Opinion

ID Security Systems Canada, Inc. v. Checkpoint Systems, Inc.

249 F. Supp. 2d 622
2003 U.S. Dist. LEXIS 4807
2003 WL 1618501

Court: District Court, E.D. Pennsylvania
Filed: Mar 28, 2003
Status: Published
Author: Robreno
On the bench: Robreno
Cited by: 27 cases
Authority: More cited than 78.3%

stating that “a district court also must utilize plain error review when deciding whether to grant a reversal or new trial based on objections untimely raised”

How later courts described this case

stating that “a district court also must utilize plain error review when deciding whether to grant a reversal or new trial based on objections untimely raised”
relying on the Restatement (Third) of Unfair Competition § 1 cmt. g for guidance, which states: “As a general matter, if the means of competition are otherwise tortious with respect to the injured party, they will also ordinarily constitute an unfair method of competition.”
finding unfair competition where competitor tortiously interfered with contract and gained advantage over direct competitor
"lack of familiarity with the methods and the reasons underlying [his source’s] projections virtually precluded any assessments of the validity of those projections through cross-examination”

Written by the judges who cited it.

The opinion

OPINION

ROBRENO, District Judge.

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Plaintiff, ID Security Systems Canada, Inc. (“ID Security”), brought this federal antitrust and state law action against Checkpoint Systems, Inc. (“Checkpoint”) in connection with Checkpoint’s alleged interference in a supply agreement between ID Security and Tokai Electronics, Ltd. (“Tokai”). According to ID Security, Checkpoint, a manufacturer of electronic article surveillance systems (“EAS systems”), violated the federal antitrust laws through illegal monopolization, attempted monopolization and conspiracy to monopolize with respect to the radio frequency tags (“RF tags”), products that are used in conjunction with EAS systems. In particular, ID Security alleged that Checkpoint interfered with its existing contract with Tokai in order to block ID Security’s efforts to enter the RF tag market as a second supplier of tags to Checkpoint customers and as the future producer of a unique and superior tag compatible with Checkpoint’s EAS systems. The contract interference in question also gave rise to ID Security’s state law claims of tortious interference with contractual relations and unfair competition.

After a trial, the jury found in favor of Checkpoint on ID Security’s claim of monopolization of commerce, but against Checkpoint on ID Security’s claims of attempted monopolization and conspiracy to monopolize. It awarded ID Security compensatory damages of $28.5 million. Under federal antitrust law, the court trebled that amount to $85.5 million. The jury also found against Checkpoint on the state law tort claims, and awarded damages in the amount of $19 million, for a combined total of $104.5 million for both the antitrust and the state law claims. Checkpoint has since filed a motion for post-trial relief seeking judgment as a matter of law or, alternatively, a new trial with respect to each of the four claims as to which the jury found in favor against Checkpoint. Checkpoint further challenges the award of damages in this case as unduly speculative, against the great weight of evidence, and a product of erroneous evidentiary rulings by the court.

With respect to the antitrust issues in this case, the court’s threshold inquiry, before it may address whether there is sufficient evidence to sustain either of the antitrust verdicts against Checkpoint, is what constitutes the relevant market in this ease, given the particular dynamics between the foremarket for EAS systems, in which Checkpoint competed strenuously with its rival Sensormatic, and the aftermarket for RF tags used with Checkpoint’s system, i.e., the market which ID Security attempted to enter as a second source tag supplier. A related question is whether, given the burden of proof and the evidence in this case, the relevant market may be determined as a matter of law. As explained in more detail below, the court has determined that it can, and that a proper application of

Kodak

and its progeny dictate, as a matter of law, that EAS systems alone constitute the relevant market that Checkpoint could be accused of attempting or conspiring to monopolize.

The next question presented by Checkpoint’s motion for post-trial relief is whether, given a relevant market for EAS systems, there was legally sufficient evidence to support a jury finding that Checkpoint indeed attempted to monopolize, i.e., had a dangerous probability of succeeding in monopolizing, the EAS systems market. In addition, the court must determine whether there was legally sufficient evidence to support a finding that Checkpoint conspired to monopolize the EAS market in violation of § 2 of the Sherman Act, i.e., whether, even given that Checkpoint had the specific intent to monopolize the EAS

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market, Tokai Electronics, the object of its acquisition efforts, shared that intent. Having addressed the difficult antitrust questions that characterize this case, the court turns to an examination of the proofs, instructions, and rulings concerning ID Security’s state law claims, as well to a determination of whether a new trial is warranted with respect to the damages awarded by the jury.

For the reasons that follow, the court concludes that ID Security failed to produce sufficient evidence that the RF tag market is the relevant market in this case. Instead, the court finds that the relevant market in this case is the market for EAS systems. Given this market and the proofs at trial, the court concludes that there was no legally sufficient evidence to support a jury finding that Checkpoint is liable either for attempted monopolization or for conspiracy to monopolize in violation of § 2 of the Sherman Act. Thus, the court will grant judgment as a matter of law in Checkpoint’s favor on ID Security’s federal antitrust claims, and will vacate the verdict in favor of ID Security on the antitrust claims. The court also discerns no error in its treatment warranting either judgment or a new trial with respect to either of the state law claims in this case. However, as set forth in detail below, the court determines, given the speculative nature of the expert testimony offered by ID Security in support of certain items of damages sustained, the court will reduce the state claims award to $13 million.

I. FACTS

The following facts were established at trial and are viewed in the light most favorable to ID Security, the winner of the jury verdict challenged in this motion.

This case involves the relationship between Checkpoint, a manufacturer of anti-shoplifting devices known as electronic article surveillance systems (“EAS systems”), and ID Security Systems Canada, Inc., a company that unsuccessfully attempted to compete with Checkpoint in the aftermarket for sale of RF tags, devices compatible with Checkpoint’s EAS hardware. Tokai is a supplier of tags to Checkpoint and was later acquired by Checkpoint. At the time of the acquisition, ID Security claimed that it had a contract with Tokai under which Tokai was to supply ID Security with tags.

Stores using EAS technology affix to their products a tag that, unless deactivated with the proper equipment, emits a radio frequency (RF) or acoustomagnetic (AM) signal that is detectable by a sensor that is placed near the store’s exit.

See

T.T. 4/29/02 (doc. no. 159) at 46M8. The sensor will alert when a shopper attempts to leave the store’s premises with a good bearing an active tag, i.e., a good that the shopper has not presented to the cashier for deactivation at the time of payment. T.T. 4/29/02 (doc. no. 159) at 48. Thus, an EAS system is comprised of sensors and deactivators, as well as of a continuing supply of tags compatible with both pieces of hardware. T.T. 5/9/02 (doc. no. 176) at 28-29.

In the market for EAS systems, the two major competitors are Checkpoint, which sells EAS systems based on RF technology and is the defendant in this case, and Sensormatic, which sells EAS systems based on AM technology. T.T. 5/9/02 (doc. no. 176) at 29-30. Given that RF and AM technologies are incompatible with each other, T.T. 5/8/02 (doc. no. 177) at 10; T.T. 5/9/02 (doc. no. 176) at 57-58, the choice of one technology over another is a significant decision, because a customer dissatisfied with a system based on one technology could only switch to a system based on the other at the great expense of replacing its entire existing system and retraining

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its employees. T.T. 5/15/02 (doc. no. 192) at 67-68. Such measures are both uneconomic, T.T., 5/9/02 (doc. no. 176) at 58, and rarely undertaken. T.T. 5/15/02 (doc. no. 192) at 67. As of 1997, the relevant period in this litigation, Checkpoint held a 25 percent share of the market for EAS systems, while Sensormatic enjoyed a 59 percent share. T.T. 5/9/02 (doc. no. 176) at 31.

The initial purchase of an EAS system creates an aftermarket for tags compatible with that system. Because RF tags deactivated at the point of sale leave the store with the good that has been purchased, retail stores must buy replacement tags on a continual basis to affix to new inventory. T.T. 4/29/02 (doc. no. 159) at 43. . In addition, because RF and AM technologies are incompatible with each other, such that AM tags cannot be used with RF systems, and vice versa, the owner of an RF system, for example, can only buy usable tags from an RF supplier. T.T. 5/8/02 (doc. no. 177) at 10; T.T. 5/9/02 (doc. no. 176) at 57-58. In this aftermarket for RF tags, Checkpoint held at least a 90 percent share of the market for replacement RF tags during the relevant period. T.T. 5/7/02 (doc. no. 172) at 66. Sensormatic, on the other hand, sold 100 percent of the tags compatible with its system. T.T. 5/9/02 (doc. no. 176) at 41.

The sophisticated customers who purchase EAS systems are well aware of the attendant necessity of purchasing compatible replacement tags on an ongoing basis. T.T. 5/9/02 (doc. no. 176) at 40-42. Indeed, Checkpoint and Sensormatic present prospective customers with projections detailing return on investment, based on the nature of the customers’ products, the volume of items to be tagged, the customers’ estimated future tag needs, and industry trends. T.T. 5/9/02 (doc. no. 176) at 40-44. Such projections also explain to prospective customers the cost of the EAS system, and its component parts, including tags, over time. T.T. 5/15/02 (doc. no. 192) at 78-81.

Prospective EAS system purchasers typically receive competing proposals from Checkpoint and Sensormatic, T.T. 5/15/02 (doc. no. 192) at 81, and then attempt to play the two competitors off against each other in multiple rounds of negotiations in the hope of obtaining a reduced EAS system price as Checkpoint and Sensormatic attempt to undercut each other on price. T.T. 5/9/02 (doc. no. 176) at 45; T.T. 5/15/02 (doc. no. 192) at 81-83. The total price of the EAS system, and thus of its component parts, decrease as a result of these negotiations. T.T. 5/15/02 (doc. no. 192) at 81-83. Moreover, the costs of replacement tags are often explicitly considered in this calculus, with customers typically seeking, and occasionally succeeding, in capping or fixing tag prices over time. T.T. 5/15/02 (doc. no. 192) at 84. Checkpoint customers can attempt, and, in some cases, do attempt successfully, to negotiate lower tag prices at the end of their contracts. T.T. 5/15/02 (doc. no. 192) at 84-85.

In general, however, Checkpoint and Sensormatic match each other’s prices so that prospective customers will choose an EAS system based on the relative appeal of their respective technologies. T.T. 5/14/02 (doc. no. 187) at 67-68. For example, drug stores and supermarkets, which will need to ■ deactivate a large volume of tagged items quickly, may tend to prefer RF-based systems, while retail stores tend to choose AM-based systems because widely spaced AM sensors are less likely to obstruct store entrances. T.T. 5/14/02 (doc. no. 187) at 65-67. From 1995 to 2000, Checkpoint, matching Sensormatic’s prices, charged an average price of 3.5 cents per tag to both new and installed customers. T.T. 5/9/02 (doc. no. 176) at 49-50; 58.

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In 1995, Checkpoint, attempting to enhance its ability to sell EAS systems competitively with Sensormatic in Europe, acquired the Actron Group, Ltd., T.T. 5/10/02 (doc. no. 182) at 179-82, a European company that accounted for 95 percent of the sales of Tokai Electronics, Ltd., a manufacturer of RF tags. T.T. 5/10/02 (doc. no. 182) at 182. At the time, Actron, supported by Tokai’s manufacturing, was the only company, other than Checkpoint, that had developed mass-production capabilities for disposable RF tags. T.T. 5/2/02 (doc. no. 165) at 180. Because of the relationship between Actron and Tokai, Checkpoint’s acquisition of Actron gave it a one-third ownership interest in Tokai and a seat on Tokai’s board of directors. T.T. 5/13/02 (doc. no. 185) at 5. As Checkpoint and Tokai shaped the contours of their new relationship, they entered into a Supply Agreement, under which Checkpoint would purchase 20 to 30 million tags per month over the three years following the acquisition. T.T. 5/13/02 (doc. no. 185) at 7. Although it costed Tokai two cents to make each RF tag, Tokai’s agreement with Checkpoint ensured that Checkpoint would be charged one cent per tag. T.T. 5/2/02 (doc. no. 165) at 203-08; 5/13/02 (doc. no. 185) at 52. To compensate for selling tags to Checkpoint at a loss, under the Supply Agreement, Tokai had the right to sell any tags manufactured in excess of Checkpoint’s quota to other companies at a higher price per tag. T.T. 4/29/02 (doc. no. 159) at 99; 5/13/02 (doc. no. 185) at 8-9.

