Lantec, Inc. v. Novell, Inc.

306 F.3d 1003

LANTEC, INC., a Utah corporation; Lancompany Informatica Ltda., a Brazil corporation; Lantec Informatica Ltda., a Brazil corporation; Lantraining Informatica Ltda., a Brazil corporation, Plaintiffs-Counter Defendants-Appellants, v. NOVELL, INC., a Delaware corporation, Defendant-Counter Claimant-Appellee.

Docket No. 01-4109.

United States Court of Appeals, Tenth Circuit.

September 19, 2002.

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P. Bruce Badger, Robert A. Garda and Stanford B. Owen of Fabian & Clendenin, Salt Lake City, UT; and Evan A. Schmutz of Hill, Johnson & Schmutz, P.C. Provo, UT, with him on the briefs of Fabian & Clendenin, Salt Lake City, UT, for Plaintiffs-Counter Defendants-Appellants.

Stanley J. Preston, R. Brent Stephens and Maralyn M. Reger with him on the brief of Snow, Christensen & Martineau, Salt Lake City, UT, for Defendant-Counter Claimant-Appellee.

Before KELLY, Circuit Judge, BRORBY, Senior Circuit Judge, and HARTZ, Circuit Judge.

BRORBY, Senior Circuit Judge.

While the Microsoft antitrust case has captured much media attention, this antitrust case is just as important to the computer program developers involved. Here, the Lantec companies appeal a district court order dismissing state-law contract and promissory estoppel claims on summary judgment. The Lantec companies also argue the district court incorrectly granted Novell, Inc.'s ("Novell") motion for judgment as a matter of law on several antitrust claims. The facts and legal issues in this case are complex and will be discussed at length. However, the Lantec companies' basic argument is Novell drove them out of business.

We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and affirm.

FACTUAL BACKGROUND

Beginning in the mid-1980s, Novell sold a network operating system for connecting computers called NetWare. James E. Gaskin, Mastering NetWare 5, 20 (1999). A network operating system "is the software used to connect computers and other devices, share resources, transfer files, and perform other network services and activities." Sue Plumley, Network Administration Survival Guide 25 (1999). It controls access to the network and allows users to share data. Id.

Novell also distributed Message Handling System and Global Message Handling System. These products were messaging transport agents¹ for NetWare. A messaging transport agent essentially acts as the computer version of a post office; it routes, stores, and delivers messages sent by e-mail or groupware programs.² Message Handling System and Global Message Handling System were designed to be used with the NetWare operating system and groupware programs. In addition to routing messages, Message Handling System and Global Message Handling System allow groupware to access security features, printing, file sharing, and other data shared through the NetWare operating system.

Although Novell began marketing Message Handling System and Global Message Handling System in the early 1990s, it did not immediately develop groupware programs to be used with Message Handling System and Global Message Handling System. Instead, independent software programers developed this groupware. By making the application program interfaces³ in Message Handling System and Global Message Handling System publicly available, Novell enabled independent programers to write groupware. Software designed using the Message Handling System and Global Message Handling System application program interfaces can communicate with Message Handling System or Global Message Handling System and therefore with NetWare.

In addition to providing application program interfaces, Novell participated in a group known as the Message Handling System Alliance. The Alliance was a group of independent software developers interested in Message Handling System. Through this group, Novell helped independent software programers market, and provide technical support for, their groupware products.

Lantec, Inc. ("Lantec"), LanCompany Informatica Ltda. ("LanCompany"), Lantec Informatica Ltda. ("Lantec Brazil"), and LanTraining Informatica Ltda. ("LanTraining") (collectively "the Lantec companies") were interested in making groupware using the application program interfaces in Message Handling System and Global Message Handling System. All the Lantec companies grew out of a predecessor Brazilian software development company called DataRede. Originally, DataRede worked with Novell to distribute NetWare in Brazil. At that time, Brazil refused to allow foreign software developers access to the Brazilian market unless there were no similar software products designed by Brazilian companies. DataRede conducted similarity tests to help convince Brazilian regulators to allow Novell's products in Brazil.

One of the contract disputes in this case arises from a February 1990 letter from Novell to DataRede that discusses DataRede's participation in the similarity tests. LanCompany now refers to this letter as the "DataRede Agreement" and claims Novell breached the Agreement by failing to fully compensate DataRede or its successor company for conducting the similarity tests.

