Case: 19-1805   Document: 69     Page: 1   Filed: 07/13/2020




        NOTE: This disposition is nonprecedential.


   United States Court of Appeals
       for the Federal Circuit
                 ______________________

        POWER ANALYTICS CORPORATION,
               Plaintiff-Appellant

                            v.

   OPERATION TECHNOLOGY, INC., DBA ETAP,
 OSISOFT, LLC, SCHNEIDER ELECTRIC USA, INC.,
               Defendants-Appellees
              ______________________

                       2019-1805
                 ______________________

    Appeal from the United States District Court for the
 Central District of California in No. 8:16-cv-01955-JAK-
 FFM, Judge John A. Kronstadt.
                  ______________________

                 Decided: July 13, 2020
                 ______________________

    ROBERT F. RUYAK, RuyakCherian LLP, Washington,
 DC, argued for plaintiff-appellant. Also represented by
 RICHARD RIPLEY, BRITTANY VACEK RUYAK.

     TREVOR V. STOCKINGER, Kesselman Brantly Stockinger
 LLP, Manhattan Beach, CA, argued for all defendants-ap-
 pellees. Defendant-appellee Operation Technology, Inc.
 also represented by SALUMEH R. LOESCH, JOHN D.
 VANDENBERG, Klarquist Sparkman, LLP, Portland, OR.
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 2              POWER ANALYTICS CORP.   v. OPERATION TECH., INC.




     MICHAEL JOHN SACKSTEDER, Fenwick & West, LLP,
 San Francisco, CA, for defendant-appellee OsIsoft, LLC.
 Also represented by GEOFFREY ROBERT MILLER, New York,
 NY; JOSEPH STEPHEN BELICHICK, Mountain View, CA.

     REGINALD J. HILL, Jenner & Block LLP, Chicago, IL, for
 defendant-appellee Schneider Electric USA, Inc. Also rep-
 resented by BENJAMIN J. BRADFORD, SHAUN VAN HORN;
 ADAM G. UNIKOWSKY, Washington, DC.
                 ______________________

     Before LOURIE, MOORE, and O’MALLEY, Circuit Judges.
     Opinion for the court filed by Circuit Judge O’MALLEY.
       Concurring opinion filed by Circuit Judge MOORE.
 O’MALLEY, Circuit Judge.
      As courts have regularly maintained, the allegations
 set forth in a complaint may not simply recite the elements
 of a cause of action. A plausible “short and plain” state-
 ment of the plaintiff’s claim, pursuant to Federal Rule of
 Civil Procedure 8(a)(2), must contain putative facts that
 provide fair notice and show that the plaintiff is entitled to
 relief. Skinner v. Switzer, 562 U.S. 521 (2011). Although
 we accept such factual allegations as true at the motion to
 dismiss stage, the complainant “must plausibly suggest an
 entitlement to relief, such that it is not unfair to require
 the opposing party to be subjected to the expense of discov-
 ery and continued litigation.” Starr v. Baca, 652 F.3d 1202,
 1216 (9th Cir. 2011).
      The “practical significance” of Rule 8 rings especially
 true in antitrust cases. Bell Atlantic Corp. v. Twombly 550
 U.S. 544, 557–58 (2007) (quoting Dura Pharms., Inc. v.
 Broudo, 544 U.S. 336, 347 (2005)). In such cases, district
 courts properly insist on some specificity to relieve parties
 of “the potentially enormous expense of discovery in cases
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 with no reasonably founded hope that the discovery process
 will reveal relevant evidence to support a [Sherman Act]
 claim.” Id. at 559–60 (internal citations omitted). That is
 what the district court did in this case.
      With the patience of a first grader’s piano teacher, the
 district court detailed the requirements of Sherman Act
 §§ 1 and 2 violations, explained why the allegations failed
 to establish anticompetitive conduct, and dismissed Power
 Analytics’ multiple amended complaints without prejudice,
 providing the plaintiff with an opportunity to shore up such
 deficiencies. Despite the advantage of developed discovery
 and three bites at the Rule 8 apple, Power Analytics never
 provided a plausible statement of relief. Instead, it an-
 nounced during the last motion to dismiss hearing that the
 district court had misconstrued its § 1 claim as alleging
 “exclusive dealing arrangements” as opposed to concerted
 “refusals to deal,” and demanded a favorable outcome on
 this new basis. Power Analytics Corp. v. Operation Tech.,
 Inc., et al., Case No. 16-01955, 2018 WL 10231437, at *1
 n.1 (C.D. Cal. July 24, 2018). Declining to address the new,
 unbriefed theory, the district court dismissed the com-
 plaint as deficient, once again without prejudice, allowing
 Power Analytics to advance its new theory with proper
 briefing. Rather than accept the district court’s generous
 offer to amend its complaint for a fourth time, Power Ana-
 lytics took this appeal, and now maintains that the district
 court’s entire analysis under § 1 is “irrelevant” here. It
 asks that we do what it did not give the district court an
 opportunity to do: evaluate its § 1 claim under a refusal to
 deal theory. We will not do that.
      Because we find that Power Analytics has waived its
 § 1 argument and agree with the district court’s conclu-
 sions regarding § 2 and the attendant state law claims, we
 conclude that Power Analytics’ third amended complaint
 fails to state a claim for which relief may be granted. We
 affirm.
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 4              POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



                        I. BACKGROUND
  A. Grid Design and Management Products and Services
     Appellant Power Analytics and Appellees ETAP,
 OSISoft LLC (“OSI”), and Schneider Electric USA, Inc.
 (“Schneider”) (collectively, “Appellees”) are all in the busi-
 ness of developing and selling software products for use
 with power grids or microgrids. Power Analytics Corp.,
 2018 WL 10231437, at *1.
     Grid Design and Management Products and Services
 (“Grid D and M Products) help operators design and man-
 age power grids and microgrids that operate in facilities
 ranging from nuclear power plants to data centers. J.A.
 1403 ¶ 18. There are a variety of different products and
 services within the Grid D and M Products category, but as
 relevant to this appeal, the parties develop and sell:
 (1) Grid Design Products and Services (“Grid Design prod-
 ucts”); (2) Real Time products; and (3) Historian Software
 products.
     Grid Design products are software programs used in
 the engineering, design, and subsequent management of
 power grids and microgrids. J.A. 1403 ¶ 22. Some of these
 products are audited and certified for use in nuclear facili-
 ties, as required by federal law and regulation. J.A. 1404
 ¶ 25. Both Power Analytics and ETAP sell Grid Design
 products. Id.
     Once a power grid or microgrid is designed, installed,
 and deployed, the operator can use software products that
 provide additional functionality. These include “Real
 Time” products, which “analyz[e] trends and predict[] po-
 tentially damaging events.” J.A. 1405 ¶ 27. Real Time
 products can improve the current and future operation of a
 Power Grid or Microgrid by “collecting and utilizing cur-
 rent data in near real time to inform such functionality.”
 J.A. 1492 ¶ 27. Power Analytics makes and sells a Real
 Time product that can track Power Grid operations on a
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 POWER ANALYTICS CORP.   v. OPERATION TECH., INC.          5



