                     FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT


 MAGNETAR TECHNOLOGIES CORP., a                   Nos. 13-56119
 Nevada corporation,                                   13-56333
                  Plaintiff-Appellant/
                     Cross-Appellee,                 D.C. No.
                                                  8:07-cv-01052-
                     v.                              GAF-JCG

 INTAMIN, LTD., a Maryland
 corporation,                                        OPINION
                 Defendant-Appellee/
                    Cross-Appellant.


        Appeal from the United States District Court
           for the Central District of California
          Gary A. Feess, District Judge, Presiding

                    Argued and Submitted
              June 2, 2015—Pasadena, California

                   Filed September 14, 2015

 Before: Milan D. Smith, Jr. and N. Randy Smith, Circuit
  Judges and Royce C. Lamberth,* Senior District Judge.

             Opinion by Judge Milan D. Smith, Jr.

 *
   The Honorable Royce C. Lamberth, Senior District Judge for the U.S.
District Court for the District of Columbia, sitting by designation.
2                MAGNETAR TECHS. V. INTAMIN

                           SUMMARY**


              Malicious Prosecution / Antitrust

    The panel affirmed the district court’s summary
judgment on claims of (1) malicious prosecution of a patent
infringement action and (2) monopolization in violation of
Section 2 of the Sherman Antitrust Act.

    The panel held that under California law, the defendant
did not maliciously prosecute the plaintiff for infringement
of a magnetic braking system patent because a reasonable
attorney could have concluded that the on-sale bar of
35 U.S.C. § 102 did not apply to invalidate the patent.

    Affirming the district court’s grant of summary judgment
on the plaintiff’s claim that the defendant, along with its
European affiliate corporations, used the invalid patent to
monopolize the market for magnetic braking systems, the
panel held that the plaintiff failed to establish a causal
antitrust injury stemming from the defendant’s actions.

    On cross-appeal, the panel affirmed the district court’s
denial of the defendant’s motion for sanctions under Fed. R.
Civ. P. 37 against the plaintiff for bringing a frivolous
antitrust action.




  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
              MAGNETAR TECHS. V. INTAMIN                    3

                        COUNSEL

Maxwell M. Blecher (argued), Harold R. Collins, Blecher,
Collins, Pepperman, and Joye, P.C., Los Angeles, California,
for Plaintiff-Appellant/Cross-Appellee.

Gerald E. Hawxhurst (argued), Daryl M. Crone, David S.
Harris, Crone, Hawxhurst LLP, Los Angeles, California, for
Defendant-Appellee/Cross-Appellant.


                         OPINION

M. SMITH, Circuit Judge:

    Plaintiff-Appellant/Cross-Appellee Magnetar Technologies
Corporation (Magnetar) alleges that Defendant-
Appellee/Cross-Appellant Intamin Limited (Intamin)
maliciously prosecuted a patent infringement action against
it, asserting U.S. Patent No. 6,062,350 (‘350 Patent).
Magnetar claims that Intamin prosecuted the action even
though the ‘350 Patent was invalid pursuant to the on-sale bar
of 35 U.S.C. § 102 (on-sale bar). Magnetar also contends that
Intamin, along with its European affiliate corporations, used
the invalid ‘350 Patent to monopolize the market for
magnetic braking systems, in violation of Section 2 of the
Sherman Antitrust Act, 15 U.S.C. §§ 1–7 (Sherman Act).

    The district court granted summary judgment to Intamin,
holding that a reasonable attorney could have concluded that
the on-sale bar did not apply to the ‘350 Patent, and that
Intamin thus could not have maliciously prosecuted Magnetar
for patent infringement. The district court also ruled that
4              MAGNETAR TECHS. V. INTAMIN

Magnetar had offered insufficient evidence to prove an
antitrust injury in its antitrust claims against Intamin.

    In its cross-appeal, Intamin contends that the district court
erred by not imposing Rule 37 sanctions against Magnetar for
bringing a frivolous antitrust action against Intamin. The
district court denied Intamin’s motion for sanctions,
concluding that Magnetar brought its antitrust claims in good
faith.

    We affirm the decision of the district court.

