## Facts

- California Computer Products, Inc. (CalComp) manufactured plotters and, after acquiring Century Data Systems in 1969, began selling disk drives and controllers designed to be “plug compatible” with IBM central processing units (CPUs).
- IBM sold CPUs and peripheral equipment, including disk drives and controllers, in a computer systems market characterized by rapid technological change.
- CalComp challenged IBM conduct from roughly 1963–1972, alleging monopolization or attempted monopolization in disk products and related peripheral markets.
- CalComp alleged IBM engaged in premature product announcements, frequent redesigns, and interface changes that forced plug-compatible manufacturers to repeatedly redesign to maintain compatibility.
- CalComp alleged IBM used pricing and leasing practices, including price cuts and offering integrated systems, that reduced demand for external peripherals and foreclosed independent disk-product suppliers.
- CalComp claimed it suffered lost sales and reduced margins and was effectively unable to compete in the disk drive and controller markets.
- After a lengthy trial, the district court directed a verdict for IBM on all claims; CalComp appealed.

## Issues

1. Whether IBM’s product redesigns, integration of functions into CPUs, and marketing practices constituted exclusionary conduct amounting to monopolization or attempted monopolization under § 2 of the Sherman Act.
2. Whether CalComp presented legally sufficient evidence of predatory pricing or other unlawful conduct, as distinct from competition based on product improvement.
3. Whether CalComp proved antitrust injury and causation, rather than harm attributable to technological progress and lawful competitive behavior.

## Decision

- The Ninth Circuit affirmed the directed verdict for IBM.
- The court held the evidence was insufficient for a reasonable jury to find that IBM willfully acquired or maintained monopoly power through exclusionary conduct.
- The court treated IBM’s integration and design changes primarily as product improvement in a fast-developing industry, not unlawful exclusion.
- The court found insufficient evidence that IBM priced below an appropriate measure of cost or otherwise engaged in predatory pricing.
- The court found CalComp’s proof of causation and damages too speculative to link its losses to anticompetitive conduct rather than lawful competition.

## Legal Principles

- § 2 liability requires proof of willful acquisition or maintenance of monopoly power, not merely a dominant market position or superior performance.
- Product innovation, redesign, and functional integration generally remain lawful even when they disadvantage rivals, absent proof the changes lacked legitimate justification and served only to exclude competitors.
- Predatory pricing requires evidence of pricing below an appropriate measure of cost and a theory of exclusion consistent with rational competitive behavior.
- Antitrust plaintiffs must prove antitrust injury and causation; injury from technological change or ordinary competition is not enough.
- A directed verdict is proper when, viewing the evidence most favorably to the plaintiff, no reasonable jury could find the essential elements of a § 2 violation.

## Conclusion

The Ninth Circuit concluded that CalComp’s evidence did not permit a jury finding that IBM’s redesigns, integration decisions, and pricing practices were exclusionary rather than competitive, and that CalComp failed to prove predation, causation, and non-speculative antitrust injury; judgment for IBM as a matter of law was therefore affirmed.


California Computer Prods., Inc. v. Int'l Bus. Machs. Corp., 613 F.2d 727 (9th Cir. 1979)