 continuous basis. J.A. 1405–06 ¶¶ 29–31. When paired
 with Power Analytics’ Grid Design products, its Real Time
 product achieves “full functionality.” J.A. 1428 ¶ 114.
 Power Analytics alleges that ETAP and Schneider sell Real
 Time products that compete with Power Analytics’ own
 product. J.A. 1406 ¶ 32.
     Nuclear power generation facilities require software
 products known as “Historian Software.” J.A. 1406 ¶ 33.
 Historian Software products allow these facilities to sys-
 tematically collect and retain time series information re-
 lated to the operation of their power grid systems, record
 this information, and report certain prescribed incidents of
 system operation to other facilities. Id. Grid Design and
 Real Time products, if audited and implemented in nuclear
 facilities, must interact with Historian Software. J.A. 1406
 ¶ 34. Appellant and Appellees all offer Historian Software
 products. J.A. 1406–07 ¶ 35–38.
     These three types of products—Grid Design, Real
 Time, and Historian—can be sold in “bundles” as a com-
 plete platform, utilized to operate a facility’s entire mi-
 crogrid. Power Analytics, 2018 WL 10231437, at *3.
             B. The Alleged Antitrust Markets
      Power Analytics’ Third Amended Complaint (“TAC”)
 alleges that there are three relevant product markets:
 (1) the Nuclear Procurement Issues Committee (“NUPIC”)
 Grid Design Market; (2) the NUPIC Real Time Market; and
 (3) the Energy Management Systems (“EMS”) Platform
 Market. We describe each of these below.
     NUPIC is an “industry partnership among nuclear
 power plants licensed by the Nuclear Regulatory Commis-
 sion.” Power Analytics, 2018 WL 10231437, at *4 (quoting
 J.A. 1501 ¶ 63). All North American nuclear facilities are
 NUPIC members. Id. (citing J.A. 1501 ¶ 63). Software
 products used in nuclear facilities must attain NUPIC
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 6              POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



 certification through an audit by at least five separate
 NUPIC members. Id.
     The TAC defines the NUPIC Grid Design Market as
 the North American market for “the sale and servicing of
 Grid Design Products to customers who, by law and or reg-
 ulation, may only purchase and deploy Grid Design Prod-
 ucts that have been ‘certified’ by successfully completing a
 NUPIC audit within the prior three years.” J.A. 1500 ¶ 60.
 The TAC defines the NUPIC Real Time Market as the
 North American market for “the sale and servicing of Real
 Time Products to customers who by law and or regulation,
 may only purchase and deploy Real Time Products that
 have been ‘certified’ by successfully completing a NUPIC
 audit within the past three years.” Power Analytics, 2018
 WL 10231437, at *5 (citing J.A. 1500 ¶ 61). According to
 the TAC, the NUPIC Markets are comprised “almost en-
 tirely of nuclear power generation facilities, a small num-
 ber of other facilities that use or employ nuclear power, and
 entities who provide design and other services to such nu-
 clear power facilities.” Id. (quoting J.A. 1500–01 ¶ 62).
 The TAC alleges that NUPIC’s exhaustive certification pro-
 cess makes products and services sold in the NUPIC Mar-
 kets “economically and functionally distinct” from markets
 that sell non-NUPIC certified versions of these products,
 such as the EMS Platform Market. Id. (quoting J.A. 1501
 ¶ 64); J.A. 1413–14 ¶ 64.
     EMS Platforms are “the full bundle of automation,
 monitoring and control software, hardware and related
 equipment purchased by facility owner/operators for use as
 an ‘EMS Platform.’” J.A. 1435 ¶ 136. They consist of a
 bundle of numerous components, including Grid Design
 and Real Time products. Power Analytics, 2018 WL
 10231437, at *5. The TAC defines the EMS Platform Mar-
 ket as the North American market dedicated to the sale
 and servicing of EMS platforms. J.A. 1519 ¶ 119.
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 POWER ANALYTICS CORP.   v. OPERATION TECH., INC.          7



        C. Appellees’ Putative Anticompetitive Behavior
      In 2013, Power Analytics released a new Real Time
 product. J.A. 1507 ¶ 84. A press release announced that
 this product provided “the ability to see the ‘as designed’
 system and compare it against the real time power system
 as it is operating.” J.A. 1507 ¶ 84. The product was adver-
 tised to host a variety of new features, such as the ability
 to “run what-if scenarios, generate reports, [and] view real
 time usage and diagnostic data.” J.A. 1507–08 ¶ 84.
     After ETAP learned of the press release, its senior
 management circulated an internal memorandum, which
 recited:
    Great!!!!!
    All of our USP [Unique Sales Propositions] will be
    now [sic] for EDSA 1. We need to kill such competi-
    tion from these companies. (EDSA, Cyme, Dig-
    Silent, PSSE in particular).
 J.A. 1508 ¶ 85. Power Analytics contends this was a dec-
 laration of intent to “kill competition” from Power Analyt-
 ics. Appellant Br. 8.
     The TAC alleges that ETAP then embarked on a com-
 petition-killing strategy intended to insulate its Grid De-
 sign business from Power Analytics’ superior offerings.
 J.A. 1507–09 ¶¶ 84–90. According to the TAC, this re-
 sulted in two anticompetitive agreements: one with OSI
 and one with Schneider.
                 1. The OSI-ETAP Agreement
     In September 2014, ETAP and OSI announced that
 they had entered into a “strategic partnership.” J.A. 1508
 ¶ 86. As alleged in the complaint, the two companies


    1  During this time, Appellant Power Analytics was
 known as “EDSA Micro Corporation.” J.A. 1453 ¶ 191.
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 8              POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



 agreed to bundle their products—ETAP’s Grid Design soft-
 ware and OSI’s Historian Software. The TAC character-
 izes this as an attempt to “exclude existing and potential
 competitors from providing products which challenge each
 of their dominant monopoly positions in the market.”
 Power Analytics, 2018 WL 10231437, at *7 (citing J.A. 1506
 ¶ 79). The resulting agreement (“the OSI-ETAP Agree-
 ment”) allegedly placed “‘unreasonable impediments and
 conditions intended to preclude and/or deter’ existing cus-
 tomers from switching out OSI and ETAP’s products with
 those of [Power Analytics’] and certain other ‘actual and
 potential competitors.’”     Power Analytics, 2018 WL
 10231437, at *7 (citing J.A. 1509 ¶ 91).
     The TAC refers to a 2013 Term Sheet documenting key
 provisions of the agreement. Id. The document allegedly
 states that customers who purchase OSI products under
 the OSI-ETAP Agreement may only use those products in
 conjunction with ETAP products. Id. The TAC also states
 that ETAP and OSI produced a Memorandum of Under-
 standing (“MOU”) to commemorate this “exclusivity mech-
 anism”: both companies are allegedly required to
 recommend each other’s products to prospective customers.
 Power Analytics, 2018 WL 10231437, at *7 (citing J.A.
 1510–11 ¶¶ 94–95).
            2. The Schneider-ETAP Agreement
     In 2012, ETAP and Schneider began to jointly sell
 Schneider’s Historian Software with ETAP’s Grid Design
 software. J.A. 1456 ¶¶ 198–99. A year later, around the
 time of ETAP’s internal memorandum, ETAP allegedly
 met with Schneider with the intention of “expand[ing]
 [their] initial arrangement.” J.A. 1457 ¶ 202. The TAC
 contends that Schneider and ETAP agreed to an exclusive
 and sole-sourced arrangement (the “Schneider-ETAP
 Agreement”). J.A. 1457 ¶ 204. In support of this allega-
 tion, the TAC cites to a press release that Schneider issued
 in 2015, where the company announced it had
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 POWER ANALYTICS CORP.   v. OPERATION TECH., INC.           9