    FACTUAL AND PROCEDURAL BACKGROUND

I. Factual Background

    A. The Parties

    Magnetar is a corporation organized and existing under
the laws of Nevada, with its principal place of business in
California. Magnetar manufactures and distributes magnetic
brakes and braking systems for use on roller coaster rides.

    Intamin is a corporation organized and existing under the
laws of Maryland, with its principal place of business in
Maryland. Intamin is affiliated with Intamin AG, located in
Switzerland, and Ride Trade Corp., located in Liechtenstein.
The three corporations design and build roller coaster rides
for use in amusement parks.

    B. The “Hellevator”

   On September 14, 1994, Intamin entered into a written
“Ride Manufacture/User Agreement” with Kentucky
                 MAGNETAR TECHS. V. INTAMIN                            5

Kingdom, an amusement park located in Kentucky,
concerning a ride named the “Hellevator.” The agreement
described the braking system to be installed on the ride as
“fin brakes,” a type of mechanical braking system.

    On October 11, 1994, Intamin entered into a written
“Letter Agreement” with Kentucky Kingdom that augmented
the September 1994 sales contract. The October 11
agreement required that Intamin deliver the Hellevator to
Kentucky Kingdom during the 1995 amusement park season.
The agreement also prohibited Intamin from selling the ride
to regional competitors of Kentucky Kingdom until 1997.

    On October 19, 1994, Intamin sent a fax to Kentucky
Kingdom providing details about the braking system to be
installed on the Hellevator: “INTAMIN is planning to have
the braking executed by a newly developed magnetic brake
unit which does not physically enter in contact with the
vehicles.” Kentucky Kingdom subsequently issued a press
release stating that the Hellevator would use “an innovating
braking system . . . and does not include the traditional ‘run-
out’ found in existing free-fall rides.” Unlike mechanical
braking systems, “[m]agnetic brakes create ‘eddy currents’
when a conductor passes through a gap between two sets of
magnets. These eddy currents, in turn, create a magnetic
friction that slows and stops the car attached to the
conductor.” Intamin, Ltd. v. Magnetar Techs., Corp.,
483 F.3d 1328, 1330 (Fed. Cir. 2007) (Intamin II).1




  1
   The district court entered the judgment at issue in Intamin II on July
19, 2005. Intamin, Ltd. v. Magnetar Techs., Corp., No. 04-0511 GAF
(C.D. Cal.) (Intamin I).
6             MAGNETAR TECHS. V. INTAMIN

    After the execution of the October 11, 1994 contract,
Intamin began work on the Hellevator. Intamin also
continued researching and testing the magnetic braking
system mentioned in its October 19 fax. In his affidavit,
Sandor Kernacs, President of Intamin, stated that Intamin did
not deliver the Hellevator to Kentucky Kingdom on time “due
to the extensive testing that the magnetic brake technology
required. For this reason, Intamin was forced to pay
Kentucky Kingdom a substantial penalty.”

    In March of 1995, Intamin published a report suggesting
that it was still in the early stages of testing the magnetic
braking system, and that the system was not yet ready for use
on the Hellevator. At several points, the report noted that
experiments were ongoing, and that the final parameters were
not yet known.

    One witness testified that the magnetic braking system
was ready as early as October of 1994. In his affidavit,
Ronald H. Berni, General Manager of Operations at Kentucky
Kingdom, stated that “it was never contemplated that the
braking system for the ride would be anything other than an
eddy current magnetic braking system. The braking system
shown on all technical drawings for the Giant Drop Ride will
verify this statement. No details on the technical drawings
ever indicated an intent to install, or a means for installing
mechanical brakes.”       On the other hand, Kentucky
Kingdom’s former CEO, Ed Hart, testified that it was
possible for the braking mechanism on the Hellevator to have
been either magnetic brakes or mechanical brakes. In
October of 1995, Intamin completed construction on the
Hellevator, using the magnetic braking system.
               MAGNETAR TECHS. V. INTAMIN                      7

    C. The ‘350 Patent

     On April 12, 1996, Intamin filed an application with the
U.S. Patent and Trademark Office (PTO) for a patent on the
magnetic braking system used in the Hellevator. Intamin’s
application was submitted on behalf of the inventors of the
magnetic braking system, including Patrick Spieldiener, a
director of Intamin. See ‘350 Patent. Intamin contends that
it informed its patent counsel that it had initially proposed the
magnetic braking technology in the Fall of 1994, when it
contracted to provide the Hellevator to Kentucky Kingdom.

