Full opinion text
OPINION FINDINGS OF FACT AND CONCLUSIONS OF LAW ROBERT P. PATTERSON, Jr., District Judge. In this antitrust action instituted on October 4,1991, Corsearch, Inc. (“Corsearch”) seeks an injunction requiring Defendant Thomson & Thomson, Inc. (“T & T”) to permit Dialog Information Services, Inc. (“Dialog”) to continue to provide T & T’s on-line state trademark computer information services to Corsearch, who utilizes these services to provide services to corporations, law firms and others purchasing trademark searches, in competition with similar services offered by T & T to the same market. Corsearch moved for a preliminary injunction, the hearing on which was consolidated with a trial of the action on the merits pursuant to Rule 65(a)(2) of the Federal Rules of Civil Procedure. Trial was held from November 18, 1991 to December 12, 1991. There have been a number of post trial filings unauthorized by the Court, as well as motions filed by Corsearch on February 5, 1992 to supplement the record, which motion was granted, and to reopen its case, which motion was denied on February 19, 1992. This opinion and order constitutes the findings of fact and conclusions of law of the Court with respect to Counts II, III, IV, and VI of the complaint. Corseareh’s action is based on § 2 of the Sherman Act. It alleges that T & T has monopoly power in the “comprehensive trademark search market” and that T & T terminated Corsearch’s right to access to T & T’s on-line computer information service, offered by Dialog under the title Trade-markscan-State (“TS-State”), in order to eliminate Corsearch as a competitor. T & T has elected not to terminate Corsearch’s access to TS-State while the decision of this Court is pending. TS-State is a copyrighted on-line computer information service product of T & T which is updated at least monthly for use by subscribers to Dialog. It has been offered by Dialog since 1987 pursuant to license agreements with such subscribers and billed at a price based on the amount of computer time utilized by the subscriber and the number of trademark records retrieved by the subscriber. Dialog’s revenues are shared with T & T pursuant to a contract between those corporations. TRADEMARK SEARCHING Persons who are intending to adopt a new trademark often wish to determine whether the same or similar trademarks are already in use by others. A trademark used or registered earlier may pose an obstacle to registration with the United States Patent and Trademark Office (“PTO”) or with the Secretaries of State of the various states. The adoption of a trademark confusingly similar to an earlier trademark that is currently in use may also, under some circumstances, give rise to a claim for infringement and litigation. The PTO, which is charged with administering federal registration of trademarks and the maintenance and storage of registrations, is by statute also the agency of record with respect to trademarks and ser-vicemarks. 15 U.S.C. § 1051. The existence of a current file at the PTO for a particular mark constitutes public notice of ownership of the mark and thereby affords the mark’s owner a wide range of protection. As of 1983, the trademarks registered with the PTO were prepared and recorded in individual hard copy files. Searching for earlier trademarks is not an exact science. Prior to filing a trademark registration, applicants often determine to search one or more of the following bodies of information: (a) A search of the federal trademarks filed at the United States Patent & Trademark Office. (b) A common law search. This generally consists of a search of sources such as trade directories, telephone books, Dun & Bradstreet’s company name database, the Thomas Register (a directory of all United States manufacturers of goods), major newspapers, and other current sources. T & T maintains its own common law database of such sources with the permission of the database owners and publishers. With today’s technology, many common law searches can be performed through “online” computerized information services such as those operated by former Co-defendant Dialog Information Services, Inc. (c)A state search. A state search may consist of reviewing the files of a particular state or a search of all fifty states. All states allow public searching of records by one means or another. In addition to the states’ own records, state trademark information is available from private companies such as T & T and Trademark Research Corporation (“TRC”) (formerly “Trademark Service Corporation” or “TSC”) (a competitor of Corsearch and T & T owned by Commerce Clearing House). To perform a “comprehensive” or “full” search means to perform all three of these searches for the trademark in question. Sometimes a party planning to adopt a trademark will ask a company such as Cor-search, T & T, or TRC to perform a comprehensive search, but thousands of federal trademark applications are filed each year without ordering a full search from any trademark information service. Instead, law firms, or the applicants themselves, perform searches in many instances where a full search is not ordered from Cor-search, T & T, or TRC. The applicants or law firms may decide to perform a “knockout” search, i.e. a preliminary screening check to eliminate marks. Tr. 71-73 (Altman). Corsearch and T & T combined performed only approximately 60,000 comprehensive searches in 1990, a substantial number of which did not result in trademark applications. 127,000 trademark applications were filed with the PTO in 1990. THE GROWTH OF T & T’S DATABASES T & T, formerly an intellectual property law firm, became dissatisfied many years ago with the quality of government trademark records and began to compile records of its own and to offer trademark research services to others. Until the early 1970s, T & T maintained its federal trademark database in hard copy, primarily on index cards, and its searches were conducted manually. Manual searching was the method used by the PTO well into the 1980s. By the early 1980s, however, T & T had fully computerized its proprietary federal trademark database and was also utilizing a fully computerized fifty-state trademark database (“NCR-State”), a more complete database than TS-State, for its searches. Trademarkscan, T & T’s federal database that went on line in October 1983, contained T & T’s record of all active federal registrations and pending applications. It was the first trademark database available on line and permitted the subscriber to do a federal trademark search of Trademarkscan’s database without ordering T & T’s full federal search at a time when comprehensive searches accounted for eighty-three percent of all T & T’s client requests. THE COMPUTERIZATION OF THE TRADEMARK SEARCH BUSINESS Recognizing the need to overhaul the federal registration system, Congress in 1980 enacted legislation requiring the Commissioner of Patents and Trademarks to formulate a plan to identify (or if necessary to develop) feasible computerized data storage and retrieval systems. In separate agreements entered into with the PTO during 1983 and 1984, T & T and two of T & T’s then competitors, Compu-Mark SA (“Compu-Mark”) and TCR Services, Inc. (“TCR”) agreed to provide the PTO with the following: (a) T & T was to create and develop for the PTO a computerized historic database of all federally registered trademarks as well as all servicemarks consisting