 “standardized” the use of ETAP software for its electrical
 engineering design, analysis, and operation services. J.A.
 1458 ¶ 204. The press release, entitled “Schneider Electric
 Standardizes on ETAP Across its Services Division,” re-
 cites in relevant part:
    Schneider Electric, a global leader in energy man-
    agement and engineering solutions has chosen
    ETAP Power System Enterprise Solution as its
    strategic platform for its engineering services busi-
    ness . . . Schneider Electric decided to standardize
    the use of ETAP for its projects in order to leverage
    the advanced, next-generation technology of the in-
    tegrated ETAP software suite to further increase
    its productivity through greater efficiencies. ETAP
    provides Schneider Electric higher design reliabil-
    ity and quality, rule-based analysis, and automa-
    tion capabilities that will help to optimize and fast
    track project engineering design and analysis pro-
    cesses.
 Id. The TAC alleges that this use of “standardized” indi-
 cates that all Schneider EMS Platform Products will only
 include ETAP Grid Design and Real Time products. J.A.
 1457–58 ¶ 204 (emphasis included). This press release al-
 legedly signaled to Schneider’s customers that they would
 “be offered no other choice of competing products in the
 Schneider EMS Platform bundle.” Id.
                   D. Procedural History
     On January 11, 2008, Power Analytics filed its TAC—
 the operative complaint in this appeal. Power Analytics,
 2018 WL 10231437, at *1. The TAC is substantially simi-
 lar to Power Analytics’ Second Amended Complaint. It al-
 leges Sherman Act § 1 claims against ETAP, OSI, and
 Schneider, § 2 claims against ETAP, and state law claims
 against ETAP, OSI, and Schneider predicated on the same
 allegedly anti-competitive conduct.
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  10            POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



          1. The Alleged Sherman Act Violations
      The TAC first alleges that OSI and ETAP, through the
 OSI-ETAP Agreement, violated § 1 of the Sherman Act.
 According to the complaint, the OSI-ETAP Agreement is
 exclusionary and illegally restrains trade in the NUPIC
 Markets. J.A. 1506 ¶¶ 70–80; J.A. 1509 ¶ 90; JA. 1511
 ¶ 95; J.A. 1516 ¶ 113; J.A. 1559 ¶ 257. Citing to the Term
 Sheet and the MOU, the TAC suggests that the OSI-ETAP
 Agreement prevents customers from switching to Power
 Analytics’ products via an alleged duplicative license. J.A.
 1509–10 ¶¶ 91, 93–94. The TAC also maintains that OSI
 is obligated to exclusively “recommend and promote ETAP
 Products as a preferred power systems analysis and man-
 agement platform.” J.A. 1500 ¶¶ 60–61; J.A. 1510 ¶ 94. It
 concludes that the OSI-ETAP Agreement has had a “direct,
 substantial adverse effect on competition,” including:
 (1) foreclosing competition from lower cost, higher quality
 products and services in those markets; (2) reducing cus-
 tomer choice within those markets; (3) foreclosing innova-
 tion in those markets; and (4) reducing consumer welfare.
 Power Analytics, 2018 WL 10231437, at *11 (citing J.A.
 1558 ¶ 251).
     The TAC also alleges that Schneider and ETAP,
 through the Schneider-ETAP Agreement, violated § 1 of
 the Sherman Act. The TAC maintains that the Schneider-
 ETAP Agreement illegally restrains trade in the EMS Plat-
 form Market. Id. (citing J.A. 1562 ¶ 272). Citing to Schnei-
 der’s 2015 press release, the TAC contends that the
 Schneider-ETAP Agreement requires Schneider to “exclu-
 sive[ly]” rely on ETAP’s Grid Design products. J.A. 1544–
 46 ¶¶ 198, 204. The TAC alleges that the agreement has
 “harmed competition by denying end use[r] customers ac-
 cess to price competition and innovative products offered
 by Power Analytics and other competitors for the sale of
 Power Grid D and M Products to the EMS Platform Mar-
 ket.” Power Analytics, 2018 WL 10231437, at *11 (citing
 J.A. 1561 ¶ 267).
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     Finally, the TAC contends that ETAP has violated § 2
 of the Sherman Act through its monopolization and at-
 tempted monopolization of the NUPIC Grid Design Mar-
 ket. Power Analytics, 2018 WL 10231437, at *12 (citing
 J.A. 1564 ¶¶ 284, 286). The TAC alleges that, by virtue of
 its 97 percent share of the market, ETAP has monopoly
 power over this market. According to the TAC, the OSI-
 ETAP Agreement constitutes “predatory conduct” that vio-
 lates § 2 of the Sherman Act. J.A. 1564 ¶¶ 284–85. The
 TAC accuses ETAP’s “exclusionary, anticompetitive con-
 duct” of harming Power Analytics’ sales and profits, its
 ability to develop economies of scale to permit it to compete
 in the market, and its ability to offer new and innovative
 products. J.A. 1564 ¶ 289–90. The TAC argues that the
 combination of the OSI-ETAP Agreement, ETAP’s monop-
 oly power, and the high cost of initial and recurring NUPIC
 audits “has made it impossible for Power Analytics or any
 other competitor to obtain the economies of scale necessary
 to offer existing, new and innovative products to customers
 in the NUPIC Grid Design Market.” J.A. 1563 ¶¶ 278–81.
 “The anticompetitive effects of ETAP’s conduct outweighs
 any possible procompetitive justifications for its actions.”
 J.A. 1564 ¶ 288
           2. The Motion to Dismiss Proceedings
     On February 8, 2018, Schneider filed a motion to dis-
 miss the TAC. Power Analytics, 2018 WL 10231437, at *1.
 ETAP and OSI brought parallel motions. The defendants
 argued, in part, that the OSI-ETAP and Schneider-ETAP
 Agreements were not “exclusive deal[ing]” arrangements
 actionable under § 1. J.A. 1661. Notably, in defending
 against motions to dismiss the Original, First, and Second
 Amended Complaints, Appellant defended these com-
 plaints by also characterizing them as alleging exclusive
 dealing arrangements and cited case law governing such
 arrangements. J.A. 691–93. In support of their motions as
 to the TAC, ETAP and OSI submitted a declaration attach-
 ing four documents discussed in the TAC: (1) the OSI
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  12            POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



 Umbrella Partnership Agreement (the “Umbrella Partner-
 ship Agreement”); (2) the Partner Program OEM Adden-
 dum (the “Addendum”); (3) the MOU; and (4) the Term
 Sheet. Power Analytics, 2018 WL 10231437, at *11.
     As it had in connection with the motions to dismiss its
 earlier complaints, Power Analytics did not object to the
 defendants’ characterization of its § 1 claims as “exclusive
 dealing” claims in its responsive briefing and, again, relied
 on exclusive dealing cases and nomenclature to defend its
 claims. Despite this, Power Analytics attempted to change
 course during oral argument, contending for the first time
 that the alleged § 1 violations were actually “refusals to
 deal,” not exclusive dealing arrangements. J.A. 1994–
 1995. Counsel for Power Analytics explained to the district
 court that this change was prompted by a type of “ah ha”
 moment counsel had when preparing for argument. J.A.
 1994 (“In giving this thought over the past couple of
 months, these agreements function as refusals to deal.”).
 Based on this apparent enlightenment, Power Analytics
 reasoned that the district court should disregard Appellees’
 arguments regarding the § 1 claims because they relied on
 the wrong precedent. J.A. 1994. Appellees objected to
 Power Analytics’ attempted course correction. J.A. 2011.
 They explained that the TAC only provided allegations of
 “exclusive dealing arrangements,” J.A. 2012, as had the
 two complaints before it. The defendants then asked the
 court to allow for additional briefing if the court was in-
 clined to consider Power Analytics’ “refusal to deal” argu-
 ment in connection with the § 1 claims. J.A. 2024.
      On July 24, 2018, the district court granted the defend-
 ants’ motions to dismiss the TAC, without prejudice. Power
 Analytics, 2018 WL 10231437, at *1. At the outset, the dis-
 trict court declined to address Power Analytics’ “refusal to
 deal” arguments because it was a “new theory [that] ha[d]
 not been briefed by the parties.” Id. at *1 n.1. The court
 then turned to the substantive arguments in the parties’
 briefs. The court explained that the § 1 claims were
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 POWER ANALYTICS CORP.   v. OPERATION TECH., INC.           13



