On Thursday, a putative class action lawsuit was filed by Kaleida Health, on behalf of similarly situated parties, against Intuitive Surgical Inc. in the Northern District of California. Intuitive, a major producer of surgical robots that carry out minimally invasive surgeries, is accused of monopolization and tying of aftermarket services for both their Da Vinci robot and its EndoWrist attachment in violation of Sections 1 and 2 of the Sherman Act.
The prospective class is defined as “all entities that paid Intuitive directly for da Vinci service and/or the service, including repair and replacement, of EndoWrists in the United States at any time from May 21, 2017 to the present.”
Intuitive, the owner of the only FDA approved surgical robots from 2000 to 2015, has had a massive, monopolizing share of that market for a long time, the complaint said. Other comparable products purportedly do not have the same range of capabilities as the da Vinci. As a result, virtually every hospital has the da Vinci as their surgical robot and has trained their incoming surgeons in the use of its equipment for years.
This has made the introduction of a new robot extremely difficult both financially and time-wise, the plaintiff argued. The amount of time, effort, and money it would take to switch systems and retrain staff is a major deterrent for hospitals who are dissatisfied with their current arrangement. This monopolization can also be a deterrent for companies who are considering entering that business.
The plaintiffs said that intuitive has leveraged this monopoly in one field in order to gain monopolies in other aspects of the surgical robot business as well. “Intuitive conditions the sale or lease of the da Vinci on the purchaser’s acceptance of Intuitive’s mandatory service contract. The service contract allegedly requires the purchaser to use Intuitive as the sole service provider for all da Vinci systems, and prohibits the purchaser from either servicing the robot itself or hiring an independent robot repair company (“IRRC”) to service the da Vinci.”
Kaleida argued that since the defendant already has a monopoly over the robotics equipment, tying the two aftermarket repair and maintenance services to this product is monopolizing those industries as well. Unlike their robot monopoly, there are many prospective competitors in those aftermarkets that could be servicing these hospitals and lowering the costs for both them and their patients. According to the plaintiff, Intuitive charges 30% more for EndoWrist repair and replacement in comparison with its competitors.
The plaintiffs claimed that the defendant is very aggressive in enforcing these contractual agreements. Many hospitals and IRRCs have received cease and desist letters from intuitive for doing 3rd party maintenance on the equipment. This has allowed them to set their own prices and rates without fear of being undersold.
The EndoWrist technology can also only be used 10 times before requiring replacement or maintenance, which plaintiffs claim is an unnecessarily short expiration. According to other service companies, the wrist can be used safely up to 50 times with proper care.
The defendants have also been accused of falsely claiming that using repaired EndoWrists would violate FDA requirements and intellectual property rights, which resulted in the cancellation of many contracts that company had with hospitals. Companies like this one have been effectively boxed out of what has proven to be a multi-billion dollar industry.
The plaintiff seeks relief for all of the costs incurred and profits lost as a result of this alleged monopoly, and asks that the court find intuitive in violation of section one and two of the Sherman Act.
The plaintiff is represented by Hausfeld.
