In2 Networks v. Honeywell International et al

Filing 41

ORDER AND MEMORANDUM DECISION granting in part and denying in part #29 Motion for Leave to File Amended Complaint. Signed by Judge Tena Campbell on 10/11/11 (alt)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

IN2 NETWORKS, INC.,
Plaintiff,

ORDER
AND

vs.

MEMORANDUM DECISION

HONEYWELL INTERNATIONAL, et al.,

Case No. 2:11-cv-6-TC

Defendants.

In2 Networks, Inc. (In2) brought suit against Defendants Honeywell International, Inc.
(Honeywell) and ADI, alleging breach of contract, state law tort claims, and state and federal
antitrust claims. On May 31, 2011, the court granted Defendants’ motion to dismiss. In2 was
given three weeks to file a motion to amend its complaint. In accordance with the court’s order,
In2 filed a motion to amend with a supporting memorandum and proposed amended complaint.
Defendants oppose In2's motion and contend that the proposed amended complaint fails to state a
claim upon which relief can be granted. For the reasons set forth below, In2’s motion to amend
(Dkt. No. 29) is GRANTED IN PART AND DENIED IN PART.
BACKGROUND1
In2 develops software and hardware products, technology and services for internet
controllable home security and environmental control systems. Two such products are at issue in

1

The factual allegations are contained in In2's proposed amended complaint (Dkt. No.
30-1). The court will refer to specific factual allegations as necessary.

this case: In2's Vista ICM and Energy ICM systems. These products enable owners to control
their security and environmental control systems through a web-based interface. Both of these
systems are compatible with the Honeywell series of security and environmental control systems.
The two ICM products were the subject of several contracts between In2 and Honeywell,
including the OEM Supply and License Agreement (OEM Agreement), the Bailment and Service
Agreement (Bailment Agreement), and the Non-Disclosure Agreement. In2 alleges that the
Defendants breached various provisions of the Bailment Agreement, the Non-Disclosure
Agreement, and oral agreements made in connection with those agreements.
Further, In2 alleges that the Defendants interfered with In2's existing and prospective
economic relationships; made false and disparaging statements about In2, its products and
services; misappropriated In2's trade secrets; and engaged in various forms of anti-competitive
behavior, in violation of federal and Utah antitrust law.
ANALYSIS
Standard of Review
“Although Federal Rule of Civil Procedure 15(a) provides that leave to amend shall be
given freely, the district court may deny leave to amend where amendment would be futile. A
proposed amendment is futile if the complaint, as amended, would be subject to dismissal.”
Bradley v. Val-Mejias, 379 F.3d 892, 901 (10th Cir. 2004) (quoting Jefferson Cty. Sch. Dist. v.
Moody’s Investor’s Servs., 175 F.3d 848, 859 (10th Cir. 1999)). Consequently, the court will
analyze Defendants’ objection to In2's proposed amended complaint as it would a motion to
dismiss.
When reviewing a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which
2

relief may be granted, the court must presume the truth of all well-pleaded facts in the complaint,
but need not consider conclusory allegations. Tal v. Hogan, 453 F.3d 1244, 1252 (2006);
Mitchell v. King, 537 F.2d 385, 386 (10th Cir. 1976). Conclusory allegations are allegations that
“do not allege the factual basis” for the claim. Brown v. Zavaras, 63 F.3d 967, 972 (10th Cir.
1995). See also Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991) (“conclusory allegations
without supporting factual averments are insufficient to state a claim on which relief can be
based” (emphasis added)). The court is not bound by a complaint’s legal conclusions, deductions
and opinions couched as facts. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). And
although all reasonable inferences must be drawn in the non-moving party’s favor, Tal, 453 F.3d
at 1252, a complaint will only survive a motion to dismiss if it contains “enough facts to state a
claim to relief that is plausible on its face,” Ridge at Red Hawk, LLC v. Schneider, 493 F.3d
1174, 1177 (10th Cir. 2007) (quoting Twombly, 550 U.S. at 570). Stating a claim under Rule 8
“demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. A pleading
that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action
will not do.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at
555).
Tort Claims
Interference with Economic Relations (Cause of Action 1) and Interference with
Prospective Economic Advantage (Cause of Action 2)
Under Utah law, the tort of interference with economic relations “protects both existing
contractual relationships and prospective relationships of economic advantage not yet reduced to
a formal contract.” St. Benedict’s Dev. Co. v. St. Benedict’s Hosp., 811 P.2d 194, 200 (Utah