 deficient because they failed to plausibly allege the exist-
 ence of (1) express or de facto exclusive dealing arrange-
 ments between ETAP and Schneider or ETAP and OSI;
 (2) harm to competition in either the EMS Platform Market
 or the NUPIC Grid Design Market; (3) foreclosure of com-
 petition in the NUPIC Real Time Market 2; or (4) antitrust
 injury. Id. at *14–23. As to the § 2 claims, the court con-
 cluded that the complaint failed to plausibly allege either
 that ETAP engaged in anticompetitive conduct or had
 caused an antitrust injury. Id. at *23–24. The court dis-
 missed the state law claims because it found them to be
 dependent upon the anti-competitive acts it found were in-
 adequately alleged in connection with the antitrust claims.
 Id. at *24–25.
     Rather than amend, Power Analytics filed a notice of
 intent not to file an amended complaint and filed a notice
 of appeal to the Ninth Circuit Court of Appeals. J.A. 2049–
 2050. Appellees moved to dismiss for lack of jurisdiction.
 The Ninth Circuit agreed and transferred the appeal to us.
 We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
                       II. DISCUSSION
     We review an appeal of an order granting a motion to
 dismiss for failure to state a claim under the law of the re-
 gional circuit. In re Bill of Lading Transmission & Pro-
 cessing Sys. Patent Litig., 681 F.3d 1323, 1331 (Fed. Cir.
 2012). The Ninth Circuit reviews a dismissal for failure to




     2   The district court reasoned that the TAC does not
 plausibly allege substantial foreclosure of competition in
 the NUPIC Real Time Market because Power Analytics has
 neither sought nor obtained NUPIC certification for its
 Real Time products, and the TAC does not plausibly allege
 that ETAP has market power in the relevant market.
 Power Analytics, 2018 WL 10231437, at *21.
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  14            POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



 state a claim de novo. Khoja v. Orexigen Therapeutics, Inc.,
 899 F.3d 988, 998 (9th Cir. 2018).
      Power Analytics raises three issues on appeal. It ar-
 gues that (1) the district court’s decision regarding Power
 Analytics’ § 1 claims employed the wrong legal framework;
 (2) the district court erroneously concluded that the TAC
 fails to plausibly allege anticompetitive conduct sufficient
 to state a claim under § 2 or antitrust injury caused by that
 conduct; and (3) the district court erred in dismissing
 Power Analytics’ state law claims. We address each issue
 in turn.
   A. Power Analytics’ Sherman Act § 1 “Refusal to Deal”
                  Argument is Waived
     As a general matter, “a federal appellate court does not
 consider an issue not passed upon below.” Singleton v.
 Wulff, 428 U.S. 106, 120 (1976). See also TriMed, Inc. v.
 Stryker Corp., 608 F.3d 1333, 1339 (Fed. Cir. 2010). Such
 a practice is essential to avoid surprising litigants on ap-
 peal with issues that were unbriefed or undeveloped before
 the district court, Hormel v. Helvering, 312 U.S. 552, 556
 (1941). It is a practice we adhere to today.
      Though Power Analytics argues on appeal that the dis-
 trict court “incorrectly recast” its allegations under the ru-
 bric of “exclusive dealing arrangements” as opposed to
 “refusals to deal,” Appellant Br. 15–17, Power Analytics
 was complicit in inviting the district court to consider its
 claims as exclusive dealing ones. Power Analytics’ original
 and amended complaints repeatedly characterized the ac-
 cused agreements as “exclusive dealing arrangements.”
 J.A. 88, 373, 389, 392, 429–30, 842, 851. It never objected
 to Appellees’ or the district court’s discussion of “exclusive
 dealing arrangements” during the proceedings on the first
 three motions to dismiss. J.A. 2011 (“[Mr. Stockinger:] I
 think I should start with this idea now that the claim being
 put forward is a refusal to deal and not an exclusive dealing
 claim. We have now gone through four complaints and
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 three amendments. And we have never before heard that
 this claim is actually about a refusal to deal.”). And, when
 faced with Appellees’ briefing on the motions to dismiss the
 first amended complaint, Power Analytics actually relied
 on case law addressing exclusive dealing arrangements in
 the context of § 1 in its responsive briefs. J.A. 691–93. It
 was not until the hearing on the last motion to dismiss that
 Power Analytics sprang its new § 1 theory, governed by po-
 tentially different authority. And so, unsurprisingly, the
 district court declined to address Power Analytics’ “new ba-
 sis,” undeveloped by the parties. Power Analytics, 2018 WL
 10231437, at *1 n.1. Given the extensive history of this
 case, and the fact that this “refusal to deal” issue appeared
 only as a Hail Mary during argument, the district court’s
 treatment of the issue was proper.
     Power Analytics argues that it has not waived this is-
 sue on appeal because its “invocation of the refusal to deal
 description did not alter the substance of the [§ 1] claims or
 the theory of recovery.” Appellant Reply Br. 7. It main-
 tains that this “refusal to deal” argument cannot be consid-
 ered a “new theory” because “[t]he agreements are the
 same; the parties to the agreements are the same; and the
 purpose and effect of the agreements . . . is unchanged.”
 Appellant Reply Br. 6. But Power Analytics conflates the
 allegations of a complaint with the arguments raised by a
 party in opposition to a motion to dismiss those allegations.
 Certainly, a complaint need not plead every potential legal
 theory or basis for relief under § 1 of the Sherman Act. A
 party may not, however, ambush the court with new legal
 theories after briefing on a motion to dismiss is completed.
 To rule otherwise would obviate the purpose of briefing. 3 A




     3  Indeed, the district court had no obligation to hold
 argument on Appellees’ fourth motion to dismiss—it could
 have resolved the motion on the briefs alone. Under those
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  16            POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



 district court, moreover, has no obligation to craft argu-
 ments or theories on a plaintiff’s behalf to help counter a
 motion to dismiss. It must be able to rely on what the
 plaintiff says its theory of liability is.
     We conclude that Power Analytics “refusal to deal” ar-
 gument is “an issue not passed upon below” and decline to
 address it on appeal. Singleton v. Wuff, 428 U.S. 106, 120
 (1976). See also Carlin v. DairyAmerica, Inc., 705 F.3d 856,
 867 (9th Cir. 2013) (limiting its review to those addressed
 by the district court); U.S. ex rel. Lee v. SmithKline Bee-
 cham, Inc., 245 F.3d 1048, 1050 n.1 (9th Cir. 2001) (“[W]e
 limit our review to issues argued in a party’s opening
 brief.”). Power Analytics’ new theory had “not been briefed
 by the parties” and is thus waived. Power Analytics, 2018
 WL 10231437, at *1 n.1. And, because Power Analytics
 concedes that the merits of the district court’s opinion un-
 der the “exclusive dealing arrangements” framework are
 “irrelevant” to the § 1 issues on appeal, we need not even
 address the detailed § 1 analysis actually undertaken by
 the district court. 4 See Power Analytics Corp. v. Operation



 circumstances, Appellees’ argument would never even
 have been floated to the court.