of designs or images, or what are commonly known as “logos.” (b) Compu-Mark was to develop for the PTO a computerized database with respect to all active federally registered trademarks and servicemarks registered as of 1980. (c)TCR was to develop for the PTO a software system that would encompass information “necessary for the PTO’s trademark application monitoring system.” On April 11, 1984, T & T acquired TCR, including TCR’s obligations to the PTO, for approximately $6 million. As a part of this acquisition of TCR, T & T acquired TCR’s state database. By 1986, the services to be performed by T & T, Compu-Mark, and TCR under the agreements had been substantially performed. Pursuant to the original agreements, the PTO had agreed that, in exchange for T & T, Compu-Mark, and TCR services to the PTO, which were performed without charge, each company would receive for a ten-year period the co-exclusive right to make the federal database available for commercial purposes. This period of exclusivity was first shortened by act of Congress and subsequently terminated by unilateral action of the PTO in approximately the fall of 1989. In the fall of 1989, after the early termination of T & T’s co-exclusive license of the federal database, the entire computerized federal database, prepared by T & T and Compu-Mark, became available for purchase from the PTO by any person or entity for what T & T maintains was a fraction of what it had cost T & T to develop. Corsearch, Mead Data Central, and others then purchased copies of the PTO federal database for utilization in the offering of trademark research services in competition with T & T. THE OFFERING OF COMPUTERIZED ON-LINE SERVICE In 1984, while it was developing the PTO database, T & T entered into a license agreement with former Co-defendant Dialog to sublicense the right to access a federal database (under the tradename “Tra-demarkscan”) by means of a personal computer outfitted with a modem. The parties refer to this as “on-line” access. Shortly thereafter, Compu-Mark, which started operations in the United States in 1983, also offered a direct on-line service for both its federal and state trademark databases. Similarly, in late 1986, T & T announced the on-line availability of a state trademark database under the tradename “Trade-marksean-State” and began calling its federal on-line database “Trademarkscan-Fed-eral” (“TS-Federal”). In its license agreements with Dialog with respect to TS-Federal and TS-State, T & T required that the following terms and conditions be included in Dialog’s subli-cense agreements with Dialog’s customers: Data may not be duplicated in hard copy or machine readable form without the prior written authorization from Thomson and Thomson, One Monarch Drive, North Quincy, MA 02171, except that limited reproduction of printed outputs is permitted within the user’s internal operation. Under no circumstances may copies produced under this provision be offered for sale or resale. The last sentence is referred to as the “Resale Limitation” and is included in Cor-search’s user agreement with Dialog for both TS-Federal and TS-State. More than sixty of the databases available through Dialog and owned by companies unrelated to T & T impose similar limitations on resale. Def.Exh. UUU. T & T’S DEVELOPMENT OF TS-STATE For many years T & T has obtained trademark information (which may be in hard copy or electronic form) from the fifty states and Puerto Rico on an on-going basis. This data is then compiled, selected, and stored in T & T’s internal use database (“M-204”). T & T then selects from the data contained in the internal use database and arranges the selected data in a uniform manner for TS-State so that each TS-State trademark record, from whatever source, presents similar information in the same format. Based upon its years of experience as a trademark search firm, T & T maintains that T & T’s own selection and arrangement is particularly appropriate for a computerized trademark database. Where the states’ trademark application forms do not call for all of the information that T & T regards as appropriate, T & T has advised the states of the type of data it wishes to collect and has provided forms to the states to facilitate collection of that data. Over the years, T & T has made changes in the items of information from the state trademark registrations that it selects for inclusion in the internal use database and ultimately in the TS-State database. In addition to the selection of data from source documents collected from the states, T & T adds various types of information. For example, T & T adds to each TS-State record a code indicating whether the trademark consists of a word with a design, a word only, or a design only, permitting searches for specific types of marks. T & T also reviews the description of the goods or services of each state trademark record and adds for TS-State its assessment of the United States and International Class designations, even when the state itself uses no class designations or uses idiosyncratic class designations that differ from the standard United States and International Classes. Even if the state does assign a standard United States or International Class, T & T reviews the description of goods and services and sometimes exercises its own independent discretion to correct the United States and International Classes. TS-State also includes additional “enhancements” to the data contained in each record in the internal and TS-State databases. Enhancements add to or modify the data so that the search software will be better able to locate and retrieve relevant data. Records for trademarks consisting of words with corrupted spellings (e.g., “Kar Kraft”) are supplemented with their proper English equivalents. Foreign words are translated into English. Numerals are given alphabetic equivalents and vice versa. Greek letters are given Latin alphabet equivalents. Puns and slang words (e.g., “skeeter”) are given proper English equivalents (e.g., “mosquito”). To enable its internal and TS-State databases of trademark information to be searched by computer, T & T organizes the data in each record into data “fields,” each containing a certain type of information, Such as name of the mark, date of first use, owner of the mark, or description of the goods. T & T also adds to the record of each trademark a number of search fields, which organize the information contained in the data fields into discrete units of information. For example, TS-State organizes data concerning the date of registration of a mark into several search fields, one containing the year of registration to permit searching for marks by year, and one containing the year, month, and date of registration to permit searching for marks by specific dates. Each TS-State record contains numerous fields. A user of the database can search the fields independently or in combinations, which permits the user to obtain, for example, records of all trademarks owned by a particular company or all trademarks first used in December 1989 and registered in Michigan. T & T also adds “search indices” to each trademark record. Search indices are created from the data contained in certain fields in the record and permit more complete and accurate searching of that record. In the “rotating trademark index,” for example, T & T breaks the trademark name into its components — prefix, suffix, embedded letter