July 12, 2005

The Financial & Securities Products Association (FSPA), a trade organization for third-party ATM maintenance firms, was denied a preliminary injunction against Diebold in its antitrust lawsuit filed in U.S. District Court in Northern California.

The FSPA lawsuit alleges that ATM manufacturer Diebold (Canton, Ohio) engaged in anticompetitive behavior by reversing its "open-door policy" that permitted servicing of Diebold ATMs by third-party maintenance companies, particularly for Triple-DES (Data Encryption Standard) upgrades. The motion for a preliminary injunction was denied on the grounds that the FSPA failed to demonstrate "a significant threat of irreparable harm," the court wrote.

The court also cast doubt on the FSPA's likelihood of success on the merits of the case. In order to prove that Diebold has an illegal monopoly, the FSPA would have to prove that Diebold had "a specific intent to control prices or to destroy competition," among other tests.

Furthermore, in order to prevail, the FSPA would have to succeed in getting the court to accept its definition of the "relevant market," which is the area of competition over which a monopoly may exist. The FSPA contends that the relevant market is spare parts and services for Diebold ATMs, while Diebold replies that since ATM owners can switch between manufacturers at will, the relevant market should be the entire market for ATMs themselves.

In addition, the court recognized that Diebold holds patents on its ATMs, software and manuals, and thus enjoys rights of patent protection that need to be balanced against antitrust considerations. "The protection of our intellectual property is critical to our ability to make ongoing improvements and innovations in service," said David Bucci, senior vice president of Customer Solutions for Diebold, in a statement.

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