Kentucky Fried Chicken Corporation v. Diversified Packaging Corporation

This case presents us with something mundane, something novel, and something bizarre. The mundane includes commercial law issues now well delimited by precedent. The novel aspects of the case center on intriguing and difficult interrelationships between trademark and antitrust concepts. And the bizarre element is the facially implausible — some might say unappetizing— contention that the man whose chicken is “finger-lickin’ good” has unclean hands.

Kentucky Fried Chicken Corporation, a franchisor of fast-food restaurants, brought this action claiming that defendants were infringing its trademarks and engaging in unfair competition by their manner of selling boxes and other supplies to Kentucky Fried franchisees. Defendants placed Kentucky Fried’s trademarks on the supplies without Kentucky Fried’s consent, and they allegedly misled franchisees with respect to the supplies’ source and quality. Defendants counterclaimed, asserting that Kentucky Fried’s franchise agreements, which required franchisees to buy supplies from approved sources, constituted an illegal tying arrangement. The district court, in a penetrating opinion reprinted at 376 F.Supp. 1136 (S.D.Fla.1974), ruled in Kentucky Fried’s favor on every issue and enjoined defendants’ activities. Although some of the issues are not without difficulty, and although we find that franchisors must walk a narrow path when including in their franchise agreements clauses requiring franchisees to buy supplies from approved sources, we affirm.

I. Facts

Colonel Harland Sanders founded the Kentucky Fried Chicken business in the early 1950s. The Colonel prepared chicken in accordance with his own secret recipe, and among the Colonel’s achievements has been to convince much of the American public that his product bears a close resemblance to the southern fried chicken that preceded peanuts as the south’s most famous cuisine. The Colonel no longer owns the business, having transferred it in five different segments. The plaintiff, Kentucky Fried Chicken Corporation, now conducts the business in 47 states, and four unrelated entities conduct the business in the other three states. 1

Although Kentucky Fried owns some retail stores, its primary manner of conduct *373 ing business, and the one of importance here, is franchising local outlets for its product. The franchise agreements require franchisees to purchase various supplies and equipment from Kentucky Fried or from sources it approves in writing. The agreements provide that such approval “shall not be unreasonably withheld.” Before purchasing supplies from a source not previously approved, a franchisee must submit a written request for approval, and Kentucky Fried may require that samples from the supplier be submitted for testing. Of crucial importance is the fact that Kentucky Fried has never refused a request to approve a supplier.

The supplies that are subject to the approved-source requirement include those around which this litigation revolves: three sizes of carry-out chicken boxes, napkins, towelettes, and plastic eating utensils technically known as “sporks.” 2 Kentucky Fried sells these items to its franchisees, but under the franchise agreement the franchisees may also purchase any or all of these supplies from other approved sources. There are nine independent approved sources of cartons and a tenth that is a subsidiary of Kentucky Fried.

The specifications for these supplies require, among other things, that they bear various combinations of Kentucky Fried’s trademarks. The marks, now widely known to the American public, include (1) “it’s finger-lickin’ good,” (2) “Colonel Sanders’ Recipe,” (3) the portrait of Harland Sanders, (4) “Kentucky Fried Chicken,” and (5) “Colonel Sanders’ Recipe, Kentucky Fried Chicken.” 3

Upon its formation in 1972, defendant Diversified Container Corporation (Container) began using Kentucky Fried’s marks without its consent. 4 Container used the marks on chicken cartons, napkins and towelettes that it advertised and sold to Kentucky Fried franchisees. 5 Unlike other suppliers who sought and received approval, Container never requested that Kentucky Fried approve it as a source of these products, and in important respects Container’s products failed to meet Kentucky Fried’s specifications. 6

Container garnered buyers for its low-quality imitations of Kentucky Fried’s sup *374 plies by making inaccurate and misleading statements. Container’s advertisements invited franchisees to “buy direct and save” and represented that Container’s products met “all standards.” Container affixed Kentucky Fried’s trademarks to the shipping boxes in which it delivered chicken cartons to franchisees. And when asked by franchisees whether Container was an “approved supplier” of cartons, Container employees evaded the question and said that Container sold “approved boxes.”