strings — each of which becomes searchable as a separate element. In order to access all of the data in the various fields, T & T creates an index for each piece of data. The search software responds to the search requests of the internal database user and TS-State database user by sorting through these indexes to pull up corresponding trademark information. T & T markets the TS-State and TS-Federal on-line services primarily to trademark attorneys as an initial screening device to identify marks that are identical or nearly identical to the mark that the attorney’s client is intending to adopt. Becker Aff., 1117. T & T’s internal state file contains information not available on Dialog.Pl.Exh. 118. TS-Federal and TS-State are derived from this broader internal database (“M-204”). Tr. 1544 (Becker). T & T believes that Trademarkscan on-line screening searches are best done for such screening or “knock-out” purposes, Becker Aff., U17, and that a searching organization such as Corsearch that uses Dialog’s software produces a report that is inferior to T & T’s own in-house reports generated by T & T’s proprietary software. For this reason, T & T believes it is inaccurate and misleading for a trademark search company to imply to the public that its search reports, generated by Dialog software, are equivalent to T & T’s search reports, generated by T & T’s internal software. Becker Aff., ¶ 18. T & T has always placed a copyright notice on the initial screen that one accesses when signing on to TS-State through Dialog. A similar copyright notice is used for TS-Federal. CORSEARCH’S ENTRY INTO TRADEMARK SEARCH BUSINESS Corsearch is in the business inter alia of providing computerized trademark searches for corporations, law firms, and other customers located throughout the United States. Robert M. Frank is the president of Corsearch and has held that position since 1983 when Corsearch was founded under the name Prodata Searches and was incorporated in New York as an information brokerage firm business that specialized in providing general computer research services for small to medium-sized law firms. At the end of 1983 Corsearch had raised $304,000 in capital, generated revenues of $7400, was left with $46,000 in cash, and had losses of nearly $250,000. At the end of 1984 Corsearch had combined losses of over $700,000 for the eighteen months it had been in business. In 1985, shortly after T & T licensed TS-Federal through Dialog, Corsearch began offering trademark searches on federal trademark registrations by accessing TS-Federal through Dialog. Soon thereafter Corsearch began offering a comprehensive trademark search using the on-line state trademark service of Compu-Mark and various on-line services of Dialog for the common law portion of trademark searching. T & T’S PERMISSION FOR RESALE BY CORSEARCH On June 26, 1985 Mr. Frank wrote to Anthea Gotto of T & T requesting permission for Corsearch to include data from TS-Federal in Corsearch’s search reports sold to Corsearch’s clients. On July 18, 1985 Mr. Frank received a letter from Ms. Gotto dated July 16, 1985 granting Corsearch permission to use the results of Trademarkscan-Federal searches in the search reports sold to Corsearch clients. Pl.Exh. 180. Later in 1985 Corsearch introduced to the market the first same-day service for a fully automated comprehensive computer generated trademark search report. At the end of 1985 Corsearch had combined losses for the years 1983 through 1985 of over $960,000. In 1986 Corsearch revenues grew. Cor-search’s usage of Dialog increased to $150,-000 as compared to total payments of $50,-000 in 1985. In November 1986 T & T announced the release of TS-State on Dialog. Corsearch decided to switch to this new source because it was frustrated with Compu-Mark’s billing errors and because the searching software of TS-State was superi- or to that offered by Compu-Mark. Corsearch sent a letter dated December 17, 1986 to Ms. Gotto of T & T requesting permission to use the output of TS-State in its trademark search reports. Specifically, Corsearch asked for “permission to (1) search the file, (2) download the results to a diskette, (3) word process the results in order to eliminate useless records, search strategy, etc., and (4) print one copy of the results for the client who ordered the search.” Pl.Exh. 182. Corsearch added that “[a]s with all the files we search, we would, of course, maintain the masthead and copyright information supplied through DIALOG.” Pl.Exh. 182. By letter dated January 8, 1987, T & T granted permission to Corsearch to use the output of TS-State, stating: Thomson & Thomson is pleased to grant CORSEARCH permission to search the file and use the results in the manner you described, provided there is due ac-knowledgement together with the copyright notice. We also request that you inform your clients that the TRADEMARKSCAN-STATE database does not include corporate name records and that tradenames, assumed names and fictitious names are also not generally included, although they may be identified for some states. Pl.Exh. 183 (original emphasis). On September 16, 1987, Corsearch requested that T & T give Corsearch ninety days notice prior to any termination of the permission previously granted by T & T to Corsearch to use the contents of TS-Federal and TS-State in Corsearch’s search reports. The request was granted. Def. Exh. L & M; Tr. 544 (Frank). THE RELEVANT MARKET In the only evidence on the relevant market for purposes of § 2 of the Sherman Act, Corsearch’s economist, Dr. Marion Stewart, defined the submarket relevant to Plaintiff’s monopoly claims as the market for comprehensive trademark search services in the United States. Dr. Stewart testified that for such services in-house and trademark counsel are “unwilling to rely upon their own internal searches” and that “more sophisticated searches, are reserved for marks which have passed knock out tests and are being seriously considered for trademark registration.” Stewart Aff., ¶¶ 21-22. Dr. Stewart’s finding that corporations and law firms are unwilling to rely on their own searches was one of his principal reasons for limiting the relevant market to firms like TRC, T & T, and Corsearch. CORSEARCH’S GAIN OF MARKET SHARE AND COMPETITIVE IMPROVEMENTS During 1987 and 1988, Corsearch offered a series of competitive improvements and gained market share of the comprehensive trademark search market as its client base grew. Corsearch was the first to implement the following improvements to trade mark search reports: a) dividers between sections of the report to make it easier to locate specific portions of the search; (b) identification of the mark being searched from the top of each page of the report; (c) sequentially numbered pages in each section with an indicator of how many pages are in that section; (d) table of contents reflecting the cited mark, record number, page number where the record could be found, and status of the marks cited; (e) back cover on the report (to prevent the last page from falling off) with the signature of the researcher who completed the report. Corsearch’s comprehensive trademark search reports also included notes from the researcher regarding decision criteria used by the researcher to select the most relevant records. When Corsearch got into the trademark search business the average turnaround time on comprehensive search reports from T & T was ten to fourteen