       4  While we decide this appeal with respect to the § 1
 claims on the basis of waiver, we do not suggest that Power
 Analytics’ new “refusal to deal” theory is any less flawed
 than the one it abandoned. A § 1 violation requires con-
 certed action, and the TAC does not allege that ETAP, OSI,
 and Schneider collectively agreed to boycott Power Analyt-
 ics. Cf. United States v. Gen. Motors Corp., 384 U.S. 127,
 136 (1996) (considering a boycott in which evidence demon-
 strated that General Motors “confronted” multiple dealers
 to “elicit[] from each dealer a promise not to do business
 with . . . discounters” to avoid price competition). Rather,
 read generously, the allegations state that OSI and
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 POWER ANALYTICS CORP.   v. OPERATION TECH., INC.             17



 Tech., Inc., No. 19-1805, Oral Arg. at 4:20–5:08, available
 at               http://oralarguments.cafc.uscourts.gov/de-
 fault.aspx?fl=19-1805.mp3 (“[The Court:] [W]e need not re-
 solve whether or not the court got the exclusive dealing
 portion of the opinion correct, is that right? [Power Ana-
 lytics:] No your honor, I do think that is irrelevant, that’s
 right.”). 5
   B. Power Analytics’ Third Amended Complaint Fails to
       Plausibly Allege a Violation of Sherman Act § 2
     As relevant here, to assert a cause of action under § 2
 of the Sherman Act, a claimant must plausibly allege one
 of two sets of circumstances. 6 First, a plaintiff may allege
 that (1) the defendant possesses monopoly power in the rel-
 evant market and (2) willfully acquired or maintained that
 power by engaging in anticompetitive conduct. Verizon
 Comm’ns. Inc. v. Law Offices of Curtis v. Trinko, LLP, 540
 U.S. 398, 407 (2004) (“Trinko”). Second, a plaintiff may al-
 ternatively allege that (1) the defendant has engaged in


 Schneider each individually refused to deal with Power An-
 alytics and that ETAP benefited from those actions. These
 are single-firm actions, actionable, if at all, only under § 2.
 But Power Analytics did not assert § 2 claims against ei-
 ther Schneider or OSI.

     5    Though Power Analytics argues in its briefing that
 the district court erred by concluding that the TAC does not
 allege substantial foreclosure of competition in the NUPIC
 Real Time Market because no company is certified to offer
 NUPIC Real Time Products, that issue only arose in the
 context of its § 1 claims. It is, thus, mooted by Power Ana-
 lytics’ waiver of any substantive arguments in support of
 those claims.

     6    The TAC does not allege a § 2 conspiracy to monop-
 olize.
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  18            POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



 anticompetitive conduct with (2) the specific intent to ob-
 tain monopoly power, and (3) that the defendant has a dan-
 gerous probability of achieving monopoly power. Spectrum
 Sports, Inc. v. McQuillan, 506 U.S. 447, 456 (1993). In both
 circumstances, the plaintiff must also plead an antitrust
 injury. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429
 U.S. 477, 488 (1977). The TAC purports to allege both
 causes of action against ETAP. Specifically, the TAC al-
 leges that ETAP has monopoly power in the NUPIC Grid
 Design Market and maintains that power through preda-
 tory conduct, or, at the least, has attempted to monopolize
 that market through anti-competitive conduct.
     The district court found that the TAC plausibly alleged
 both the existence of a relevant market for § 2 purposes and
 that ETAP possesses monopoly power in that market.
 ETAP does not challenge these findings on appeal. Despite
 these threshold findings in favor of Power Analytics, how-
 ever, the court found that the TAC failed to plausibly allege
 that ETAP engaged in the type of anticompetitive conduct
 that is actionable under § 2 and failed to plausibly allege
 that an antitrust injury flowed from ETAP’s conduct and
 market share. It is these latter two findings that Power
 Analytics challenges on appeal.
     We find no error in the district court’s conclusions on
 either point. 7



       7 According to the concurrence, we need not reach
 the § 2 issues raised in Power Analytics’ appeal. The con-
 currence contends that Power Analytics’ refusal to deal ar-
 gument on appeal pertains to both its §§ 1 and 2 claims,
 and accordingly, the court could have resolved the entire
 issue on waiver alone.
     We cannot. Power Analytics’ appeal pertaining to the
 § 2 dismissal does not hinge on the district court’s failure
 to consider ETAP’s anticompetitive conduct as refusals to
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 POWER ANALYTICS CORP.   v. OPERATION TECH., INC.             19




 deal. For example, Appellant’s opening brief only discusses
 its refusal to deal argument in its § 1 discussion. See Ap-
 pellant Br. 15–17 (“When reviewed under the correct
 framework, (i.e., are there sufficient allegations of con-
 certed action in restraint of trade in which the predatory
 conduct is a refusal to deal?) the ETAP-OSI and ETAP-
 Schneider agreements each satisfy the elements of a Sec-
 tion 1 violation.”); id. at 19–20 (“[An exclusive dealing ar-
 rangement] is categorically not the type of anticompetitive
 agreement on which Plaintiff bases its Section 1 claim
 against ETAP and OSI. The Complaint alleges a refusal to
 deal . . . .” (emphasis included)). The brief’s § 2 discussion,
 on the other hand, focuses on the district court’s holding
 that the TAC failed to “plausibly [] allege anticompetitive
 conduct that caused antitrust injury sufficient to state a
 claim” under § 2. Appellant Br. 52.
      ETAP, moreover, did not argue in its briefing that
 Power Analytics waived any arguments in connection with
 its § 2 claims. This makes sense. ETAP is a competitor of
 Power Analytics, not an entity with which it wants to deal.
 It is not ETAP’s refusal to deal with it about which Power
 Analytics complains; it complains of ETAP’s unwillingness
 to step aside and share a portion of its own market with
 Power Analytics. While Power Analytics conceded that we
 need not review the district court’s analysis of the OSI-
 ETAP and Schneider-ETAP Agreements under the “exclu-
 sive dealing” framework, it did so in the context of a discus-
 sion of its section 1 claims and did not suggest that its § 2
 appeal rested entirely on the exclusive nature of the agree-
 ments. See Oral Arg. at 4:20–5:08. Indeed, the TAC points
 to ETAP’s “stranglehold on the nuclear market” and its
 “lower quality, higher priced” Grid Design products as evi-
 dence of ETAP’s anticompetitive conduct. J.A. 1563
 ¶¶ 281–82 (“ETAP’s stranglehold on the nuclear market—
 of which ETAP’s arrangement with OSI is a material
 cause—has made it impossible for Power Analytics or any
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  20            POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



