New York Court Upholds Injunction Against Kodak in Collins Ink-Supply Dispute

scales of justice 2March 31, 2015   Law360 reports that the New York Sixth Circuit has upheld a preliminary injunction that stops Eastman Kodak from engaging in a pricing scheme that allegedly stifles competition for Versamark printer ink. The New York Sixth Circuit judge said the district court had not abused its discretion in issuing the injunction against Kodak   in August 2014, U.S. District Judge Michael R. Barrett ruled that Kodak must adhere to an injunction that it not differentiate pricing for print-head refurbishing services based on whether the customer uses Collins or Kodak ink for use with Kodak Versamark production printers. Kodak appealed that decision.

According to Law360:

“In an opinion penned by Circuit Judge John M. Rogers,the appeals court said Collins Inkjet has shown it will likely succeed on the merits of two of the central elements of a tying claim, which are both at issue in the appeal: market power in the tying product market and coercion of buyers of the tying product to buy the tied product, adding that the district court — although its legal analysis differed on the coercion part — had not erred in granting the preliminary injunction.

“’Because Collins appears to have a relatively strong likelihood of success on the two elements of unlawful tying challenged in this appeal, the district court’s finding of likelihood of success on the merits — though not its reasoning as to coercion — was correct,’ the opinion states.”

Collins Was Long-Time Exclusive Supplier for Versamark Ink

The complicated legal case goes back to 2013,  when Cincinnati-based Collins Inkjet, which is the only other company besides Kodak to sell ink for Kodak Versamark production printers – filed a lawsuit that alleged Kodak had been begun enforcing steep surcharges and other penalties on Versamark customers who purchased ink from Collins for the Versamark production printers.

Since the late 1980s, Collins has manufactured and sold ink for Kodak’s Versamark printers, and beginning in 2001, Collins entered into contracts with Kodak under which it became the exclusive reseller of Versamark ink. Under the agreements, Collins produced its own ink branded under the Collins name and under the Kodak brand.

In 2011, Collins sought to terminate the contracts because of outstanding payments from Kodak ranging from $1.8 million to $2.5 million.

However, when Kodak entered bankrupcty protection in January 2012, Collins terminated its Kodak contracts in May 2012.

After Collins terminated its contracts, however, it alleges Kodak began implementing a plan to drive out Collins. Kodak informed Collins’ customers in May 2012 that the price for refurbished print heads would increase if “non-Kodak inks” were used, according to Collins. Kodak is also said to have implemented more dramatic pricing policies that created a further disincentive for using Collins’ ink, according to Collins.

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