ID Security took advantage of Tokai’s ability to sell tags to companies other than Checkpoint. On April 1, 1996, Tokai entered into a two-year agreement negotiated by ID Security’s President, Peter Murdoch, and Tokai’s President, Tadayoshi Haneda, whereby ID Security acquired the right to distribute all Tokai tags produced in excess of the 20 million tags that Tokai was obligated to sell to Checkpoint and the number allotted to Tokai’s small group of existing Asian customers. T.T. 4/29/02 (doc. no. 159) at 53, 55. The ID-Tokai contract also contained a provision that prohibited Tokai from selling certain “source tag material” to any company other than ID Security. T.T. 4/29/02 (doc. no. 159) at 154-55. Sometime in the course of 1996, Checkpoint became aware of the fact that ID Security and Tokai had entered into a contract. T.T. 5/6/02 (doc. no. 171) at 14.

Murdoch viewed a contract with Tokai as desirable for ID Security in two main respects. First, ID Security intended to establish a presence in the RF tag aftermarket as a “second source,” or alternative supply, of Tokai-made RF tags for Checkpoint customers. T.T. 4/29/02 (doc. no. 159) at 60, 117-18,122. As such, ID Security expected that it would be able to charge tag prices in excess of Checkpoint’s. T.T. 5/1/02 (doc. no. 164) at 95-96. Indeed, Murdoch stated that he had, in fact, undercut Checkpoint’s RF tag price only inadvertently, as a result of incorrect information on Checkpoint’s pricing. T.T. 4/30/02 (doc. no. 158) at 83-85; 5/1/02 (doc. no. 164) at 95-96.

Second, ID Security planned to use its relationship with Tokai in the long term to further the development of Laserfuse, a novel product that ID Security intended to introduce on the RF tag market. T.T. 4/29/02 (doc. no. 159) at 94. In theory, the particular technology used in Laserfuse tags would provide EAS system owners with tag that was compatible with RF systems, yet superior to existing tags in that, unlike standard RF tags, (1) one-hundred percent of Laserfuse tags on a purchased roll would be active, (2) one-hundred percent of Laserfuse tags would properly deactivate, and (3) there would be no Lazarus effect, i.e., possibility that even a properly deactivated tag would come

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back to life at a later date, associated with the product’s use, T.T. 4/29/02 (doc. no. 159) at 76, and (4) the Laserfuse technology would allow store owners to control for fraudulent returns because it would allow them to determine whether a tag had, in fact, been passed over the deactivator at a point of sale. T.T. 4/29/02 (doc. no. 159) at 80-81.

At the time of the April 1996 contract, ID Security’s long term goal was to sell both standard Tokai tags and Laserfuse tags within the RF tag aftermarket. T.T. 4/29/02 (doc. no. 159) at 98-99. The first step in ID Security’s plan was to establish itself as a distributor of Tokai tags; later, once Laserfuse tags were no longer in an embryonic stage, Tokai was to act as co-manufacturer of the marketed Laserfuse product. T.T. 1/29/02 (doc. no. 159) at 98-99. In particular, Tokai was to participate in the development of Laserfuse by providing hot roll laminate, a unique material integral to the proper functioning of the Lasefuse tag, and to participate in the initial manufacturing stages for Laserfuse tags. T.T. 4/29/02 (doc. no. 159) at 93-94, 99.

However, neither portion of ID Security’s plan came to fruition. After entering into its contract with Tokai, ID Security managed to warehouse a total of 50 million Tokai tags; of the total 65 million tags purchased, ID Security sold a total of only 16 million up to December 1996, after which point ID Security never ordered, or was permitted to order, another RF tag from Tokai. T.T. 5/1/02 (doc. no. 164) at 199. At trial, ID Security produced only a single purchase order memorializing a promotional sale of ID Security tags to Target at the price of 3 cents per tag, T.T. 4/29/02 (doc. no. 159) at 139-41. Moreover, at the time of trial in 2002, not a single Laserfuse tag was then being produced or offered for sale anywhere in the world. T.T. 5/1/02 (doc. no. 164) at 53, 69. ID alleges that Checkpoint’s violations of the antitrust laws and interference with the ID-Tokai contract were ultimately responsible for these eventualities.

In the wake of the April 1996 agreement, a series of disputes arose between ID and Tokai. By December 1996, complaining about the poor quality of the adhesive on Tokai-manufactured tags, and alleging that Tokai had breached their contract by selling source tags to Checkpoint, Murdoch informed Haneda that ID Security would place no further orders for Tokai tags and would withhold payments on invoices for tags already received. T.T. 5/1/02 (doc. no. 164) 187-88, 191-93. In response, Haneda agreed to meet with Murdoch in Amsterdam in January 1997 to discuss their dispute. T.T. 4/29/02 (doc. no. 159) at 159. In the meantime, according to Murdoch, the two companies were to be in “a standstill position relative to the requirement of purchasing more tags and making additional payments '....” T.T. 4/29/02 (doc. no. 159) at 159.

During the time period leading up to and following the Amsterdam meeting between Haneda and Murdoch, however, unbeknownst to Murdoch, Haneda and Tokai were negotiating with Checkpoint, which was hoping to acquire the manufacturer in toto. T.T. 5/6/02 (doc. no. 171) at 20-21. Lucas Geiges, Checkpoint’s former Senior Vice President for International Development, testified at trial that, at the time of those negotiations, he was aware that To-kai was selling labels to ID Security, but was unaware that that relationship was an exclusive one. T.T. 5/6/02 (doc. no. 171) at 22.

Haneda proceeded to meet with Murdoch in Amsterdam, and addressed with Murdoch a wide variety of topics, including when the adhesive problem would be fixed, new Laserfuse designs, profit sharing, and

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tag prices. T.T. 4/29/02 (doc. no. 159) at 164-65. Coming out of the meeting, Murdoch was satisfied that he and Haneda had agreed that (1) the ID-Tokai contract would be extended for an additional three years, through 2000, T.T. 4/29/02 (doc. no. 159) at 165, (2) source tag material would be sold in the future only to ID Security. T.T. 4/29/02 (doc. no. 159) at 165, (3) the adhesive would be fixed by February 1997, T.T. 4/29/02 (doc. no. 159) at 165-66, (4) no further orders would be placed or products were to be shipped until the adhesive was corrected, T.T. 4/29/02 (doc. no. 159) at 166, (5) a payment schedule for outstanding invoices had been worked out, provided that the meeting in Amsterdam produced a written and signed agreement, T.T. 4/29/02 (doc. no. 159) at 169-70, and (6) that this agreement was intended to replace prior agreements. 5/1/02 (doc. no. 165) at 205. Murdoch believed that he and Haneda had resolved their disputes. T.T. 5/1/02 (doc. no. 164) at 200-201.

Because of Haneda’s reportedly poor English skills, in eases, as here, where the parties had met and reached oral agreement, it was customary that Murdoch would memorialize the agreement reached, and would then send it to Haneda for review and signature. T.T. 5/1/02 (doc. no. 164) at 205. Murdoch followed this procedure on January 28, 1997, when he sent Haneda a confirming letter purporting to document the substantive agreement reached between ID Security and Tokai at the Amsterdam meeting, and to suggest that an arbitration clause be added to the agreement between the parties. T.T. 4/29/02 (doc. no. 159) at 177-80. Contrary to Murdoch’s expectations, Haneda did not sign or return the confirmation letter, despite Murdoch’s repeated requests that he do so. T.T. 4/29/02 (doc. no. 159) at 182-83,186-88.

In declining to respond to Murdoch’s letter, Haneda acted at the request of Geiges, who, upon learning that a possible agreement between ID Security and Tokai had been reached in Amsterdam, convinced Haneda “not to sign the confirming letter or do anything else that could further restrict Tokai’s ability to sell all of its RF tags to Checkpoint ... [bjecause [he] knew that [Checkpoint was] going to ... buy Tokai and [an agreement with ID Security] would be a big obstacle.” T.T. 5/6/02 (doc. no. 171) at 31. On February 13, 1997, while Murdoch waited for a response from Haneda, Checkpoint signed a contract that made it the exclusive distributor of Tokai’s tags.

See

Ex. P-140. A press release by Checkpoint to that effect followed.

See

Ex. P-63.

Upon obtaining a copy of the press release, Murdoch wrote a letter on February 20, 1997 to Checkpoint’s President, Kevin Dowd, informing him that ID had a preexisting contract with Tokai to distribute RF tags. T.T. 4/30/02 (doc. no 158) at 9-11. Checkpoint then launched an investigation into Murdoch’s allegations that a contract existed between ID Security and Tokai, T.T. 5/6/02 (doc. no. 171) at 33-35, before it decided to extend the exclusive distributorship contract with Tokai through December 31, 1997. T.T. 5/6/02 (doc. no. 171) at 41; P-144. Tokai sent ID Security formal notice of the termination of the ID-Tokai contract as late as April 8, 1997. T.T. 4/30/02 (doc. no. 158) at 32-33; Ex. P-75. Litigation ensued between ID Security and Tokai, and, after that litigation ultimately terminated in a settlement, Checkpoint acquired Tokai in toto. T.T. 5/6/02 (doc. no. 171) at 40-44.

In this litigation, which pits ID Security against Checkpoint, ID Security claims that, as a result of Checkpoint’s actions, ID Security lost its financing with respect to its venture with Tokai, its label supplier,

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the opportunity to compete with Checkpoint and Sensormatic in the world market, and more than $80 million in potential profits. T.T. 4/30/02 (doc. no. 158) at 105. With respect to Laserfuse, Murdoch asserted that ID Security lost the raw material necessary to make the product, with the result that the introduction of the product was delayed for four years while ID Security scrambled to find an alternative supplier. T.T. 4/30/02 (doc. no. 158) at 105-07. In connection with these claims, ID Security sued Checkpoint in this court for alleged violations of the federal antitrust laws through monopolization, attempt to monopolize, and conspiracy to monopolize, and for Pennsylvania state law torts, including tortious interference with contractual relations and unfair competition.

After trial, the jury returned a verdict in favor of Checkpoint on ID Security’s monopolization claim, but found Checkpoint liable for attempted monopolization and for conspiracy to monopolize. On the federal antitrust claims, the jury awarded ID Security $14 million in damages with respect to its Laserfuse line, and $14.5 million in damages for lost Tokai tag sales. The total award of $28.5 million was trebled by the court pursuant to the antitrust laws, such that the Checkpoint was held liable for antitrust damages in the amount of $85.5 million. The jury also found Checkpoint liable on ID Security’s state law claims of tortious interference with contractual relations and unfair competition, and awarded ID Security $6 million in damages for its Laserfuse line and $13 million in lost sales of Tokai tags, for a total of $19 million in damages for state law claims. Thus, the award against Checkpoint totalled $104.5 million.

Checkpoint has filed a motion for post-trial relief seeking either judgment as a matter of law or a new trial on all claims.

II. DISCUSSION

A. Applicable Standards

Rule 50

Rule 50 provides that in the aftermath of a jury trial, a court may grant a motion for judgment as a matter of law if it determines that there was “no legally sufficient evidentiary basis for a reasonable jury to have found for a particular party on an issue,” and that, without a favorable finding on that issue, the party cannot maintain his claim under controlling law. Fed.R.Civ.P. 50(a)(1). In determining whether to grant judgment as a matter of law, the court “must view the evidence in the light most favorable to the non-moving party, and determine whether the record contains the ‘minimum quantum of evidence from which a jury might reasonably afford relief.’”

