, 1993 the Court heard oral argument regarding the issuance of a preliminary injunction. We have taken all care to resolve the issue before the effective date of the contract, which is June 1, 1993, and our decision follows.
Findings of fact and conclusions of law made by the Court at the preliminary injunction stage of a case are not binding at trial on the merits. University of Texas v. Camenisch, 451 U.S. 390, 395, 68 L. Ed. 2d 175, 101 S. Ct. 1830 (1981). The following facts are those which we find have been demonstrated by the submissions of the parties and during the hearing for the purpose of determining the propriety of a preliminary injunction only.
Plaintiff Ortho is a New Jersey corporation having its principal place of business in New Jersey and is a wholly owned subsidiary of Johnson & Johnson. Defendant Abbott is an Illinois corporation having its principal place of business in Illinois and licensed to do business in New York.
Both Ortho and Abbott sell blood screening tests used by blood donor centers ("BDCs") and plasma centers
to ensure the purity of blood collected across the country.
There are five tests which are used by BDCs to screen each unit of blood donated for transfusion: (1) HBsAg tests for hepatitis B surface antigens; (2) HIV 1/2 tests for two strains of the HIV AIDS virus; (3) Anti-core is a further test for hepatitis B; (4) HTLV tests for a form of leukemia; and (5) HCV tests for hepatitis C. These tests are not interchangeable; each must be performed on every unit of blood collected. Plasma centers usually provide blood components, rather than whole blood, to hospitals and industry. Plasma centers use three of these five tests, specifically the HCV, HBsAg, and HIV 1/2 tests. Abbott and Ortho use different technologies to perform the test which are incompatible with each other; Abbott uses a "bead" technology, and Ortho uses a "micro-plate" technology.
In addition to the tests, many BDCs use a computer software data management system to record and correlate the results of the thousands of individual units of blood tested daily. Abbott's proprietary data management system, upon which many BDCs depend, is known as "DMS". The American Red Cross ("ARC") owns the DMS system outright. Other BDCs which use DMS must obtain it from Abbott. Some large BDCs have developed their own data management systems, and therefore do not use DMS at all. Abbott estimates that 23.7 percent of the screening tests performed each year by BDCs and plasma centers are processed by Abbott-owned DMS systems. (Bryant Decl. at P 17). Ortho is in the process of developing a comparable computer software system, "LOMS", which is currently undergoing field testing.
Four companies sell the blood screening tests in the United States. Only Abbott sells all five of the blood screening tests. Ortho sells HCV, HBsAg and Anti-core. Ortho also offers an HTLV test, but it has not gained acceptance in the market. Ortho currently has applications pending for FDA approval of both an improved HTLV test, and an HIV 1/2 test. Ortho's internal estimates indicate that the HTLV test could gain approval by as early as June of this year (Michels Dep. at 35) and the HIV 1/2 test could gain approval by the second half of 1993 (Michels Dep. at 33). Abbott's and Ortho's only other competitors have a negligible share of the market and therefore do not play a part in this lawsuit.
BDCs and plasma centers together collect approximately 25 million units of blood annually. BDCs collect blood from volunteer donors and screen approximately 13 million units of blood annually. The BDC customer group includes the American Red Cross, which tests approximately 50 percent of these 13 million units; the CCBC, an association of approximately 55 BDCs which together accounts for approximately 35 to 40 percent, or approximately 5 million units, of the blood collected and tested; and unaffiliated BDCs which account for the balance of the blood collected.
Abbott and Ortho differ on whether the relevant customer market is the BDCs alone or the BDCs and the plasma centers taken together. However, it is clear that Abbott holds a predominant share of the market, defined either way, in four out of five of the tests. For example, Abbott's unit and dollar market shares of sales to BDCs in 1992 were approximately as follows:
Product Units Dollars
HTLV 91% 90%
HIV 86% 87%
HBsAg 75% 73%
Anti-core 70% 69%
HCV 21% 20%
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