Invisalign Maker Hit with Antitrust Class Action Over Alleged Scheme to Maintain 'Monopoly' [UPDATE]

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Align Technology, Inc. faces a proposed class action over an alleged anticompetitive scheme with which the Invisalign maker has supposedly attempted to maintain its monopoly position while a key tool to its decades of market dominance became threatened. 

The 36-page lawsuit alleges Align, around 2017 when its thicket of intellectual property patents faced expiration, engaged in a scheme in order to “foreclose competition” in the linked markets of aligners, essentially “plastic braces,” and hand-held digital intraoral scanners, tools used to take digital images of the jaw, teeth and bite of a patient.

Align, which the lawsuit says has for years enjoyed “more than 80 percent” of the plastic aligners market and consistent, durable profit margins, has wielded its intellectual property to protect its position, and frequently engaged in patent infringement lawsuits against potential competitors, the suit says. According to the complaint, Align, through the apparent scheme, sought to create a “self-reinforcing cycle” wherein the company’s dominance of the intraoral scanner market ensured it would continue to dominate the market for plastic tooth aligners. 

As the case tells it, the patent protections on Align’s intellectual property that helped drive its market dominance began to expire by 2017, posing a threat to the company’s operating results and overall market position. Per the lawsuit, Align has been able to charge high prices and reap significant profits on Invisalign because the product has been protected by “a thicket of hundreds of patents” wielded “aggressively” by the company to preserve its alleged monopoly. The prospective loss of patent protections posed a real threat to Align’s business, according to the complaint. 

Central to Align’s alleged conduct, according to the lawsuit, was its sale of an oral scanner called the iTero. Per the suit, Align’s primary competitor in the scanner market, 3Shape, sold a similar product called the “Trios” scanner. An “obvious difference” between the two scanners, the suit notes, is that the Trios allows dentists to order tooth aligners from “a number of different Aligner manufacturers,” thus encouraging competition in the market, the case says. By contrast, the lawsuit says, Align’s iTero scanner is “a closed system” in that it imposes “substantial costs” on dentists who try to use the scanner to order aligners not made by the defendant. 

“As a result of this distinction, the spread of iTero’s closed-system scanner across dentists drives sales toward Invisalign and excludes rival Aligner manufacturers,” the complaint alleges. 

The suit alleges Align Technology’s scheme relied upon several key components, including: 

• The “economically irrational, unilateral termination” of the defendant’s “longstanding and profitable” agreement with 3Shape that allowed the Trio Scanner to be used to order Invisalign;
• The use of exclusive dealing contracts with two of the country’s largest dental service organizations (DSO), which effectively prevented DSO members from dealing with Align’s competition in the scanner and aligner markets; and
• The Fusion program, which bundled together sales of the iTero scanner and Invisalign aligner, effectively preventing dentists from ordering either product from Align’s rivals. 

The case says Align’s termination of its agreement with 3Shape amounted to a sacrifice of short-term profits, and made sense “because of the anticompetitive effects that it subsequently caused.” The overall effect of Align’s alleged conduct was the substantial foreclosure of competition in the aligner and scanner markets as the defendant successfully tied its Invisalign product to iTero “in order to monopolize both markets,” the complaint alleges. 

“Because Align controls approximately 90 percent of the Aligner market, that has effectively foreclosed the ability for a rival Scanner manufacturer to compete,” the suit alleges. 

Another effect, the lawsuit says, is that those looking to compete with Align and Invisalign would have no choice but to offer below-cost prices to offset certain penalties and restrictions Align laid upon customers through the alleged scheme. 

Forced to shoulder much of the burden created by Align’s alleged competition-suppressing scheme are consumers in that they’re ultimately responsible for paying for Invisalign treatment, the complaint relays. Per the suit, Invisalign aligners generally cost up to $8,000, a price that dental insurers may only cover a portion of.

According to the lawsuit, Align has “specifically emphasized” that it works to arrange third-party financing programs for end-user consumers to help pay for the cost of Invisalign treatments. The case, citing Invisalign CEO Joseph Hogan, states that Align’s Invisalign financing program, through which consumers pay the defendant directly, eliminates the need for dentists to pass through high down payments for the treatment to patients. Whether consumers pay for aligner treatments directly to the defendant through financing or through payments provided by dentists, consumers “have paid the price for Align’s anticompetitive scheme through supracompetitive prices on Invisalign Aligners,” the lawsuit alleges. 

The proposed class action looks to represent:

“All persons or entities in the United States that purchased, paid and/or provided reimbursement for some or all of the purchase price for Invisalign Aligners acquired for personal use during the period beginning March 15, 2015 until such time as the anticompetitive conduct alleged herein has ceased (the ‘Class Period’).” 

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