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March 26, 1997

ANTI-MONOPOLY, INC., Plaintiff, against HASBRO, INC., TOYS "R" US, INC. and K MART CORPORATION, Defendants.

The opinion of the court was delivered by: MCKENNA


 Family board game manufacturer Anti-Monopoly, Inc. ("AMI") commenced this antitrust action against its competitor, Hasbro, Inc. ("Hasbro"), alleging, among other things, violations of §§ 1 and 2 of the Sherman Act, §§ 3 and 7 of the Clayton Act, the Robinson-Patman Act, and state law. *fn1" Hasbro moves for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure, to dismiss AMI's Second Amended Complaint. Hasbro also moves for partial judgment on the pleadings to dismiss AMI's secondary-line Robinson-Patman Act claims. *fn2" For the reasons set forth below, Hasbro's motions are granted and AMI's Second Amended Complaint is dismissed in its entirety. The other motions pending before the Court are either disposed of in this Memorandum and Order or are dismissed as moot. *fn3"

 I. Factual Background

 A. The Rise and Fall of Anti-Monopoly

 In 1973, AMI introduced Anti-Monopoly into the marketplace, a board game in which "players broke up monopolies by bringing antitrust suits against monopolists." (Anspach Decl., 7-15-96, PP 1, 16.) AMI sold over 400,000 Anti-Monopoly games in the United States between 1973 and 1976, despite the concession of AMI's founder and president, Ralph Anspach, that the subject matter of the game was not well understood by the public. (Id. at PP 16, 16a; Person Decl., 7-15-96, Ex. C6.)

 In 1976, AMI was temporarily enjoined from using the word "Monopoly" in the title of its game on the ground that it infringed the mark owned by Parker Brothers for its popular board game, Monopoly. *fn4" In 1982, the Ninth Circuit Court of Appeals concluded that the word "Monopoly" as applied to board games had become generic and invalidated Parker Brothers' trademark registration. Anti-Monopoly v. General Mills Fun Group, Inc., 684 F.2d 1316, 1326 (9th Cir. 1982), cert. denied, 459 U.S. 1227, 103 S. Ct. 1234, 75 L. Ed. 2d 468 (1983). During the period of the injunction, AMI continued to sell Anti-Monopoly under a different name.

 In 1977, before the Ninth Circuit's decision was rendered, AMI introduced a second board game, which Anspach describes as an "upgrade" of the board game Monopoly. (Anspach Decl., 7-15-96, P 16b.). Precluded from using "Monopoly" in the board game's title, AMI called the game "Choice." (Id.) In 1983, after Parker Brothers' trademark was invalidated and the injunction against using "Monopoly" was lifted, AMI changed the name of Choice to Anti-Monopoly II. (Id. at P 16c.) In 1987, believing that consumer confusion between Anti-Monopoly and Anti-Monopoly II was harming sales of the latter, "completely different," game, Anspach caused AMI to cease the production of the original game and remove the "II" from the name of the latter game. (Id. at P 17; Person Decl., 7-15-96, Ex. C6.) It is sales of the second Anti-Monopoly game which AMI claims have been harmed by Hasbro's allegedly anticompetitive conduct. *fn5"

 According to AMI's records, Choice sold 2,557 units in the United States in 1980 and 1,939 units in 1981. After Choice's name was changed to Anti-Monopoly II, the game's United States sales increased from 1,416 units in 1983 to 12,648 units in 1986 to its peak of 42,218 units in 1989. (Person Decl., 7-15-96, Ex. C6.) In 1990, the year Anti-Monopoly (formerly Anti-Monopoly II) was dropped by the mass retailers, including TRU and Kmart, AMI sold only 3,400 units of Anti-Monopoly, and has since not sold more than 3,000 units in any year. (Id. ; Anspach Decl., 7-15-96, P 51.) TRU and Kmart stopped selling Anti-Monopoly because, in the opinion of their game buyers, it lacked consumer appeal. (Boyle Decl. P 2; Christensen Decl. P 5.) In 1995, the most recent statistic available, AMI sold only 460 units of Anti-Monopoly in the United States.

 Parker Brothers, presently a subsidiary of Hasbro, bought the trademark to Anti-Monopoly, and licensed it back to AMI. (See Person Decl., 7-15-96, Ex. Q5.) After AMI's prior distributorship agreement with Elite Games Group expired, AMI approached Hasbro with a "proposition" for Hasbro to market Anti-Monopoly through its subsidiary, Milton Bradley, which Hasbro refused. (Anspach Decl., 7-15-96, PP 57, 59-60.) Perhaps the explanation for this lawsuit is Hasbro's refusal to market Anti-Monopoly. Anspach claims that "the present market share (and power) of Hasbro gives it a better chance of success than if a board game were marketed by another manufacturer. Accordingly, from a business standpoint, there is an element of guarantee inherent in Hasbro's monopolistic position." (Id. at P 48.) After Hasbro rejected AMI's "proposition," AMI commenced this antitrust action. (Id. at P 60.)

