Dataphase Systems Inc. v. C L Systems, Inc.

C L Systems, Inc. (CLSI) (defendant) was the industry leader in the field of automated library circulation systems. Dataphase Systems Inc. (Dataphase) (plaintiff) was a relatively new competitor in the field with its own product. In June 1978, Dataphase sued CLSI in district court, alleging that CLSI had engaged in anticompetitive conduct, such as bidding below costs and making false statements about Dataphase’s product and services, to prevent Dataphase from obtaining contracts and customers. CLSI denied the allegations and claimed that all its statements were true. Following evidentiary hearings, the court granted Dataphase’s request for a preliminary injunction, restraining CLSI from making any false or misleading statement disparaging Dataphase’s product, financial condition, or ability to furnish goods and services. The court’s order was based on its finding that there was a “serious litigable issue” as to whether the specified product market was in danger of being monopolized. The court further found that there were 12 statements that Dataphase claimed were false and CLSI contended were true and that these statements raised “questions of fact which are serious enough to require litigation.” CLSI appealed. The Eighth Circuit reviewed the case en banc to clarify the standard for issuing preliminary injunctions.