    The PTO issued the ‘350 Patent on May 16, 2000. The
inventors listed on the ‘350 Patent were: Alfons Saiko, Peter
Rosner, Reinhold Spieldiener, Robert Spieldiener, and Patrick
Spieldiener. See ‘350 Patent. Intamin acquired exclusive
property rights in the ‘350 Patent on March 18, 2004, when
four of the original five inventors assigned their rights to
Intamin. See Intamin, Ltd. v. Magnetar Techs. Corp., 623 F.
Supp. 2d 1055, 1073 (C.D. Cal. 2009) (Intamin III).

    D. The Patent Infringement Action

    In 2004, Intamin filed suit against Magnetar, contending
that Magnetar had infringed the ‘350 Patent by selling “Soft
Stop” brakes, a type of magnetic braking system. See Intamin
II, 483 F.3d at 1331. The district court granted summary
judgment to Magnetar, holding that the “Soft Stop” brakes
did not infringe the ‘350 Patent because the components of
the “Soft Stop” brake differed from those in the magnetic
braking system Intamin had patented. Id. at 1332. The
Federal Circuit reversed the grant of summary judgment and
remanded the case to the Central District of California,
8             MAGNETAR TECHS. V. INTAMIN

concluding that the district court had erred by relying on a
narrow construction of the ‘350 Patent. Id. at 1337.

    After remand, the district court again granted summary
judgment to Magnetar, finding in part that Intamin had
“unclean hands” concerning post-issuance assignment of the
‘350 Patent: “[D]espite not having been assigned any rights
in the patent, Intamin began writing letters in 2001 to several
companies claiming those companies had infringed Intamin’s
patent and threatening litigation if the companies did not
compensate Intamin by purchasing a license.” Intamin III,
623 F. Supp. 2d at 1072. The Federal Circuit affirmed the
district court’s second grant of summary judgment, per
curiam. See Intamin, Ltd. v. Magnetar Techs. Corp., 404 F.
App’x 496 (Fed. Cir. 2010) (Intamin IV).

II. Prior Proceedings in this Action

    On September 11, 2007, Magnetar filed its complaint in
this action, alleging that Intamin had violated the Sherman
Act by using a fraudulently-obtained patent to establish a
monopoly in the market for magnetic braking systems. On
January 21, 2011, Magnetar filed a Second Amended
Complaint, to add a malicious prosecution claim, based on
Intamin filing suit against Magnetar for patent infringement.
The malicious prosecution claim is based on California law.

    On May 28, 2013, the district court granted summary
judgment to Intamin on both the malicious prosecution and
Sherman Act claims. On the former claim, the court held that
a reasonable attorney could have concluded that the on-sale
bar did not apply to the ‘350 Patent. Because there was a
legitimate dispute as to the applicability of the on-sale bar,
Intamin had probable cause to bring its patent infringement
              MAGNETAR TECHS. V. INTAMIN                    9

action. On the latter claim, the district court concluded that
Magnetar’s theory of antitrust injury was unreliable and
speculative, and that Magnetar had not provided an adequate
causal link between Intamin’s purported anticompetitive
conduct and Magnetar’s damages. The district court also
denied Intamin’s Rule 37 motion for sanctions against
Magnetar.

   This timely appeal followed.

   JURISDICTION AND STANDARD OF REVIEW

    The district court had subject matter jurisdiction over
Magnetar’s antitrust claims pursuant to 28 U.S.C. § 1331, and
had supplemental jurisdiction over the malicious prosecution
claim pursuant to 28 U.S.C. § 1337. We have jurisdiction
over this appeal pursuant to 28 U.S.C. § 1291.

    We review de novo the district court’s decision to grant
summary judgment to Intamin on the malicious prosecution
and antitrust claims. We consider disputed material facts in
the light most favorable to Magnetar, the non-moving party.
Summary judgment is appropriate if no genuine issue of
material fact exists, and Intamin is entitled to judgment as a
matter of law. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986).