 B. The Board Game Industry

 A picture of the board game industry in the United States is difficult to discern from the parties' papers. AMI's papers are replete with conclusory statements and lack organization and coherence. Hasbro's papers, in contrast, strategically omit any comprehensive discussion of the board game industry apparently because Hasbro contends that the relevant market in this case consists of portions of the "toy and game" industry in which Hasbro's market share is far more limited. Despite this difficulty, for the purposes of the instant motions, the Court is able to conclude the following when the facts are viewed in the light most favorable to AMI.

 Hasbro possesses approximately 70% of the games and puzzles market, which constitutes approximately 14% of the total toy industry. (Person Decl., 7-15-96, Ex. L2.) Family board games, the putative relevant market in this case, is a subset of those products included in the games and puzzles market.

 AMI defines family board games as "non-strategy board games, in which players move tokens on a board surface, and the games are suitable for players at least 7-8 years old and are targeted for group play which does not exclude the 7 or 8 to 18 year age group." (Second Am. Compl. PP 12, 15.) AMI has not supplied facts to show that the market statistics on which it relies are based on this narrow definition. The president of NPD Group, Inc. ("NPD"), which compiled the market data, confirmed that NPD "provides no formal definitions for the categories contained in its reports." (Roth Decl. P 5.) Because Hasbro's own documents relate its large share of the non-electronic game industry, and because the Court can resolve the pending motions without defining the precise contours of the relevant market, the Court will assume for the purposes of the instant motions that family board games refer to a discrete class of products. *fn6"

 According to a toy industry report, five mass retailers -- TRU, Wal-Mart, Kmart, Target, and Kay Bee/Toy Works -- accounted for more than 50% of the dollar sales in the toy and game industry in 1994. TRU possessed the largest retail share of toy and game sales with approximately 20% of 1994 sales. (Harrington Decl. Ex. 13, at 23; Ordover Decl., 6-12-96, PP 45-49; see also Anspach Decl., 2-28-96, P 13.) Regarding games, the record indicates that Hasbro "owns" almost 55% of the items sold in Kmart and TRU, and over 70% of the items sold in Wal-Mart and Target. The percentage of Hasbro games sold in Kay Bee/Toy Works is not apparent from the record.

 Hasbro, which includes such well-known manufacturers as Milton Bradley and Parker Brothers, is the dominant producer of family board games in the United States based on NPD-compiled statistics. Some of the historically more popular board games distributed by Hasbro include: Monopoly, Life, Risk, Scrabble, Outburst, Pictionary, and Trivial Pursuit. (See Hasbro, Inc. 1994 Annual Report, Harrington Decl. Ex. 5.) NPD statistics indicate that Hasbro sells 70.3 percent of the family board games sold in the United States, and sold the five best-selling games in the first half of 1993. (Person Decl., 7-15-96, Exs. I2 & B6.) As of June 1993, Tyco was apparently the next largest family board game manufacturer in the United States with less than 10 percent of the market. (Id. Ex. I2.) Other market participants include Pressman Games and a number of smaller manufacturers.

 The parties agree that it is neither difficult nor expensive to manufacture a new board game, but disagree as to whether it is easy to enter the board game market. (Second Am. Compl. P 15(D); Harrington Decl. Ex. 6, at 2; Orbanes Decl. P 26; Wilson Decl. P 4.) Hasbro concedes that the mere ability to manufacture a board game does not guaranty its success. Of 42 games introduced by Parker Brothers and Milton Bradley in 1991 only 21 were still being offered for sale by 1994. (Orbanes Decl. P 31.) Moreover, board games sold by the mass merchants are much more likely to garner large volumes of sales in the short term than those sold only in regional department stores or individual toy and game stores.

 An independent manufacturer has a number of choices when it decides to introduce a new game. The most common method is to license the game to one of the major manufacturers, such as Hasbro. (Hersch Decl. P 6.) An independent manufacturer may also choose to market its game directly to retailers, bearing the attendant costs and risks. (Hersch Decl. P 7.) The mass retailers are less likely to accept a game for sale if it doesn't promise substantial sales in a short period of time. (Orbanes Decl. P 26; Christensen Decl. P 2.) This reluctance makes it more difficult for smaller manufacturers, with less capital for national advertising, to place their games in the mass retailers. However, a manufacturer can successfully launch a game through smaller retail stores, such as local department stores and independent game stores. Examples of games that achieved national success by first approaching smaller retail stores include Pictionary, Scruples, and Mindtrap. (Orbanes Decl. P 27.)

 C. Hasbro's Purported Anti-Competitive Acts

 AMI's various antitrust claims are premised on the same facts, which the Court concludes fall into two general categories. *fn7" First AMI claims that certain Hasbro discounts and promotions available to mass retailers, such as TRU, are purportedly not available to smaller retailers, and are thus discriminatory. Second, AMI claims that certain Hasbro practices, including volume discounts that benefit the mass retailers, discourage those retailers from purchasing non-Hasbro games, such as Anti-Monopoly, and thus harm competition. Much of AMI's alleged evidence focuses on innuendo based on communications between Hasbro and TRU, and/or vague inferences from ambiguous documents and testimony.

 1. Retailer Discrimination

 AMI claims that Hasbro discriminates against smaller retailers in favor of the mass retailers, such as TRU. According to AMI, it is harmed by this discrimination because smaller retailers cannot compete with the mass retailers, which causes them to go out of ...

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