The HONORABLE LEVIN H. CAMPBELL, United States Circuit *

Judge for the First Circuit, sitting by designation.

 The Honorable Jimm Larry Hendren, United States District 1

Judge for the Western District of Arkansas.

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95-2887

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David Marts, doing business as * Lasertech,*

*

Plaintiff/Appellant, *

*

v. * Appeal from the United States

* District Court for the

Xerox, Inc., * Western District of Arkansas

*

Defendant/Appellee. *

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Submitted: January 8, 1996

Filed: March 11, 1996

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Before WOLLMAN, CAMPBELL, and MURPHY, Circuit Judge. *

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MURPHY, Circuit Judge.

David Marts, doing business as Lasertech, brought this action

alleging that Xerox, Inc. violated federal antitrust and Arkansas law by

conditioning certain photocopier warranties on the use of Xerox replacement

copy cartridges. After both sides moved for summary judgment, the district

court granted the motion of Xerox and ordered judgment entered in its

1

favor. Marts appeals from that judgment, and we affirm for the following

reasons.
 The relevant warranty provisions read: 2

D. VOIDING OF WARRANTY

IF, DURING THE WARRANTY PERIOD, CUSTOMER USES A COPY

CARTRIDGE OTHER THAN AN UNMODIFIED NEW OR RECYCLED

CARTRIDGE PURCHASED FROM XEROX AND/OR THE COPY

CARTRIDGE BEING USED IS MODIFIED FROM ITS ORIGINAL

CONFIGURATION, THIS WARRANTY WILL BE VOID. If the

warranty becomes void, Customer may purchase from

Xerox, if available, a Service Agreement or service at

the then current time and materials rates.

E. Warranty Procedure

The customer must telephone the Xerox Customer Service

Support Center . . . with the copier serial number, a

description of the problem and any status codes

displayed on the control panel. The Xerox Service

Representative will attempt to diagnose and solve the

problem on the telephone, and when necessary, schedule

a Xerox service call to repair the Equipment. IF THE

CUSTOMER IS USING A CARTRIDGE THAT RESULTS IN A VOIDED

WARRANTY AND A XEROX REPRESENTATIVE TRAVELS TO THE

INSTALLATION ADDRESS TO PERFORM WARRANTY SERVICE, THE

SERVICE REPRESENTATIVE WILL ADVISE CUSTOMER THE

WARRANTY IS VOID. SUCH SERVICE CALL WILL BE BILLED TO

CUSTOMER AT XEROX' THEN APPLICABLE TIME AND MATERIALS

RATES. CUSTOMER MAY INITIATE A SERVICE AGREEMENT

WITHOUT CARTRIDGE COVERAGE.

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Xerox manufactures several models of photocopiers in the twelve to

thirty page per minute category, referred to as convenience copiers. Xerox

includes a three year warranty with these copiers at no additional charge.

The warranty covers all parts and service necessary during that period.

Xerox also offers one year extended warranties which can be purchased after

the initial warranty expires at a cost between roughly $200 and $500 per

year. Both the initial and extended warranties require that the customer

use only Xerox copy cartridges. The cartridges contain a number of

2

critical components with limited lives and produce approximately 20,000

copies. Users can replace spent cartridges easily.
 Section 1 of the Sherman Act, 15 U.S.C. § 1, reads: 3

Every contract, combination in the form of trust or

otherwise, or conspiracy, in restraint of trade or

commerce among the several States, or with foreign

nations, is declared to be illegal. Every person who

shall make any contract or engage in any combination or

conspiracy hereby declared to be illegal shall be

deemed guilty of a felony, and, on conviction thereof,

shall be punished by fine not exceeding $10,000,000 if

a

corporation, or, if any other person, $350,000, or by

imprisonment not exceeding three years, or by both said

punishments, in the discretion of the court.

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Xerox will service its copiers that are not under warranty. Service

is available on a time and materials basis, in which case the customer pays

for parts and labor ($155 for the first half hour and $120 per hour

thereafter.) Xerox also offers a maintenance agreement which requires that

customers pay an annual charge of roughly $150 and then a fixed price for

each service call, also roughly $150. Parts are included in that charge.

Lasertech is an Arkansas proprietorship owned by David Marts. In

addition to servicing photocopiers and computer printers, Lasertech

reconditions and sells toner and copy cartridges used by various printers

and copiers. In late 1993, Lasertech began reconditioning cartridges for

Xerox convenience copiers. It sold twelve remanufactured Xerox cartridges

to two clients in Fort Smith, Arkansas over a period of several months.