3

1991). A plaintiff must prove: “(1) that the defendant intentionally interfered with the plaintiff’s
existing or potential economic relations (2) for an improper purpose or by improper means, (3)
causing injury to the plaintiff.” Langille v. Logan City, 9 Fed. App’x 892, 900 (10th Cir. 2001)
(quoting St. Benedict’s, 811 P.2d at 200).
In pleading a claim for interference with economic relations, “[a] plaintiff cannot rest on
conclusory allegations that it has existing or potential economic relations. . . . [Rather, a plaintiff
must] allege facts showing either an existing contract or business relationship with a third party,
or a potential contract or business opportunity with a third party or identifiable class of persons.”
Purco Fleet Servs. v. Towers, 38 F. Supp. 2d 1320, 1325 (D. Utah 1999) (quoting Proctor &
Gamble Co. v. Haugen, 947 F. Supp. 1551, 1556-57 (D. Utah 1996)). The court in Purco Fleet
dismissed the plaintiff’s claim for interference with contractual relationship because the plaintiff
failed to allege the existence of a present contract or relationship. The plaintiff had merely
alleged that there were “current and potential customers” who were affected. Purco Fleet, 38 F.
Supp. 2d at 1325-26. This was insufficient even under the pre-Twombly/Iqbal pleading
standards.
In its proposed amended complaint, In2 alleges that Honeywell intentionally interfered
with “existing economic relations between In2 and In2's customers, distributors, and vendors”
and “also threatened dealers and wholesalers, including Ridgeline Mechanical, who had been
doing business with In2.” (Compl. ¶ 44.)2 Rather than merely alleging that In2 had “current and
potential customers,” In2 alleges that it was “actively engaged with outside sales rep firms

2

“Compl.,” as used throughout, refers to In2's proposed amended complaint (Dkt. No. 30-

1).
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including Ridgeline Mechanical and EDOS to assist In2 in marketing and selling the In2 branded
Energy ICM.” (Id. ¶ 30.) Further, In2 alleges that Honeywell interfered with its relationship
with EDOS: “In April 2010, John Tyhacz told the owner of EDOS that Honeywell would
terminate their representation agreement if they engaged with In2.” (Id. ¶ 30.) Viewed in the
light most favorable to In2, these allegations make it plausible that Defendants interfered with
existing or potential relationships with Ridgeline Mechanical and EDOS.
Because In2 has sufficiently pled its interference with economic advantage claim, In2's
motion to amend is GRANTED for causes of action 1 and 2. But these causes of actions are
limited to In2's relationships with Ridgeline Mechanical and EDOS, as those are the only two
parties that In2 identifies in its proposed amended complaint.
Business Disparagement3 (Cause of Action 3)
For a plaintiff to recover under a claim of business disparagement, it must prove (1)
falsity of the statement made; (2) malice by the party making the statement; and (3) special
damages. Farm Bureau Life Ins. Co. v. Am. Nat’l Ins. Co., 505 F. Supp. 2d 1178, 1191 (D. Utah
2007) (quoting Direct Imp. Buyers Ass’n v. KSL, Inc., 538 P.2d 1040, 1042 (Utah 1975)).
In2 alleges that the Defendants made two disparaging statements in a letter sent to dealers
who purchased Vista ICM: (1) that Vista ICM was obsolete (Compl. ¶ 13) and (2) that
Defendants had concerns regarding In2's ability to continue to provide long-term support for the
product (id. ¶ 14). In2 also alleges that the statements were false; that the Vista ICM was fully

3

Business disparagement is merely a different name for the tort of injurious falsehood.
Farm Bureau Life Ins. Co. v. Am. Nat’l Ins. Co., 505 F. Supp. 2d 1178, 1191 (D. Utah 2007)
(quoting Bankwest v. Fid. & Deposit Co., 63 F.3d 974, 980 (10th Cir. 1995)).
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functional and not obsolete (id. ¶ 13) and that Defendants did not actually have concerns about
In2's ability to provide long term support (id. ¶ 14). Finally, In2 alleges that Defendants made
these statements intentionally and with the purpose of injuring and extinguishing In2's business.
(Id. ¶¶ 13, 14.)
Defendants contend that the statements made in the letter, when viewed in context,
cannot be defamatory. This argument is based largely on Defendants’ interpretation of the words
and phrases used in the letter—interpretations that In2 disputes. At this stage, the court must
view all allegations in the light most favorable to In2. In doing so, the court finds that In2
sufficiently states a claim for business disparagement. Accordingly, In2's motion to amend is
GRANTED for cause of action 3.
Misappropriation of Trade Secrets (Cause of Action 8) and Violation of Uniform
Trade Secret Act (Cause of Action 15)4
A claim for misappropriation of trade secrets requires (1) existence of a trade secret; (2)
communication of the trade secret; and (3) that defendant’s use of the trade secret injures the
plaintiff. Farm Bureau, 505 F. Supp. 2d at 1184-85.
In its proposed amended complaint, In2 alleges, in a conclusory fashion, that “[a]ll or a
portion of the documents and information comprising In2's confidential and proprietary business
and trade secret information constitute ‘trade secrets’ under the Utah Uniform Trade Secrets
Act.” (Compl. ¶ 66.) In2 does not identify the information or even provide a general description
of the information that it contends is a “trade secret.”