   We review for an abuse of discretion the district court’s
decision not to sanction Magnetar under Rule 37. See
Comeaux v. Brown & Williamson Tobacco Co., 915 F.2d
1264, 1268 (9th Cir. 1990).
10            MAGNETAR TECHS. V. INTAMIN

                       DISCUSSION

I. Malicious Prosecution

    Magnetar contends that Intamin maliciously prosecuted
the patent infringement action, because Intamin brought the
action despite knowing that the ‘350 Patent was invalid
pursuant to the on-sale bar of 35 U.S.C. § 102. To prevail on
a claim of malicious prosecution, Magnetar must show that
the patent infringement action: (1) was commenced by or at
the defendant’s direction and terminated in plaintiff’s favor,
(2) was brought without probable cause, and (3) was initiated
with malice. See Freeman v. City of Santa Ana, 68 F.3d
1180, 1189 (9th Cir. 1995); see also Sheldon Appel Co. v.
Albert & Oliker, 765 P.2d 498, 501 (Cal. 1989) (quoting
Bertero v. National General Corp., 529 P.2d 608, 613 (Cal.
1974)).

    Whether probable cause exists in a malicious prosecution
case is a legal question resolved by the court. Wilson v.
Parker, Covert & Chidester, 50 P.3d 733, 736 (Cal. 2002).
The court’s “inquiry is objective,” Estate of Tucker v.
Interscope Records, Inc., 515 F.3d 1019, 1031 (9th Cir.
2008), asking whether a “reasonable attorney would have
thought the claim tenable.” Sheldon Appel Co., 765 P.2d at
511.

    In this case, we ask whether a “reasonable attorney would
have thought” the on-sale bar did not apply to the ‘350 Patent.
See id. “[T]he on-sale bar applies when two conditions are
satisfied before the critical date. First, the product must be
the subject of a commercial offer for sale. . . . Second, the
invention must be ready for patenting.” Pfaff v. Wells Elecs.,
Inc., 525 U.S. 55, 67 (1998).
              MAGNETAR TECHS. V. INTAMIN                   11

     With regard to the ‘350 Patent, a reasonable attorney
could have determined that the on-sale bar did not apply due
to the genuine dispute concerning whether the magnetic
braking system had been (1) offered for sale before the
critical date; and (2) was ready for patenting before the
critical date. We address each of these issues in turn.

   A. Offered for Sale More than One Year Prior

    The on-sale bar of 35 U.S.C. § 102 provides that “no
person is entitled to patent an ‘invention’ that has been ‘on
sale’ more than one year before filing a patent application.”
Pfaff, 525 U.S. at 57. Although our court has not delineated
the precise boundaries of the “on sale” prong of 35 U.S.C.
§ 102 after the Supreme Court’s controlling decision in Pfaff,
the Federal Circuit has held that “[o]nly an offer which rises
to the level of a commercial offer for sale, one which the
other party could make into a binding contract by simple
acceptance (assuming consideration), constitutes an offer for
sale under § 102(b).” Grp. One, Ltd. v. Hallmark Cards, Inc.,
254 F.3d 1041, 1048 (Fed. Cir. 2001). We are persuaded by
the Federal Circuit’s reasoning, and apply its holding here.
We conclude that a reasonable attorney could have
determined that the magnetic braking system was not part of
Intamin’s contract with Kentucky Kingdom and that the
magnetic braking system was not commercially offered for
sale more than one year prior to April 12, 1996. See Pfaff,
525 U.S. at 67.

       1. The “Ride Manufacture/User’s Agreement”

     The September 14, 1994 contract between Intamin and
Kentucky Kingdom did not constitute a commercial offer to
sell the magnetic braking system described in the ‘350 Patent.
12            MAGNETAR TECHS. V. INTAMIN

The contract specified that passengers on the Hellevator
would be stopped by a “braking zone where they are stopped
by a series of permanently closed fin brakes.” Fin brakes are
a form of mechanical brakes. The September contract further
states elsewhere that “mechanical brakes” would be used.

