A Chicago dental practice has filed a proposed class action lawsuit against Align Technology, Inc. in which it alleges the Invisalign maker has leveraged its dominance in both the aligner and hand-held digital dental scanner markets as a means to suppress competition.
According to the 30-page suit out of Delaware federal court, Align Technology’s anti-competitive conduct has allowed it to not only artificially boost and/or maintain its market share and power, but to artificially inflate prices in both markets. The defendant’s alleged conduct, the lawsuit says, essentially amounts to a de facto bundling of its aligners and intraoral scanners that offers no corresponding discount to purchasers.
Align’s Technology’s Invisalign-brand aligners are by far the dominant product in the overall aligner market, the case begins. The defendant reportedly pulls in “well over a billion dollars per year” selling Invisalign, according to the suit.
The plaintiff charges that the defendant knew from the outset that dental practitioners’ use of digital scanners would make them more likely to use its aligners in that “once a dental practice purchases a digital scanner, that practice would be more likely to order more aligners as a way to pay for the scanner.”
“The bottom line,” the complaint reads, “was that more iTero Scanners meant more Invisalign orders.”
Since at least March 15, 2015, the defendant, the case claims, had been able to charge high prices and keep its profit margins in the black for Invisalign due to protection from “a thicket of hundreds of patents” Align Technology has supposedly wielded aggressively to “protect its aligner monopoly.” As the lawsuit tells it, however, once some of Align Technology’s key patents expired in 2017, the company was forced to turn its attention to the outside influence of competitors while keeping one eye on the lofty expectations of its investors. To juggle its predicament, the defendant “responded with the anticompetitive scheme” over which the lawsuit was filed, the plaintiff argues.
Moreover, the defendant’s possession of Invisalign-related patents, along with “other high barriers to entry” in the above-described markets, allegedly served as an effective deterrent for competitors looking to enter the market.
“Instead of reacting to the advent of competition by improving its product or lowering its prices, Defendant worked to suppress that potential competition by using its dominance in the Aligner market to impair competition in the Scanner market, and then in turn using its dominance in the Scanner market to impair competition in the Aligner market,” the case reads.
With regard to the particulars of the defendant’s alleged competition-quashing scheme, the lawsuit says it came down to Align Technology’s production of both Invisalign and the tool with which dentists determine whether the treatment is right for a patient:
“In particular, when a patient seeks Invisalign treatment, that patient would visit a Dental Practice that is authorized by Defendant to prescribe the treatment. A dentist or staff member would then normally perform a scan of the patient's mouth using a Scanner, and the dentist would review the scan. If the dentist determines that Invisalign treatment is appropriate, the Dental Practice will then purchase a set of Invisalign Aligners directly from Defendant, custom-designed and custom-manufactured for that specific patient based on the patient's mouth scan.”
All this amounts to a de facto “closed system” that essentially makes it impractical for dental practitioners to order Invisalign aligners from other manufacturers, the case says. The defendant’s iTero scanner, according to the suit, does not accept scans in an industry-standard format nor from other scanners. The plaintiff stresses that this makes it more time-consuming and expensive for proposed class members to go outside of the framework set in place by Align Technology.
As of September 2018, Align Technology has “an over 80% share in the market for aligners in the United States and an over 80% share in the market for scanners in the United States,” the lawsuit says. With this much muscle, the defendant, the plaintiff alleges, has been able to leverage its position to inflate prices for its iTero dental scanners and Invisalign treatments.