4

The Utah Uniform Trade Secrets Act displaces the common law misappropriation claim.
Utah Code Ann.§ 13-24-8(1).
6

Further, In2 does not allege how Honeywell used this trade secret information to In2's
detriment. It appears that In2 believes that Gordon Hope, who works for Honeywell, used In2's
trade secrets to copy their product. But In2 does not specify any information that Mr. Hope used
to create a copy of In2's product. It also is unclear if In2 alleges that Defendants did
misappropriate In2's trade secrets or only that they could misappropriate them. The proposed
amended complaint alleges that Defendants “received all review information from the diligence
team enabling Honeywell to misappropriate valuable In2 intellectual property and unfairly plot
internal development strategies to work around currently filed and in process product patents.”
(Compl. ¶ 33 (emphasis added).) But In2 does not allege that Defendants actually took any
actions.
Even viewed in a light most favorable to In2, these allegations fail to state a claim for
misappropriation. Accordingly, In2's motion to amend is DENIED for causes of action 8 and 15.
Injunctive Relief (Cause of Action 16)
In2 seeks an injunction
ordering Honeywell and ADI to immediately return all In2 Confidential Information,
intellectual property and business and trade secret information . . . and restraining
Honeywell and ADI acting in concert with them from using, copying, publishing,
disclosing, transferring, and/or selling In2's confidential and proprietary business and
trade secret information, and from obtaining any commercial advantage or unjust
enrichment from their respective misappropriation of that information.
(Compl. ¶ 88.) Because In2's claim for injunctive relief is based on In2's eighth and fifteenth
causes of action and the court has denied leave to amend those causes of action, In2's motion to
amend is DENIED for cause of action 16.
Contract Claims

7

Breach of Contract (Cause of Action 10)
In2 alleges that “Honeywell breached the Bailment Agreement and Non-Disclosure
Agreement by misappropriating In2 confidential information . . . , and by refusing to provide
essential consideration . . . in the form of volume of sales and orders. Honeywell breached its
promise to permit In2 to offer its products for sale through ADI and market In2 branded
products.” (Compl. ¶ 72.) These breaches are based in part on alleged oral agreements that In2
and Defendants had.
Defendants contend that the terms of the agreements themselves bar In2's claim. In2
disputes the meaning Defendants give to the terms of the contracts. At this stage in the
proceedings, the court will not interpret the various contract provisions. Viewing the allegations
in the light most favorable to In2, In2 sufficiently identifies the agreements and alleged oral
agreements, and a breach of those agreements. Accordingly, In2's motion to amend is
GRANTED for cause of action 10.
Breach of the Covenant of Good Faith and Fair Dealing (Cause of Action 11)
Under both Utah and New York law,5 “[a]n implied covenant of good faith and fair
dealing inheres in every contract.” Oman v. Davis Sch. Dist., 2008 UT 70, ¶ 47, 194 P.3d 956;
see also Dalton v. Educ. Testing Serv., 663 N.E.2d 289, 291 (N.Y. 1995) (“Implicit in all
contracts is a covenant of good faith and fair dealing in the course of contract performance.”).
This implied covenant ensures that neither party does anything that would have the effect of
destroying or injuring the right of the other party to receive the fruits of the contract. Oman,