                  1. Anticompetitive Conduct
      As noted, § 2 requires “an element of anticompetitive
 conduct.” Trinko, 540 U.S. at 407. This is a fundamental
 tenet of the Court’s modern antitrust jurisprudence be-
 cause “there is no duty to aid competitors.” Id. at 411. An-
 titrust laws are intended to protect against harm to the
 competitive process, not merely harm to competitors.
 Brooke Grp., 509 U.S. at 224. Thus, exclusionary conduct
 under § 2 must do more than reduce consumer welfare by
 raising prices or restricting output. See Trinko, 540 U.S.
 at 407 (“The mere possession of monopoly power, and the
 concomitant charging of monopoly prices, is not only not
 unlawful; it is an important element of the free market sys-
 tem.”). “Under certain circumstances, a refusal to cooper-
 ate with rivals can constitute anticompetitive conduct and
 violate § 2.” Id. at 408. See also Pacific Bell Tel. Co. v.
 Linkline Comms., Inc., 555 U.S. 438, 448 (2009)
 (“Linkline”) (“But there are rare instances in which a dom-
 inant firm may incur antitrust liability for purely unilat-
 eral conduct. For example, we have ruled that firms may
 not charge ‘predatory’ prices—below-cost prices that drive
 rivals out of the market and allow the monopolist to raise
 its prices later and recoup its losses.”). As the Ninth Cir-
 cuit has explained, however, courts have been “very cau-
 tious in recognizing such exceptions.” MetroNet Servs.
 Corp. v. Qwest Corp., 383 F.3d 1124, 1131 (9th Cir. 2004)
 (quoting Trinko, 540 U.S. at 408). Even at the “outer
 boundar[ies] of § 2 liability,” the monopolist’s course of
 dealing must suggest “a willingness to forsake short-term
 profits to achieve an anticompetitive end.” Trinko, 540



 other competitor to obtain the economies of scale necessary
 to offer existing, new and innovative products to customers
 in the NUPIC Grid Design Market.”).
     We thus address the merits of the § 2 claims against
 ETAP.
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 POWER ANALYTICS CORP.   v. OPERATION TECH., INC.           21



 U.S. at 409. In other words, to constitute actionable pred-
 atory conduct, the defendant’s actions must make no eco-
 nomic sense other than for the elimination of competition.
 See, e.g., Novell v. Microsoft Corp., 731 F.3d 1064, 1075
 (10th Cir. 2013) (Gorsuch, J.) (“Put simply, the monopo-
 list’s conduct must be irrational but for its anticompetitive
 effect.”); Morris Commc’ns Corp. v. PGA Tour, Inc., 364
 F.3d 1288, 1295 (11th Cir. 2004) (anticompetitive conduct
 is “conduct without a legitimate business purpose that
 makes sense only because it eliminates competition” (inter-
 nal quotation marks omitted)).
      Viewing the operative complaint through this lens, the
 district court was correct that the TAC contains no plausi-
 ble allegations of exclusionary conduct. See Trinko, 540
 U.S. at 408. The TAC only alleges that ETAP violated § 2
 by entering into an agreement with OSI, whereby OSI and
 ETAP agreed to sell their products in conjunction with the
 other’s. The TAC says this eliminates ETAP’s competitors
 from entering the NUPIC Grid Design Market because pur-
 chasers who want to use OSI’s entrenched Historian Soft-
 ware have no choice but to also use ETAP’s products. But
 those allegations merely assert that ETAP entered into a
 strategic partnership with another supplier in order to ad-
 vance the appeal of its own products and thereby maximize
 its sales and profits. The Ninth Circuit has made clear that
 such efforts, by themselves, do not constitute exclusionary
 conduct. Metronet Servs., 383 F.3d at 1133. Conduct by a
 supplier that serves to make its products “more attractive
 to buyers, whether by reason of lower manufacturing cost
 and price or improved performance” does not qualify as ex-
 clusionary. Allied Orthopedic Appliances Inc. v. Tyco
 Health Care Grp. LP, 592 F.3d 991, 1002 (9th Cir. 2010)
 (quoting Cal. Comput. Prods., Inc. v. Int’l Bus. Mach. Corp.,
 613 F.2d 727, 744 (9th Cir. 1979)). See also Novell, 731
 F.3d at 1076 (“[R]efusal to deal doctrine specifically and
 section 2 generally seek to protect, not penalize, such pro-
 saic    profit-maximizing     (and    presumptively     pro-
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  22            POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



 competitive) conduct by independently operating firms,
 even dominant firms.”).
     Importantly, the OSI-ETAP Agreement, which the
 TAC characterizes as “predatory conduct,” is not even an
 exclusive agreement. J.A. 1564 ¶ 285. As the district court
 observed:
       Section 1.1 of the Addendum states that ETAP is a
       “nonexclusive” Original Equipment Manufacturer
       (“OEM”) for OSI’s products. Ex. B to Stockinger
       Decl. (Addendum) § 1.1. Section 1.2 of the Adden-
       dum states that OSI grants to ETAP a “non-exclu-
       sive nontransferable license” to distribute OSI’s
       products. Id. The remaining two documents, the
       MOU and the Term Sheet, reiterate these terms.
       See Ex. C to Stockinger Decl., Dkt. 392-1 at 30
       (“OSIsoft agrees to grant ETAP a nonexclusive,
       non-transferrable license to distribute and license
       the OSIsoft Products only in combination with
       ETAP Products.”); see also Ex. D to Stockinger
       Decl., Dkt. 392-1 at 39 (same).
 Power Analytics, 2018 WL 10231437, at *11. The incorpo-
 rated documents establish that ETAP and OSI have no ob-
 ligation to exclusively promote each other’s products, and
 plainly contradict the TAC’s allegations that OSI and
 ETAP software customers are precluded from selecting
 substitute competitor products. 8     Id.    Indeed, they



       8  We also reject Power Analytics’ argument that the
 district court’s review of the Umbrella Partnership Agree-
 ment and the Addendum, the MOU, and the Term Sheet
 was erroneous because a “review of materials outside the
 pleadings violate[s] Ninth Circuit law.” Appellant Br. 23
 (citing Kohja v. Orexigen Therapeutics, Inc., 899 F.3d 988
 (9th Cir. 2018)). It is well-established that a district court
 may consider documents that are incorporated by reference
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 POWER ANALYTICS CORP.    v. OPERATION TECH., INC.               23



 anticipate that OSI might partner with competing suppli-
 ers. Id. at *18. Thus, despite Appellant’s arguments oth-
 erwise, ETAP’s accused conduct does not meet the
 minimum threshold to establish predatory behavior.
     Power Analytics’ claim that ETAP’s products are of a
 “lower quality” and are “higher priced” does not remedy
 this deficiency. J.A. 1563 ¶ 282. The sale of inferior or
 higher priced products is not predatory conduct. Asser-
 tions of “superiority” have little significance when “the free
 market and not a judge or a jury decides whose products
 are inferior” or preferable. Olympia Equip. Leasing Co. v.
 Western Union Telegraph Co., 797 F.2d 370, 378 (7th Cir.
 1986). Power Analytics, moreover, has provided no evi-
 dence that ETAP used its monopoly power to force nuclear



 in the allegations. Khoja, 899 F.3d at 998, 1002 (explaining
 that documents may be properly incorporated “if the plain-
 tiff refers extensively to the document or the document
 forms the basis of the plaintiff’s claim”). Each of the docu-
 ments considered by the district court qualify as incorpo-
 rated documents. The Umbrella Partnership Agreement,
 dated November 4, 2013 and signed by OSI and ETAP, in-
 cludes the terms and conditions of the allegedly “anticom-
 petitive” agreement, as detailed in the TAC. J.A. 1669–72.
 The TAC also quotes language from the MOU and charac-
 terizes certain provisions of the Term Sheet to support its
 allegations of anticompetitive conduct. J.A. 1510 ¶¶ 92, 94.
 In fact, Power Analytics’ own opening brief supports the
 district court’s view that these documents were incorpo-
 rated into the TAC. See, e.g., Appellant Br. 27 (“The Com-
 plaint references elements of the MOU, UPA, and Term
 Sheet to provide circumstantial facts supporting . . . that
 the ETAP-OSI agreement included a commitment . . . to
 refuse to deal . . . .”). We find no error in the district court’s
 application of this doctrine.
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  24            POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