       2. “Letter Agreement”

    The October 11, 1994 letter agreement similarly does not
support Magnetar’s position that the magnetic braking system
was sold by Intamin to Kentucky Kingdom. This document
augments the September 14 contract, but it says nothing about
the use of magnetic brakes on the Hellevator.

       3. October 19, 1994 Letter from Intamin AG

    The October 19, 1994 letter from Patrick Spieldiener
specified that magnetic brakes could be used on the
Hellevator: “Contrary to previous descriptions INTAMIN is
planning to have the braking executed by a newly developed
magnetic brake unit which does not physically enter in
contact with the vehicles.” Nevertheless, a reasonable
attorney could have determined that this letter does not
constitute “a commercial offer for sale” of magnetic brakes.
Pfaff, 525 U.S. at 67.

     The language in the letter does not require that magnetic
brakes be used on the Hellevator. Rather, Patrick Spieldiener
states that Intamin is “planning” to use the magnetic brakes,
which implies at least some uncertainty. Because the original
contract stated that mechanical brakes would be used, the
letter suggests only that Intamin would attempt to replace the
mechanical brakes with magnetic ones.
               MAGNETAR TECHS. V. INTAMIN                     13

    Moreover, an attorney analyzing all the facts could
determine that the original contract to provide mechanical
brakes had not been modified by the October 19 letter. The
parties do not dispute that Kentucky law applies to the
contract because Kentucky is the place of performance, and
Kentucky Kingdom is located in that state. Under Kentucky
law, a modification is subject to the same requirements as the
contract itself; namely, offer, acceptance, and consideration.
See Energy Home, Div. of S. Energy Homes, Inc. v. Peay,
406 S.W.3d 828, 834 (Ky. 2013).

     It is unclear whether the contract modification discussed
in the letter was complete. “For the terms [of a modification]
to be considered complete they must be ‘definite and certain’
and must set forth the ‘promises of performance to be
rendered by each party.’” Id. (quoting Kovacs v. Freeman,
957 S.W.2d 251, 254 (Ky. 1997)). Here, the letter does not
refer to the original agreement nor does it clearly state that it
is meant as an amendment to the original contract. The
alleged modification was signed by Patrick Spieldiener, who
did not state he was signing on behalf of Intamin Ltd., the
party to the original contract. Patrick Spieldiener was also an
officer of Intamin AG. In light of these facts, a reasonable
attorney could have concluded that the letter did not modify
the original contract, and that Intamin had only contracted to
sell mechanical brakes to Magnetar.

        B. Experimentation Exception

    Even if we were to decide that a commercial offer for sale
of the magnetic brakes was contained in the October 19 letter,
a reasonable attorney could still have concluded that the
magnetic braking system was not “ready for patenting” when
the Hellevator was sold to Kentucky Kingdom. An invention
14              MAGNETAR TECHS. V. INTAMIN

is “ready for patenting” if it has been “reduc[ed] to practice
before the critical date . . . [or if] prior to the critical date the
inventor had prepared drawings or other descriptions of the
invention that were sufficiently specific to enable a person
skilled in the art to practice the invention.” Pfaff, 525 U.S. at
67–68.

    The Federal Circuit has described “reduction to practice”
as “proof that an invention will work for its intended
purpose.” See EZ Dock, Inc. v. Schafer Sys., Inc., 276 F.3d
1347, 1352 (Fed. Cir. 2002). The Federal Circuit also held
that ongoing experiments on an invention after the critical
sale date can show that the invention had not been reduced to
practice. Id. at 1352–53. We are persuaded by the reasoning
of the Federal Circuit, and we adopt its holding on this issue.

     There is ample evidence in the record showing that
experiments on the magnetic brakes continued after the
critical sale date. According to a report issued in March
1995—just one month before the critical date—the magnetic
brake technology was still being studied, and the final
parameters were unknown. Sandor Kernacs, President of
Intamin, testified that experiments on the magnetic brake
technology continued into June and July of 1995.