5

The Bailment Agreement contains an applicable law provision that designates New
York law as the applicable law. (Dkt. No. 6-2.)
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2008 UT 70, ¶ 47; Dalton, 663 N.E.2d at 291.
In2 alleges that “Honeywell failed to deal with In2 fairly and abused and exploited its
dominant position in the security marketplace” and “acted with intent to deprive In2 of the value
of its Agreements with Honeywell.” (Comp. ¶ 75.) In addition, “Honeywell induced In2 to enter
agreements and accept promises when Honeywell intended to ensure that the value of the
agreements and the promises would not be realized.” (Id. ¶ 75.) When considered as a whole,
with the other allegations in the Complaint, In2 sufficiently alleges a cause of action for breach of
the implied covenant of good faith and fair dealing. Accordingly, In2's motion to amend is
GRANTED for cause of action 11.
Antitrust Claims
As an initial matter, Defendants contend that all of In2's antitrust claims fail in light of
Christy Sports, LLC v. Deer Valley Resort Co., Ltd., 555 F.3d 1188 (10th Cir. 2009). Christy
Sports involved an antitrust claim brought by Christy Sports, a ski rental business, against Deer
Valley Resort Company (Deer Valley), the owner of a destination ski resort. Originally, Deer
Valley owned all of the property at the resort’s mid-mountain village, but over time, it sold
parcels to third parties. One such parcel was sold to people who then built a commercial building
that was leased to Christy Sports’ predecessor. The parcel was subject to a restrictive covenant
that prohibited the owners from renting skis on the property without Deer Valley’s consent. At
some point, Deer Valley allowed Christy Sports’ predecessor to rent skis in return for fifteen
percent of the rental revenue. Later, after Christy Sports began operating at Deer Valley’s midmountain village, Christy Sports stopped paying the fifteen percent, with no objection from Deer
Valley. But in 2005, Deer Valley opened its own mid-mountain ski rental business and notified
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Christy Sports that the following year the restrictive covenant would be enforced and Christy
Sports could no longer rent skis. Christy Sports argued that Deer Valley’s decision to begin
enforcing the restrictive covenant violated § 2 of the Sherman Act by either actual or attempted
monopolization.
The Tenth Circuit affirmed the district court’s dismissal of Christy Sports’ Sherman Act
claim and held that “the creator of a resort has no obligation under the antitrust laws to allow
competitive suppliers of ancillary services on its property.” Id. at 1193. The court found that its
conclusion could be reached one of two ways: by reference to the proper definition of a market or
by reference to the absence of anticompetitive conduct. First, Christy Sports’ definition of the
product market as “rental skis” was too narrow. Deer Valley offered “a cluster of products that
combine to create a destination ski experience; rental skis [were] only one small component.” Id.
at 1194. Alternatively, the court reasoned that Deer Valley’s conduct was not anticompetitive.
“Deer Valley [was] not required to invite competitors onto its property to rent skis to its patrons,
even if a failure to do so would mean it [was] the sole supplier of rental skis at the ski area.” Id.
Under either line of reasoning, Christy Sports had failed to plead a plausible claim for
monopolization under § 2 of the Sherman Act.
Christy Sports might be determinative if In2 were to simply allege that the Defendants
prevented In2 from selling Honeywell compatible products (requiring Honeywell intellectual
property). But when the allegations in the proposed amended complaint are viewed in the light
most favorable to In2, this is not all that In2 alleges. In2 alleges that “Honeywell’s action and
directions to third parties prevented In2 from entering the markets for security and environmental
control systems, and in particular, the internet submarkets, and prevented In2 from developing a
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competing product.” (Comp. ¶ 36.) From this and similar allegations, the court must draw the
inference that In2 had either a competing product that did not require use of Honeywell’s
intellectual property or that it had the potential to create such a product. While the antitrust laws
would not require Honeywell to allow In2 to use its property, like Deer Valley was not required
to invite competitors onto its property to rent skis, they would prevent anticompetitive activity
affecting In2's independent products. Accordingly, the court must evaluate each of In2's antitrust
claims to determine if it has sufficiently plead those claims.
Sherman Act § 2 Monopolization (Cause of Action 4)
To state a monopolization claim under Sherman Act § 2, the plaintiff must plead “(1) the
possession of monopoly power in the relevant market and (2) the willful acquisition or
maintenance of that power as distinguished from growth or development of a consequence of a
superior product, business acumen, or historic accident.” Full Draw Prods. v. Easton Sports,
Inc., 182 F.3d 745, 756 (10th Cir. 1999). Monopoly power “requires proof of both power to
control prices and power to exclude competition.” Id. at 757. This power may be inferred when
a company has a predominant share of the market. United States v. Grinnell Corp., 384 U.S.
563, 571 (1966).
In2 alleges that Honeywell “has monopoly power in the Home Systems market,
manufacturing in excess of 50% of all such systems in the United States,” “has monopoly power
in the submarkets of home security systems as the manufacturer of more than 50% of such
systems in the United States,” “is believed to have control [sic] between 75% and 90% of the
internet controllable systems,” “has monopoly power in the home environmental systems
submarket as the manufacturer of more than 50% of such systems in the United States,” and “is
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believed to have control [sic] between 75% and 90% the internet capable systems.” (Compl. ¶¶
34-35.) From In2's allegation that Honeywell has a predominant share of the relevant markets
(between 50 and 90%), the court can infer, for purposes of this motion, that Honeywell had
monopoly power.6
But, even liberally reading the allegations, In2 has failed to properly plead that any such
monopoly power was willfully acquired and is not the result of a superior product, business
acumen, or historic accident. The only allegation pertaining to this second element states that
“Honeywell has undertaken improper and illegal steps to obtain and maintain its monopoly
power.” (Compl. ¶ 70.) There are no factual allegations that support this conclusion. Because
In2's proposed amended complaint does not contain “enough facts to state a claim to relief that is
plausible on its face,” Ridge at Red Hawk, 493 F.3d at 1177, In2's motion to amend is DENIED
for cause of action 4.
Sherman Act § 1 Unfair Competition (Cause of Action 5)
To state a claim for a Sherman Act § 1 violation, “the plaintiff must allege facts which
show: the defendant entered a contract, combination or conspiracy that unreasonably restrains
trade in the relevant market.” Full Draw, 182 F.3d 745, 756 (10th Cir. 1999). A conspiracy
involves “two or more entities that previously pursued their own interests separately . . .
combining to act as one for their common benefit.” Abraham v. Intermountain Health Care Inc.,

