Eastman Kodak Co. v. GAF Corp.

CourtNew York Supreme Court Appellate Division
Writing for the CourtBefore SIMONS
Citation419 N.Y.S.2d 372,71 A.D.2d 833
Parties, 205 U.S.P.Q. 1140, 1980-1 Trade Cases P 63,189 EASTMAN KODAK COMPANY, Respondent, v. GAF CORPORATION, Appellant.
Decision Date13 July 1979

Page 372

419 N.Y.S.2d 372
71 A.D.2d 833, 205 U.S.P.Q. 1140,
1980-1 Trade Cases P 63,189
Supreme Court, Appellate Division, Fourth Department.
July 13, 1979.

Page 373

Skadden, Arps, Slate, Meagher & Flom, New York City, Goldstein, Goldman, Kessler & Underberg, Rochester, by Edwin E. McAmis, New York City, for appellant.

Nixon, Hargrave, Devans & Doyle, Rochester, by William H. Morris, Rochester, for respondent.



Plaintiff sues defendant in contract to recover royalties allegedly due pursuant to several licensing agreements permitting use of various products and processes owned and patented by plaintiff. Relevant to this appeal are two affirmative defenses dismissed by Special Term. The first affirmative defense alleges that the patent license agreements are unenforceable because of plaintiff's monopolization of relevant markets in the photographic industry contrary to federal antitrust laws, a claim which is the subject of a pending antitrust action in federal court. The fourth affirmative defense alleges patent invalidity.

Special Term properly dismissed the first affirmative defense. The alleged antitrust violations are not inherent in the licensing agreements but only collateral to them. That being so, they may not be asserted as a defense to the contract action (see Kelly v. Kosuga, 358 U.S. 516, 79 S.Ct. 429, 3 L.Ed.2d 475; New York Stock Exch. v. Goodbody & Co., 42 A.D.2d 556, 345 N.Y.S.2d 58; Western Electric Co., v. Solitron Devices, Inc., 1967 Trade Cases (CCH) P 72,057 (Sup.Ct.N.Y. Co., 1967), affd. 28 A.D.2d 1211, 285 N.Y.S.2d 269; cf. Continental Wall Paper Co. v. Louis Voight and Sons Co., 212 U.S. 227, 29 S.Ct. 280, 53 L.Ed. 486). Cases to the contrary cited by defendant are cases in which the contract itself was the basis for an arrangement which violated the antitrust laws. In this case, plaintiff's alleged antitrust violation is not the product of the licensing agreement but rather of plaintiff's domination of the photographic industry and its alleged misuse of patents.

Special Term erred, however, in dismissing the fourth affirmative defense because assuming the factual allegations of the pleading to be true, as we must, patent invalidity is a valid defense to a state court contract action (CPLR 3211; Lear, Inc. v. Adkins, 395 U.S. 653, 89 S.Ct. 1902, 23 L.Ed.2d 610; see, also,...

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3 cases
  • Eastman Kodak Co. v. Ricoh Co., 12 Civ. 3109 (DLC)
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • August 9, 2013
    ...Corp., 451 N.Y.S.2d 171, 175 (2d Dep't 1982) (patent misuse is defense to breach of contract); with Eastman Kodak Co. v. GAF Corp., 419 N.Y.S.2d 372, 373 (4th Dep't 1979) (misuse of patents not embodied in license agreement itself, not a defense to suit for royalties). With this background ......
  • Theatre Confections, Inc. v. Andrea Theatres, Inc.
    • United States
    • New York Supreme Court Appellate Division
    • January 23, 1987
    ...582, 318 N.Y.S.2d 924; cf. Kelly v. Kosuga, 358 U.S. 516, 518-521, 79 S.Ct. 429, 430-432, 3 L.Ed.2d 475; Eastman Kodak Co. v. GAF Corp., 71 A.D.2d 833, 419 N.Y.S.2d 372). Since the issue of the legality of the agreements is central, not collateral, to resolution of the state action, conside......
  • North Fork Bank & Trust Co. v. Bernstein & Gershman
    • United States
    • New York Supreme Court Appellate Division
    • February 7, 1994
    ...(see, Delaware & Hudson Co. v. Mechanicville & Fort Edward R.R. Co., 268 N.Y. 394, 399, 197 N.E. 325; Eastman Kodak Co. v. GAF Corp., 71 A.D.2d 833, 419 N.Y.S.2d 372; Neubauer v. Smith, 40 A.D.2d 790, 337 N.Y.S.2d In light of the fact that the promissory notes and guarantees grant the plain......

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