Cleary Gottlieb represented Swedish Match North America LLC (Swedish Match) in its successful defense of Sherman Act and Cartwright Act claims brought by Dryft Sciences LLC (Dryft) in the U.S. District Court for the Central District of California.
Dryft claimed that Swedish Match engaged in a series of sham litigations to monopolize an alleged market for nicotine pouch products. According to the complaint, Swedish Match’s efforts to enforce its patent and trade secret rights forced Dryft to incur significant legal expenses and created uncertainty and risk, which prevented Dryft from attracting investors and expanding its operations. Dryft exited the alleged market through an asset sale to British American Tobacco (BAT)—purportedly at a substantially lower price than it was valued before the challenged litigations. Dryft sought treble damages of at least $1.2 billion.
Swedish Match moved to dismiss the antitrust claims on the basis that the litigations were immune from antitrust liability under the Noerr-Pennington doctrine. Noerr-Pennington recognizes that non-baseless litigation is protected by the First Amendment right to petition. Notably, Swedish Match obtained substantial relief in some of the allegedly sham proceedings, and other claims survived a motion for summary judgment and were scheduled for trial. Cleary argued that Swedish Match’s record of bringing successful and meritorious claims entitled Swedish Match to Noerr-Pennington immunity and required dismissal of Dryft’s claims as a matter of law at the motion to dismiss phase. Cleary also argued that Dryft failed to plausibly allege harm to competition and antitrust injury, among other reasons for dismissal.
Cleary represented Swedish Match at a motion to dismiss hearing in November 2022. The court recognized that Swedish Match raised “serious challenges to the viability of Plaintiff’s claims” and allowed Dryft to amend its complaint to try to avoid dismissal. After Dryft amended its claims, Swedish Match renewed its motion to dismiss.
The antitrust claims were dismissed with prejudice as part of a settlement that also resolved patent and trade secret claims asserted by Swedish Match in separate litigations. Swedish Match’s trade secret claims were scheduled for trial in February 2023, before the same court that oversaw the antitrust litigation. Swedish Match’s renewed motion to dismiss remained pending at the time of settlement.