 facilities to adopt its products. As discussed above, the in-
 corporated documents “are inconsistent with the allegation
 that the agreement includes ‘unreasonable impediments
 and conditions intended to preclude and/or deter’ NUPIC
 customers from substituting in [Power Analytics’] products
 for those of OSI and ETAP.” Power Analytics, 2018 WL
 10231437, at *17–18. “Absent evidence of such compulsion,
 the only rational inference that can be drawn from some
 consumers’ adoption of [ETAP’s product] is that they re-
 garded it to be a superior product.” Allied Orthopedic, 592
 F.3d at 1002.
     Similarly, Power Analytics’ continued reference to
 ETAP’s intent to “kill competition” is irrelevant. Appellant
 Br. 54. Courts have regularly explained that there is no
 duty to aid competitors and that “[s]tatements of an inno-
 vator’s intent to harm a competitor . . . are insufficient by
 themselves to create a jury question under Section 2.” Al-
 lied Orthopedic, 592 F.3d at 1001. “Were intent to harm a
 competitor alone the marker of antitrust liability, the law
 would risk retarding consumer welfare by deterring vigor-
 ous competition.” Aerotec Int’l, Inc. v. Honeywell Int’l, Inc.,
 836 F.3d 1171, 1184 (9th Cir. 2016). In this case, ETAP’s
 memo discusses no interest in restricting competition in
 the industry; it only expresses a desire to defeat ETAP’s
 competitors. J.A. 1508 ¶ 85. And, it proposes no conduct
 such as below-“cost” pricing, that would make no economic
 sense other than for purposes of eliminating competition.
     Finally, the TAC asserts that “[t]he anticompetitive ef-
 fects of ETAP’s conduct outweighs any possible procompet-
 itive justifications for its actions.” J.A. 1564 ¶ 288.
 Through this conclusory statement, Power Analytics seems
 to suggest that any procompetitive benefit is “outweighed”
 by the loss of competition in the alleged NUPIC Markets.
 While the D.C. Circuit once suggested in United States v.
 Microsoft Corp., 253 F.3d 34, 59 (D.C. Cir. 2001), that “if
 the monopolist’s procompetitive justification stands unre-
 butted, then the plaintiff must demonstrate that the
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 POWER ANALYTICS CORP.   v. OPERATION TECH., INC.              25



 anticompetitive harm of the conduct outweighs the procom-
 petitive benefit,” the Ninth Circuit has rejected resorting
 to such balancing tests in place of the statute’s requirement
 for anticompetitive conduct. It has made clear that, after
 Trinko:
     There is no room in this analysis for balancing the
     benefits or worth of a product improvement against
     its anticompetitive effects . . . To weigh the benefits
     of an improved product design against the result-
     ing injuries to competitors is not just unwise, it is
     unadministrable . . . The balancing test proposed
     by plaintiffs would therefore require courts to
     weigh as-yet-unknown benefits against current
     competitive injuries. Our precedents and the prec-
     edents we have relied upon strongly counsel
     against such a test.
 Allied Orthopedic, 592 F.3d at 1000. Accordingly, we de-
 cline to adopt Power Analytics’ proposed balancing test
 here.
     We find that the district court correctly dismissed the
 § 2 claims based on their failure to plausibly allege that
 ETAP engaged in actionable anticompetitive—i.e., “preda-
 tory”—conduct.
                      2. Antitrust Injury
      “Congress designed the Sherman Act as a ‘consumer
 welfare prescription.’” Reiter v. Sonotone Corp., 442 U.S.
 330, 343 (1979). As we describe above, it is axiomatic that
 “[t]he antitrust laws . . . were enacted for ‘the protection of
 competition not competitors.’” Brunswick, 429 U.S. at 488
 (quoting Brown Shoe Co. v. United States, 370 U.S. 294,
 320 (1962) (emphasis in original)). Thus, in order to state
 a claim for an antitrust violation, under either § 1 or § 2, a
 private plaintiff must, adequately plead an impact on com-
 petition. This is also known as “antitrust injury.” The
 Ninth Circuit has held that antitrust injury requires
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  26            POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



 “(1) unlawful conduct, (2) causing an injury to the plaintiff,
 (3) that flows from that which makes the conduct unlawful,
 and (4) that is of the type the antitrust laws were intended
 to prevent.” Somers v. Apple, Inc., 729 F.3d 953, 963 (9th
 Cir. 2013) (quoting Am. Ad Mgmt., Inc. v. Gen. Tel. Co. of
 Cal., 190 F.3d 1051, 1055 (9th Cir. 1999)).
      We agree with the district court that Power Analytics
 failed to plead antitrust injury in support of its § 2 claims.
 From the outset, Power Analytics cannot demonstrate an-
 titrust injury because the TAC does not plausibly allege
 that ETAP engaged in “unlawful conduct.” As we discuss
 above, ETAP’s prior conduct only demonstrates an interest
 in defeating its competitive rival and its agreement with
 OSI contains no anticompetitive elements. These allega-
 tions are not sufficient to demonstrate § 2 predatory con-
 duct. See Aerotec Int’l, 836 F.3d at 1184 (“While it is true
 that intent is a necessary element of attempted monopoli-
 zation, it is not sufficient alone to establish liability.”).
      Even assuming the TAC sufficiently pleads unlawful
 conduct, moreover, it still fails to allege injury that is “of
 the type the antitrust laws were intended to prevent and
 that flows from that which makes defendants’ acts unlaw-
 ful.” Brunswick, 429 U.S. at 489. Antitrust injury must
 “flow” from “a competition-reducing aspect or effect of the
 defendant’s behavior.” Atlantic Richfield Co. v. USA Petro-
 leum, Inc., 495 U.S. 328, 343–44 (1990) (“ARCO”) (empha-
 sis added). The TAC, however, does not sufficiently plead
 that ETAP’s behavior was “competition-reducing.” For ex-
 ample, the plain text of the incorporated documents explic-
 itly characterize the OSI-ETAP Agreement as a “non-
 exclusive” agreement.        Power Analytics, 2018 WL
 10231437, at *11 (citing J.A. 1670–98). The OSI-ETAP
 Agreement does not limit the types of products or services
 the contracting parties may offer to consumers or prohibit
 them from promoting the products of other competitors. Id.
 And it does not place any price restrictions on their ser-
 vices. Id. While Power Analytics may feel aggrieved by
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 POWER ANALYTICS CORP.   v. OPERATION TECH., INC.              27