days, and Cor-search offered reports in three to five days. Corsearch was the first company to offer a full comprehensive trademark search in less than one day. T & T and Compu-Mark followed Corsearch. Corsearch was the first search company to offer a four-hour service. T & T and Compu-Mark followed. Corsearch is the only search company to assign one researcher to do all three parts of a given search, i.e. federal, state, and common law. Corsearch is the only company to guarantee delivery of a report even if Federal Express fails to arrive on time. At the end of 1988, Corsearch was free of debt, other than trade payables, for the first time. At the end of 1989, Corsearch had retained earnings of $561,161. Corsearch has become T & T’s main competitor in the computerized comprehensive trademark report market. At the present time, Corsearch’s price for a three-to-five-day comprehensive trademark search is $255, more than ten percent lower than T & T's price of $285. CORSEARCH’S DEVELOPMENT OF CORBASE In 1989, following the PTO’s offering of its computerized database, Corsearch decided to purchase that database and offer it on line to others. It chose a vendor for the project. In 1990, Corsearch announced that it was offering the federal database as an on-line service under the tradename Corbase. As a result of its acquisition of the federal database, Corsearch no longer had to pay Dialog for access to TS-Federal information. Like T & T, Corsearch affixes a copyright notice to reports generated by its own federal trademark database. Once Corbase became operational, Dialog stood to lose revenue of approximately $600,000 per year that Corsearch otherwise would have paid for access to TS-Federal. Prior to approximately November of 1990, Corsearch was receiving a volume discount of ten dollars per hour from Dialog on the condition that Corsearch spend at least $100,000 a year in on-line time charges with Dialog. After November 1990, Corsearch and Dialog renegotiated the volume discount so that it became a sliding scale discount based upon usage and conditioned upon Corsearch spending $800,000 annually on the various on-line services offered by Dialog. In June 1991 Corsearch began to investigate the possibility of building a state trademark database. Corsearch decided to begin studying the feasibility of building its own state database in 1991 because it concluded it was now in a financial position to take on a project of that magnitude. Corsearch judged that it would improve Corsearch’s competitiveness to have an independent source of state trademark data and that Corsearch would then be no longer subject to its competitor’s pricing. Corsearch’s 1992 Business Plan has allocated $100,000 for the initial study and planning of building Corsearch’s own state trademark database. In 1991, Corsearch projected that it would spend at least $750,000 over the next three years, 1992-1994, for TS-State license fees paid to Dialog. THE DEVELOPMENT OF CD-ROM SEARCHING In late 1990, T & T licensed to Dialog the right to sublicense T & T’s TS-Federal and TS-State to users in CD-ROM versions (the state version is hereafter referred to as the “T & T CD-ROM State”). A CD-ROM is a disk, similar to a musical recording compact disc. The T & T CD-ROMs are revised bi-monthly and T & T CD-ROM State contains the entire TS-State database as of the month of release. Using a personal computer, sublicensees of T & T CD-ROM State can search and print out from the TS-State database without using online services and incurring on-line charges. The agreement between T & T and Dialog with respect to the licensing of the T & T CD-ROMs contained terms and conditions requiring the restriction of the use of the data contained on the T & T CD-ROMs to the user’s internal purposes and expressly prohibiting the resale of the data. Def. Exh. B. The “Dialog on Disc License Agreement” utilized by Dialog in licensing the T & T CD-ROMs contained the following terms and conditions: 3. LICENSE. A.DIALOG hereby grants to Cus: tomer and Customer hereby accepts from DIALOG a non-transferable and non-exclusive right and license to use the Products according to the terms and conditions set forth in this Agreement. Customer acquires no ownership rights respecting the Products, or portions thereof, and all such rights remain in DIALOG. Customer’s use of the Products is subject to such disclaimers and restrictions on use that may be published by DIALOG and/or its suppliers in conjunction therewith. Such disclaimers and restrictions may be. changed from time to time and Customer will be sent all revisions thereto. Neither the Products, nor any portions thereof, may be reproduced, transferred, or transmitted in any form or by any means without the prior written consent of DIALOG, except as expressly permitted hereunder. B. Customer may use the Products only for internal purposes and shall not use the Products as a component of or a basis for a database prepared for commercial sale, access or distribution outside of Customer’s organization. Customer is not permitted to alter or duplicate the Products in any way, provided, however, that Customer may make one (1) back-up copy of Software to use solely for emergency purposes. C. Specific restrictions concerning Customer’s use of the Products or portions thereof, include, without limitation, the following: (1) Products may be used only on a single computer at any time; (2) Products may not be used in a service or software rental bureau, timesharing, interactive cable television, multiple computer processing unit or multiple site arrangement; (3) Use of Products via a Customer network is permissible ONLY to the extent that Customer has so noted in the space provided for same elsewhere within the order form (in accordance with the then-applicable Product Price List); (4) Portions of the Database may for temporary use or storage in conjunction with Customer’s editing or reformatting of data for purposes of making a single print-out (human-readable copy) thereof; (5) No telecommunications transfer of any portion of the Products may be made; (6) The Products, including any portions thereof, shall not be exported outside of the territorial limits of the country in which they were originally delivered; and (7) Customer may not modify, reverse engineer, disassemble, decompile or create derivative works based on the Products, or any portion thereof. Additional Database specific restrictions on use (and/or permissible uses) may be found within Documentation. 4. THIRD-PARTY ACCESS. ... No other transfer of Database portions are permitted under this Agreement and no rights are granted permitting any systematic retrieval and printing of Database portions to third parties by or through any for-profit entity. 