and that it has not violated the Sherman or Clayton Acts.
To prove a per se illegal tie-in, a plaintiff must establish three distinct elements: "First, he must establish that the conduct in question was a tie-in: 'an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product.' Northern Pacific Railway v. United States, 356 U.S. 1, 5, 78 S. Ct. 514, 518, 2 L. Ed. 2d 545 (1958). Second, he must establish that the seller 'has sufficient economic power with respect to the tying product to appreciably restrain free competition in the market for the tied product.' See Page 6, page 518, 78 S. Ct. of the Northern Pacific decision. Third, he must establish that 'a "not insubstantial" amount of interstate commerce is affected.'" See Ungar v. Dunkin' Donuts of America, Inc., 531 F.2d 1211, at Pages 1223 and 1224 (3d Cir.1976) cert. denied, 429 U.S. 823, 97 S. Ct. 74, 50 L. Ed. 2d 84 (1977). As Judge Aldisert emphasized in Dunkin' Donuts, ". . . coercion is implicit -- both logically and linguistically -- in the concept of leverage upon which the illegality of tying is premised: The seller with market power in one market uses that power as a 'lever' to force acceptance of his product in another market. If the product in the second market would be accepted any way, because of its own merit, then, of course, no leverage is involved . . ." See Page 1218 of that opinion.
The Supreme Court in the Northern Pacific Railway case which was referred to by Judge Aldisert in Dunkin' Donuts as "perhaps the fountainhead of tying law under Section 1 of the Sherman Act," explained the marketplace rationale for forbidding tying arrangements. The Court stated that where such arrangements "are successfully and exacted, competition on the merits with respect to the tied product is inevitably curbed . . . They deny competitor's free access to the market for the tied product, not because the party imposing the tying requirements has a better product or a lower price, but because of his power or leverage in another market. At the same time buyers are forced to forego their free choice between competing products." See Northern Pacific Railway v. United States, 356 U.S. at Pages 5 and 6, 78 S. Ct. at Page 518. See also Bogus v. American Speech & Hearing Association, file of 582 F.2d 277 (3d Cir.1978); SmithKline Corp. v. Eli Lilly & Co., 575 F.2d 1056 (3d Cir.1978), cert. denied 439 U.S. 838, 99 S. Ct. 123, 58 L. Ed. 2d 134 (1979). Finally, as Justice Black noted in the Northern Pacific case, "of course where the buyer is free to take either product by itself, there is no tying problem even though the seller may also offer the two items as a unit at a single price." 356 U.S., page 6 at note 4, 78 S. Ct. page 518 at note 4.
I conclude that here IBM customers are for the purposes of the Sherman and Clayton Acts free to take either the DFDSS program or the IPO"J" by itself and that on this basics alone there is no illegal tying arrangement. Three uncontradicted facts confirm this conclusion. First, any IBM customer is free to license the DFDSS program at any time by itself. Second, any IBM customer can order IPO"J" in a segmented version which does not include the DFDSS program. And, third, any IBM customer who orders the DFDSS program, whether by itself or together with either a segmented or integrated version of IPO"J", is free to cancel the license for the program at any time, paying the license fee only for the period of usage. While plaintiff argues that users may be dissuaded from such a cancellation buy the technical and administrative burdens associated therewith, it admits that the terms and procedure for such a cancellation are the same as those for any other IBM license. Thus, as a matter of law, in the absence of evidence that the purchase of the alleged tied product was required as a condition of sale of the alleged tying product -- rather than merely as a prerequisite for practical and effective use of the tying product -- Innovation has failed to show the requisite coercion necessary to establish a per se illegal tying arrangement. See Foremost Pro Color, Inc. v. Eastman Kodak, 703 F.2d 534 at 542 (9th Cir.1983).
There is, in addition, another basis for granting IBM's motion for summary judgment as to plaintiff's per se tying claim, and that is that the integrated IPO"J" rather than constituting an illegal tying arrangement, instead constitutes -- on this undisputed record -- a lawful package of technologically interrelated components. Even if the components of IPO"J" were not priced separately and available individually, there would still be no unlawful "tie." As the Ninth Circuit has stated, "it is not an unlawful tying arrangement for a seller to include several items in a single mandatory package when the items may be reasonably considered to constitute parts of a single distinct product." See International Manufacturing Company v. Landon, Inc., 336 F.2d 723 at 730 (9th Cir.1964), cert. denied sub nom. Jacuzzi Bros., Inc. v. Landon, Inc., 379 U.S. 988, 85 S. Ct. 701, 13 L. Ed. 2d 610 (1965). Further, as Judge Wallace has recently stated, "as a general rule . . . we hold that the development in introduction of a system of technologically interrelated products is not sufficient alone to establish a per se unlawful tying arrangement even if the new products are incompatible with the products then offered by the competition and effective use of any one of the new products necessitates purchase of some or all of the others." See Foremost Pro Color v. Eastman Kodak, Inc., 703 F.2d at pages 542 and 43.