 ETAP’s unwillingness to cede some of its market share to
 it, there is simply no evidence that ETAP’s agreement with
 OSI caused injury to competition. Paladin Assocs., Inc. v.
 Mont. Power Co., 328 F.3d 1145, 1158 (9th Cir. 2003)
 (“Where the defendant’s conduct harms the plaintiff with-
 out adversely affecting competition generally, there is no
 antitrust injury.”).
     We acknowledge the TAC’s assertions that ETAP’s be-
 havior has: (1) “reduced output in the form of new products
 and functionality”; (2) “stifled innovation and customer
 choice,”: and (3) “de facto eliminated any source of price
 competition.” J.A. 1429–30 ¶ 116. But these are conclu-
 sions, not facts. “A pleading that offers labels and conclu-
 sions or a formulaic recitation of the elements of a cause of
 action will not do . . . Nor does a complaint suffice if it ten-
 ders naked assertions devoid of further factual enhance-
 ment.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
 (quotations omitted). Upon review of the TAC for the sup-
 porting factual allegations, we discover that: (1) there is no
 claim that product and service availability to consumers
 has declined; (2) “stifled innovation” and “choice” only
 mean that Power Analytics has lost customers to competi-
 tion (J.A. 1462 ¶¶ 218–19); and (3) “de facto elimination of
 price competition” means that consumers have continued
 to purchase Appellees’ products, despite Power Analytics’
 alleged lower prices (J.A. 1459–60 ¶¶ 209–10). Such alle-
 gations fall short of establishing antitrust injury. Broad-
 com Corp. v. Qualcomm Inc., 501 F.3d 297, 308 (3d Cir.
 2007) (“Conduct that merely harms competitors . . . while
 not harming the competitive process itself, is not anticom-
 petitive.”). Though ETAP’s partnership with OSI may
 have helped it secure a more dominant market position and
 harmed a competitor’s business, “[Power Analytics’] injury
 does not correspond to any allegedly anticompetitive effect
 on the market but rather a truly competitive one.”
 NicSand, Inc. v. 3M Co., 507 F.3d 442, 455 (6th Cir. 2007).
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  28            POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



     In the absence of adequate pleadings regarding the ex-
 istence of antitrust injury, the “injury” about which Power
 Analytics complains does not sound in antitrust.
   C. Power Analytics’ State Law Unfair Competition and
        Antitrust Claims Were Properly Dismissed
      Power Analytics next argues that the district court
 erred when it dismissed Power Analytics’ state law anti-
 trust claims “[b]ecause the complaint pleaded a valid claim
 under the Sherman Act against each defendant.” Appel-
 lant Br. 56. As explained above, however, Power Analytics’
 § 1 arguments are waived and the TAC did not plausibly
 allege § 2 violations. Accordingly, we conclude that the dis-
 trict court did not err when it dismissed Power Analytics’
 state law antitrust claims.
      Power Analytics also argues that the district errone-
 ously dismissed Power Analytics’ common law claim for
 Tortious Interference with Prospective Economic Ad-
 vantage by dismissing the relevant allegations as “conclu-
 sory.” Appellant Br. 57–58. Power Analytics maintains
 that, because the district court was reviewing those allega-
 tions of fact at the 12(b)(6) stage, it should have accepted
 all the allegations as true. But this reflects a misunder-
 standing of the Rule 8 pleading standard. To avoid an un-
 necessary expenditure of time and resources, particularly
 in antitrust cases, district courts should “insist upon some
 specificity in pleading before allowing a potentially mas-
 sive factual controversy to proceed.” Twombly, 550 U.S. at
 557–58. The TAC’s allegations regarding Power Analytics’
 tortious interference claim constitutes one paragraph:
       Since the inception of this anticompetitive Agree-
       ment, Power Analytics has lost four existing
       NUPIC Market customers: Duke Energy, Enercon,
       Atomic Energy of Canada and Energy Northwest,
       representing more than 35% of its pre-ETAP OSI
       Agreement installed customer base, who on infor-
       mation and belief, have all switched from Power
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 POWER ANALYTICS CORP.     v. OPERATION TECH., INC.           29



     Analytics as a direct result of OSI and ETAP’s an-
     ticompetitive agreement and related anticompeti-
     tive actions to ETAP.
 J.A. 1515–16 ¶ 112. The complaint offers no further expla-
 nation or detail as to what “information and belief” sup-
 ports its allegation that Power Analytics lost four existing
 NUPIC Market customers due to the OSI-ETAP Agree-
 ment. Because Power Analytics fails to allege sufficient
 facts to “nudge [its] claim[] across the line from conceivable
 to plausible,” its claim must be dismissed. Twombly, 550
 U.S. at 570. 9
                       III. CONCLUSION
      For these reasons, the district court’s opinion and order
 dismissing Power Analytics’ Third Amended Complaint is
 affirmed.
                         AFFIRMED
                              COSTS
     Costs to Appellees.




     9   In addition, a tortious interference claim requires
 an allegation of an independently wrongful act. Korea Sup-
 ply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1159
 (2003). Because the TAC fails to plausibly allege a Sher-
 man Act violation, Power Analytics’ corresponding tortious
 interference claim fails.
Case: 19-1805    Document: 69      Page: 30    Filed: 07/13/2020




         NOTE: This disposition is nonprecedential.


    United States Court of Appeals
        for the Federal Circuit
                   ______________________

         POWER ANALYTICS CORPORATION,
                Plaintiff-Appellant

                              v.

    OPERATION TECHNOLOGY, INC., DBA ETAP,
  OSISOFT, LLC, SCHNEIDER ELECTRIC USA, INC.,
                Defendants-Appellees
               ______________________

                         2019-1805
                   ______________________

    Appeal from the United States District Court for the
 Central District of California in No. 8:16-cv-01955-JAK-
 FFM, Judge John A. Kronstadt.
                  ______________________

 MOORE, Circuit Judge, concurring in judgment.
     I concur in the court’s conclusion that Power Analytics
 waived its refusal to deal argument, but would find this
 waiver alone sufficient to resolve Power Analytics’ Section
 1 and Section 2 antitrust claims on appeal.
     Power Analytics alleged only an exclusive dealing the-
 ory in its original and amended complaints. Given Power
 Analytics’ clear choice, the district court assessed the Third
 Amended Complaint (TAC) under an exclusive dealing
 framework and expressly held against Power Analytics for
 both its Sherman Act Section 1 and Section 2 claims. See
Case: 19-1805     Document: 69     Page: 31     Filed: 07/13/2020




 2              POWER ANALYTICS CORP.   v. OPERATION TECH., INC.



 generally Power Analytics Corp. v. Operation Tech., Inc.,
 No. 16-1955, 2018 WL 10231437 (C.D. Cal. July 24, 2018).
 The district court expressly declined to consider Power An-
 alytics’ unbriefed refusal to deal argument, raised for the
 first time at the motion to dismiss hearing for the TAC. Id.
 at *1 n.1. Power Analytics confirmed at oral argument that
 it is not challenging the district court’s analysis of either
 its Section 1 or Section 2 claims under the exclusive dealing
 framework, leaving only Power Analytics’ refusal to deal
 argument for us to consider. See Power Analytics Corp. v.
 Operation Tech., Inc., No. 19-1805, Oral Arg. at 4:20–4:51,
 available at http://oralarguments.cafc.uscourts.gov/de-
 fault.aspx?fl=19-1805.mp3. I see no error in the district
 court’s decision that Power Analytics’ refusal to deal theory
 was a new, unbriefed theory and therefore waived. The
 district court, in an abundance of generosity, expressly per-
 mitted Power Analytics to cure this defect through subse-
 quent amendment which Power Analytics chose not to
 pursue. Under these circumstances, I would not be willing
 to decide this waived issue on appeal. Because Power An-
 alytics does not challenge the district court’s decision on
 the exclusive dealing theory and I see no error in the dis-
 trict court’s decision not to address the refusal to deal the-
 ory, I would affirm.