6

The court notes that “market share alone is insufficient to establish market power.”
Bright v. Moss Ambulance Serv., Inc., 824 F.2d 819, 824 (10th Cir. 1987). But at this stage in
the proceedings and when the allegations are viewed in the light most favorable to In2, the
allegations that Honeywell controlled between 50 and 90% of the relevant markets make it
plausible that Honeywell had monopoly power.
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461 F.3d 1249, 1256 (10th Cir. 2006).
Here, In2 only generally alleges that Honeywell: “directed wholesalers and retailers to
refuse to sell . . . In2 products” (Compl. ¶ 36); “threaten[ed] potential customers and business
partners of In2" (id. ¶ 73); and “force[d] or induce[d] third parties to terminate and/or refuse to
do business with In2" (id.). Nowhere in its proposed amended complaint does In2 identify any
specific person with whom Honeywell agreed. The closest it comes is the allegation that
Honeywell directed its own (unspecified) wholesalers and retailers to refuse to sell In2 products.
As in Twombly, In2's “complaint leaves no doubt that [In2] rest[s] [its] § 1 claim on descriptions
of parallel conduct and not on any independent allegation of actual agreement.” Twombly, 550
U.S. at 564. And, like in Twombly, In2 has not pled a “specific time, place, or person involved
in the alleged conspiracies.” Id. at 565 n.10. This does not meet the pleading requirement, and
In2's cause of action fails for this reason. See Compliance Mktg., Inc. v. Drugtest, Inc., 2010 WL
1416823, at *6 (D. Colo. April 7, 2010) (dismissing Sherman Act § 1 claim because the
complaint did not “provide sufficient factual basis to demonstrate concerted action between each
[company using the service] and [the company offering the service]”).
Accordingly, In2's motion to amend is DENIED for cause of action 5.
Sherman Act § 2 Refusal to Deal by a Monopolist (Cause of Action 6)
This cause of action fails because In2 hasn’t adequately pled that Honeywell willfully
acquired and maintained monopoly power, as discussed above for cause of action 4 (the Sherman
Act § 2 monopoly claim). Additionally, Honeywell’s alleged refusal to deal with In2 cannot
support a claim under the Sherman Act. “As a general rule, businesses are free to choose the
parties with whom they will deal, as well as the prices, terms, and conditions of that dealing.”
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Pac. Bell Tel. Co. v. Linkline Commc’ns, Inc., 555 U.S. 438, 129 S. Ct. 1109, 1118 (2009); see
also Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, 540 U.S. 398, 408 (2004) (the
Sherman Act “does not restrict the long recognized right of [a] trader or manufacturer engaged in
an entirely private business, freely to exercise his own independent discretion as to parties with
whom he will deal”). And In2 has not added any facts or allegations that Honeywell’s conduct
falls outside of this “general rule.”
Further, to the extent that In2 pleads an exclusive dealing arrangement, In2 must plead a
relevant market, which includes both a relevant product market and a relevant geographic
market. “[T]he United States” is a sufficient geographic market. See Compliance Mktg., 2010
WL 1416823, at * 7 (finding geographic market of “the United States” sufficient”). In2 must
also “specifically define the product market by reference to the ‘reasonable interchangeability of
use or the cross-elasticity of demand between the product [in question] and substitutes for it.’”
Compliance Mktg., 2010 WL 1416823, at *7 (quoting Brown Shoe Co., Inc. v. United States,
370 U.S. 294, 325 (1962)). And where the plaintiff “fails to define its proposed relevant market
with reference to the rule of reasonable interchangeability and cross-elasticity of demand, or
alleges a proposed relevant market that clearly does not encompass all interchangeable substitute
products even when all factual inferences are granted in plaintiff’s favor, the relevant market is
legally insufficient and a motion to dismiss may be granted.” Campfield v. State Farm Mut.
Auto. Ins. Co., 532 F.3d 1111, 1118 (10th Cir. 2008). In2 has not so defined its alleged relevant
product market.
For these reasons, In2's motion to amend is DENIED for cause of action 6.
Sherman Act § 1 Concerted Refusal to Deal (Cause of Action 7)
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This cause of action, like cause of action 5 discussed above, fails because In2 has not pled
an agreement between Honeywell and another specified entity. Stating a claim under § 1 requires
“a complaint with enough factual matter (taken as true) to suggest that an agreement was made.”
Twombly , 550 U.S. at 556. Accordingly, In2's motion to amend is DENIED for cause of action
7.
Sherman Act § 1 Illegal Tying (Cause of Action 9)
“In cases involving a tying arrangement, the plaintiff must prove that the defendant has
market power in the tying product.” Compliance Mktg., 2010 WL 1416823, at *9. Because In2
has failed to plead the relevant market adequately, as discussed above, any argument that
Defendants’ conduct constitutes an illegal tying arrangement necessarily fails under a rule of
reason analysis.
In2, therefore, could only plead a per se illegal tying arrangement. In order to establish
the existence of an illegal tying arrangement, “Plaintiffs must adequately plead the existence of:
(1) two separate products; (2) a tie- or conditioning of the sale of one product on the purchase of
another; (3) sufficient economic power in the tying market; and (4) a substantial volume of
commerce affected in the tied product market.” Id. at *10 (internal citations and quotations
omitted).
Here, In2 does not allege that Honeywell conditioned the sale of its product on the
purchase of another (“tied”) product. Rather, In2 alleges that Honeywell conditioned the sale of
its products on the third-party not buying In2 products. This type of “negative tie” can be the
basis of a tying claim if the buyer “agrees that he will not purchase [the tied product] from any
other supplier.” Eastman Kodak Co. v. Image Technical Servs. Inc., 504 U.S. 451, 461 (1992).
15

