## Facts

- Lexmark manufactured printers and the toner cartridges used in those printers and competed against third-party remanufacturers of Lexmark-compatible cartridges.
- Static Control Components, Inc. (SCC) supplied parts (including microchips) used by remanufacturers to produce cartridges that functioned in Lexmark printers.
- Lexmark’s overall share in the broader printer market was substantially lower than a leading competitor’s, but the dispute focused on a claimed aftermarket for Lexmark-compatible toner cartridges.
- Lexmark sold cartridges through multiple channels, including arrangements with resellers; one major relationship involved IBM reselling Lexmark printers and cartridges.
- The remanufacturers and SCC presented evidence that an agreement with IBM imposed penalties (including loss of consideration or termination) if IBM sold non-Lexmark cartridges compatible with Lexmark printers.
- The challengers also pointed to practices surrounding discounted “return” or “single-use” cartridge programs and technological measures that limited reuse, which allegedly constrained remanufacturing competition.
- The challengers offered evidence that printer buyers could not readily evaluate total life-cycle costs at the time of printer purchase and that Lexmark’s conduct increased overall cartridge prices over time.

## Issues

1. Whether a relevant market could be defined as an aftermarket for Lexmark-compatible toner cartridges distinct from the foremarket for printers.
2. Whether Lexmark had sufficient market power or monopoly power in the relevant market to support claims under Sherman Act §§ 1 and 2.
3. Whether Lexmark’s contractual and technological restrictions plausibly constituted exclusionary conduct that harmed competition rather than hard competition on the merits.
4. Whether the challengers produced sufficient evidence of causation and antitrust injury (including higher cartridge prices) to survive summary judgment.

## Decision

- The court largely denied Lexmark’s motion for summary judgment on the antitrust claims.
- The court held that the record created genuine disputes of material fact on market definition and aftermarket power, including evidence of lock-in and limited consumer ability to assess life-cycle costs.
- The court held that a reasonable factfinder could view Lexmark’s contracting practices (including alleged reseller penalties) and cartridge restrictions as exclusionary conduct affecting competition in the aftermarket.
- The court held that evidence of higher overall cartridge prices and consumer harm was sufficient at the summary-judgment stage to support antitrust injury and causation theories.

## Legal Principles

- Summary judgment is inappropriate where competing evidence creates genuine disputes of material fact on market definition, market power, and competitive effects in an antitrust case.
- A single-brand aftermarket can, on an appropriate evidentiary record, constitute a relevant antitrust market when purchasers are locked in after buying the primary product and cannot reasonably evaluate total life-cycle costs at the time of purchase.
- Monopoly power or market power may be inferred from evidence of control in the relevant aftermarket combined with barriers to switching and conduct that maintains or exploits that position.
- Contractual restraints and technological restrictions may constitute exclusionary conduct when they plausibly restrict rivals and contribute to supracompetitive pricing or other harm to competition.
- Antitrust injury may be shown by evidence that challenged conduct caused higher prices or reduced competitive alternatives in the relevant market.

## Conclusion

The court allowed the Sherman Act claims to proceed because the evidence, viewed in the nonmovants’ favor, supported a triable theory that Lexmark could exercise power in a Lexmark-compatible cartridge aftermarket through lock-in, information problems, and restrictive contracting and cartridge practices that increased cartridge prices and harmed competition.


Static Control Components, Inc. v. Lexmark Int'l, Inc., 487 F. Supp. 2d 861 (E.D. Ky. 2007)