Glenn Distribs. Corp. v. Carlisle Plastics, Inc.,

297 F.3d 294, 299 (3d Cir.2002) (quoting

Mosley v. Wilson,

102 F.3d 85, 89 (3d Cir.1996)). Indeed, a court may grant judgment as a matter of law “only if, viewing the evidence in the light most favorable to the nonmovant and giving it the advantage of every fair and reasonable inference, there is in-, sufficient evidence from which a jury reasonably could find liability.”

LePage’s, Inc. v. 3M,

324 F.3d 141, 145-46 (3d Cir.2003) (quoting

Lightning Lube, Inc. v. Witco Corp.,

4 F.3d 1153, 1166 (3d Cir.1993)).

In this endeavor, “[t]he court may not weigh evidence, determine the credibility of witnesses or substitute its version of the facts for that of the jury,”

Parkway Garage, Inc. v. City of Philadelphia,

5 F.3d 685, 691 (3d Cir.1993), but rather may grant a Rule 50 motion only “if upon review of the record it can be said as a matter of law that the verdict is not supported by legally sufficient evidence.”

Id.

at 691-92 ; see

also LePage’s,

at 145-46

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(“[R]eview of the jury’s verdict is limited to determining whether some evidence in the record supports the jury’s verdict.”);

Glenn Distribs.,

297 F.3d at 299 (stating that “[t]he standard for granting summary judgment under Rule 56 ‘mirrors the standard for a directed verdict under Fed. R.Civ.P. 50(a)’ ”) (quoting

Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 250 , 106 S.Ct. 2505 , 91 L.Ed.2d 202 (1986)).

Rule 59

Rule 59 of the Federal Rule of Civil Procedure allows a trial court, in its discretion, to grant a new trial “on all or part of the issues in an action where there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States.” Fed. R.Civ.P. 59(a)(1). Such an endeavor is not, however, lightly undertaken, because it necessarily “effects a denigration of the jury system and to the extent that new trials are granted the judge takes over, if he does not usurp, the prime function of the jury as the trier of the facts.”

Lind v. Schenley Indus., Inc.,

278 F.2d 79, 90 (3d Cir.1960) (en banc). Therefore, “[a] new trial may be granted [only] when the verdict is contrary to the great weight of the evidence; that is, ‘where a miscarriage of justice would result if the verdict were to stand.’ ”

Pryer v. C.O. 3 Slavic,

251 F.3d 448, 453 (3d Cir.2001) (quoting

Olefins Trading, Inc. v. Han Yang Chem. Corp.,

9 F.3d 282, 289 (3d Cir.1993)). When, as here, the asserted basis for a new trial is trial error, “[t]he court’s inquiry ... is twofold. It must first determine whether an error was made in the course of the trial, and then must determine whether the error was so prejudicial that refusal to grant a new trial would be inconsistent with substantial justice.”

Farra v. Stanley-Bostitch, Inc.,

838 F.Supp. 1021, 1026 (E.D.Pa.1993).

B. Plaintiffs Antitrust Claims

Attempt to monopolize

Checkpoint challenges under Rule 50(b) the verdict in favor of ID Security on its § 2 claims as being supported by insufficient evidence. In relevant part, § 2 of the Sherman Act sanctions those “who shall ... attempt to monopolize ... any part of the trade or commerce among the several States, or with foreign nations.” 15 U.S.C. § 2 . In order to prevail under an attempted monopolization claim, “a plaintiff must prove that the defendant (1) engaged in predatory or anticompetitive conduct with (2) specific intent to monopolize and with (3) a dangerous probability of achieving monopoly power.”

Queen City Pizza, Inc. v. Domino’s Pizza, Inc.,

124 F.3d 430, 442 (3d Cir.1997) (quoting

Spectrum Sports, Inc. v. McQuillan,

506 U.S. 447, 456 , 113 S.Ct. 884 , 122 L.Ed.2d 247 (1993);

Ideal Dairy Farms, Inc. v. John Labatt, Ltd.,

90 F.3d 737, 750 (3d Cir.1996);

Advo, Inc. v. Philadelphia Newspapers, Inc.,

51 F.3d 1191, 1197 (3d Cir.1995)). It is the third of these elements that is most strongly implicated in Checkpoint’s motion for judgment as a matter of law.

In order to determine whether there is a dangerous probability of monopolization in a particular case, however, a court must first “inquire ‘into the relevant product and geographic market and the defendant’s economic power in that market.’ ”

Id.

(quoting

Spectrum Sports,

506 U.S. at 459 , 113 S.Ct. 884 ,

Ideal Dairy Farms,

90 F.3d at 750 ;

Pastore v. Bell Tel. Co. of Pa.,

24 F.3d 508, 512 (3d Cir.1994)). The plaintiff bears the burden of defining and proving the relevant market.

Brokerage Concepts, Inc. v. U.S. Healthcare, Inc.,

140 F.3d 494, 513 (3d Cir.1998). The parties agree that the entire world comprises

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the relevant geographic product market in this case. T.T. 5/21/02 (doc. no. 202) at 183. As to the product market, in order to assess whether there was legally sufficient evidence to support a finding that Checkpoint was dangerously close to achieving monopoly, the court must first consider whether the relevant product market in this case was the market for EAS systems, as Checkpoint asserts, or the market for RF tags, as ID Security contends. Stated in the specific terms of this case, the court must first assess whether ID Security, as the antitrust plaintiff, produced sufficient evidence that RF tags constituted the relevant product market in this case. Once the relevant product and geographic market is defined, the court must assess whether ID Security produced sufficient evidence that Checkpoint attempted to monopolize that market.

Relevant market and market power

Kodak and the relevant product market

The relevant market for antitrust purposes “is composed of products that have reasonable interchangeability.”

Eastman Kodak Co. v. Image Technical Servs., Inc.,

504 U.S. 451, 482 , 112 S.Ct. 2072 , 119 L.Ed.2d 265 (1992) (quoting

United States v. E.I. du Pont de Nemours & Co.,

351 U.S. 377, 404 , 76 S.Ct. 994 , 100 L.Ed. 1264 (1956));

see also Int’l Wood Processors v. Power Dry, Inc.,

792 F.2d 416 , 430 (4th Cir.1986) (quoting L. Sullivan, Handbook of the Law of Antitrust § 12, at 41 (1977) and defining “relevant market” as “the narrowest market which is wide enough so that products from adjacent areas or from other producers in the same area cannot compete on substantial parity with those included in the market”). “ ‘Interchangeability’ implies that one product is roughly equivalent to another for the use to which it is put; while there might be some degree of preference for the one over the other, either would work effectively.”

Allen-Myland, Inc. v. Int’l Bus. Machs. Corp.,

33 F.3d 194, 206 (3d Cir.1994) (explaining that “[a] person needing transportation ... could accordingly buy a Ford or a Chevrolet automobile, or could elect to ride a horse or bicycle, assuming those options were feasible.”).

The economic interchangeability of products is, in turn, measured by the “cross-elasticity of demand” between a particular product and any substitutes for it.

Brokerage Concepts,

140 F.3d at 513 ;

accord Queen City Pizza,

124 F.3d at 437 (also directing courts to consider “price, use, and qualities”). This is so because, when cross-elasticity is present, the prices of a product and its substitutes are linked such that “the rise in the price of a good within a relevant market would tend to create a greater demand for other like goods in that market.”

Tunis Bros. Co., Inc. v. Ford Motor Co.,

952 F.2d 715 , 722 n. 6 (3d Cir.1991). The inquiry in this case is to determine which of two closely related and interdependent markets constitutes the actual relevant market for antitrust purposes.

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Eastman Kodak Co. v. Image Technical Servs., Inc.,

504 U.S. 451 , 112 S.Ct. 2072 , 119 L.Ed.2d 265 (1992), the Supreme Court confronted, in what was to become the seminal case in the foremarket-after-market area, the question of whether a defendant’s lack of power in a primary-market precludes, as a matter of law, the possibility of market power in derivative aftermarkets.

Id.

at 455 , 112 S.Ct. 2072 . In particular, the Court had to determine whether Kodak, a manufacturer of complex business machines whose parts were incompatible with those of other manufacturers, had unlawfully monopolized and attempted to monopolize the sale of service for Kodak machines in violation of § 2 of that Act, when it implemented a policy of selling replacement parts only to buyers of Kodak equipment who used Kodak service or repaired their own machines.

Id.

at 456-59, 112 S.Ct. 2072 . The practical effect of Kodak’s policy was that it became more difficult, if not impossible, for independent service organizations (“ISO’s”) to sell service for Kodak machines, because they were unable to obtain Kodak parts.

Id.

at 458 , 112 S.Ct. 2072 .

The ISO’s contended that Kodak had monopolized, or attempted to monopolize, what they alleged to be the relevant market, namely the aftermarket for parts and services.

Id.

at 459 , 112 S.Ct. 2072 . Kodak countered that the existence of competition in the primary equipment market, which it alleged to be the relevant market and of which it did not possess a monopoly share, inherently constrained its ability to raise aftermarket prices of service and parts above the level that would be charged in a competitive market.

See id.

at 465-66 , 112 S.Ct. 2072 . Therefore, Kodak argued that, as a matter of law, it was neither a monopolist nor an attempted monopolist.

Id.

at 467 , 112 S.Ct. 2072 . The Supreme Court disagreed.

Id.

at 466-467, 477 , 112 S.Ct. 2072 .

The Court declined the invitation of the defendant in the case to create a legal presumption that the fore- and aftermarkets inherently act as “pure complements to one another,”

id.

at 477 , 112 S.Ct. 2072 , because market imperfections in the fore-market, “could create a less responsive connection between service and parts prices [in the aftermarket] and equipment sales [in the foremarket].”

Id.

at 478 , 112 S.Ct. 2072 . In particular, the Supreme Court found that significant information and switching costs, for example, could limit the ability of competition in the fore-market to prevent an exercise of monopoly power in the aftermarket.

Id.

Therefore,

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the Supreme Court directed that courts faced with the task of evaluating whether a tie between fore- and aftermarkets violates the antitrust laws must proceed on “a case by case basis, focusing on the particular facts disclosed by the record.”

Id.

at 467 , 112 S.Ct. 2072 .

Kodak’s

teaching is not about market power alone, but about market definition. Noting that Kodak had chosen in its arguments to the Court “to focus on market power directly rather than arguing that the relationship between equipment and service and parts is such that the three should be included in the same market definition,”

id.

at 469 n. 15, 112 S.Ct. 2072 , the Court explained that “[w]hether considered in the conceptual category of ‘market definition’ or ‘market power,’ the ultimate inquiry is the same-whether competition in the equipment market will significantly restrain power in the service and parts markets.”

Id.

(emphasis supplied).

Therefore, switching and information costs are significant, not only as indicators of market power, but also in the definition of the relevant market, because they inherently interfere with the cross-elasticity of demand.

See id.

at 469, 473 , 112 S.Ct. 2072 .

ii.

Relevant market analysis in the wake of Kodak

In the wake of

Kodak,

reasonable interchangeability continues to define the boundaries of the relevant market.

See

Brokerage Concepts, Inc. v. U.S. Healthcare, Inc.,

140 F.3d 494, 513 (3d Cir.1998);

Queen City Pizza, Inc. v. Domino’s Pizza, Inc.,

124 F.3d 430, 439 (3d Cir.1997). However, Kodak established that, in a situation where a court must determine whether the aftermarket, rather than the foremarket, is the relevant market for antitrust purposes, the fact that the aftermarket goods are unique, i.e., not interchangeable with similar repair or replacement products, does not automatically establish the aftermarket as the relevant market.

See Queen City Pizza,

124 F.3d at 439-40 .

Rather, both the uniqueness of aftermarket goods, and the existence of fore-market switching and information costs that “create an economic lock-in that could reduce or eliminate the cross-elasticity of demand” between fore- and aftermarket products, serve to establish the aftermarket as the relevant market.

See id.

This is so because uniqueness, switching and information costs, in tandem, generate market power even as they delineate the boundaries of the market in which such power is exercised.

See id.