But even a negative tying claim requires the existence of two separate and distinct products. See
id. at 462; Compliance Mktg., 2010 WL 1416823, at *9.
In2 only generally alleges that Honeywell conditioned the sale of its product on the buyer
not buying any In2 product. In2 has not made clear that there is a second product that buyers
were prohibited from purchasing from In2. For a similar reason, In2 fails to allege that
Honeywell has sufficient economic power in the tying market—it is unclear what the tying
market would be other than the home security system market. And finally, In2 does not allege
the existence of an agreement between Honeywell and any third-party (as discussed above) or
that a substantial volume of commerce in the tied market was affected.
For all of these reasons, In2 fails in its proposed amended complaint to state a claim for
tying. Accordingly, In2's motion to amend is DENIED for cause of action 9.
Utah Antitrust Statute - Utah Code § 76-10-914(a) (Causes of Action 12-14)
Both parties agree that the interpretation of Utah’s Antitrust Statute is guided by federal
case law interpreting the Sherman Act. Because In2's proposed amended complaint does not
state a claim under the Sherman Act, In2's motion to amend is DENIED for causes of action 12,
13, and 14.
CONCLUSION
For the foregoing reasons, In2's motion to amend (Dkt. No. 29) is GRANTED IN PART
AND DENIED IN PART:
- In2 may file its proposed amended complaint for causes of action 1, 2, 3, 10, and 11, as
more fully discussed above;
- In2's motion to amend causes of action 4 through 9 and 12 through 16 is DENIED.
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DATED this 11th day of October, 2011.
BY THE COURT:

______________________________
TENA CAMPBELL
United States District Judge

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