    Magnetar argues that when an invention is reduced to
practice, the applicability of the experimentation exception to
the on-sale bar is negated. We agree that this is legally
correct. See, e.g., Weatherchem Corp. v. J.L. Clark, Inc., 163
F.3d 1326, 1332 (Fed. Cir. 1998). In the present case,
however, Magnetar needed to show that every reasonable
attorney would have thought that the magnetic braking
system had been reduced to practice, and thus, would have
thought that the on-sale bar applied. Because Magnetar has
              MAGNETAR TECHS. V. INTAMIN                   15

not made such a showing, it cannot prove that Intamin lacked
probable cause to bring the patent infringement action against
Magnetar.

II. Sherman Act Antitrust Claims

    We next turn to Magnetar’s antitrust claims. Section 2 of
the Sherman Act, 15 U.S.C. § 2, makes it illegal to
“monopolize, or attempt to monopolize, or combine or
conspire with any other person or persons, to monopolize any
part of the trade or commerce among the several States, or
with foreign nations.” The Sherman Act “prohibits efforts
both to restrain trade by combination or conspiracy and the
acquisition or maintenance of a monopoly by exclusionary
conduct.” Image Tech. Servs., Inc. v. Eastman Kodak Co.,
125 F.3d 1195, 1214 (9th Cir. 1997).

    Magnetar asserts three related antitrust claims based on
Section 2 of the Sherman Act. First, it contends that Intamin,
together with its European affiliates Intamin AG and Ride
Trade Corp., obtained the ‘350 Patent through fraud on the
PTO, and then entered into a conspiracy to eliminate
competition in the market for magnetic braking systems.
Intamin and its European affiliates purportedly eliminated
competition by forcing other market participants to pay
licensing and registration fees to Intamin, and threatening to
file lawsuits based on the ‘350 Patent. Second, Magnetar
claims that, by fraudulently obtaining the ‘350 Patent and
subsequently using the ‘350 Patent to drive out competitors
from the magnetic braking market, Intamin attempted to
monopolize the magnetic braking market. Third, Magnetar
contends that Intamin actually monopolized the business of
manufacturing, selling, and distributing magnetic braking
systems.
16                MAGNETAR TECHS. V. INTAMIN

     All three of Magnetar’s alleged causes of action require
it to show a causal antitrust injury.2 We recognize that
Intamin’s conduct relating to the ‘350 Patent is problematic.
A final decision of a district court concluded that “Intamin
filed with the PTO fraudulent, back-dated assignments twice,
once in 2005 and again in 2007, each of which purported to
assign Intamin the rights to the ‘350 patent in 1997.” Intamin
III, 623 F. Supp. 2d at 1072. The present case, however,
involves Magnetar’s claims that Intamin knew the ‘350 Patent
was invalid based on the on-sale bar, but then used the
purportedly fraudulent ‘350 Patent to establish market power
in the market for magnetic braking systems. Considering this
specific set of claims only, we affirm the district court’s
decision granting summary judgment to Intamin because
Magnetar has not alleged sufficient facts to show a causal
antitrust injury stemming from Intamin’s actions.




  2
     To prove a conspiracy claim, Magnetar must demonstrate: “(1) the
existence of a combination or conspiracy to monopolize; (2) an overt act
in furtherance of the conspiracy; (3) the specific intent to monopolize; and
(4) causal antitrust injury.” Paladin Assocs., Inc. v. Mont. Power Co.,
328 F.3d 1145, 1158 (9th Cir. 2003). To prevail on a claim of an attempt
to monopolize, Magnetar must prove: (1) specific intent by Intamin to
control prices or destroy competition; (2) predatory or anti-competitive
conduct directed toward accomplishing that purpose; (3) a dangerous
probability of success; and (4) causal antitrust injury. See Image Tech.
Servs., Inc., 125 F.3d at 1202. Finally, to hold Intamin liable for the actual
monopolization of the market in magnetic braking systems, Magnetar has
to show: (1) Intamin’s possession of monopoly power in the relevant
market; (2) the willful acquisition or maintenance of that power; and
(3) causal antitrust injury. See Allied Orthopedic Appliances Inc. v. Tyco
Health Care Grp. LP, 592 F.3d 991, 998 (9th Cir. 2010).
              MAGNETAR TECHS. V. INTAMIN                    17

   A. Causal Antitrust Injury

    Magnetar contends that Intamin caused two antitrust
injuries: (1) lost profits resulting from Intamin’s patent
infringement lawsuit and other attempts to force Magnetar to
pay licensing fees to Intamin, and (2) litigation costs
Magnetar incurred in defending the patent lawsuit. Magnetar,
however, does not provide an estimate of the amount of
damages that can be attributed to Intamin’s anticompetitive
conduct nor does it show that Intamin’s conduct caused these
damages. See City of Vernon v. S. Cal. Edison Co., 955 F.2d
1361, 1371 (9th Cir. 1992); McGlinchy v. Shell Chemical Co.,
845 F.2d 802, 808 (9th Cir. 1988).