7. COPYRIGHT AND PROTECTION. A. The Products, including all portions thereof, except where expressly stated otherwise, are protected by copyright and other laws respecting proprietary rights. Unauthorized reproduction, transfer and/or use may be a violation of criminal as well as civil law. B. Customer shall take all necessary action, whether by instruction, agreement or otherwise, to restrict control and limit the use of and access to the Products to those uses expressly permitted hereunder (unless prior written agreement has been obtained from DIALOG) and shall protect and secure the Products, and all portions thereof, to prevent unauthorized copying, transfer or use. C. The Products contain highly proprietary and valuable trade secrets of DIALOG and of its suppliers. Accordingly, it is acknowledged that unauthorized copying, transfer or use may cause DIALOG and/or its suppliers irreparable injury that cannot be adequately compensated for by means of monetary damages. It is therefore agreed that any breach hereof by Customer may be enforced by means of equitable relief (such as but not necessarily limited to injunc-tive relief) in addition to any other rights and remedies that may be available. D. Customer agrees that any supplier of any portion of Products may enforce its rights against Customer even though such supplier is not a party to this Agreement. Def.Exh. C. Dialog requires its sublicen-sees to agree to these terms prior to obtaining the TS-Federal or TS-State database on CD-ROM. Mr. Frank was aware of these terms of the Dialog on Disc License Agreement and, in late 1990 and early 1991, Corsearch requested that Dialog license to it T & T’s TS-State database on CD-ROM. In approximately the spring of 1991, Dialog asked T & T if it would agree to permit the T & T CD-ROM State to be licensed to Corsearch or any other resellers of data. By letter dated May 31,1991, T & T specifically advised Dialog that it did not wish to license its databases on CD-ROM to companies that frequently resell the information and that therefore the T & T CD-ROM would not be made available to resellers like Corsearch since their only purpose in obtaining the T & T CD-ROM would be to use it for resale. No Corsearch officer or employee made any direct approach to T & T to ask T & T if it would agree to license its T & T CD-ROM State to Corsearch. CORSEARCH’S EFFORTS TO OBTAIN THE CD-ROM BY FALSE PRETENSES By July 1, 1991, Corsearch had been advised by Dialog that TS-State would not be made available to it on CD-ROM. At about that time, Mr. Frank, without identifying his capacity as an officer of Cor-search, ordered a trial copy of the T & T CD-ROM State, not through Corsearch’s usual Dialog representative in New York, but by letter written on Mr. Frank’s home stationery and received by Dialog on July 3, 1991. By order form dated July 23, 1991, Mark Shklar, Esq., vice president of Corsearch, similarly submitted an application for the purchase of the T & T CD-ROM State utilizing his home address. This application similarly did not disclose Mr. Shklar’s relationship to Corsearch. In early or mid-July 1991 Dialog, in response to Mr. Frank’s order, forwarded a trial copy of the T & T CD-ROM State to Mr. Frank at his home address, and sometime thereafter he was sent an updated version of the T & T CD-ROM State. Mr. Shklar also received a T & T CD-ROM State at home. Without authorization or knowledge of Dialog or T & T, Mr. Frank and Mr. Shklar caused Corsearch to utilize one or both versions of the T & T CD-ROM State for four to six weeks in preparing state trademark reports for its customers. The search reports produced by Corsearch using the T & T CD-ROM State copied exactly the selection, organization, and arrangement of the data in T & T’s TS-State database and also copied the original material added by T & T to the database. Def. Exh. ZZZ. Corsearch’s vice president, Mr. Shklar, testified that Corsearch made “heavy use” of the T & T CD-ROM State during this period and thereby avoided paying at least $26,000 that it would otherwise have had to pay for on-line access to TS-State through Dialog. Corsearch had been advised previously by its then attorney, Ira Finkelstein, that Corsearch’s surreptitious acquisition and use of the T & T CD-ROM State to generate reports for resale could constitute a breach of contract or fraud, and Corsearch was aware that such use could result in a cut-off of Corsearch’s access to TS-State through Dialog. Corsearch’s 1992 draft Business Plan indicates that the state trademark reports that Corsearch generated by means of its unauthorized use of the T & T CD-ROM State were sold or resold to Corsearch’s customers. The Plan stated as follows: Corsearch also depends upon another Thomson and Thomson product, Trade-markscan-State. It is the most reliable and lowest cost per search system avail-able_ At the beginning of 1991, Cor-search was spending approximately $22 per search for Trademarkscan-State information. At that time Thomson and Thomson/Dialog introduced the information on CD-ROM (Compact Disc-Read Only Memory) for $3,000 per year. (Cor-search’s on-line fees for this information are over $225,000 per year). Corsearch requested copies of the CD-ROM products and was denied such request by Dialog. The resolution of this matter is unclear. Corsearch obtained one state trademark CD-ROM disc for a brief period. During that time state trademark cost per search decreased by 25%. Presently management is unclear if the company will be able to keep the disc. The projections assume that the disc will have minimal usage during 1992. An average cost per search will remain similar to 1991 levels. Presently, Corsearch does not anticipate bringing legal action against either Dialog or Thomson & Thomson to force continued delivery of these products. Corsearch management understands that later either Thomson & Thomson or Dialog (or a joint effort) may bring charges against Corsearch for license agreement violations and/or copyright infringements. Corsearch’s potential liability is the estimated additional fees that would have been levied had on-line information rather than CD/ROM information been used, and legal fees associated with the Company’s defense. (Either bringing or responding to charges has associated legal fees. At the present, Corsearch would rather be the respondent than the complainant.) Corsearch management continues to pursue options aimed at reaching an agreement with Dialog and Thomson & Thomson on this matter. Since May, 1991 Corsearch’s efforts towards establishing a meeting with senior managers of Dialog to discuss this issue have been rebuked. Corsearch has budgeted $60,-000 for legal fees related to this issue in 1992. Def.Exh. TT; Tr. 393 (Shklar). In September 1991 Mr. Frank, on behalf of Corsearch, “downloaded” the T & T CD-ROM State onto computer tapes or disks. The contents of the CD-ROM State were copied in a form that could be retrieved by computer. Corsearch sent samples of the T & T CD-ROM-State database to an outside contractor to determine whether the contractor could convert the T & T database into a “Corsearch” state trademark database. In response to discovery requests in this action, Corsearch advised T & T of this copying and preservation of the CD-ROM, and, after demand, Corsearch’s attorneys turned over the discs or tapes containing the contents of CD-ROM State to T & T’s attorneys on November 7, 1991. The T & T CD-ROM State received by Mr. Frank and Mr. Shklar had been returned on September 23, 1991. T & T’s TERMINATION OF COR-SEARCH’S RESELL RIGHTS TO TS-STATE On August 14, 1991 T & T by letter to Corsearch terminated Corsearch’s resale permission for TS-State. The termination letter was misaddressed. T & T re-sent the same termination letter to Corsearch’s correct address on August 27, 1991. The termination letter gave Corsearch thirty days notice of termination. Mr. Becker, President of T & T, was unaware that Corsearch had asked for and received a ninety-day notice period. Corsearch notified T & T of the ninety-day notice period and Becker promptly extended the termination period for the ninety days. There were no further negotiations between the parties until after the initiation of this action alleging that T & T, a monopolist, is engaged in an illegal restraint of competition. COMPETITION IN THE TRADEMARK SEARCH BUSINESS Over the years relatively few companies offered trademark services to lawyers and corporations in the United States. With the advent of computers in the late 1970s and 1980s, some companies entered the United States market, notably TCR and in 1983 Compu-Mark. T & T has conceded that “TCR’s active marketing efforts and state of the art search software made them a credible, viable competitor within several years.” Competition in trademark research services generally can be traced through T & T’s Management Plans provided to its parent, the International Thomson Organization (“ITO”). 