IBM has sufficient justification to offer the DFDSS program as part of the integrated Installation Productivity Option "J". In addition, to the reported sentiments or preferences of its customers, the DFDSS program is the only IBM dump/restore program that is currently capable of loading an integrated format tape onto a disk without the assistance of a pre-existing operating system, typical of the situation facing a new MVS customer, and it is admittedly the only program available anywhere which can thus load an IBM model 3375 disk drive absent a pre-existing operating system. Under these circumstances IBM would have justified in offering only an integrated version of IPO"J" -- as a single product and at a single price. See California Computer Products v. International Business Machines Corp., 613 F.2d 727 at 744 (9th Cir.1979); Hirsh v. Martindale Hubbell, 674 F.2d 1343, at 1348 (9th Cir.) cert. denied 459 U.S. 973, 103 S. Ct. 305, 74 L. Ed. 2d 285 (1982); Telex v. IBM Corporation, 367 F. Supp. 258 at 347 (N.D.Okl.1973), affirmed in relevant part, 510 F.2d 894 (10th Cir.), cert. dismissed, 423 U.S. 802, 96 S. Ct. 8, 46 L. Ed. 2d 244 (1975).
Thus, because IBM, under these circumstances, could have properly chosen to offer IPO"J" without giving its customers the option of licensing its components separately, it is clear that IBM's actual conduct here cannot constitute an unlawful tying arrangement. For both this reason and because of the lack of any legally sufficient showing of coercion, I conclude that plaintiff has failed to demonstrate the existence of a per se unlawful tying arrangement. I will therefore grant defendant's motion for summary judgment as to this claim.
Plaintiff, however notes that even if it fails on its per se illegal tying arrangement theory, it must still be entitled to proceed under its claim that defendant IBM's practices violate the general standards of the Sherman and Clayton Acts. As Justice Black noted in Fortner Enterprises v. U.S. Steel, 394 U.S. 495 at page 500, 89 S. Ct. 1252 at page 1257, 22 L. Ed. 2d 495 (1959), (Fortner) "(a) plaintiff can still prevail on the merits (if it) can prove, on the basis of a more thorough examination of the purposes and effects of the practices involved, that the general standards of the Sherman Act have been violated." The standards guiding such an inquiry are, of course, known as the "rule of reason." U.S. Steel Corp. v. Fortner Enterprises, 429 U.S. 610 at 612 note 1, 97 S. Ct. 861 at 863-64 note 1, 51 L. Ed. 2d 80 (1977) (Fortner II). This more generalized claim presents genuine issues of material fact which preclude my granting summary judgment at this time. These issues include inter alia defendants IBM's intent, motive or purpose in linking the DFDSS program to the IPO"J"; its practical effect on competition; its practical effect both beneficial and detrimental -- in use by customers and the nature and circumstances of the business the parties are engaged in. See Chicago Board of Trade v. United States, 246 U.S. 231 at 238, 38 S. Ct. 242 at 243-44, 62 L. Ed. 683 (1918) (Brandeis, J.). See also Areeda & Turner, Antitrust Law Section 31 (1978).
Therefore, I must deny defendant's motion for summary judgment as to plaintiff's claim that defendant IBM violated the general rule of reason standards in introducing the integrated version of IPO"J" which included the DFDSS program as one of its components.
I next turn to Innovation's motion to strike IBM's affirmative defense of release. In IBM's Third Affirmative Defense, it contends that plaintiff Innovation's claim are barred by the terms of a written Release Agreement and entered into by the parties in 1976 -- which is attached as Exhibit A to the affidavit of Mr. Reid. Plaintiff argues that this release agreement, insofar as it may be interpreted to exculpate IBM from liability for subsequent antitrust violations, is void as against public policy.
Both parties are in agreement that a release purporting to extinguish any and all future claims for violations of the federal antitrust laws is void or voidable as against public policy. See Three Rivers Motors Company v. Ford Motor Company, 522 F.2d 885 at 896 (3d Cir.1975). The rationale for this rule was clearly articulated in Fox Midwest Theatres v. Means, 221 F.2d 173 at 180 (8th Cir.1955): "Any contractual provision which would be argued to absolve one party from liability for future violations of the antitrust statutes against another would to that extent be void as against public policy. Is this is because the effect of such a release could be to permit a restraint of trade to be engaged in, which would have impact not simply between the parties but between the public as well. Such a release, if recognized as having any validity of that nature, could therefore itself operatively serve as a contract 'in restraint of trade . . .'"
See also Gaines v. Carrollton Tobacco Board of Trade, Inc., 386 F.2d 757 at 759 (6th Cir.1967); Taxin v. Food Fair Stores, Inc., 181 F. Supp. 181, at Page 185, (E.D.Pa.1960), affirmed, 287 F.2d 448 (3d Cir.1961).
These authorities clearly demonstrate that defendant IBM's Third Affirmative Defense is legally insufficient. The essence of plaintiff Innovation's claim in this matter is that IBM -- by means of conduct clearly commencing several years after the execution of the Release Agreement and relating to a program product not even then in existence has created an unlawful tying arrangement. The only way in which the Release Agreement could here serve as an affirmative defense for IBM would be if it had application as against antitrust violations occurring after the date of the release. Because some prospective applications are clearly against public policy, See Redel's, Inc. v. General Electric Company, 498 F.2d 95 (5th Cir.1975), and because no conceivable reformation of the Release Agreement could make it both applicable to the alleged tying arrangement and harmonize it with this public policy. I will grant plaintiff's motion to strike IBM's Third Affirmative Defense.
I note Mr. Mullen has urged this Court to defer application of a ruling on this subject today for pragmatic reasons. I tried to indicate during the course of this colloquy that the law in this instance must transcend pragmatism.
In sum, I have determined to grant a partial -- defendant a partial summary judgment as to plaintiff's per se tying claim but to deny summary judgment as to plaintiff's general "rule of reason" claims. I have also decided to grant plaintiff's motion to strike IBM's Third Affirmative Defense of release.
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