Using the facts of

Kodak

as an example, the Third Circuit explained:

If Kodak repair parts had not been unique, but rather, could be obtained from additional sources at a reasonable price, Kodak could not have forced copier purchasers to buy repair parts from Kodak. This would be true even if the copier purchasers faced information and

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switching costs that locked them into to (sic) use of Kodak copiers. This fact indicates that switching and information costs alone cannot create market power. Rather, it is the lack of a competitive market in the object to be purchased-for instance, a competitive market in Kodak parts-that gives a company market power.

Id.

at 439 n. 10;

see also Pastore,

24 F.3d at 513 (characterizing market share as the “most significant” factor in an attempted monopolization claim, and observing that “[i]ndeed, a pair of the leading antitrust commentators state that ‘it is clear that the basic thrust of the classic rule is the presumption that attempt does not occur in the absence of a rather significant market share.’ ”). As a matter of law, a market share of less than 30 percent is presumptively insufficient to establish the market power that is a prerequisite to a defendant’s enjoying a dangerous probability of achieving monopoly power.

See Jefferson Parish Hosp. Dist. No. 2 v. Hyde,

466 U.S. 2 , 26 n. 43, 104 S.Ct. 1551 , 80 L.Ed.2d 2 (1984) (market power indicated by 30 percent market share generally insufficient to create an unacceptable likelihood of anticompetitive conduct);

see also Cargill, Inc. v. Monfort of Colorado, Inc.,

479 U.S. 104 , 119 n. 15, 107 S.Ct. 484 , 93 L.Ed.2d 427 (1986) (“With only a 28.4% share ... and lacking a plan to collude, [defendant] would harm only itself by embarking on a sustained campaign of predatory pricing.”);

AD/SAT, Div. of Skylight, Inc. v. Assoc. Press,

181 F.3d 216 , 229 (2d Cir.1999) (20 percent to 30 percent market share “does not approach the level required for a showing of dangerous probability of monopoly power”);

Acme Mkts., Inc. v. Wharton Hardware & Supply Corp.,

890 F.Supp. 1230, 1241 (D.N.J.1995) (endorsing the idea that “[f]or defendants who control 30% or less of the relevant market, claims of attempted monopolization should be ‘presumptively1 rejected”).

Because assessing a defendant’s probability of achieving monopoly hinges on an assessment of market power, which is not always accurately reflected by market share alone, other factors may affect a defendant’s probability of achieving monopoly in a relevant market, such as “the strength of competition, probable development of the industry, the barriers to entry,

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the nature of the anti-competitive conduct, and the elasticity of consumer demand.”

Barr Labs.,

978 F.2d at 112 . With these factors in mind, therefore, the court turns to an examination of the evidence in this case.

It is undisputed that Checkpoint possesses a 25 percent share of the EAS systems market, T.T. 5/9/02 (doc. no. 176) at 31, a market share presumptively insufficient to confer upon Checkpoint a dangerous probability of success. In an attempt to rebut this presumption, ID Security resurrects the duopoly argument that it earlier advanced to prove that RF tags were the relevant market in this case. In particular, ID Security asserts that Checkpoint’s small share of the EAS systems market does not accurately reflect its power within that market. This is so, according to ID Security, because there was sufficient evidence to support a jury finding that Checkpoint enjoyed a dangerous probability of achieving monopoly because Checkpoint and Sensormatic, in theory, comprise a price matching duopoly. Noting that Checkpoint’s tag manufacturing costs were less than those of Sensormatic, ID Security insists that the jury could have found that Checkpoint would be able to raise its RF tag prices with impunity after eliminating All-Tag, a minor player in the RF tag market, and would thereafter increase the price of its system, with the result that “such a price increase by Checkpoint might be quickly and eagerly followed by Sensormatic.” Mem. of Law by PI. in Response to Mot. by Def. for Post-Trial Relief at 32. Essentially, ID Security argues that the fact that Checkpoint and Sensormatic price match allows Checkpoint to raise the price of both RF- and AM-based systems, much as a monopolist would, even though Checkpoint does not have a majority share of the EAS systems market. The court does not agree.

First, those courts that have squarely addressed the issue have determined that § 2 of the Sherman Act applies to the conduct of single firms only, rather than to the conduct of a small number of firms engaged in tacit collusion, as in cases involving oligopoly, shared monopoly, or, as here, duopoly.

See Rebel Oil Co., Inc. v. Atl. Richfield Co.,

51 F.3d 1421, 1443 (9th Cir.1995) (stating that the “fact that competitors may see proper ... to follow the prices of another manufacturer ... does not violate the Sherman Act ... To pose a threat of monopolization, one firm

alone

must have the power to control market output and exclude competition” and that “[a]n oligopolist lacks this unilateral power. By definition, oligopolists are interdependent. An oligopolist can increase market price, but only if the others go along”);

Indiana Grocery, Inc. v. Super Valu Stores, Inc.,

864 F.2d 1409, 1416 (7th Cir.1989) (“At best, [plaintiffs theory] poses the danger that [defendant’s] ... conduct could result in diminished price competition in an oligopolistic, or, at worst, a duopolistic market. Section 2, however, does not govern single-firm anti-competitive conduct aimed only at creating oligopoly.”);

H.L. Hayden Co. of N.Y., Inc. v. Siemens Med. Sys., Inc.,

879 F.2d 1005 , 1018 (2d Cir.1989) (affirming the district court’s conclusion that the market shares of two defendants “could not be aggregated to establish an attempt to monopolize in violation of Sherman Act section two .... ” and endorsing the view that “in order to sustain a charge of ... attempted monopolization, a plaintiff must allege the necessary domination of a particular defendant”).

This view garners some support

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from Supreme Court dicta, which provides that “[t]he conduct of a

single

firm is governed by § 2 alone and is unlawful only when it threatens actual monopolization.”

Copperweld Corp. v. Independence Tube Corp.,

467 U.S. 752, 767 , 104 S.Ct. 2731 , 81 L.Ed.2d 628 (1984) (emphasis supplied). Given this precedent, the court concludes that, as a matter of law, ID Security cannot maintain a § 2 attempted monopoly claim based on the alleged existence of a CheckpoinNSensormatic duopoly. Accordingly, Checkpoint is entitled to judgment in its favor on ID Security’s attempted monopoly claim.

Even, assuming it were legally correct for ID Security to premise a § 2 claim on a duopoly theory,

however, ID Security has pointed to no evidence that Checkpoint and Sensormatic in fact operated as a duopoly. As discussed above, the evidence reveals that competition between Checkpoint and Sensormatic is actually quite lively,

see

discussion,

supra

Part II. B.l.b.ii.B., and that the two firms’ consistent practice is to compete for prospective customers by decreasing their prices during price negotiations with prospective customers. T.T. 5/15/02 (doc. no. 192) at 82. Thus, ID Security failed to prove that Sensormatic would “eagerly” match a systems price increase by Checkpoint.

Nor is there merit to the claim that the elimination of All-Tag would somehow cause Checkpoint to cease attempts to undercut Sensormatic on price, and would instead elect to raise its prices in the EAS system market. The potential impact by All-Tag on the EAS systems market was barely mentioned at trial. Indeed, All-Tag only garnered one passing reference during ID’s closing argument, where counsel noted only that Checkpoint was “trying to exclude All-Tag” from the relevant market. T.T. 5/21/02 (doc. no. 202) at 87. Simply put, in the context of the EAS systems relevant market,

ID Security’s § 2 attempted monopoly claim falters on its facts. Thus, the court concludes that there is insufficient evidence to support ID’s attempt to monopolize claim, and will grant Checkpoint judgment as a matter of law.

Checkpoint’s motion for a new trial on the attempt to monopolize claim

Rule 50 of the Federal Rules of Civil Procedure requires that a court that has granted a renewed motion for judgment as a matter of law “shall also rule on the motion for a new trial, if any, by determining whether it should be granted if the judgment is thereafter vacated or re

*651

versed, and shall specify the grounds for granting or denying the motion for the new trial.” Fed.R.CivJP. 50(c)(1). Mindful of its responsibility, the court notes that Checkpoint has made an alternative motion for a new trial with respect to ID Security’s attempt to monopolize claim on the grounds that (1) the jury verdict in favor of Checkpoint on the monopolization claim was, given the facts of this case, fundamentally inconsistent and irreconcilable with the verdict rendered against Checkpoint on the attempted monopolization claim, (2) the jury instructions given by the court were incorrect, and that the court erred in admitting (3) the expert testimony of ID Security’s expert, Dr. Martin Asher, (4) evidence of Checkpoint’s patent enforcement activities, and (5) evidence of Checkpoint’s acquisition of manufacturers Meto and Mercatec. For the reasons that follow, the court concludes that, if Checkpoint is not entitled to judgment as a matter of law on the attempted monopolization claim, then irreconcilable inconsistency between the jury verdicts in this case warrants the grant of a new trial. The court concludes, however, that Checkpoint’s other arguments in favor of a new trial are without merit.

Inconsistent verdicts

Although inconsistent verdicts constitute grounds for ordering a new trial,

Malley-Duff & Assoc., Inc. v. Crown Life Ins. Co.,

734 F.2d 133, 145 (3d Cir.1984), a district court faced with inconsistent verdicts is under a constitutional mandate to search for any view of the case that reconciles the verdicts.

McAdam v. Dean Witter Reynolds, Inc.,

896 F.2d 750, 764 (3d Cir.1990);

see also Mycogen Plant Science, Inc. v. Monsanto Co.,

61 F.Supp.2d 199, 266 (D.Del.1999) (“A district court should uphold the jury’s verdict if there exists some legal basis, supported by the evidence, upon which the verdict could be based.”). Indeed, “[t]he court is obligated to reconcile the jury’s verdict independently of whether the jury likely reasoned in the same fashion and it is the court’s duty to harmonize the jury’s answers if at all possible to do so.”

Mycogen Plant Science,

61 F.Supp.2d at 266 (citing

Gallick v. Baltimore & Ohio R.R. Co.,

372 U.S. 108, 119 , 83 S.Ct. 659 , 9 L.Ed.2d 618 (1963);

Allen Organ Co. v. Kimball Int’l, Inc.,

839 F.2d 1556, 1563 (C.A.Fed.1988)).

An examination of the jury verdicts rendered in favor of Checkpoint on ID Security’s monopolization claim and against Checkpoint on ID Security’s attempted monopolization claim reveals that, regardless of whether the jury determined that the relevant market in this case was that of EAS systems or RF tags,

the verdict is plagued by fundamental inconsistencies that stem from the fact that Checkpoint controls approximately 25 percent of the EAS systems market, and approximately 90 percent of the market for RF tags, and that the apparent inconsistencies are irreconcilable. For the reasons that follow, the court concludes that, if judgment as a matter of law in Checkpoint’s favor with respect to ID Security’s antitrust claims were vacated on appeal, the inconsistency of the jury verdicts would warrant a new trial on ID Security’s attempted monopolization claim.

Assuming EAS systems as the relevant market

Examination of the jury verdicts from the perspective that the jury determined that the relevant market was the market for EAS systems reveals at least facial

*652

inconsistencies between the verdict in favor of Checkpoint on monopolization and against Checkpoint on attempt. It is undisputed that Checkpoint’s 25 percent share of the EAS systems market is insufficient to establish that Checkpoint was a monopolist within that market. However, this market share is also presumptively insufficient to confer on Checkpoint the dangerous probability of achieving monopoly power that would support imposing liability for attempted monopolization.

See Jefferson Parish Hosp. Dist. No. 2 v. Hyde,

466 U.S. 2 , 26 n. 43, 104 S.Ct. 1551 , 80 L.Ed.2d 2 (1984). Acknowledging this apparent inconsistency, ID Security has advanced one convoluted theory that, it asserts, would reconcile this verdict. For the reasons that follow, the court, unable itself to imagine any plausible competing explanation, does not agree.

ID Security’s theory is, in essence, that the jury could have concluded that (1) competitor All-Tag, barely mentioned at trial, somehow constrains Checkpoint’s ability to raise prices in the RF tag market, (2) Checkpoint would be able to eliminate All-Tag from the RF tag market through successful patent enforcement actions, (3) Checkpoint, having eliminated All-Tag in the RF tag market, would then raise RF tag prices, and, therefore, the prices of its EAS systems, and that (4) Sensormatic would then match Checkpoint’s EAS systems price increases.