1983: The T & T 1984-1988 Management Plan prepared in August 1983 contains the following chart dealing with pricing, market shares, and financial/managerial stability: Co. T & T TCR Compu-Mark TSC PTO Searchers Pricing Full Search 150 165 N/A 140 50-75 Market Shares 50 28 0 14 8 Financial/Managerial Stability Stable Shareholders Suit Pending Negotiating with Mead Data Central Stable Company changed hands 3 times in 12 years President of longstanding let go 6/83 by CT Corp. Stable 1984: T & T acquired TCR Service, Inc. on April 11, 1984, taking advantage of a stockholders’ dispute to purchase its largest competitor. T & T saw benefits in utilizing TCR’s strengths to augment its own and to overcome certain “deficiencies.” T & T’s reasons for acquiring TCR “included the quality of their database, their large and more up-to-date software development staff, and their core of qualified search analysts.” T & T then developed scenarios for integrating the T & T and TCR databases and utilizing the TCR systems on both an interim and continuing basis to satisfy both reporting and searching needs. The acquisition of the TCR (federal) database was viewed as an “aid in the clean-up and enhancement” of T & T’s own database. “While each database has deficiencies, each complements the other. T & T’s basic weaknesses of less than full text content and little historical data are TCR’s greatest strengths. By combining the strengths of each database, T & T will have compiled the most complete and accurate trademark database available.” In regard to its federal database, T & T’s view in 1984 was that “many inactive T & T records which contained typographical errors and inconsistencies will be overlaid completely with more accurate TCR data.” With respect to T & T’s state database, information contained in the TCR database would be used to verify the accuracy of T & T's information. By combining the largest two search operations in the United States, T & T further solidified its position in the industry and enjoyed a seventy-five percent share of the United States trademark search business. T & T estimated that the United States market for trademark searches for 1984 was as follows: U.S. Trademark Search Activity Estimates of Market Size/Share 1984 Firm Number of Searches/ Year Average Search Price Estimated 1984 Sales (millions) Market Share % As of 1984, T & T claimed to be “the price leader in the industry” and recognized that it must be “cognizant of competitors’ attempts to gain market share by undercutting our rates.” Its then competitors, TSC and Compu-Mark, priced their searches more than thirty dollars below comparable T & T services as of 1984. As of mid-August 1984, the Compu-Mark online search system was “just becoming fully operational.” 1985: The 1985-1989 T & T Management Plan identified several areas where acquisitions or joint ventures might be possible. It stated that “no acquisitions will be entered into unless they fall within the ITO requirements for cashflow, paid back with investment and other prescribed financial targets.” 1986: The 1986-1990 T & T Management Plan prepared in the fall of 1985 noted the shift and the nature of trademark searching “toward heavy on-line usage” and projected healthy growth in the Trademarkscan product in the context of providing it through Dialog. It reported that as what is now called TS-Federal approached its second anniversary it achieved gross sales of $1.5 million a year. With an erosion of traditional search business in favor of on-line searching, 235 of T & T’s top 500 clients have become regular users of TS-Federal. T & T management reported that its introduction of Trademarkscan had been a correct move since, had it not taken place, the Compu-Mark system would have been infinitely more successful. T & T noted that being first on line also “enhanced the image of T & T as a leader and innovator.” The T & T 1986-1990 Plan also announced that T & T would take two steps to control the future negative impact of TS-Federal on its sales revenues, both of which would be covered in the contract renegotiations with Dialog scheduled for the fall of 1985. First, T & T would insist on control of future price increases and would adjust the price as needed to maintain its margins. Second, T & T would insist on receiving detailed usage information, to enable it to track usage by key T & T clients and tie it to possible declines in traditional research business. In August of 1985 T & T management estimated it serviced approximately seventy-four percent of the domestic market for trademark research. T & T stated that Compu-Mark had made inroads into this market, although their product addressed primarily marks that had been registered, giving light treatment to marks established by common law usage. T & T also reported that it had seen the loss of some clients to TSC based on aggressive price competition, but that these clients for the most part had returned to T & T. Assessing the TCR acquisition, T & T’s 1986-1990 Management Plan stated: Despite the burdens imposed on T & T by the TCR acquisition, that purchase has been invaluable in foreclosing an opportunity for others to buy an established competitive position in the marketplace. For that reason alone, but also for several others, the TCR acquisition has proven well worth the cost involved. The 1986-1990 Plan’s estimate of dollar sales and market shares and average search prices for T & T and its competitors in 1985 was as follows: T & T: 68,000 searches at an average price of $212 with total estimated 1985 sales of $14.5 million with $700,000 from Trademarkscan and a market share of 74.2%. TSC: 10,000 searches at an average price of $150 for estimated 1985 sales of $1.6 million and a 7.8% market share. Compu-Mark: In-house searches 4,000 at an average price of $135 with estimated sales of $600,000 and on-line sales of $100,000 for a market share of 3.4%. Private Searches at U.S. PTO and all information brokers: 60,000 searches at an average price of $50, total 1985 estimated sales of $3 million and a market share of 14.6%. The total United States market was estimated at 142,000 searches with total estimated sales of $20.5 million. The 1986-1990 Plan contained a one-page treatment of Corsearch noting that in the Spring of 1985 Corsearch began to advertise the availability of a “full search.” Cor-search offered two benefits: a search less expensive than T & T’s (cost $175) but more expensive than TRC or Compu-Mark, and twenty-four-hour turnaround time. T & T noted several problems that Corsearch had, including “fairly