Lasertech presented evidence that at least one client stopped purchasing

Lasertech cartridges when Xerox personnel informed him that continued use

of non-Xerox cartridges would void the warranties on the copiers. The

evidence suggests that Lasertech contacted several other prospective

clients, at least one of whom expressed interest in purchasing Lasertech

products before learning from Xerox that the new copier warranty would be

voided. Lasertech made no further sales of remanufactured Xerox cartridges

since early 1994.

Lasertech sued Xerox in the district court, alleging violations of

§ 1 of the Sherman Act, 15 U.S.C. § 1, and § 3 of 3
 Section 3 of the Clayton Act, 15 U.S.C. § 14, reads: 4

It shall be unlawful for any person engaged in

commerce, in the course of such commerce, to lease or

make a sale or contract for sale of goods, wares,

merchandise, machinery, supplies, or other commodities,

whether patented or unpatented, for use, consumption,

or resale within the United States or any Territory

thereof or the District of Columbia or any insular

possession or other place under the jurisdiction of the

United States, or fix a price charged therefor, or

discount from, or rebate upon, such price, on the

condition, agreement, or understanding that the lessee

or purchaser thereof shall not use or deal in the

goods, wares, merchandise, machinery, supplies, or

other commodities of a competitor or competitors of the

lessor or seller, where the effect of such lease, sale,

or contract for sale or such condition, agreement, or

understanding may be to substantially lessen

competition or tend to create a monopoly in any line of

commerce.

 The complaint also alleged that Xerox had damaged 5

Lasertech's business reputation and had used deceptive trade

practices under Ark. Code Ann. §§ 4-88-101 et seq. These claims

were dismissed by stipulation of the parties before the district

court ruled on the motions for summary judgment.

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the Clayton Act, 15 U.S.C. § 14. Lasertech claimed that Xerox improperly 4

tied the availability of warranty service to the purchase of Xerox

cartridges. The complaint also alleged that Xerox had tortiously

interfered with Lasertech's contract rights and business expectations.5

Xerox responded with a number of defenses, including that it lacked the

market power necessary to produce anticompetetive effects, that it made

service available to copier owners in economically viable ways other than

the warranties, and that Lasertech had not proven antitrust damages. 

The district court concluded that Xerox lacked sufficient market

power to make any tying arrangement a violation of federal antitrust law.

Based on this conclusion and a stipulation by
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Lasertech that no state law violation could be shown if there was no

violation of federal law, the district court granted summary judgment in

favor of Xerox.

We review a grant of summary judgment de novo; like the district

court, we must construe the evidence in the light most favorable to the

nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255

(1986). Summary judgment is appropriate where there is no genuine issue

of material fact for trial and the moving party is entitled to judgment as

a matter of law. Id. at 247-48, 250. The nonmoving party must show that

there is some genuine issue requiring trial. Id. at 250. 

A tying arrangement is "the sale or lease of one item (the tying

product) on the condition that the buyer or lessee purchase a second item

(the tied product) from the same source." Amerinet, Inc. v. Xerox Corp.,

972 F.2d 1483, 1498 (8th Cir. 1992) (citations omitted), cert. denied, 506

U.S. 1080 (1993). When a party can use its market power in the tying

product to force customers to buy the tied product, competition may be

harmed and the market upset. See Jefferson Parish Hosp. Dist. No. 2 v.

Hyde, 466 U.S. 2, 10 n.14 (1984).

A plaintiff may prove a per se tying violation under the Sherman Act

by demonstrating that two distinct products are tied, that the defendant

has sufficient power in the tying product market to restrain competition

in the tied product market, and that the tied product involves a "not

insubstantial" amount of interstate commerce. Amerinet, 972 F.2d at 1498-

99 (citations omitted). The Supreme Court stated in Jefferson Parish that:

Our cases have concluded that the essential characteristic of

an invalid tying arrangement lies in the seller's exploitation

of its control over the tying product to force the buyer into

the purchase of a tied product that the buyer either did not

want at all, or might have preferred to purchase elsewhere on

different
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terms. When such "forcing" is present, competition on the

merits in the market for the tied item is restrained and the

Sherman Act is violated.

466 U.S. at 12. Lasertech argues that Xerox forced customers to buy Xerox

cartridges by illegally tying both the initial and extended warranties to

the purchase of its copy cartridges. We address each type of warranty in

turn.