None of the evidence at trial, however, supports such a scenario. As Checkpoint notes, although All-Tag was mentioned in connection with its patent enforcement actions, there is no evidence from which a reasonable jury could have concluded that Checkpoint’s RF tag pricing was constrained by the presence of All-Tag in the RF market. Instead, Checkpoint’s officers consistently testified that All-Tag’s product, plagued by inferior quality, inability to meet demand, and inability to charge competitive prices, was not considered a competitive threat. T.T. 5/6/02 (doc. no. 171) at 154-55, 165-66. These were contentions that ID Security never directly refuted. Moreover, not even ID Security’s counsel advanced during closing any theory akin to that now advanced to reconcile the verdicts in this case, but rather chose to refer only in passing to Checkpoint’s attempts to “exclude” All-Tag from the RF market. T.T. 5/21/02 (doc. no. 202) at 87. Therefore, the court concludes that if the jury determined that EAS systems constituted the relevant market in this case, the verdict in favor of Checkpoint on monopolization and against Checkpoint on attempted monopolization, are both inconsistent and irreconcilable.

Assuming RF tags as the relevant market

Examination of the jury verdicts from the perspective that the jury determined that the relevant market was the market for RF tags also reveals facial inconsistencies between the verdict in favor of Checkpoint on monopolization and against Checkpoint on attempt. Checkpoint points out that, in essence, with a 90 percent share of the RF tag market, it was already a monopolist, so that, if the jury believed that the relevant market was the market for RF tags, it was obliged to find

against

Checkpoint on the monopolization claim. Moreover, Checkpoint asserts that there was no evidence from which a reasonable jury could have concluded that Checkpoint lacked monopoly power in the tag market despite its market share, but had a dangerous probability of achieving monopoly power by obtaining an even greater market share. ID Security has advanced several scenarios that purport to resolve this inconsistency. For the reasons that follow, the court concludes that its attempt is unsuccessful.

*653

ID Security first argues that the jury could have found that All-Tag’s presence constrained Checkpoint from charging monopoly prices, despite Checkpoint’s 90 percent market share, and that the elimination of All-Tag would remove that barrier. As discussed in detail above,

see supra

Part II.B.l.d.i.A, ID Security’s theory envisions a role for All-Tag that the trial evidence does not support, and the court concludes that this attempt to reconcile the verdict is without merit.

ID Security’s second and third attempts to reconcile the verdict are variations on a theme; both are premised on the theory that the jury could have found that Checkpoint attempted to acquire monopoly power by eliminating ID Security, but was unsuccessful because competition from Sensormatic in the EAS systems market constrained its ability to charge monopoly prices in the RF tag market.

Against this background, ID Security argues that the jury could nonetheless have determined that Checkpoint had a dangerous probability of achieving monopoly power because Sensormatic may choose to match price increases by Checkpoint. Given that there is literally no evidence in the record that Sensormatic would match a price

increase

by Checkpoint, however, the court determines that ID Security’s argument on this point is without merit, given Checkpoint’s consistent pattern of pricing.

See

T.T. 5/7/02 (doc. no. 172) at 90-91, 137; 5/10/02 (doc. no. 182) at 162; 5/15/02 (doc. no. 192) at 87.

In its alternative third theory, ID Security argues that the jury could have determined that Checkpoint’s 90 percent share

per se

constituted a dangerous probability of succeeding in obtaining monopoly power in the RF tag aftermarket. The jury was not so instructed,

See

T.T. 5/21/02 (doc. no. 202) at 194-95, and ID Security has pointed to no law supporting such an approach. Consequently, the court determines that the jury verdicts on monopolization and attempted monopolization are inconsistent, and irreconcilable, and that, in the event that Checkpoint is not entitled to judgment as a matter of law, it is entitled to a new trial on ID Security’s attempted monopolization claim.

ii.

Antitrust jury instructions

Checkpoint next argues that it is entitled to a new trial on the theory that the court erred by failing to instruct the jury according to Checkpoint’s proposed jury instructions 16, 17, 19, 20, 21, 22, and 23. The instructions deal generally with the issue of market power and market definition. Checkpoint contends that the court’s decision not to charge according to its proposed instructions resulted in an inadequate and inaccurate charge. The court does not agree, and does not find that Checkpoint is entitled to a new trial on the basis asserted.

The court instructed the jury on relevant product market as follows:

In determining the product market, the basic idea is that the products within it are interchangeable as a practical matter from the buyer’s point of view. This does not mean that the two products must be identical to be in the same market. It means that they must be as a matter of practical fact and the actual behavior of consumers substantial or reasonably interchangeable to fill the same consumer needs or purpose. Two products are within a single market if one of them could suit the buyer’s needs substantially as well as the other. In

*654

sum, what you are being asked to ask is to decide which products compete with each other. This is a practical determination. Products do not have to be identical to be in the same relevant product market, but they must compete meaningfully with each other. In defining the relevant product market you must consider what is called the commercial realities faced by buyers. You may consider some factors which may help you to make this determination: Whether and to what extent the market for EAS systems constrains or limits the prices that are charged for RF tags. You may consider the information regarding tags and whether such information is available to purchasers of EAS systems and RF tags, and, if so, at what point in time during the transaction. You may also consider whether Checkpoint made any unexpected changes or increases in its tag prices.

T.T. 5/21/02 (doc. 202) at 181-82.

The instruction given by the court, as a whole, offers a correct statement of the law and the applicable legal standard. The charge highlighted for the jury that a relevant market is determined by reasonable interchangeability of use,

see Eastman Kodak Co. v. Image Technical Servs., Inc.,

504 U.S. 451, 482 , 112 S.Ct. 2072 , 119 L.Ed.2d 265 (1992);

Brokerage Concepts, Inc. v. U.S. Healthcare, Inc.,

140 F.3d 494, 513 (3d Cir.1998);

Queen City Pizza, Inc. v. Domino’s Pizza, Inc.,

124 F.3d 430, 439 (3d Cir.1997), that the jury should consider to what extent the foremarket realistically constrains the aftermarket in a given case,

see Kodak,

504 U.S. at 473, 477 , 112 S.Ct. 2072 ;

Allen-Myland, Inc. v. Int'l Bus. Machs. Corp.,

33 F.3d 194 , 208 n. 16 (3d Cir.1994), and that, to this end, it should take information costs into account,

see Queen City Pizza,

124 F.3d at 439-40 , as well as any post lock-in changes of policy.

See Alcatel, USA, Inc. v. DGI Techs., Inc.,

166 F.3d 772, 783 (5th Cir.1997).

Checkpoint’s Proposed Instructions 16, 17,19, 20, 21, 22, and 23, though all correct statements of the law, are merely flourishes on and refinements of the basic legal framework that was articulated in the cases that the court used to formulate its charge.

That the court exercised its discretion and refused to charge the jury in the precise fashion that Checkpoint requested, is not error where the charge given by the court “as a whole, stated the correct legal standard.”

Ryder v. Westinghouse Elec. Corp.,

128 F.3d 128, 135 (3d Cir.1997). Similarly, the fact that the court also instructed the jury that “[t]wo products are within a single market if one of them could suit the buyer’s needs substantially as well as the other,” T.T. 5/21/02 (doc. no. 202) at 182, did not render the jury instructions inaccurate by obscuring, as Checkpoint contends, the impor

*655

tance of an inquiry into whether prices in the secondary market are constrained by competition in the primary market. Indeed, the court explicitly directed the jury to consider the existence of such a constraint, and emphasized the importance of information costs, as well as post lock-in conduct, relevant to that determination. T.T. 5/21/02 (doc. no. 202) at 181-82. Accordingly, the court concludes that it did not err in excluding Checkpoint’s proposed jury instructions from the charge given, and that the exclusion of those instructions does not warrant a new trial.

iii.Testimony of Dr. Martin Asher

Checkpoint next contends that it is entitled to a new trial on ID Security’s antitrust claims on the theory that the court erred in applying the

Daubert

principles,

and, therefore, in admitting the testimony of ID Security’s antitrust expert, Dr. Martin Asher. Checkpoint contends that Dr. Asher’s testimony does not “fit” the facts of the case, primarily because Dr. Asher reached his conclusion that Checkpoint was charging supracompetitive prices in the RF tag market from the hotly disputed factual proposition that ID Security was willing to enter the RF market at a promotional price of approximately 2.95 cents per tag or a regular price of 8 cents per tag, approximately half a cent lower than Checkpoint’s price of 3.5 cents. Upon review of the relevant materials, the court concludes that Dr. Asher’s economic model was itself sufficiently reliable to warrant the admission of his testimony into evidence for the reasons stated in

ID Sec. Sys. Canada, Inc. v. Checkpoint, Inc.,

198 F.Supp.2d 598, 605 (E.D.Pa.2002).

That Dr. Asher’s theory rested on a particular interpretation of a disputed fact in this case does not mean that his testimony, based on a methodology that the court previously found to be reliable, should have been excluded from evidence. Resolution of the question of whether ID Security was willing and able to enter the RF tag market at a price that undercut that of Checkpoint, was properly left to the jury. If the jury chose to credit the factual predicate on which Dr. Asher’s economic theory operated, then it was also free to accept, if it so chose, Dr. Asher’s suggestion that Checkpoint was charging supracompetitive prices in the RF tag market. Therefore, the court concludes that it did not err in admitting Dr. Asher’s testimony into evidence, and Checkpoint is not entitled to a new trial on this point.

iv.Evidence of patent enforcement activity

Checkpoint next contends that it is entitled to a new trial because the court erred in allowing ID Security to introduce evidence of patent enforcement lawsuits brought by Checkpoint against would-be competitors in the RF tag market in order to show that Checkpoint had engaged in anticompetitive conduct. The court does not agree.

Generally, a patent holder who brings an infringement action to enforce its patent rights is “exempt from the antitrust laws, even though such a suit may have an anti-competitive effect,”

In re Indep. Serv. Orgs. Antitrust Litig. CSU, L.L.C.,

203 F.3d 1322, 1325 (C.A.Fed.2000), except in cases where (1) the asserted patent was obtained through fraud,

see LePage’s, Inc. v.3M,

324 F.3d 141 , 152 (3d Cir.2003);

Nobelpharma AB v. Implant Innovations, Inc.,

141 F.3d 1059, 1068-69 (C.A.Fed.1998), or (2) the patent infringement suit is a “sham,” i.e., the antitrust plaintiff can prove that the defendant’s enforcement suit was “objectively baseless and subjectively motivated by a desire to impose

*656

collateral, anti-competitive injury rather than to obtain a justifiable legal remedy.”

In re Independent,

203 F.3d at 1325 . It is undisputed that neither of these standard exceptions was implicated by the facts of this case. However, some courts have also recognized a third exception, that “patent owners may incur antitrust liability for enforcement of a patent ... where there is an overall scheme to use the patent to violate the antitrust laws.” Atari

Games Corp. v. Nintendo of Am., Inc.,

897 F.2d 1572, 1576-77 (C.A.Fed.1990);

see also Kobe, Inc. v. Dempsey Pump Co.,

198 F.2d 416, 425 (10th Cir.1952) (“The infringement action ... in [itself was] not unlawful, ... but when considered with the entire monopolistic scheme which preceded [it] we think ... that [it] may be considered as having been done to give effect to the unlawful scheme.”).

In this case, the court, ruling on a motion in limine, initially excluded evidence of Checkpoint’s patent enforcement activities on the grounds that ID Security had pointed to no evidence in the record in support of the proposition that any of these exceptions applied.

