Cyborg Systems v. Management Science America

Citation: Cyborg Sys., Inc. v. Management Science America, Inc., 77 Civ. 2645 (N.D. Ill., filed January 30, 1978), reprinted in 1978-1 Trade Cases (CCH) ¶61,927 (1978).

Factual Background
The four count complaint was filed by Cyborg Systems, an Illinois corporation, charging Management Science America, Inc. ("MSA") and others with the common law torts of slander and intentional interference with prospective economic advantage and with violations of Section 2 of the Sherman Act. The gravamen of all four counts was MSA's publication and republication of statements attacking Cyborg's integrity and accusing it of having stolen the software payroll system that MSA markets. MSA responded to Cyborg's complaint with a motion to dismiss, or, alternatively, to stay. This motion contested personal jurisdiction and venue and argued that three of the counts failed to state claims upon which relief could be granted.

Trial Court Decision
The district court ruled that there had been the necessary minimum contacts to satisfy the Illinois long-arm statute and due process, because the long-arm statute has been interpreted to include extraterritorial acts which had injurious consequences within Illinois. The court further found that venue was proper because (1) Cyborg contended that the antitrust claims arose in the district, (2) MSA did not state that they would be inconvenienced by litigation in the district, and (3) the injury was suffered by an Illinois corporation, i.e., the claim "arose" in Illinois.

The three claims that were challenged involved various torts and allegations of monopolization and attempts to monopolize in violation of Section 2 of the Sherman Act. The court ruled that the tort allegations were sufficient to state a cause of action. The antitrust claims were based on the allegations of defamation and bad faith litigation initiated in a related trade secret case. These claims also charged that MSA occupied a monopoly position in the relevant market licensing and servicing over fifty per cent of the software systems in the United States. The court ruled that the Noerr Pennington doctrine did not protect MSA from the antitrust charges, since the case could come within the "sham litigation" exception of the doctrine, even though it was the sole case that had been filed.

The court further ruled that a stay of the antitrust suit was not appropriate, even though a judicial determination that the trade secrets covering the computerized payroll system had been obtained unlawfully would undermine the antitrust charges.