Kentucky Fried brought this suit to enjoin Container’s activities, relying upon the related theories of unfair competition and trademark infringement. Kentucky Fried did not seek damages. 7 Defendants counterclaimed seeking treble damages for purported antitrust violations. The case was tried to the court, which resolved all claims in Kentucky Fried’s favor. The court’s findings of fact are incorporated in its memorandum opinion. See 376 F.Supp. 1136. The court entered an appropriate injunction.

On this appeal the central issues are whether the district court correctly held defendants liable on the unfair competition and trademark infringement theories and whether the court correctly held that Kentucky Fried’s franchise arrangements were not shown to violate the antitrust laws. We must also address defendants’ contentions that the district court should have granted a new trial on the basis of evidence allegedly discovered after trial, that the district court lacked subject matter jurisdiction, and that the district court erred in allowing Kentucky Fried to amend its reply to defendants’ counterclaim. We find a kernel of truth in all Kentucky Fried’s contentions and therefore affirm.

II. Antitrust

Container’s antitrust counterclaim forces us to confront three contentions: (1) that Kentucky Fried’s conduct constitutes a tie-in and thus a per se antitrust violation, (2) that if Kentucky Fried’s approved-source requirement is not a tie it should nonetheless be held to constitute a new category of per se offense, and (3) that in any event Kentucky Fried’s arrangement contravenes the rule of reason. We reject each contention of the triad.

Container’s primary contention is that Kentucky Fried has established a tying arrangement in violation of § 1 of the Sherman Act, 15 U.S.C. § 1. That section prohibits “every contract, combination . or conspiracy in restraint of trade or commerce.” For the most part an arrangement runs afoul of the § 1 mandate only if its restraint on trade is unreasonable. See, e. g., Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619 (1911); Chicago Board of Trade v. United States, 246 U.S. 231, 38 S.Ct. 242, 62 L.Ed. 683 (1918). A § 1 plaintiff must therefore generally establish the anticompetitive impact of the. conduct it challenges. Certain categories of business arrangements, however, exhibit a high likelihood of anticompetitive impact and offer virtually no prospect at all of enhancing competition. With respect to such arrangements, antitrust plaintiffs need not demonstrate unreasonableness; the conduct constitutes a per se violation of the Sherman Act.

Tying arrangements comprise one such category of behavior that is illegal per se. See, e. g., Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969); United States v. Loew’s, Inc., 371 U.S. 38, 83 S.Ct. 97, 9 L.Ed.2d 11 (1962); Northern Pacific Railway Co. v. United States, 356 U.S. 1, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958); Miller v. Granados, 529 F.2d 393 (5th Cir. 1976).

The per se label indicates that a plaintiff need not demonstrate that the effects of the tie are unreasonable. Indeed, not only is the plaintiff relieved from establishing that the effects are unreasonable, but in addition the defendant is not free to dem *375 onstrate that the effects are reasonable or even affirmatively desirable. The competir tive impact of the arrangement simply is not an issue for trial. Unless a defendant can establish certain narrow affirmative defenses, a finding that the defendant’s conduct falls within the category of per se tying arrangements disposes of the case in the plaintiff’s favor.

Here, as elsewhere, however, the per se label can sometimes prove misleading. Per se analysis is susceptible to the unwarranted inference that a plaintiff prevails in a tying case merely by finding some way to characterize the defendant’s conduct as a tie. A tie can be generally defined as an arrangement under which a seller agrees to sell one product (the “tying product”) only on the condition that the buyer also purchase a second product (the “tied product”). See Northern Pacific, ■ supra, 356 U.S. at 5-6, 78 S.Ct. 514. To bring a defendant’s conduct within the category of ties that are per se violations of the Sherman Act, however, a plaintiff must go beyond some color-able characterization of the arrangement as fitting this rough definition.