See ID Sec.,

198 F.Supp.2d at 627 n. 20.

However, at trial, ID Security cured this defect by pointing the court to the deposition testimony of Lucas Geiges, Checkpoint’s former Senior Vice President for International Development, and that of Albert E. Wolf, Checkpoint’s founder, both of whom suggested that Checkpoint in fact sued to enforce its patents in order to gain business advantage. Geiges testified at his deposition, ultimately presented at trial, that, with respect to Actron, “Checkpoint felt quite strong at that point that they had a case where if Actron wouldn’t cooperate [by allowing Checkpoint to acquire a major equity position in Tokai] they could force them out due to the patent litigation,” and that Checkpoint wanted Actron out of business because Actron “was an unfriendly competitor.” T.T. 5/8/02 (doc. no. 177) at 88. Moreover, in describing the course of the negotiations that led to Checkpoint’s acquisition of the desired ownership interest in Tokai, Wolf detailed the manner in which Checkpoint used the threat of possible patent litigation of the type previously undertaken against Actron in Europe as leverage to obtain the ownership interest that it sought in Tokai and thus neutralize Tokai as a competing source of RF tags. T.T. 5/8/02 (doc. no. 177) at 89-96. Having revisited this evidence, and its clear bearing on Checkpoint’s motivation for embarking on otherwise pro-competitive and protected patent litigation, the court concludes that the testimony of both Geiges and Wolf was properly admitted into evidence under the overall scheme exception to the prohibition against allowing patent enforcement activities to be used as evidence of anticompeti-tive conduct in antitrust suits. Therefore, the admission of this evidence, by itself, does not warrant a new trial for Checkpoint on the attempted monopoly claim,

Evidence of Meto and Mercatec acquisitions

Checkpoint argues that the court erred in admitting evidence concerning Checkpoint’s acquisitions of two RF tag manufacturers, Meto and Mercatec, and in allowing ID Security to argue in its closing that Checkpoint had ultimately excluded Meto, as well as Tokai and ID Security, from the RF tag market. In particular, Checkpoint asserts that it is entitled to a

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new trial on ID Security’s attempt to monopolize claim on the theory that the evidence of the Meto and Mercatec acquisitions is irrelevant to the question of whether Checkpoint’s actions in connection with the contract between ID and Tokai constituted an attempt to monopolize because both acquisitions occurred

after

the events involving the ID-Tokai contract and because neither company devoted a significant portion of its business to RF tags. The court does not agree that Checkpoint is entitled to a new trial on ID Security’s attempt to monopolize claim on this basis.

ID Security counters, and the court agrees, that the evidence was relevant to the extent that Checkpoint’s actions subsequent to its interference with the ID-To-kai contract could constitute circumstantial evidence of what its specific intent may have been at the time of that interference. To put it another way, the evidence of the Meto and Mercatel acquisitions bears on whether Checkpoint’s actions in connection with the ID-Tokai contract were part of a larger, ongoing pattern of anticompetitive conduct on Checkpoint’s part, and on whether Checkpoint specifically intended to control literally 100 percent of the RF tag market. As described in detail above, a finding of specific intent is necessary to both an attempt to monopolize claim,

Queen City Pizza, Inc. v. Domino’s Pizza, Inc.,

124 F.3d 430, 442 (3d Cir.1997), and a § 2 conspiracy to monopolize claim.

United States v. Jerrold Electronics Corp.,

187 F.Supp. 545, 567 (E.D.Pa.1960).

It is true, of course, that the probative value of this evidence is diminished by the fact that the acquisitions occurred after the events at issue in this case, and by the fact that neither company apparently had significant investment in RF tags. However, even if admitting the Meto and Mer-catel evidence was error, such error was harmless. The record reveals that Checkpoint was able to undercut this evidence as to Checkpoint’s intent by cross-examining extensively with respect to these companies’ de minimis presence in the RF market.

See

T.T. 5/7/02 (doc. no. 172) at 64-65; T.T. 5/9/02 (doc. no. 176) at 84, 94-96. Therefore, the court concludes that the admission of this evidence did not prejudice Checkpoint, and does not warrant granting Checkpoint a new trial.

Conspiracy to monopolize

Checkpoint challenges the jury verdict on conspiracy to monopolize as supported by legally insufficient evidence. In order to succeed on a conspiracy to monopolize theory brought under § 2 of the Sherman Act, a plaintiff must prove: “(1) the existence of a combination or conspiracy to monopolize; (2) overt acts done in furtherance of the combination or conspiracy; (3) an effect on an appreciable amount of interstate commerce; and (4) a specific intent to monopolize.”

Lantec, Inc. v. Novell, Inc.,

306 F.3d 1003, 1028 (10th Cir.2002);

see also Friedman v. Del. County Memorial Hosp.,

672 F.Supp. 171, 196 (E.D.Pa.1987);

Pontius v. Children’s Hosp.,

552 F.Supp. 1352, 1377 (E.D.Pa.1982) (both stating the elements of a § 2 conspiracy to monopolize as “(1) an agreement or understanding between two or more economic entities, (2) a specific intent to monopolize, and (3) the commission of an overt act in furtherance of the alleged conspiracy”).

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Within this framework, a plaintiff alleging antitrust conspiracy to monopolize under § 2 of the Sherman Act bears “the burden of providing sufficient evidence to establish that the conspirators ‘had a conscious commitment to a common scheme designed to achieve an unlawful objective.’ ”

Friedman,

672 F.Supp. at 196 (quoting

Edward J. Sweeney & Sons, Inc. v. Texaco, Inc.,

637 F.2d 105, 111 (3d Cir.1980)). For the reasons set forth below, the court concludes that, even assuming that Checkpoint possessed the requisite intent, there was no legally sufficient proof to support a finding by a reasonable jury that Tokai, the target of Checkpoint’s acquisitions efforts and the alleged co-conspirator in Checkpoint’s alleged attempt to monopolize either the EAS systems fore-market or the RF tag aftermarket, shared Checkpoint’s specific intent to monopolize.

ID Security in fact proceeded under § 2, rather than § 1, of the Sherman Act.

Before proceeding to an analysis of the merits of ID Security’s § 2 conspiracy claim, the court must, as an initial matter, evaluate ID’s assertion that its conspiracy claim was actually premised on a violation of § 1, rather than on § 2, of the Sherman Act. The import of this argument is that, if so, ID Security would be relieved on the burden of proving specific intent to monopolize on the part of Checkpoint and Tokai, and could prevail essentially on a showing that there was a conspiracy that had illegal objects, anticompetitive effects, and caused injury to ID.

See Syufy Enters. v. American Multicinema, Inc.,

793 F.2d 990, 1000 (9th Cir.1986) (“[E]very combination or conspiracy that offends antitrust policy can easily be held to be an unreasonable restraint of trade, without the need for considering the additional complexities that flow from using the § 2 monopoly concept.”) (quoting 3 P. Areeda & D. Turner, Antitrust ¶ 839 (1978));

see also Fleer Corp. v. Topps Chewing Gum, Inc.,

658 F.2d 139, 147 (3d Cir.1981) (explaining the requisite elements of a § 1 claim). In this attempt, ID Security argues that a § 1 claim was stated in the complaint, argued to the jury, and charged by the court in both its preliminary and final instructions to the jury. Upon examination of the relevant materials and, given the evolution of this case, the court does not agree that ID Security stated a § 1 claim in the complaint, or that the case was tried on a § 1 theory of conspiracy, or that the jury was so charged. Instead, the court concludes that it properly instructed the jury on the § 2 conspiracy requirements.

In the complaint, ID Security did not identify or refer by name to § 1 or § 2 of the Sherman Act as the basis for its conspiracy claim. Curiously, while using the § 1 language “conspiracy to restrain commerce,” the complaint plead specific intent, a requirement of § 2. Thus, the complaint states: “Checkpoint, Tokai and others so conspired with the

specific intent

of restraining and monopolizing trade and commerce in the relevant product and geographic market.” Complaint ¶ 48 (emphasis supplied).

Second, as discovery unfolded in this case, it became clearer that ID Security was proceeding on a § 2 conspiracy theory, and not a § 1. During his deposition, Dr. Asher, ID Security’s key expert, stated that he was not offering any opinions with respect to § 1 violations on the part of Checkpoint, and that his analysis focused on economic issues relating to a monopolization claim under § 2 of the Sherman Act. Asher Dep. at 10. Asher further

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explained that he was not offering any opinion regarding “any illegal conspiracy to restrain commerce,” because he was not asked to do so. Asher Dep. at 11. No other expert testimony was presented by ID Security relating to a § 1 conspiracy.

Third, the proposed instructions submitted by ID Security shed further light on the nature of the case. ID Security invoked § 2 with the caption of the charge, which was styled “conspiracy to monopolize.” Pl.’s Proposed Jury Instructions I.D.2. Moreover, the requested charge described the first element as

First: That there was conspiracy between Checkpoint and Tokai to monopolize an appreciable amount of identifiable interstate or foreign commerce, which commerce plaintiff claims to be the disposable RF tag market.

Pl.’s Proposed Jury Instructions I.D.2. This language evokes the first element of a § 2 claim.

See

Kevin F. O’Malley, Jay E. Grenig & William C. Lee, Federal Jury Practice and Instructions, § 150.33 (“First: That there was a conspiracy between defendant ... and others to monopolize an appreciable amount of identifiable interstate or foreign commerce of the United States, which commerce plaintiff ... claims to be describe relevant market. ...").

Fourth, in its proposed jury verdict form ID Security sought that the jury answer the following question:

Did defendant monopolize, attempt to monopolize, and/or

conspire to monopolize

trade or commerce in violation of the Sherman Act?

Pl.’s Proposed Verdict Form and Special Interrogatories to the Jury (emphasis supplied). Nowhere does ID Security seek that the jury determine whether Checkpoint conspired to “restrain trade” under § 1.

Fifth, the issue of whether the jury should be instructed on the basis of a § 1 or a § 2 claim was raised during the charge conference. T.T. 5/20/02 (doc. no. 200) at 49-50. On the one hand, defense counsel informed the court that “this is the first time I’ve heard ... that there was a Section 1 claim in this case .... ” T.T. 5/20/02 (doc. no. 200) at 49.

This contention was disputed by ID Security’s counsel. T.T. 5/20/02 (doc. no. 200) at 49-50. Ultimately, the court charged the jury on the specific intent requirement that is characteristic of a § 2 claim. T.T. 5/21/02 (doc. no. 202) at 204. This construction was consistent with the court’s preliminary instructions to the jury, which also charged on the requirement of specific intent.

See

T.T. 4/26/02 (doc. no. 170) at 7-8. ID Security did not object to the inclusion of the specific intent requirement in the final

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charge, just as it had not objected to the preliminary instruction on specific intent.

In fact, ID Security’s sole objection to the conspiracy charge centered around its contention that an actionable claim of conspiracy was made out through Checkpoint’s actions with entities other than Tokai, T.T. 5/20/02 (doc. no. 200) at 14-16, an issue totally unrelated to the need to show specific intent.

Finally, the final verdict sheet, of which ID Security twice indicated its approval, T.T. 5/21/02 (doc. no. 202) at 34-85, made no mention of a claim of any “conspiracy in restraint of trade,” supposedly based on § 1 of the Sherman Act. Rather, the verdict sheet specifically required the jury to determine whether ID Security had proved by a preponderance of the evidence “its claim of conspiracy to

monopolize

commerce,” a § 2 claim. ID Security also did not object during the jury charge to the court’s use of the phrase “conspiracy to monopolize,” rather than “conspiracy to restrain trade.”

See, e.g.,

T.T. 5/21/02 (doc. no. 202) at 195, 204. It is thus clear that ID Security did not intend that a § 1 conspiracy claim be placed before the jury, and it cannot at this late date inject a new theory of liability with a different and lower threshold of proof.

ID Security’s § 2 failure of proof

As mentioned above, “[a] finding of specific intent by the person or persons involved either to achieve [an] unlawful end or to conspire to do so is necessary to establish a violation of [Section 2 of the Sherman Act].”.

United States v. Jerrold Electronics Corp.,

187 F.Supp. 545, 567 (E.D.Pa.1960). Given this requirement, a plaintiff alleging a § 2 conspiracy has the burden of producing sufficient evidence to establish that the alleged conspirators “had a conscious commitment to a common scheme designed to achieve an unlawful objective,” namely that of endowing one conspirator with monopoly power.

