Antitrust, Pornography

On Remand: Kodak Moments In The Courtroom

(c) Image by Juri H. Chinchilla.

Five years ago yesterday, Eastman Kodak took our Kodachrome away. On June 22, 2009, the company announced that, after seventy-four years of production, it would no longer make Kodachrome, the world’s first successful color film. This week, On Remand looks back at the camera film that gave us those nice bright colors and greens of summers, Kodak’s antitrust battles, a sordid suit involving Penthouse magazine photos, and a law student’s $100,000 case over two missing rolls of film.

After Kodachrome’s release in 1935, photographers quickly adopted it. No previous film had portrayed color as realistically as Kodachrome. As the film choice of professional and amateur photographers alike, Kodachrome captured key moments in vivid color: the Hindenburg explosion in 1936, Tenzing Norgay at the top of Everest in 1953, President Kennedy’s assassination in 1963, Don Draper’s wedding day. But by 2009, even Steve McCurry, the photographer chosen by Kodak to receive the last roll of Kodachrome film, had switched to digital. When McCurry — who captured the famous “Afghan Girl” photo for National Geographic magazine using Kodachrome film — finished the last roll, he hand-delivered it to the only place in the U.S. that could develop it: Dwayne’s Photo in Parsons, Kansas….

When Kodachrome debuted in 1935, the roughly fifty-year old Eastman Kodak Co. was on its way to becoming an industrial titan. But with success came antitrust concerns. After a court found that Kodak monopolized sales of cameras and photographic supplies, Kodak entered a consent decree in 1921. The decree prohibited Kodak from selling its film as a store brand. Then in 1954, Kodak agreed not to sell its film bundled with the cost of development.

After facing legal trouble for developing film, Kodak even found itself the target of a lawsuit when it didn’t develop film. In the summer of 1979, Penthouse International, Ltd. — the publisher of the men’s magazine Penthouse — sued Kodak for refusing to develop its smut photographs. When Penthouse sent 2,000 photos to a Kodak laboratory in New Jersey, the lab’s managers rejected roughly 300 of them as “lewd,” pursuant to Kodak’s policy on sexually explicit photos:

Pictures depicting the following types of conduct will not be returned to customers by Kodak when they are discovered during the work performed in completing a customer order:

. . .

2.  Masturbation, excretory functions or lewd exhibition of genitals.

Kodak returned the offending film, unprocessed, only after Penthouse’s General Counsel proclaimed Penthouse’s ignorance of the policy, personally accepted delivery of the film at Kodak’s laboratory, and acknowledged Kodak’s policy in writing. Kodak’s legal department followed up the next day with a detailed explanation of the policy.

Undeterred, Penthouse sent thousands more photos to the New Jersey lab for processing. Kodak rejected hundreds of them. But this time, Penthouse sued. In its brief, Penthouse framed the case as a violation of its First Amendment rights. The Superior Court of New Jersey rejected the argument. Penthouse and Kodak were private parties, not government actors, so the “state action” required for a constitutional violation was missing. Although the Court decided in Kodak’s favor, after extensive study in their private chambers, the judges apparently could not tell much difference between Penthouse submissions that Kodak processed and those it did not:

Although the Court is not unduly impressed with Kodak’s concern over its image as a ‘family business’ in light of transparencies it has chosen to accept for processing over the years versus those it has rejected, the court must affirm Kodak’s right to make a reasonable determination, pursuant to written notice of policy, to reject those it finds violates such policy.

Penthouse wasn’t the only one that Kodak stiffed on pictures. In 1981, law student Jonathan Morgenstern sued Kodak for $100,000 in compensatory and punitive damages after two rolls of film from his ten-month European vacation never materialized. Before leaving for Europe, Morgenstern had prepaid for developing services from Kodak. While abroad, Morgenstern dropped completed rolls of film in the prepaid envelopes and mailed them to a Kodak development center. Kodak would then develop the film and return it to the address specified by Morgenstern. But two rolls Morgenstern mailed to Kodak never made it back to him.

The Court thought it was Morgenstern’s complaint — not his film — that was undeveloped. Kodak’s records showed that Morgensten’s rolls had been developed and mailed, which the Court said shifted the risk of loss to Morgenstern. Roughly a year into Morgenstern’s tenure as a new lawyer at Morgenstern & Associates, the Court dismissed the complaint.

A few years prior to Morgenstern’s lost film saga, Kodak learned of a technology that it hoped would stay hidden. In June 1975, a Kodak engineer created the first digital camera. But when he showed his invention to Kodak, the company was not pleased. As the engineer explained in an interview years later:  “… it was filmless photography, so management’s reaction was, ‘that’s cute — but don’t tell anyone about it.’” Indeed, Kodak’s critics believe its focus on preserving the film market even in an increasingly digital world led to its downfall.

By the mid-90s, the film market had changed significantly. Five international companies now sold film, dropping Kodak’s U.S. market share to 67% (from a 90% hold in 1954) and its global market share to 36%. More options for developing photos existed as well, including mail-order labs, wholesale labs (such as Walgreens and Target), and small on-site “rush” minilabs. In 1995, on the basis of these market changes, Kodak sought to terminate the 1921 and 1954 antitrust consent decrees. With no market power, Kodak’s loss was also its gain: the Second Circuit struck down the decrees.

Despite the victory, Kodak continued to struggle. In 2012, after experiencing a 98% drop in its core film business over the last decade, it declared bankruptcy, and sold pieces of its business to Shutterfly, Google, Apple, Facebook, and others. Kodak even sold its crown jewel — the film and photo paper business. Now back from bankruptcy, Kodak is a much smaller company focused on commercial imaging. The digital revolution touched another of this story’s protagonists as well. As Kodak emerged from bankruptcy, Penthouse magazine entered it. With the proliferation of free online options, perhaps the Penthouse bankruptcy proves that no one ever read the magazine for the articles. As for Morgenstern, who recently passed the Florida bar exam, the $100,000 question is: what was on those rolls of film?

Samantha Beckett (not her real name) is an attorney with more than ten years of experience working in Biglaw. When not traveling back in time, she is most likely billing it. Her writing has been featured in state and federal courts across the nation and in the inboxes of countless clients, colleagues, and NSA analysts. She can be reached at

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