The Supreme Court refused yesterday to review the Eastman Kodak -- Berkey Photo battle over the Pocket Instamatic camera, a case which produced one of the most controversial antitrust decisions of the past decade.
In declining the case, the justices let stand a Court of Appeals decision which stunned traditional trust-busters by permitting monopolistic control as a legitimate fruit of business success.
The appeals court ruled in effect that a monopolist, in this case Kodak, has every right to obliterate a competitor so long as it uses technological innovation and not antitrust conspiracy.
The Second Circuit decision had reversed much of the $87 million judgment awarded Berkey by a District Court judge in New York.
The case revolved around Kodak's Pocket Instamatic, the best-selling camera in the annals of amateur photography. Berkey alleged that through the carefully timed and secretive development of the camera and a new film compatible with it only, Kodak used its massive control of the market to severly damage competitors. Because consumers for a time could use the film only with Kodak equipment, Berkey maintained that its own camera sales plummeted to negligible levels.
Berkey argued that Kodak should have tipped off its competitor about the new film and camera to give it time to adapt its own equipment and benefit from the innovation.
The Appeals Court disagreed. "Even a monopolist has a right to the lead time that follows from its success . . . it is apparent that the ability to introduce (the new film and camera) was solely a benefit of integration" and corporate efficiency, the judge said.
". . . The purpose of the Sherman Act is not to maintain friendly business relations among firms in the same industry (or) to keep these firms happy and gleeful."
Other parts of the decision upheld the district court judgment against Kodak, but the $87 million award was reduced to a mere $990,000.
The part of the decision favorable to Kodak was immediately cited by liberal antitrust lawyers as a symbol of a new -- and to them disturbing -- trend in antitrust cases.
"The opinion suggests that a monopolist may lawfully sue power in one market to gain advantage in another whenever doing so yields short-run efficiencies," wrote Lawrence A. Sullivan, a Berkely law school professor.
"It becomes irrelevant whether opportunities for smaller firms or possible entrants are reduced. It becomes irrelevant whether the goal of conduct is preserving market power. It becomes irrelevant whether the shortrun efficiency gains may be offset by long-run losses as rivalry ends."
The Supreme Court refusal to consider the case brought dissents from Justices Harry Blackmun, William Rehnquist and Lewis Powell.
In a joint written dissent, Rehnquist and Powell focused on that part of the appeals court decision which went against Kodak. The Second Circuit agreed the Kodak's failure to include Berkey Photo in its photofinishing innovations violated the Sherman Act. Berkey had argued that Kodak should have "predisclosed" its innovations.
"To one not schooled in the niceties of antitrust litigation, the notion that a stature designed to foster competition requires one competitor to disclose to another its plan to introduce the new product is difficult to fathom," Rehnquist wrote.
The case now must be partially retried under the appeals court ruling.
News services also reported these other actions by the Supreme Court:
It asked for the federal government's views on whether defendants in federal antitrust cases can try to limit their potential liability by distributing the blame for the alleged violations.
In a case of possible enormous impact on antitrust law, the justices asked Justice Department lawyers to comment on the appeal of three corrugated container manufacturers who may face paying a large part of more than $5 billion in damages.
It agreed to decide whether bank holding companies can set up, control or manage closed-end investment firms.
The justices said they will review a federal appeals court ruling that struck down a Federal Reserve Board regulation allowing such activity by bank holding companies.
It will decide whether an estimated 86,000 retired railroad workers are entitled to extra pension benefits. At stake is $119 million a year in additional benefits for the next 20 years, according to government lawyers.
Railroad employes aren't covered by the Social Security Act. Since the 1930s, however, they have been covered by a federally sponsored pension plan.
Prior to 1975, an individual who had been employed outside the railroad industry long enough could receive Social Security benefits in addition to those available after 10 years of railroad service. The Railroad Retirement Act of 1974 ended the dual benefits for all except 86,000 retirees.
One excluded retiree sued on behalf of all affected railroad workers, and the high court will be studying a federal judge's ruling that the extra benefits must be paid.
It rejected an attempt by Miller Brewing Co. to obtain exclusive right to the word "lite" or "light" for low-calorie beer. This is the second time the high court has left intact lower-court rulings that "light" is a common descriptive word which may not be used as a trademark for beer.
It turned down Adolph Coors Co.'s attempt to overturn a California court ruling that it violated a state antitrust law.
R. E. Spriggs Co. distributed Coors beer in Los Angeles from 1937 until 1964, when Coors ended the arrangement.
Coors sued to force Spriggs to stop selling its beer, and Spriggs in turn sued Coors, charging that Coors' designation of the territory within which each distributor could sell Coors beer represented an illegal restraint on trade under California's antitrust law. The state appeals court agreed.
It left intact the fraud convictions of Harold Gleason and Paul Luftig, the former board chairman and president of the now-defunct Franklin National Bank of New York.
It refused to free Eli Lilly and Co. from federal limits on water polution at its Lafayette, Ind., pesticide plant, turning down the huge pharmaceutical firm's arguments that the Environmental Protection Agency didn't give it sufficient opportunity to challenge regulation that took effect April 25, 1978.
It agreed to decide whether a man who quit his job in an armaments factory because of his religious opposition to war is entitled to unemployment benefits.
It will decide what pollution contol variances are allowed for economic reasons by the Federal Clean Water Act.