See Edward J. Sweeney & Sons, Inc. v. Texaco, Inc.,

637 F.2d 105, 111 (3d Cir.1980);

see also Int’l Distrib. Ctrs., Inc. v. Walsh Trucking Co.,

812 F.2d 786 , 796 (2d Cir.1987) (“Plaintiffs theory fails because it does not reasonably establish that any individual defendant except [the would-be monopolist] intended to create a monopoly; a plurality of actors sharing such an intent is required under section 2.”);

Syufy Enters. v. American Multicinema, Inc.,

793 F.2d 990, 1000-01 (9th Cir.1986) (“ [W]e know of no authority that a Section 2 conspiracy may be established without some showing that more than one of the alleged co-conspirators had at least some

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awareness that the underlying conduct was anticompetitive or monopolistic.”).

The requisite intent “need not be proven by direct evidence but can be inferred from the practices of the defendants.”

Jerrold Electronics Corp.,

187 F.Supp. at 567 . However, “[f]ederal antitrust law requires a plaintiff to introduce evidence that tends to exclude the possibility that the defendants acted independently or legitimately.”

U.S. Anchor Mfg., Inc. v. Rule Indus., Inc.,

7 F.3d 986 , 1002 (11th Cir.1993) (recommendation to set prices low enough to inflict losses on a competitor “merely shows a desire to win on the basis of efficiently producing a product and selling it at a lower price than less efficient rivals.”);

cf. also Yeager’s Fuel, Inc. v. Pa. Power & Light Co.,

953 F.Supp. 617, 639 (E.D.Pa.1997) (describing specific intent in the context of a § 2 attempted monopoly claim, and stating that “a mere intention to prevail over rivals or improve market position is insufficient. Even an intent to perform acts that can be objectively viewed as tending toward the acquisition of monopoly power is insufficient, unless it also appears that the acts were not predominantly motivated by legitimate business aims.”).

The question before the court at this juncture is whether, even assuming that Checkpoint possessed the specific intent to monopolize either the RF tag or the EAS systems market, there was legally sufficient evidence from which a jury could infer that Tokai, in selling its business and assets to Checkpoint, shared in that intent, and therefore was Checkpoint’s co-conspirator in the alleged conspiracy to monopolize. ID argues that five “offending” agreements, read together, reveal that To-kai was a co-conspirator in Checkpoint’s alleged scheme to monopolize, because “Tokai clearly intended to eliminate ID Security when it agreed not to sell any more RF tags to ID Security and knew that would assist Checkpoint in monopolizing the market,” and because “Checkpoint and Tokai both knew that the probable consequence of their actions would be to eliminate ID Security as a competitor.” Mem. of Law by PI. in Response to Mot. by Def. for Post-Trial Relief at 79, 80. For the reasons that follow, the court finds that the evidence at trial was not, in fact, legally sufficient to support such a finding with respect to either market.

In support, ID Security pointed the jury to the following facts:

(1) a February 13, 1997 agreement between Checkpoint and Tokai made Checkpoint the exclusive purchaser of Tokai’s RF tags,

see

Exh. P-140, even though Tokai had been obligated to sell millions of RF tags to ID Security through May 1997 through preexisting contracts with ID Security,

see

Ex. P-1, P-30, (2) according to Checkpoint’s Senior Vice President, Lukas Geiges, before Checkpoint and Tokai entered this agreement, Haneda had agreed, at Geiges’ request, not to sign any letter confirming a three-year extension of Tokai’s contract with ID Security, “or to do anything else that could further restrict Tokai’s ability to sell all of its RF tags to Checkpoint,” T.T. 5/6/02 (doc. no. 171) at 31, (3) Checkpoint and Tokai agreed on May 12, 1997 to extend their contract until December 31,

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1997,

see

P-144, (4) Tokai sold all of its assets to Checkpoint on November 10, 1997,

see

P-145, and (5) Tokai’s parent company, Tokai Aluminum, decided that it would sell its aluminum laminate only to Checkpoint.

See

T.T. 4/30/02 (doc. no. 158) at 106. In addition, Geiges testified that Checkpoint’s founder’s “dream was to be the sole supplier of [RF] labels and maintain it.” T.T. 5/2/02 (doc. no. 165) at 146.

The proffered evidence, even when viewed in a light most favorable to ID Security, establishes at most that Checkpoint desired to be the sole supplier, even a monopolist, in the RF tag market. On the other hand, however, the agreements and testimony offer absolutely no insight into whether the sale of Tokai’s business to Checkpoint stemmed from a specific intent on the part of Tokai to endow Checkpoint with monopoly power, rather than from an independent and legitimate interest in exiting the RF tag business,

see U.S. Anchor,

7 F.3d at 1002. The fact that Tokai breached its preexisting contracts with ID Security and ultimately sold its business to Checkpoint does not, without more, establish that Checkpoint and Tokai were engaged in a conspiracy to monopolize.

Cf. Syufy Enters.,

793 F.2d at 1000 (“[A] supplier who licenses a product to another does not join the licensee in a conspiracy to monopolize merely because the licensee turns around and exploits the license for its own monopolistic purposes ... [A] specific intent to monopolize is required to make one a Section 2 conspirator.”). Consequently, the court concludes that there was no legally sufficient evidence that would warrant a reasonable jury in finding that Tokai had the specific intent for Checkpoint to become a monopolist, either in the RF tag or the EAS market, and will grant Checkpoint’s motion for judgment as a matter of law on ID Security’s § 2 conspiracy claim.

Checkpoint’s motion for a new trial based on inconsistent jury verdicts

Checkpoint asserts that the verdict in its favor on ID Security’s monopolization claim is inconsistent with the verdict rendered against it on conspiracy to monopolize, and that it is entitled to a new trial as a result. The court does not agree.

If the jury determined that the market for EAS systems constituted the relevant market in this case, the two verdicts are not at all inconsistent.

This is so because, with a market share of 25 percent in the EAS systems market, Checkpoint was clearly not a monopolist. Upon a showing that Checkpoint and Tokai shared the specific intent to monopolize, however, the jury could have concluded that Checkpoint was liable for conspiracy to obtain monopoly power in that market. Although Checkpoint argues that “there is no evidence whatsoever that Checkpoint conspired with anyone to monopolize the market for EAS systems,” Mem. of Law in Support of Def.’s Mot. for Post-Trial Relief at 59, this argument is, in essence, a challenge to the legal sufficiency of the evidence against Checkpoint on specific intent, rather than an allegation that the jury verdicts were inconsistent. Therefore, the court concludes that, if it is determined on appeal that Checkpoint is not entitled to judgment as a matter of law on ID Security’s conspiracy to monopolize claim, Checkpoint is not entitled to a new trial on the

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ground that the jury verdicts in this case were irreconcilable.

Antitrust injury

The Supreme Court has required that a plaintiff alleging any violation of the antitrust laws prove “antitrust injury,” an injury “of the type the antitrust laws were intended to prevent and that flows from that which makes the defendants’ acts unlawful,”

Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,

429 U.S. 477, 489 , 97 S.Ct. 690 , 50 L.Ed.2d 701 (1977), and that reflects “the anticompetitive effect either of the violation or of anticompetitive acts made possible by the violation.”

Id.

With this principle in mind, and because “[t]he antitrust laws were enacted for ‘the protection of

competition,

not

competitors,’

”

Atl. Richfield Co. v. USA Petroleum Co.,

495 U.S. 328, 338 , 110 S.Ct. 1884 , 109 L.Ed.2d 333 (1990) (quoting

Brown Shoe Co. v. United States,

370 U.S. 294, 320 , 82 S.Ct. 1502 , 8 L.Ed.2d 510 (1962)) (emphasis in original), the Third Circuit has consistently held that “an individual plaintiff personally aggrieved by an alleged anti-competitive agreement has not suffered an antitrust injury unless the activity has a wider impact on the competitive market.”

Eichorn v. AT & T Corp.,

248 F.3d 131, 140 (3d Cir.2001).

In this case, the issue presented in Checkpoint’s alternative argument in favor of post-trial relief is whether, assuming that there was sufficient evidence to support a finding that Checkpoint was liable for attempt or conspiracy to monopolize, there was legally sufficient evidence to support a finding that ID Security had suffered a cognizable antitrust injury as a result of Checkpoint’s conduct. Citing

Columbia Metal Culvert Co., Inc. v. Kaiser Aluminum & Chem. Corp.,

579 F.2d 20 (3d Cir.1978) for the proposition that “the presence of independent producers in an oligopolistic market serves to limit the market power of the dominant firms, [such that] the departure of an independent producer in such a situation adversely affects competition,”

id.

at 32 , ID Security argues that Checkpoint’s exclusion of ID Security from the RF tag market established injury to competition, because there was clear evidence at trial that ID Security was selling RF tags to customers for prices that were substantially below those of Checkpoint. Thus, according to ID Security, the jury could have concluded that by forcing ID Security out of the market, consumers were deprived of the benefits of market competition, both in the EAS and the RF tag markets, and the lower prices that such competition would ostensibly produce. For the reasons that follow, however, the court concludes, as Checkpoint asserts,

that there was no legally sufficient evidence to support such a finding in this case, given the lack of proof that ID Security was, in fact, charging lower prices for

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RF tags, and that ID Security’s exclusion had a wider impact on competition in either the EAS market or the RF tag market.

Most significantly, the evidence reveals that ID Security’s presence had no impact on competition within the relevant market in this case, namely the market for EAS systems. Moreover, the evidence also reveals that, even within the narrow market for RF tags, ID Security left no competitive footprint. First, as ID Security’s expert conceded at trial, Checkpoint maintained a constant price of 3.5 cents per tag from 1995 to 2000, T.T. 5/9/02 (doc. no. 176) at 49-50, regardless of the fact that, during that period, ID Security entered, participated in, and ultimately exited the RF tag market. Second, even though plaintiffs expert, Dr. Asher, claimed, in the course of rendering his expert opinion, that he saw “a number” of ID Security invoices memorializing sales of tags at a price of 3 cents per tag, T.T. 5/9/02 (doc. no. 176) at 75, the evidence actually introduced at trial reflects that ID Security made only one actual sale in the RF tag market, namely a promotional sale of 2.7 million RF tags at an introductory price of 3 cents per tag. T.T. 4/29/02 (doc. no. 159) at 139-41. Third, ID Security’s presence in the RF tag market was not intended to have the price reducing effect typically associated with competition. ID Security’s President, Peter Murdoch, acknowledged that he expected to sell RF tags at prices in excess of Checkpoint’s, and that he had undercut Checkpoint’s price only inadvertently, as a result of incorrect information. T.T. 5/1/02 (doc. no. 164) at 95-96. Even viewing this evidence in a light most favorable to ID Security, the court concludes that there was no legally sufficient evidence to support a jury finding that the exclusion of ID Security had a wider impact on the RF tag market, much less on the market for EAS systems, and that ID Security therefore suffered an antitrust injury.

Accordingly, the court concludes that the lack of an antitrust injury in this case constitutes an alternative ground that warrants judgment as a matter of law to be entered in Checkpoint’s favor.

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C. Plaintiffs State Law Claims

The jury returned a verdict in favor of ID Security on both the tortious interference with contractual relations and unfair competition claims, and awarded a total of $19 million in damages. Checkpoint attacks the liability verdict as well as the damages award, and asks for judgment as a matter of law, or, in the alternative, a new trial on both counts.

Tortious interference with contractual relations

Pennsylvania law defines tortious interference with contractual relations as “inducing or otherwise causing a third person not to perform a contract with another ... without a privilege to do so.”

Nat’l Data Payment Sys., Inc. v. Meridian Bank,

212 F.3d 849, 856 (3d Cir.2000) (quoting

Glazer v. Chandler,

414 Pa. 304 , 200 A.2d 416, 418 (1964)), and requires a plaintiff alleging tortious interference with contractual relations to prove: “(1) the existence of a contractual relationship; (2) an intent on the part of the defendant to harm the plaintiff by interfering with that contractual relationship; (3) the absence of a privilege or justification for such interference, and (4) damages resulting from the defendant’s conduct.”