       1. Lost Profits

    To survive a motion for summary judgment, Magnetar
must “provide evidence such that the jury is not left to
‘speculation or guesswork’ in determining the amount of
damages to award.” McGlinchy, 845 F.2d at 811 (quoting
Dolphin Tours, Inc. v. Pacifico Creative Serv., Inc., 773 F.2d
1506, 1509–10 (9th Cir. 1985)). Magnetar does not carry this
burden. It has not submitted “expert witnesses or designated
documents providing competent evidence from which a jury
could fairly estimate” its lost profits. McGlinchy, 845 F.3d at
808 (citing Rickards v. Canine Eye Registration Found., Inc.,
704 F.2d 1449, 1452 (9th Cir. 1983), cert denied, 464 U.S.
994 (1983)).

    Magnetar’s principal expert, Karl J. Schulze, did not
provide an accurate estimate of the damages Magnetar
suffered. His expert calculation did little more than examine
the difference between Magnetar’s projected revenue, without
considering the effects of Intamin’s lawsuit, and Magnetar’s
18            MAGNETAR TECHS. V. INTAMIN

actual revenue, after the prosecution of the lawsuit. Put
differently, Schulze only compared Magnetar’s “actual
[results] versus their business plan[, which] showed that they
did not achieve their business plan.” Schulze did not delve
into the merits of the projected results. Instead, he took as a
“base assumption” the projections Magnetar provided, and
assumed that they were accurate. Accordingly, the district
court correctly found that there was no “independent
assessment of the validity of Magnetar’s projected revenues.”

    After being deposed, Schulze submitted an affidavit in
which he stated that he had reviewed the merits of Magnetar’s
projected business plan. For example, he stated, “I reviewed
in detail Magnetar’s prior operating history to ascertain
performance and trends in revenue, gross margin and costs,
as well as to confirm that Magnetar had significant
experience in the industry and line of business in which it
planned to continue operating.” Even if we accept the
affidavit as true, neither Schulze’s deposition testimony, nor
his affidavit, estimated the portion of Magnetar’s overall
losses that could be attributed to the patent lawsuit. Several
other factors could have contributed to Magnetar’s losses,
such as the decline in profits in the amusement ride business,
or the decline of the U.S. economy generally. These
alternative causes would have exacerbated the loss of profits
purportedly caused by the patent litigation.

    Second, Magnetar’s evidence does not segregate the
losses . . . caused by acts which were not antitrust violations
from those that were. See City of Vernon, 955 F.2d at 1372.
Because Schulze similarly did not make an effort to separate
the losses suffered as a result of Intamin’s conduct from the
total losses suffered by Magnetar, it would have been
impossible for a jury to estimate the lost profits attributable
               MAGNETAR TECHS. V. INTAMIN                    19

to Intamin’s conduct. See id. at 1373 (“[T]here is no
indication of what part of that $80,000 loss of savings was
due to proper interruptions of service and what part to
improper ones, or for that matter, due to other factors
entirely.”).

    Finally, Magnetar has not proven “in a reasonable manner
the link between the injury suffered and the illegal practices
of the defendant.” Id. at 1371 (quoting MCI Commc’ns Corp.
v. Am. Tel. & Tel. Co., 708 F.2d 1081, 1161 (7th Cir. 1983)).
None of Magnetar’s expert witnesses established this causal
link. As noted supra, Schulze’s expert testimony made no
effort to separate the damages attributable to the patent action
from other possible causes of losses. Similarly, Mark
Hanlon, an industry expert with an engineering background,
did not address the issue of causation. He only testified
concerning the types of braking systems used in amusement
park rides, and the engineering features of magnetic brakes.