high on-line cost associated with each search” meaning that they were making “a minimal profit on each search performed.” T & T said it would continue to monitor the progress of Corsearch, indicating concern that perhaps other information brokers might follow Corsearch’s lead and piggyback into a position in the trademark search business. T & T noted a positive side to Corsearch getting in the business: “T & T does get income from each trademark search performed by Corsearch and the other information brokers. Also, these brokers are creating an awareness of both trademark searching in general and of our Trademarkscan database.” As a means of retaining or increasing market share, T & T said it would continue to monitor the activities of competitors and would react to each as the situation warranted. The 1986-1990 Plan also noted that TS-Federal might “cannibalize our internal search business.” The report continued: “If we do experience major erosion as a result of on-line, we will begin to reduce search staff as needed and will increase the price of on-line searching to maintain our margins and to reflect the value of the online product(s).” 1987: T & T’s 1987-1989 Management Plan prepared in the fall of 1986 noted that Corsearch “experienced the fastest sales growth of the search firms. However, they already operate on the smallest margins of any firm, due to total reliance on databases supplied by others. This margin will decrease further when Trademarkscan prices are increased in the Fall.” The chart reflecting information about T & T and its competitors and information about each for 1986 showed that T & T had an average search price of $222 and a market share of 71.2%. TRC had an average search price of $160 and a market share of 6.3%. Compu-Mark (US) had an average search price of $150 and a market share of 8.5%. Corsearch had an average search price of $200 and a market share of 1.9%. T & T’s increase in average search price was in line with, or lower than, its competitors. 1988: The 1988-1990 Management Plan prepared in the fall of 1987 revealed that T & T “continued [its] competitive intelligence and analysis program.” PI. Exh. 229, p. D3172. The only competitor mentioned in the “Trademark Research” section of the Plan was Corsearch, which was noted as having “been creative about their packaging and presentation, and they have been successful at promoting a same-day search and other quick turnaround services.” T & T observed that the availability of the Trademarkscan database “to other trademark search firms and information brokers also creates a risk.” Some firms using Trademarkscan were suggesting to clients that their reports based on Trade-markscan were as complete and thorough as the T & T full search. T & T stated that “the action we have taken so far includes ... raising the price of Trademarkscan to make to make it difficult for another firm to use it as a source and undercut the T & T full search price.” The 1988-1990 Management Plan set forth the following trademark search market shares: T & T/Compu-Mark 81% TSC ' 5% Corsearch 2% All others 12% 1989: In the 1989-1991 Management Plan prepared in the fall of 1988 T & T noted that “Corsearch continues to aggressively market their services, stressing the use of online databases and quick turnaround. The company will spend an estimated $200,000 on the Trademarkscan databases in 1988.” The Plan went on to note that “in assessing opportunities for competitive attack against us, we believe there are two ‘client needs’ that competitors can seek to exploit: speed of delivery and price.” In a May 18, 1989 Memorandum, T & T noted that Corsearch’s “search product is well presented and has many good features that [T & T] should take a serious look at.” It also stated that “Frank’s aggressive approach makes him a more formidable competitor than TSC,” and that “Corsearch presents the threat of taking market share from T & T, but only if we let them.” 1990: The 1990-1992 Management Plan prepared in the fall of 1989 once again monitored Corsearch’s progress, noting that Corsearch continues to compete aggressively by effectively marketing itself as an alternative to our Full Search. Reports indicate that they are increasing their market share. If projected sales of $1.5 million for 1988 were achieved, their sales growth from 1987 to 1988 was an impressive 76% resulting in an- estimated 5% market share.... Corsearch has been the largest user of the Trademarkscan databases and among the first to purchase the USPTO tapes_ Their aggressive nature and enterprising use of other databases for common law trademarks, makes Corsearch the number one competitor during the plan period to the full search products. T & T’s CHANGE OF MANAGEMENT Mr. Becker was brought in from another ITO entity to be president of T & T in August 1990 with instructions to improve its marketing and sales. T & T trademark search sales had been flat and unit volume had decreased. Mr. Becker first considered terminating Corsearch’s permission to include data from TS-State in its search reports in the fall of 1990, around the time Mr. Becker supervised the preparation of T & T’s 1991-1993 Management Plan. That Plan acknowledged that Corsearch continues to be the most aggressive competitor to our full search product. Their estimated market share in 1990 is approximately 8%, up from 5% in 1989. Their gain came at our expense as they targeted our largest clients. In the 1991-1993 Plan, T & T stated that its past price increases, averaging eight to ten percent, were reasonably aggressive, but would be constrained in the future by increased competitive activity sensitizing customers. T & T also noted that competition has caused it to increase its customer discounts. 1991: On or about July 18, 1991, Mr. Becker had a conversation with Susan Yoder of Dialog in which he discussed the possibility of terminating Corsearch’s use of TS-State. Mr. Becker speculated with Ms. Yo-der that Corsearch might create its own state database and compete with T & T. Ms. Yoder tried to talk Mr. Becker out of terminating Corsearch, a large customer of Dialog, and as a result of this conversation and a later conversation with Ms. Yoder, Mr. Becker did not send a letter of termination to Corsearch until August 14, 1991, instead of on July 18, 1991. In late 1990, when he first considered terminating Corsearch, Mr. Becker was not aware that Mr. Frank or Mr. Shklar had obtained a T & T CD-ROM State from Dialog, or that Corsearch had been using the CD-ROMs. Tr. 1445-46 (Becker). However, Mr. Becker testified that he learned in early August that Mr. Frank had obtained the CD-ROM in Mr. Frank’s own name. Tr. 1432-34 (Becker). Mr. Becker testified that he sent the termination letter on August 14 because he had learned that Mr. Frank had obtained the CD-ROM, although Mr. Becker was uncertain at that point whether Corsearch was using the CD-ROM in violation of its license. Tr. 1446-49 (Becker). T & T’S CHANGE OF POLICY The 1992-1994 Management Plan, prepared in the fall of 1991 and issued after this lawsuit was initiated, stated with respect to its on-line services: We now expressly forbid the reproduction and resale of our data for any commercial trademark research. We expect a decrease in usage on both systems as a result of this, but expect to see an increase in other in-house research products. The Plan also noted that while the right to resell “clearly increased