Beidelman v. Stroh Brewery Co.,

182 F.3d 225, 234-35 (3d Cir.1999) (citing

Triffin v. Janssen,

426 Pa.Super. 57 , 626 A.2d 571, 574 (1993)).

Checkpoint has challenged the tortious interference verdict on three main fronts, supported by a plethora of arguments. First, Checkpoint asserts that it is entitled to judgment as a matter of law on the grounds that the evidence was legally insufficient to support a jury verdict against it. Second, and alternatively, Checkpoint contends that the jury charge on tortious interference was flawed in several key respects, and that the errors in the charge warrant a new trial. Third, Checkpoint asserts that evidentiary rulings made by the court at trial were errors warranting a new trial. The court will address all of Checkpoint’s contentions seriatim below.

Evidence at trial

In this case, Checkpoint asserts that it is entitled to judgment as a matter of law on ID Security’s claim of tortious interference with contractual relations for two reasons: (1) that the court was required to find that the 1996 contract between ID Security and Tokai had been materially breached by ID Security's refusal to pay for tags, and therefore that the contract was not in existence as a matter of law at the time of Checkpoint’s alleged interference, and (2) that the court was required to find that, even if ID Security’s nonpayment for tags

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did not destroy the ID-Tokai contract, ID Security repudiated that contract when it sought to force Tokai into signing a different contract with additional terms,

Material breach

It is axiomatic that a defendant cannot be held liable for interfering with a contract that did not, in fact, exist at the time of the alleged interference. Thus, as a threshold matter, the court must examine whether there was legally sufficient evidence to support a reasonable jury in finding that a contractual relationship was in existence between ID Security and Tokai as of February 13, 1997 with which Checkpoint could have interfered. For the reasons that follow, the court concludes, contrary to Checkpoint’s assertions, that there was legally sufficient evidence to warrant such a jury finding.

Citing provisions of the Pennsylvania Uniform Commercial Code, which allows a seller to cancel a contract with a materially breaching buyer, Checkpoint asserts that ID Security’s decision to withhold payment for Tokai’s tags in late 1996 in retaliation for the poor quality of Tokai’s adhesive and for the fact that Tokai had sold source tags to Checkpoint in violation of their agreement, itself constituted a material breach. The import of this breach, according to Checkpoint, was that “Tokai was entitled as a matter of law to treat its Agreement with ID as breached .... ” Mem. of Law in Support of Def.’s Mot. for Post-Trial Relief at 67-70. Checkpoint further asserts that the court may decide the materiality of ID Security’s breach as a matter of law.

Id.

at 70 . This argument puts the proverbial “rabbit in the hat.”

Whether ID Security materially breached its 1996 agreement with Tokai, however, is a different question from whether a valid contract between ID Security and Tokai, in fact, was in existence as of February 13, 1997. This is so because, under the statutory provisions cited by Checkpoint, cancellation of a contract is but one of

many options

for a seller faced with a buyer’s breach, even if that breach is material.

See

13 Pa. Cons.Stat. Ann. § 2703 (listing cancellation as one of six options that a seller aggrieved by a buyer’s failure to make payments when due “may” pursue); 13 Pa. Cons.Stat. Ann. § 2610 (stating aggrieved seller may “resort to any remedy for breach,” or may “suspend his own performance,” for example); 13 Pa. Cons.Stat. Ann. § 2612(c) (providing that, in an installment contract, a breach of the whole contract occurs “[w]henever nonconformity ... with respect to one or more installments substantially impairs the value of the whole contract” but setting forth conditions under which an aggrieved party may reinstate the contract). Because material breach gives the nonbreaching party the option, but does not compel it to treat the contract as terminated, the question is not, therefore, as Checkpoint suggests, whether Tokai would have been justified in terminating its contract with ID Security. Instead, the question is whether, even assuming a material breach by ID Security for its refusal to pay for the RF tags that it had received, Tokai cancelled its 1996 agreement with ID Security, and whether a jury would have been warranted in finding that Tokai did not, in fact, do so.

Viewing the evidence at trial in a light most favorable to ID Security, the court concludes that there was legally sufficient evidence to support a jury finding that ID Security’s breach, even if material, did not result in Tokai’s cancellation of the 1996 contract with ID Security. It is undisputed that, in connection with the poor quality of the adhesive on Tokai’s tags, and with ID Security’s perception that Tokai had breached their contract by selling source tags to Checkpoint, ID Security placed no additional tag orders in December 1996,

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and withheld payments on tags that it had already received. T.T. 5/1/02 (doc. no. 164) 187-88, 191-98. Given the evidence introduced at trial, however, there is sufficient evidence in, the record from which a reasonable jury could have found that, despite ID Security’s actions, Tokai did not cancel the parties’ contract after ID Security refused to pay invoices, but rather managed to resolve the dispute with ID Security through negotiation, which actually culminated in a three-year extension of their business relationship.

One, despite ID Security’s refusal to pay for its tags, Tokai did not cancel the contract immediately, but, instead, Haneda agreed to meet with Murdoch in Amsterdam in January 1997 to discuss the dispute between their two companies. T.T. 4/29/02 (doc. no. 159) at 162. In the interim, the parties agreed that they “would be at a standstill position relative to the requirement of purchasing more tags and making additional payments .... ” T.T. 4/29/02 (doc. no. 159) at 159. These circumstances, viewed together, suggest that the contract was to continue in effect until the dispute between the parties was resolved.

Two, Murdoch’s testimony suggests that one purpose of the Amsterdam meeting between Checkpoint and Tokai was that of repairing and continuing the parties’ relationship. According to Murdoch, he discussed with Haneda future plans for their two companies, including improvements to Tokai’s adhesive and the inclusion of laser fuse designs in “the next delivery of the product,” and “the ongoing requirement for deliveries using white instead of pink ink to distinguish [ID Security and Tokai’s product] from Checkpoint's] and to provide a better quality product.” T.T. 4/29/02 (doc. no. 159) at 164-65. Moreover, Murdoch testified that he and Hane-da “talked about [how] once the adhesive was fixed that production would begin again.” T.T. 4/29/02 (doc. no. 159) at 165. Murdoch also testified that “[i]t was agreed that ... the source tag material would only be supplied to ID Systems and to no other customer.” T.T. 4/29/02 (doc. no. 159) at 165. Therefore, viewing the evidence in a light most favorable to ID Security, the winner of the jury verdict in this case, if the jury credited Murdoch’s testimony, it could have concluded, from this evidence of continued negotiation and discussion between the parties, that Tokai did not treat its 1996 contract with ID Security as cancelled as a result of Checkpoint’s refusal to pay for tags.

ii.

Repudiation

Checkpoint next asserts that, assuming that the April 1, 1996 contract between ID Security and Tokai remained in place even after ID Security refused to pay for tags, ID Security repudiated that contract as a matter of law when it refused to pay for tags until Haneda signed a January 28, 1997 confirmation, which purported to introduce different terms into the existing contract, and to extend the contractual period for an additional three years. Quoting a comment to 13 Pa. Cons. Stat. Ann. § 2610, Checkpoint asserts, in substance, that “under a fair reading,” ID Security’s behavior amounted to a statement of intention not to perform the 1996 contract except on conditions that went beyond the contract, and, therefore, to a repudiation.

See

Mem. of Law in Support of Def.’s Mot. for Posfl-Trial Relief, at 70-71.

As an initial matter, the court notes that Checkpoint’s argument on repudiation suffers from the same flaw that derails its argument concerning material breach.

See

discussion,

supra

Part II.C.l.a.i. The comment that Checkpoint cites in support of its position is actually attached to 13 Pa. Cons.Stat. Ann. § 2610, which provides the relevant law on a seller’s options when

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faced with a buyer’s repudiation of their contract with respect to performance not yet due. 13 Pa. Cons.Stat. Ann. § 2610. The comment merely clarifies what kind of conduct may constitute “repudiation” for purposes of the statute; it does not mandate that the court must find repudiation as a matter of law under the circumstances that the comment describes.

See id.

Accordingly, the appropriate question is not whether Tokai may have been excused or justified in suspending performance under or canceling its 1996 contract with ID Security, but rather whether there was legally sufficient evidence to support a jury finding that Tokai did not, in fact, treat ID Security’s actions as a repudiation of their agreement, whose provisions were otherwise to remain in effect until April 1, 1998.

See

Ex. P-1. Viewing all evidence in a light most favorable to ID Security, the court concludes for the following reasons that the evidence was legally sufficient to support such a finding.

First, there is evidence to suggest that, although ID Security suspended payment of invoices as of December, 1996, the relationship originally established between ID Security and Tokai was intended to continue at least up until the Amsterdam meeting. Murdoch testified that the suspension of payments, which Checkpoint asserts is the “strongest element in repudiation,” was effected by agreement with Haneda, T.T. 4/29/02 (doc. no. 159) at 159. Moreover, evidence introduced at trial suggested, and the jury could have found, that the parties had agreed that the outstanding invoices would be paid. Murdoch testified that the parties agreed that half of all invoices due as of the time of the Amsterdam meeting would be paid at the end of January, and the other half at the end of February, provided that parties reached a written agreement memorializing the manner in which they had resolved their differences. T.T. 4/29/02 (doc. no. 159) at 169-70.

Second, although it is undisputed that Murdoch sought to introduce new terms into and to extend the term of ID Security’s contract with Tokai,

see

P-57, insisted on obtaining a written memorialization of the purported changes, T.T. 4/29/02 (doc. no. 159) at 169-70, and intended that the second agreement would thereafter replace all preexisting agreements between ID Security and Tokai, T.T. 5/1/02 (doc. no. 164) at 205, those circumstances do not compel a finding that ID Security repudiated the 1996 contract prior to February 13, 1997, the date that Tokai made Checkpoint the exclusive purchaser of its tags. Rather, the jury could have concluded that Murdoch’s written memorialization of the Amsterdam meeting represented only ID Security’s proposed modifications to its existing contract with Tokai, and that, by refusing to sign the confirmation letter, Haneda merely rejected the proposed terms, but left in place the existing contract between the parties.

Third, as late as April 8, 1997, approximately two months after the announcement that Checkpoint and Tokai had entered into an exclusive business relationship, Tokai sent ID Security a letter terminating the ID-Tokai contract. T.T. 4/30/02 (doe. no. 158) at 32-33; P-75. Viewed in a light most favorable to ID Security, this letter provides legally sufficient evidence for a jury to have concluded that the 1996 agreement between ID Security and Tokai outlived, and was not repudiated by, the purported oral contract that the parties reached in January 1997, and was actually terminated by this letter, after Checkpoint had already induced Haneda not to sign ID Security’s confirmation letter extending the duration and modifying the terms of their contract.

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The above evidence, considered together and in the light most favorable to ID Security, supports a jury finding that the 1996 contract between ID Security and Tokai was in effect at the time that Checkpoint became the only purchaser of ID Security’s RF tags, regardless of ID Security’s refusal to pay outstanding invoices and its attempts to modify the existing agreement. Noting that Checkpoint has not contested the sufficiency of the proof on any of the other three prongs of the framework under which claims of tortious interference with contractual relations are evaluated, the court concludes that there was also legally sufficient evidence to support a jury finding against Checkpoint on ID Security’s claim that Checkpoint tortiously interfered with its contractual relationship with Tokai, and will deny Checkpoint’s motion for post-trial relief on this ground.

Jury instructions

Rule 51 of the Federal Rules of Civil Procedure provides that “[n]o party may assign as error the giving or failure to give an instruction unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection.” Fed.R.Civ.P. 51. A timely objection to jury instructions has the effect of preserving the issue for appeal, and of subjecting the instructions to plenary review for a determination of whether, as a whole, they stated the correct legal standard.

Ryder v. Westinghouse Elec. Corp.,

128 F.3d 128, 135 (3d Cir.1997). However, “a party who does not clearly and specifically object to a charge he believes to be erroneous waives the issue on appeal,” is eligible only for “plain error” review of the charges to which he has untimely objected.

Alexander v. Riga,

208 F.3d 419, 426 (3d Cir.2000);