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POLYTECHNIC DATA CORPORATION v. XEROX CORPORATION

July 20, 1973

POLYTECHNIC DATA CORPORATION, A DELAWARE CORPORATION, PLAINTIFF,
v.
XEROX CORPORATION, A NEW YORK CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Bauer, District Judge.

MEMORANDUM OPINION AND ORDER

This cause comes on defendant's motion for Summary Judgment.

This suit is basically an Anti-Trust action brought under Sections 4, 12, and 16 of the Clayton Act, 15 U.S.C. § 15, 22, and 26 in order to prevent and restrain the violation by the defendant of Section 1 of the Sherman Act, 15 U.S.C. § 1 and to compensate the plaintiff for damages arising out of such violations. The plaintiff also brings this suit as a diversity action against the defendant for the willful violation of common law principles of unfair competition and tortious interference with plaintiff's advantageous business relationships.

The plaintiff, Polytechnic Data Corporation ("Polytechnic") is a Delaware corporation with its principal place of business located in Chicago, Illinois. The plaintiff is engaged principally in the business of manufacturing and selling and/or leasing, throughout the United States and elsewhere, the "Copy Controller-Key", a device which controls and measures work being performed on all types of copying machines.*fn1

The defendant, Xerox Corporation ("Xerox"), is a New York corporation transacting business in Illinois. It is alleged to be the dominant manufacturer and marketer of copying machines in the world.

The plaintiff in the Complaint has alleged, inter alia, the following facts:

  1. Plaintiff's Copy Controller-Key is of no value
    to the user unless and until it is installed on
    a copying machine. Installation consists of
    attaching several wires from the master unit
    controller key to the internal wiring of the
    copying machine by means of clip-on type
    devices. The installation of a Copy
    Controller-Key on a copying machine has no
    harmful effect upon the machine or upon the
    quality of the copies that the machine
    delivers.
  2. Plaintiff believes that Xerox has an
    arrangement to purchase for resale a metering
    device known as "Auditron", which controls and
    measures the work performed by Xerox's copying
    machines. Plaintiff also believes that Xerox
    consciously refrains from actively selling,
    leasing or otherwise marketing its metering
    device because the use of any such metering
    device upon its machines allows the user to
    exercise control over the number of copies
    being made on the copy machine and to prevent
    the making of unauthorized and unnecessary
    copies on the machine.
  3. Xerox has engaged in a nationwide combination
    with lessees of its machines to restrict the
    sale or lease of plaintiff's Copy
    Controller-Key device. This course of action
    has been initiated and carried out by Xerox,
    and many of the lessees of Xerox's machines
    have acquiesced in this course of conduct.
  4. About October 1969, Xerox implemented an
    unlawful and malicious policy and course of
    conduct designed to prevent, and which has had
    the effect of preventing the plaintiff from
    marketing its Copy Controller-Key device to
    lessees of Xerox machines. This course of
    conduct was carried out in combination with
    lessees of Xerox's machines and includes, but
    is in no way limited to, the following:
    a. If a lessee of a Xerox copy machine
      requested permission to have the plaintiff's
      Copy Controller-Keys installed on its copying
      machine, permission was denied despite the
      fact that the installation expense would be
      borne by the lessee of the copying machine,
      and the installation itself would be
      performed by either plaintiff's salesmen or
      the lessee.
    b. If a lessee purchased or leased and
      installed a Copy Controller-Key, Xerox
      informed the lessee that Xerox did not allow
      the installation of the Copy Controller-Key
      on any Xerox copy machine and ordered the
      lessee to remove the device from any or all
      of its Xerox copy machines.
    c. In other instances, the Xerox service
      personnel unlawfully, and without the
      authorization of the lessee, disconnected the
      Copy Controller-Key and refused to reconnect
      it after the service call was completed.
    d. In other instances, the Xerox service
      personnel refused to service the copying
      machine further until the Copy Controller-Key
      was removed by the lessee.
    e. In still other instances, Xerox threatened
      to remove its machine from the premises of
      the lessee if the lessee did not remove the
      Copy Controller-Key.
  5. Xerox has attempted to justify its unlawful
    course of conduct by representing to lessees of
    its machines that it cannot permit installation
    of plaintiff's Copy Controller-Key upon its
    machines because plaintiff's device has not
    been approved for use by Underwriter's
    Laboratories, Inc. ("U.L." as an accessory to
    Xerox's machines. This representation has been
    made despite the fact that plaintiff's device
    itself has been approved

    by U.L. Xerox has further represented to
    lessees of its machines that if plaintiff were
    to secure U.L. approval of the device as an
    accessory to its machines, Xerox would have no
    further objection, provided that it could be
    shown that installation of plaintiff's device
    would in no way damage the Xerox machine. Xerox
    has made these representations despite
    knowledge that plaintiff has ...

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