on-line revenues, it negatively impacted other revenue streams.” The “revenue stream” most impacted was T & T’s full search report. As of the fall of 1991, full U.S. searches accounted for approximately sixty percent of T & T’s business. In 1983, it had been ninety-five percent. It is evident that T & T sought to increase its market share of sales of full search reports and its on-line and CD-ROM products to end users by terminating permission to use the data from TS-State for resale regardless of the short term loss of revenue from Cor-search’s and other trademark research services’ use of TS-State. Tr. 1340, 1341, 1460-63 (Becker). With respect to Corsearch, the 1992-1994 Management Plan noted that “Corsearch and numerous other small information brokerage/research firms have made successful inroads with many of our customers competing on service and price.” The 1992-1994 Management Plan (PI. Exh. 232), Interrogatory Answer No. 9, the notes of Mr. Becker on p. D3829 of Pl. Exh. 243 and on Pl. Exh. 138, and Mr. Becker’s conversations with Susan Yoder, together demonstrate that the revocation of TS-State resale permission was designed and intended to prevent Corsearch’s ability to piggyback on T & T’s copyrighted materials. Tr. 1419, 1450-65 (Becker), Pl. Exh. 124. The revocation also stemmed from T & T’s marketing strategy aimed at differentiating between searches done using TS-State or TS-Federal, which T & T originated and marketed as screening tools, and the more exhaustive internal searches performed by T & T using its internal M-204 database. Tr. 1408-17, 1442-59 (Becker); Becker Aff., ¶ 18. COPYRIGHTABILITY OF THE TS-STATE DATABASE The United States Copyright Office has issued a Certificate of Copyright Registration, effective as of November 15, 1991, for T & T’s CD-ROM version of the TS-State database. This certificate gives rise to a legal presumption that the TS-State database is copyrightable. 17 U.S.C. § 410(e); but see Carol Barnhart Inc. v. Economy Cover Corp., 773 F.2d 411, 414 (2d Cir.1985) (certificate creates no irrebuttable presumption of copyright validity but rather merely orders the burdens of proof). Corsearch sought to impugn the validity of the certificate by a post-trial motion to supplement the record with affidavit evidence which the Court admitted into evidence nunc pro tunc. While facts are not copyrightable, some factual compilations are. The Supreme Court’s opinion in Feist Publications v. Rural Telephone Service Co. focused on the “undeniable tension” between these two propositions. — U.S. -, 111 S.Ct. 1282, 1287, 113 L.Ed.2d 358 (1991). To qualify as a copyrightable compilation, a work must meet each of three distinct elements: “(1) the collection and assembly of pre-existing material, facts, or data; (2) the selection, coordination, or arrangement of those materials; and (3) the creation, by virtue of the particular selection, coordination, or arrangement, of an ‘original’ work of authorship.” id. 111 S.Ct. at 1293; 17 U.S.C. § 101. In determining whether a fact-based work is an original work of authorship, as opposed to a mere collection of facts, a court should focus principally on the second requirement. 111 S.Ct. at 1294; see also Kregos v. Associated Press, 937 F.2d 700, 703-04 (2d Cir.1991) (factual compilation entitled to copyright only if it displays some minimal level of creativity). The evidence offered by Corsearch is insufficient to render invalid T & T’s copyright. As discussed above, T & T offered sufficient evidence of its selection, coordination, arrangement, enhancement, and programming of the state trademark data, as well as other contributions that establish the originality and requisite creativity, and thus eopyrightability, of the TS-State database. The TS-State database is unlike the white pages of the telephone directory at issue in Feist, in which the telephone company simply listed alphabetically by surname the data provided by its subscribers, creating “a garden-variety white pages directory, devoid of even the slightest trace of creativity.” Id. 111 S.Ct. at 1296. A copyright in a compilation, however, “extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material.” 17 U.S.C. § 103(b). Thus, T & T’s copyright extends to its internally generated information and to its particular enhancements to the items of information collected from the state trademark records, not to the items of information themselves collected from the states. See Kregos, 937 F.2d at 709. If it was able to identify which items of information were state-generated items of information obtained from the fifty states and Puerto Rico, Corsearch might select them and rearrange them in Corseareh’s own, original format without violating T & T’s copyright. Cf. Feist, 111 S.Ct. at 1295-96 (defendant did not infringe plaintiff’s copyright when it copied substantial amount of uncopyrightable facts from plaintiff’s telephone directory without copying any information original to plaintiff). T & T permissibly enforced its copyright by terminating Corsearch’s permission to resell reports from TS-State, since those reports copied TS-State exactly, including T & T’s enhancements to the state trademark data. Def. Exh. ZZZ. Accordingly, the Court will not enjoin T & T from enforcing its copyright notice for TS-State. ABUSE OF MONOPOLY POSITION T & T’s termination of permission to use TS-State data for resale is not a violation of the antitrust laws under § 2 of the Sherman Act. Under the copyright laws, the copyright owner has a right to license the use of its intellectual property and to terminate or limit that use in such manner as it deems appropriate. See Fox Film Corp. v. Doyal, 286 U.S. 123, 127-28, 130, 52 S.Ct. 546, 546-47, 547-548, 76 L.Ed. 1010 (1932). Indeed, such a right is the basis of substantial economic activity in the present day economy. Any termination of a licensee of intellectual property who is competing with the owner is bound to eliminate or curtail competition. Where the owner and the licensee are among a few companies competing in a submarket, the effect on competition on that submarket is even greater. Nevertheless, before ruling that a copyright owner is or is not liable for abuse of monopoly position when it terminates a licensee in accordance with the rights set forth in its license, a court should examine the implications surrounding such a ruling. Many intellectual property dispensers operate in limited markets with few competitors. Indeed, it is the limited number of competitors that makes the copyright valuable to its owner. Although the collection of data and its enhancement may not constitute “genius,” see United States v. Paramount Pictures, 334 U.S. 131, 158, 68 S.Ct. 915, 929, 92 L.Ed. 1260 (1948) (issuance of copyright “serves to induce release to the public of the products of ... creative genius”), copyright protection offers the incentive for the creation of copyrightable compendia and information banks from which the public benefits. See Stewart v. Abend, 495 U.S. 207, 110 S.Ct. 1750, 1764, 109 L.Ed.2d 184 (1990) (Copyright Act, in granting limited copyright term, balances artist’s right to control work during term of copyright protection and public’s need for access to creative works). The Supreme Court stated the elements of a § 2 Sherman Act violation in United States v. Grinnell Corp.: The offense of monopoly under § 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful