Eastman Kodak Co. v. Image Technical Services, Inc.

504 U.S. 451 (1992)


D manufactures and sells high-volume photocopiers and micrographic equipment. The equipment is unique, and the component parts are not compatible with competitors' machines. D provides service and parts for its machines to its customers. It produces some of the parts itself; the rest are made to order for D by independent original-equipment manufacturers (OEM's). Image (Ps) are 18 independent service organizations (ISO's) that in the early 1980's began servicing D copying and micrographic equipment. Ps also sold parts and reconditioned and sold used Kodak equipment. Their customers were federal, state, and local government agencies, banks, insurance companies, industrial enterprises, and providers of specialized copy and microfilming services. Ps provide service at a price substantially lower than D does. D implemented a policy of selling replacement parts for micrographic and copying machines only to buyers of D equipment who use D service or repair their own machines. D and the OEM's agreed that the OEM's would not sell parts that fit D equipment to anyone other than D. D also pressured D equipment owners and independent parts distributors not to sell D parts to Ps. Many ISOs were forced out of business, while others lost substantial revenue. Customers were forced to switch to D's service even though they preferred ISO service. Ps sued D alleging unlawful tying in violation of §1 of the Sherman Act and §2. D filed a motion for summary judgment, and without a hearing, the court found that Ps had provided no evidence of a tying arrangement between D equipment and service or parts. The court did not address the alleged tying agreement between D parts and service. The Court concluded that although d had a 'natural monopoly over the market for parts it sells under its name,' a unilateral refusal to sell those parts to Ps did not violate §2. The Court of Appeals found that whether service and parts were distinct markets and whether a tying arrangement existed between them were disputed issues of fact. The Court of Appeals considered a question not decided by the District Court: Was there 'an issue of material fact as to whether D has sufficient economic power in the tying product market [parts] to restrain competition appreciably in the tied product market [service]?' The Court of Appeals reversed. The Supreme Court granted certiorari.