With respect to the three year new copier warranty, Lasertech's claim

does not fit easily into the existing structure of antitrust law. The

warranty is given to customers at no additional charge when they purchase

a copier and is therefore neither sold nor leased. As a practical matter,

however, the warranty is included in the sale price. Warranties are

similar to service agreements but may differ in some ways. Moreover,

customers expect at least some warranty period on most products. For all

of these reasons, the identity of the tying product is somewhat unclear and

assessing any anticompetitive effects of a warranty may be difficult.

We need not decide these issues here, however, since we conclude that

Lasertech has in any event not presented sufficient evidence of an illegal

tying arrangement to create a genuine issue for trial. Although the

warranty does condition its continuation on the use of Xerox cartridges,

a warranty is only one way of receiving service for a new Xerox copier.

"[W]here the buyer is free to take either product by itself there is no

tying problem even though the seller may also offer the two items as a unit

at a single price." Northern Pacific Ry. Co. v. United States, 356 U.S.

1, 6 n.4 (1958). An owner of a new Xerox copier could forego the benefits

of the warranty, buy service from Xerox or an independent provider, and

purchase cartridges from the vendor of its choice. The end result is the

same: customers receive both service and cartridges for their copiers.
 Regardless of how the tying product market is defined, 6

Lasertech also cannot prevail under the Clayton Act. If the

tying product market is service on new Xerox copiers, the Clayton

Act is inapplicable because warranties are services. The Clayton

Act applies only when both the tying and tied products are goods. 

15 U.S.C. § 14; see Advance Business Systems & Supply Co. v. SCM

Corp., 415 F.2d 55, 61 (4th Cir. 1969).

If the tying product market is new convenience copiers with

warranties, Xerox lacks sufficient market power in the copier

market to support per se liability under the Clayton Act. See,

e.g., Town Sound and Custom Tops, Inc. v. Chrysler Motors Corp.,

959 F.2d 468, 477 (3d Cir.), cert. denied, 506 U.S. 868 (1992). 

Lasertech concedes that Xerox has less than eighteen percent of

the convenience copier market, which is insufficient under the

circumstances. See., e.g., Jefferson Parish, 466 U.S. at 26-27

(thirty percent insufficient); Morgenstern v. Wilson, 29 F.3d

1291, 1296 n.3 (8th Cir. 1994)(thirty percent insufficient in § 2

monopolization claim), cert. denied, 115 S. Ct. 1100 (1995);

Baxley-DeLamar Monuments, Inc. v. American Cemetery Ass'n, 938

F.2d 846, 852 (8th Cir. 1991)(twenty-nine to thirty-one percent

insufficient to support tying claim).

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Even if the products are available separately, an illegal tying

arrangement can exist if purchasing the items together is the "only viable

economic option." Amerinet, 972 F.2d at 1500. Lasertech has failed to

introduce evidence that purchasing service from Xerox through the service

maintenance agreement or on a time and materials basis is not viable. The

record contains no information regarding the frequency of required repairs

on Xerox copiers. Without that data, it is impossible to know whether the

other service and cartridge options are materially more expensive, and if

so by how much. Because we cannot conclude that the other service options

were prohibitively expensive, id. at 1500-01, any tying arrangement was not

illegal and summary judgment was appropriate as to the initial warranty.6

The issues regarding extended warranties are more straightforward

because they are simply a type of service contract. After the initial

warranty expires, a Xerox copier owner may choose from several options.

A series of one year extensions of the warranty may be purchased from Xerox

for a flat fee, in which case
 We need not consider the application of the Clayton Act to 7

the Xerox extended warranties because they are services rather

than goods. 15 U.S.C. § 14; see supra note 6.

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Xerox cartridges must be used. See supra note 2. Xerox service may be

purchased on a time and materials basis or through the standard maintenance

agreement, or an independent service operator may be used. Any brand of

cartridge may be used under the latter arrangements.

Again Lasertech has failed to show that the other service options

offered by Xerox are prohibitively expensive. Amerinet, 972 F.2d at 1500-

01. Without evidence of the frequency and severity of required repairs,

the relative costs of the various service options cannot be established.

Because Lasertech has failed to show that the tie-in included in the

extended warranty is the only economically viable option, there is no

illegal tying arrangement under the Sherman Act. Id. Because of this

7

determination it is not necessary to discuss Lasertech's other arguments

and Xerox's other defenses. 

Since Lasertech has conceded that the remaining state law claim

should be dismissed if it is unsuccessful under the Sherman and Clayton

Acts, summary judgment was properly granted on the tortious interference

claim.

Accordingly, the judgment is affirmed.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.