Did Kodak Violate U.S. Antitrust Laws In Lawsuit Vs. Collins Inkjet?

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Did Kodak Violate U.S. Antitrust Laws In Lawsuit Vs. Collins Inkjet Corp?
By Jonathan Randles
Law360, New York — Eastman Kodak Co. has violated U.S. antitrust laws during a 17-month campaign aimed at eliminating the only other company that sells ink for Kodak Versamark printers from the market, according to a lawsuit filed Thursday in Ohio federal court.

The lawsuit was brought by Cincinnati-based Collins Inkjet Corp., which is the only other company besides Kodak to sell ink for Kodak Versamark printers, pricey machines used by commercial printing businesses. The lawsuit alleges Kodak has recently begun enforcing steep surcharges and other penalties on Versamark customers that continue to use Collins ink.

“Customers have been deprived of choice,” Collins claims. “They have been economically coerced into buying Kodak ink despite the fact that Kodak ink offers a narrower range of products, products of lower quality and reliability, and products generally of a higher price.”

Collins has manufactured and sold ink for Kodak's Versamark printers since the late 1980s. By the start of the 2000s, Collins supplied approximately half of the Versamark ink being sold and counted 12 of the 15 largest Versamark ink customers in the world as its customers, the lawsuit said.

Beginning in 2001, Collins entered into a series of contracts with Kodak where 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, the lawsuit said.

But the business relationship began to deteriorate under the weight of Kodak's mounting financial problems. In 2011, Collins sought to terminate the contracts in light of outstanding payments from Kodak ranging between $1.8 million and $2.5 million, the lawsuit said.

Kodak entered bankruptcy in January 2012. Collins subsequently terminated the contracts in May of that year, at which time the company became an unsecured creditor of Kodak's owed about $2 million, the complaint said. A New York bankruptcy court approved Kodak's reorganization plan last month, allowing the scaled down company to emerge from Chapter 11.

Immediately after Collins terminated its contracts, however, Kodak allegedly began implementing its plan to drive out its Versamark Ink competitor.  When Collins terminated the contracts, “Kodak realized that Collins customers were likely to either stay with or switch to Collins due to Collins’ superior product and service,” according to the complaint.

In May 2012, Kodak informed Collins' customers that the price for refurbished printheads would increase if “non-Kodak inks” were used, the lawsuit said. The price hike “made it economically infeasible for customers to continue to use Collins ink,” the lawsuit said.

“Following that announcement, customers told Collins that they would like to continue to use Collins ink, but could not do so if forced to pay the higher charge for refurbished printheads,” according to the complaint.

Enforcement of the new pricing policy had been lax, but Kodak ratcheted up the pressure on Versamark ink customers this summer, Collins claims. Beginning in August, Kodak also implemented more dramatic pricing policies that created a further disincentive for using Collins' ink, the lawsuit said.

Moreover, Kodak has begun telling customers that “non-Kodak brand inks and fluids can potentially disrupt and damage printing components, system operations, and color matching/color management,” the lawsuit said. Collins claims Kodak's statements are groundless and serve as pretext to justify the anti-competitive pricing regime that has been imposed on its Versamark ink customers.

The lawsuit seeks an injunction and monetary damages against Kodak.

A Kodak representative could not immediately be reached for comment late Friday.

A Collins representative declined to comment. 

Collins is represented by W. B. Markovits, Paul M. De Marco and Christopher D. Stock of Markovits Stock & DeMarco LLC.

Counsel information for Kodak was not immediately available.

The case is Collins Inkjet Corp. v. Eastman Kodak Co., case number 1:13-cv-00664, in the U.S. District Court for the Southern District of Ohio.

–Additional reporting by Maria Chutchian. Editing by Jeremy Barker. 

Did Kodak Violate U.S. Antitrust Laws In Lawsuit Vs. Collins Inkjet Corp?
By Jonathan Randles
Law360, New York — Eastman Kodak Co. has violated U.S. antitrust laws during a 17-month campaign aimed at eliminating the only other company that sells ink for Kodak Versamark printers from the market, according to a lawsuit filed Thursday in Ohio federal court.

The lawsuit was brought by Cincinnati-based Collins Inkjet Corp., which is the only other company besides Kodak to sell ink for Kodak Versamark printers, pricey machines used by commercial printing businesses. The lawsuit alleges Kodak has recently begun enforcing steep surcharges and other penalties on Versamark customers that continue to use Collins ink.

“Customers have been deprived of choice,” Collins claims. “They have been economically coerced into buying Kodak ink despite the fact that Kodak ink offers a narrower range of products, products of lower quality and reliability, and products generally of a higher price.”

Collins has manufactured and sold ink for Kodak's Versamark printers since the late 1980s. By the start of the 2000s, Collins supplied approximately half of the Versamark ink being sold and counted 12 of the 15 largest Versamark ink customers in the world as its customers, the lawsuit said.

Beginning in 2001, Collins entered into a series of contracts with Kodak where 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, the lawsuit said.

But the business relationship began to deteriorate under the weight of Kodak's mounting financial problems. In 2011, Collins sought to terminate the contracts in light of outstanding payments from Kodak ranging between $1.8 million and $2.5 million, the lawsuit said.

Kodak entered bankruptcy in January 2012. Collins subsequently terminated the contracts in May of that year, at which time the company became an unsecured creditor of Kodak's owed about $2 million, the complaint said. A New York bankruptcy court approved Kodak's reorganization plan last month, allowing the scaled down company to emerge from Chapter 11.

Immediately after Collins terminated its contracts, however, Kodak allegedly began implementing its plan to drive out its Versamark Ink competitor.  When Collins terminated the contracts, “Kodak realized that Collins customers were likely to either stay with or switch to Collins due to Collins’ superior product and service,” according to the complaint.

In May 2012, Kodak informed Collins' customers that the price for refurbished printheads would increase if “non-Kodak inks” were used, the lawsuit said. The price hike “made it economically infeasible for customers to continue to use Collins ink,” the lawsuit said.

“Following that announcement, customers told Collins that they would like to continue to use Collins ink, but could not do so if forced to pay the higher charge for refurbished printheads,” according to the complaint.

Enforcement of the new pricing policy had been lax, but Kodak ratcheted up the pressure on Versamark ink customers this summer, Collins claims. Beginning in August, Kodak also implemented more dramatic pricing policies that created a further disincentive for using Collins' ink, the lawsuit said.

Moreover, Kodak has begun telling customers that “non-Kodak brand inks and fluids can potentially disrupt and damage printing components, system operations, and color matching/color management,” the lawsuit said. Collins claims Kodak's statements are groundless and serve as pretext to justify the anti-competitive pricing regime that has been imposed on its Versamark ink customers.

The lawsuit seeks an injunction and monetary damages against Kodak.

A Kodak representative could not immediately be reached for comment late Friday.

A Collins representative declined to comment. 

Collins is represented by W. B. Markovits, Paul M. De Marco and Christopher D. Stock of Markovits Stock & DeMarco LLC.

Counsel information for Kodak was not immediately available.

The case is Collins Inkjet Corp. v. Eastman Kodak Co., case number 1:13-cv-00664, in the U.S. District Court for the Southern District of Ohio.

–Additional reporting by Maria Chutchian. Editing by Jeremy Barker. 

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October 3, 2013 at 11:22 AM