A plaintiff must show that the challenged arrangement is in fact a tie: that two separate products are involved and that, in addition to complying with the literal terms of the imprecise definition, the seller’s behavior follows the general pattern found unacceptable in the earlier tying cases. To measure an arrangement against that general pattern we must take into account the principal evils of tie-ins: they may foreclose the tying party’s competitors from a segment of the tied product market, and they may deprive the tie’s victims of the advantages of shopping around. See Northern Pacific, supra, 356 U.S. at 6, 78 S.Ct. 514.

Furthermore, an arrangement falls within the category of per se tying violations only if the seller has sufficient economic power with respect to the tying product appreciably to restrain free competition in the market for the tied product and only if a “not insubstantial” amount of interstate commerce is affected. See, e. g., Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969); Northern Pacific, supra; Carpa, Inc. v. Ward Foods, Inc., 536 F.2d 39 (5th Cir. 1976).

The problem in the case at bar is to determine whether Kentucky Fried’s arrangement is in fact a tie — i. e., whether its behavior follows the genéral pattern found unacceptable in earlier tying cases. We begin with an analysis of tying in the context of franchise operations. The issue has taken on considerable significance in recent years; franchising has increased while tying strictures have grown tighter.

In the commonly recurring situation, the tying product is the franchise itself, and the tied products may be such things as the equipment the franchisee will use to conduct the business, the ingredients of the goods the franchisee will ultimately sell to consumers, or the supplies the franchisee will distribute to the public in connection with the main product. As an original matter it is less than self-evident that such arrangements should be treated as garden-variety tie-ins, to be analyzed in accordance with the same tying principles developed in other contexts. Unlike that of the tying party in a prototypal tying case, a franchisor’s own success may depend in large measure on the success of the tie’s “victim”, the franchisee. The franchisor will succeed only by establishing a favorable reputation among the consuming public, and in building that reputation the franchisor must depend largely on the quality of the franchisee’s performance. A franchisor will rarely have an opportunity to explain to a dissatisfied customer that the fault was only that of the particular franchisee. The franchisor may therefore have legitimate as well as illegitimate reasons for restraining the franchisee’s choices in the tied product market. The tie may have a benevolent or malevolent loop. Although in the archetypal case “[tjying arrangements serve hardly any purpose beyond the suppression of competition”, Standard Oil Co. v. United States, 337 U.S. 293, 69 S.Ct. 1051, 93 L.Ed. 1371 *376 (1949), in the franchising context ties may well serve acceptable purposes.

Nevertheless, tying principles are fully applicable to franchise sales. See Carpa, Inc. v. Ward Foods, Inc., 536 F.2d 39 (5th Cir. 1976); Warriner Hermetics, Inc. v. Copeland Refrigerator Corp., 463 F.2d 1002 (5th Cir. 1972); cert. denied, 409 U.S. 1086, 93 S.Ct. 688, 34 L.Ed.2d 673 (1972); Siegel v. Chicken Delight, Inc., 448 F.2d 43 (9th Cir. 1971). As these cases make clear, when a franchisor conditions the sale of a franchise on the buyer’s agreement to buy additional products from the franchisor, the law of tying comes into play. In order to establish a per se violation, the tying claimant need only demonstrate the requisite economic power and “not insubstantial” effect on commerce. Moreover, a franchisor who requires franchisees to use trademarked supplies does not escape the impact of tying principles to any extent. The franchisor’s right to prevent others from selling supplies bearing its trademarks must yield to the antitrust laws’ command to open the tied market to competitors. See Chicken Delight, supra, 448 F.2d at 52; cf. Timken Roller Bearing Co. v. United States, 341 U.S. 593, 599, 71 S.Ct. 971, 95 L.Ed. 1199 (1951).