Although disputes subsequently developed, DataRede began doing more work with Novell. As DataRede's Novell business increased, it transferred that business to three new companies headed by Marcello Thoillier and other partners in the DataRede organization. Lantec Brazil was created to develop software compatible with Novell products, particularly NetWare and Message Handling System. LanCompany was to market Novell software, and LanTraining was to train people to use Novell products. In Utah during 1991, Mr. Thoillier and his associates incorporated Lantec, an American sister corporation to the Brazilian companies. Lantec was charged with translating Lantec Brazil's products from Portuguese to English. Lantec also began looking for companies to manufacture, market, and distribute the products in the United States.

The Lantec companies developed XPostWare, a package of software containing menu, e-mail, fax, and calendaring applications. XPost, the e-mail portion of XPostWare, used Novell's Message Handling System to transport messages using NetWare. Lantec and Lantec Brazil each entered an Original Equipment Manufacturer Agreement with Novell to allow them to package XPostWare with Novell's NetWare and Message Handling System.

Just as Lantec was on the verge of offering its XPostWare package in the United States, Novell and WordPerfect announced plans to merge. At this point, the relationship between Novell and the Lantec companies became strained. The day of the announcement, Mr. Thoillier indicated he was going to shut down Lantec's business. The next day, the Lantec companies put all their marketing, advertising, and packaging projects on hold. Less than a month later, a Novell executive left Mr. Thoillier a voice message stating other executives at Novell wanted to terminate the relationship between Novell and the Lantec companies. Although Novell subsequently sent a letter stating it was willing to work with the Lantec companies and continue the Original Equipment Manufacturer Agreements, Lantec and Lantec Brazil argue the letter should be discounted because another Novell executive later threatened to drive the Lantec companies out of business. The Lantec companies never shipped XPostWare and made no attempt to actively sell XPostWare after the Novell/WordPerfect merger.

The Novell/WordPerfect merger changed Novell's approach to Message Handling System and Global Message Handling System. After the merger, Novell released GroupWise. Rather than being solely a messaging transport agent like Message Handling System and Global Message Handling System, GroupWise contains both the messaging transport agent and groupware. This software design strategy was similar to WordPerfect's pre-merger messaging software which also contained both the messaging transport agent and groupware. Ultimately, Novell quit developing Message Handling System and focused solely on GroupWise.

PROCEDURAL HISTORY

Based on these facts, in 1995, Lantec filed a complaint in federal district court in Utah. More than a year later, Lantec Brazil, LanCompany, and LanTraining joined the suit as plaintiffs. The Lantec companies brought state law tort claims, breach of contract claims, and a promissory estoppel claim. In addition, they alleged Novell violated federal and state antitrust laws by (1) unlawfully merging with WordPerfect; (2) contracting combining, or conspiring to unreasonably restrain trade; (3) monopolizing, attempting to monopolize, and conspiring to monopolize the worldwide groupware for NetWare market; (4) unlawfully using its monopoly power in the network operating system market to gain a competitive advantage in what the Lantec companies designate the "groupware for NetWare market"; and (5) unlawfully tying the sale of its groupware to NetWare. See 15 U.S.C. §§ 1, 2, 14, 18; Utah Code Ann. § 76-10-914(1), (2).

Prior to trial, the district court granted Novell's motion for summary judgment on the tort, contract, and promissory estoppel claims. It also dismissed the antitrust claims brought by LanCompany and LanTraining for lack of standing. The case, however, proceeded to trial on the remaining antitrust claims. After the Lantec companies presented their case to the jury, Novell moved for judgment as a matter of law. The district court ruled in Novell's favor. Lantec, Inc. v. Novell, Inc., 146 F.Supp.2d 1140, 1142 (D.Utah 2001).

On appeal, the Lantec companies raise several issues. We first address the contract and promissory estoppel issues and then examine the antitrust issues.

CONTRACT AND PROMISSORY ESTOPPEL CLAIMS

The Lantec companies argue the district court erred in granting summary judgment on (1) the breach of contract claim based on the "DataRede Agreement"; (2) the breach of contract claim...