## Facts

- IBM produced and distributed NC 360, numerical-control software used to program machining tools on certain IBM computers.
- IBM distributed NC 360 at a zero price.
- Symbolic Control, Inc. developed and marketed APT/70, a competing numerical-control software system designed for use with IBM computers, but it did not achieve commercial success.
- Symbolic sued IBM under federal antitrust laws, alleging that IBM’s free distribution of NC 360 was exclusionary (predatory or its functional equivalent) and prevented Symbolic from selling APT/70.
- The district court bifurcated trial proceedings and, in the first phase, assumed an antitrust violation for purposes of trial but required Symbolic to prove “impact” (causation of injury).
- Symbolic presented evidence including testimony from NC 360 users about the software’s value and what they would have paid if IBM had charged a price.
- At the close of Symbolic’s impact evidence, the district court dismissed the case, treating the user testimony as irrelevant or speculative and reasoning that IBM had placed the software in the public domain and therefore could not charge for it.
- Symbolic appealed the dismissal.

## Issues

1. Whether the district court applied an erroneous standard for proving antitrust impact/causation by evaluating impact in isolation from a developed record of the alleged anticompetitive conduct.
2. Whether customer testimony about the value of the free product and hypothetical willingness to pay was relevant and admissible evidence of impact in an antitrust case centered on zero-price distribution.
3. Whether dismissal at the close of the plaintiff’s impact evidence was proper.

## Decision

- The Ninth Circuit reversed the dismissal and remanded for further proceedings.
- The court held the district court’s causation/impact analysis, driven by the bifurcation framework, was legally erroneous because it assessed impact without an adequate examination of the alleged unlawful practice.
- The court held the district court improperly rejected or discounted customer testimony concerning the value of NC 360 and what users would have paid absent free distribution; such evidence could be probative of impact.
- Because the impact phase was conducted under an incorrect analytical framework and with improper treatment of probative evidence, dismissal at the close of Symbolic’s evidence was not warranted.

## Legal Principles

- A private antitrust plaintiff must prove antitrust impact (injury causation), but the causation inquiry must be conducted in light of the alleged anticompetitive conduct rather than through an artificially segmented approach that neutralizes the claim.
- Trial bifurcation under Fed. R. Civ. P. 42(b) is permissible, but it may not be structured or applied in a way that distorts substantive antitrust analysis or effectively heightens the plaintiff’s burden on causation.
- In cases alleging exclusion through free or below-cost distribution, customer testimony regarding product value and willingness to pay can be relevant evidence bearing on impact (and potentially damages) and is not inherently speculative merely because it is counterfactual.

## Conclusion

The Ninth Circuit reinstated Symbolic’s antitrust claims for further proceedings, concluding that the district court’s bifurcated impact-only phase produced an erroneous causation analysis and that customer testimony about NC 360’s value and hypothetical pricing could support a showing that IBM’s zero-price distribution injured Symbolic.


Symbolic Control, Inc. v. Int’l Bus. Machs. Corp., 643 F.2d 1339 (9th Cir. 1981)