Despite this relatively low threshold for invoking the per se doctrine, however, the franchisor retains a potentially significant defense — one designed to accommodate the franchisor’s interests in the franchisee’s performance. The franchisor is free to demonstrate that the tie constitutes a necessary device for controlling the quality of the end product sold to the consuming public. See Carpa, supra, 536 F.2d at 46-47; Warriner Hermetics, supra, 463 F.2d at 1016; cf. Dehydrating Process Co. v. A.O. Smith Corp., 292 F.2d 653 (1st Cir.), cert. denied, 368 U.S. 931, 82 S.Ct. 368, 7 L.Ed.2d 194 (1961) (not in franchising context); United States v. Jerrold Electronics Corp., 187 F.Supp. 545 (E.D.Pa.1960), aff’d per curiam, 365 U.S. 567, 81 S.Ct. 755, 5 L.Ed.2d 806 (1961) (same). Product protection through tying can have a legal legitimacy. As part of this defense, however, the franchisor must establish that the tie constitutes the method of maintaining quality that imposes the least burden on commerce. If there are less burdensome alternatives, a franchisor is, obligated to employ them rather than the tie. See Carpa, supra, 536 F.2d at 47; Warriner Hermetics, supra, 463 F.2d at 1016; cf. Copper Liquor, Inc. v. Adolph Coors Co., 506 F.2d 934 (5th Cir. 1975) (not in tying context). The burden of proof on this issue rests with the franchisor seeking to justify the tie, and the burden is a heavy one. The defense

fails in the usual situation because specification of the type and quality- of the product to be used in connection with the tying device is protection enough.

The only situation, indeed, in which the protection of good will- may necessitate the use of tying clauses is where specifications for a substitute would be so detailed that they could not practicably be supplied.

Standard Oil Co. v. United States, 337 U.S. 293, 306, 69 S.Ct. 1051, 1058, 93 L.Ed. 1371 (1949).

With this background we turn to Container’s claim that Kentucky Fried’s arrangement constitutes a tie. The legal tightrope upon which we walk is very taut. Kentucky Fried does not expressly require franchisees to purchase from it the allegedly tied products. Instead, the franchise agreements permit franchisees to purchase the supplies from any source Kentucky Fried approves in writing. At the time of trial there were ten approved sources for cartons, only one of which was an affiliate of Kentucky Fried. 8 Franchisees were free *377 to recommend additional suppliers for approval, and the franchise agreement mandated that Kentucky Fried’s approval “not be unreasonably withheld.”

The difference between this arrangement and a traditional tie is readily apparent. Here the franchise agreement does not require franchisees to take the “tied” product (supplies) from Kentucky Fried in order to obtain the “tying” product (the franchise). Franchisees need not purchase a single unit of the supplies in question from Kentucky Fried; they can take their entire requirements from other sources. Container, however, argues that the effect of the agreement is the same as a traditional tie because Kentucky Fried coerces franchisees into purchasing from it the supplies in question.

We agree with Container that if such coercion were proved, the per se doctrine would apply. A tie need not be reduced to writing to come within the per se proscription. A tie claimant establishes a tie when it proves that a franchisor makes a practice of coercing franchisees into purchasing supplies or other products from the franchisor. See Response of Carolina, Inc. v. Leasco Response, Inc., 537 F.2d 1307, 1326-31 (5th Cir. 1976). In such cases sale of the franchise is, as a practical matter, conditioned upon sale of the tied supplies. The claimant then need only establish the tying prerequisites — sufficient economic power with respect to the tying product appreciably to restrain free competition in' the market for the tied product and a “not insubstantial” amount of affected commerce in the tied product market. Kentucky Fried concedes that these prerequisites are satisfied here.

Kentucky Fried denies, however, that Container succeeded in proving that franchisees were coerced into taking their supplies from Kentucky Fried. The burden of proof on this issue rests on Container; demonstrating the existence of a tie is part of the claimant’s case in chief. See Response of Carolina, Inc. v. Leasco, Inc., supra, 537 F.2d at 1328. The district court resolved the question against Container, concluding that Kentucky Fried had not coerced its franchisees in this regard. Coercion is a question of fact, and we therefore review the district court’s conclusion only to determine whether it is clearly erroneous. See Fed.R.Civ.P. 52.

