## Facts

- Berkey Photo, Inc. competed with Eastman Kodak Co. in portions of the amateur photography industry, including photofinishing and (until 1978) cameras, and also purchased film, paper, and equipment from Kodak.
- Kodak was a dominant firm in amateur photography, with very large market shares in film and substantial shares in cameras and color print paper, and was vertically integrated across cameras, film, paper, and photofinishing.
- In 1972, Kodak introduced the 110 “Pocket Instamatic” camera and Kodacolor II film as complementary products; Berkey alleged the coordinated launch and compatibility features disadvantaged rivals and contributed to Berkey’s losses in cameras and related sales.
- Berkey alleged Kodak used monopoly power in film and paper to obtain advantages in other markets, including cameras, photofinishing services, and photofinishing equipment, and charged supracompetitive prices for film and paper purchased by Berkey.
- Berkey also alleged Kodak entered joint development arrangements with flashlamp manufacturers containing secrecy or nondisclosure provisions that restricted the flow of technical information to competing camera makers.
- After a jury trial in the Southern District of New York, Kodak was found liable on multiple Sherman Act § 2 and § 1 theories and substantial damages were awarded (later trebled); both parties appealed.

## Issues

1. Whether Sherman Act § 2 imposes a duty on an integrated monopolist to give competitors advance notice or technical information about new products (“predisclosure”) before a public introduction.
2. Whether a monopolist’s simultaneous introduction of complementary products can constitute monopolization or unlawful maintenance of monopoly absent exclusionary conduct beyond innovation and first-to-market timing.
3. Whether a direct purchaser may recover Clayton Act § 4 damages for monopolization overcharges, and what proof and measurement standards apply.
4. Whether joint-development secrecy or nondisclosure provisions can be unreasonable restraints of trade under Sherman Act § 1.

## Decision

- The Second Circuit affirmed in part, reversed in part, and remanded, including for further proceedings on damages.
- The court rejected a general rule that Sherman Act § 2 requires a monopolist to predisclose innovations or planned product introductions to competitors.
- The court held that mere innovation and simultaneous launch of complementary products, without more, did not establish § 2 liability based on an “innovation-leveraging” theory in the camera market.
- The court sustained § 2 liability where Kodak used market power in films and cameras to obtain a competitive advantage in photofinishing and photofinishing equipment, distinguishing that conduct from lawful product introduction.
- The court recognized the availability of overcharge damages to direct purchasers in principle but required more rigorous, non-speculative proof and remanded for recalculation consistent with proper methodology.
- The court held Kodak’s nondisclosure provision in a flashlamp joint-development arrangement violated Sherman Act § 1 as an unreasonable restraint of trade.

## Legal Principles

- A monopolist generally has no antitrust duty under Sherman Act § 2 to provide competitors advance notice or technical disclosure of product innovations before a public launch.
- The acquisition or maintenance of monopoly power is not unlawful when attributable to a superior product or successful innovation; exclusionary conduct beyond innovation is required for § 2 liability.
- Coordinated introduction of complementary products by a dominant firm is not, standing alone, monopolization; liability turns on whether the firm used monopoly power to exclude rivals or to gain advantages in adjacent markets.
- Direct purchasers may seek Clayton Act § 4 damages for monopoly overcharges, but must prove the fact and amount of overcharge with reasonable, non-speculative economic evidence; improper aggregation or unsupported models cannot sustain an award.
- Secrecy or nondisclosure provisions in joint ventures may violate Sherman Act § 1 when they function as unreasonable restraints that restrict competitive access to information beyond what is justified by legitimate protection of confidential know-how.

## Conclusion

The Second Circuit declined to impose a general predisclosure obligation on dominant firms introducing new products, while allowing antitrust liability where a monopolist used market power to disadvantage rivals in related markets and where joint-development secrecy provisions operated as unreasonable restraints of trade; it also clarified that overcharge damages are available to direct purchasers but must be proven with disciplined methods.


Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979)