    Edward M. Pribonic, President of Magnetar, also failed to
provide evidence that Intamin caused Magnetar to lose
profits. He only testified conclusorily that, “[a]fter Intamin
Ltd. filed its malicious lawsuit for patent infringement against
Magnetar, Magnetar’s business and reputation were severely
damaged. Magnetar struggled on for three years, at first
trying to maintain its growth, but as time went on, just trying
to survive. The enormous expense of the litigation defense
crippled Magnetar’s efforts to continue product development
or marketing.” At best, Pribonic’s testimony only showed a
correlation between the beginning of the patent litigation and
losses suffered by Magnetar.

    Magnetar also submitted affidavits from potential
customers, which stated that they were wary of “potential
20            MAGNETAR TECHS. V. INTAMIN

litigation” and therefore, decided not to purchase magnetic
brakes from Magnetar. Such evidence does not provide a
clear causal link to losses suffered by Magnetar. We note that
companies such as Magnetar’s customers routinely confront
“potential litigation,” especially when someone in the
industry applies for a patent.

    We affirm the district court’s decision granting summary
judgment to Intamin on the issue of lost profits. Magnetar
fails to prove a “direct causal connection between the alleged
violation and the alleged injury,” as required by the Sherman
Act. Hairston v. Pac. 10 Conference, 101 F.3d 1315, 1322
(9th Cir. 1996).

       2. Litigation Costs

    Magnetar next contends that the litigation expenses it
incurred defending itself against the patent litigation
constitute an antitrust injury. See Rickards, 783 F.2d at
1334–35; Handgards, Inc. v. Ethicon, Inc., 601 F.2d 986,
988–89 (9th Cir. 1979). We agree with Magnetar that, unlike
lost profits, its litigation expenses are not speculative.
However, to succeed in an antitrust claim based on litigation
expenses, Magnetar must show that the patent lawsuit was a
sham, based on the clear application of the on-sale bar to the
‘350 Patent. See Rickards, 783 F.2d at 1335. As we
determined supra, a reasonable attorney could have
determined that Intamin’s patent lawsuit was viable and that
the on-sale bar did not apply to the ‘350 Patent.

    The district court did not err in granting summary
judgment to Intamin on the antitrust claims because Magnetar
has not submitted sufficient evidence of a causal antitrust
injury.
               MAGNETAR TECHS. V. INTAMIN                    21

III.    Rule 37 Sanctions

    On cross-appeal, Intamin contends that the district court
erred in denying its request for attorney’s fees and costs under
Rule 37. Intamin claims that Magnetar should be sanctioned
because it could not prove antitrust injury and damages.
Although Intamin served requests for admission on Magnetar,
including requests to admit that it had not been “injured in its
business or property” by antitrust violations, Magnetar did
not admit these facts.

    Fed. R. Civ. P. 37(c)(2) states that “[i]f a party fails to
admit what is requested under Rule 36 and if the requesting
party later proves a document to be genuine or the matter
true, the requesting party may move that the party who failed
to admit pay the reasonable expenses, including attorney’s
fees, incurred in making that proof.” Here, the issue is not
whether Magnetar prevailed in the litigation but whether it
acted reasonably in believing that it might prevail. See Wash.
State Dept. of Transp. v. Nat. Gas Co., 59 F.3d 793, 805–06
(9th Cir. 1995).

    The district court did not sanction Magnetar because it
concluded that Magnetar had reasonable grounds to bring the
antitrust action. We agree with the district court. Although
we hold that Magnetar did not offer enough evidence to
establish a causal antitrust injury, we recognize that
potentially valid arguments could have been made on both
sides of this issue. Accordingly, we conclude that Magnetar
proceeded in good faith in not admitting facts related to the
antitrust injury.
22              MAGNETAR TECHS. V. INTAMIN

IV.      Conclusion

    We affirm the district court’s decision granting summary
judgment to Intamin on the malicious prosecution and
Sherman Act claims. We also affirm the district court’s
ruling denying Rule 37 sanctions against Magnetar.

      Each party shall bear its own costs on appeal.

      AFFIRMED.