Our review of the record convinces us that Container has not only failed to demonstrate clear .error but has also failed to adduce any support at all for its allegation of coercion. Coercion can be circumstantially established; it need not be an instrument under seal or proven with sound and music. Coercion cannot, however, be merely conjured. It is neither a fantasy nor a figment. It is a fact that must be established, whether inferentially or deductively.

A fundamental distinction must be drawn between coercing franchisees to purchase from Kentucky Fried and coercing franchisees to purchase from approved sources. The record is barren of any suggestion that Kentucky Fried engaged in the former type of coercion to any extent at all. 9 Thus Kentucky Fried left franchisees free to purchase the purportedly “tied” products from sources other than Kentucky Fried, sources in which Kentucky Fried had no interest and on whose sales Kentucky Fried earned no commission. 10

*378 We conclude that this arrangement simply does not constitute a tie. A monolithic tie may bring down the wrath of per se guilt, but not every use of string tangles with the antitrust laws. The principal evils of tie-ins are the foreclosure of competitors in the tied market and the denial to buyers of the advantages of shopping around. See Northern Pacific Railway Co. v. United States, 356 U.S. 1, 6, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958). Kentucky Fried’s system, at least on its face, presents neither of these evils in anything like the degree associated with tie-ins.

Competitors in the supplies market are not foreclosed from reaching a single potential buyer. Such competitors are subject to the approval requirement, but the record contains no showing that the approval requirement has had the effect in practice of foreclosing competitors in the supplies market. Kentucky Fried’s uncontradicted assertion is that it has never withheld approval from a single supplier who requested it. We might speculate that a new entrant’s arrival might be delayed, but nothing in this record demonstrates that the delay would be substantial, and Container does not aver that the perceived onerousness of this delay prevented it from seeking approval. This record shows no closure of competition; it was an invitational affair. The rope hung loosely. It was not a noose.

Turning to the second principal evil presented by tie-ins, we find that it, too, is lacking. The franchisees retain the option to shop around. The option is limited to approved suppliers, but there are ten such suppliers of cartons, and franchisees are free to nominate additional suppliers whenever they can be found. There is no allegation that Kentucky Fried exerts any influence over the terms at which its competitors sell to franchisees, and there has been no showing that the competing suppliers have combined to reduce the benefits of competition to the franchisees. Franchisees might fare better if fifty or a hundred suppliers competed for their business, but a market with ten suppliers and unrestrained entry surely poses a far different problem than the market available to the victim of a traditional tie: one supplier and no entry.

We conclude that the tie-in’s second principal evil, like the first, is not present in the approved-source system disclosed by this record. When the victim of an alleged tie-in is not required to buy a single unit of the tied product from the tying party or from any source in which the tying party *379 has an interest or on whose sales the tying party earns a commission, the arrangement simply does not constitute a tie. Kentucky Fried has not imposed a tie-in.

That the arrangement is not a tie does not, of course, prevent per se treatment; tying is not the only per se antitrust violation. We deem it inappropriate, however, to add approved-source requirements to the list of per se violations. When business arrangements exhibit consistently adverse competitive effects or are totally without redeeming virtue, per se treatment is desirable. Proving the adverse consequences in particular circumstances may prove difficult and, at any rate, will consume valuable court time. The chance that anticompetitive effects will go undetected and the cost in judicial resources make the prudent course to condemn all arrangements in a given category rather than to attempt to sort the harmful from the harmless. See, e. g., Northern Pacific, supra, 356 U.S. at 5, 78 S.Ct. 514.

We are not prepared to say, however, that approved-source requirements are so universally devoid of redeeming virtue that they warrant per se treatment. As we noted in developing the background law of franchise tying, ties themselves are not as completely objectionable in the franchise context as in the contexts in which tying law originally developed. Moreover, franchise arrangements may sometimes create better competitive markets than would otherwise exist. A system under which an independent franchisee’s choices are somewhat restricted may nevertheless prove superior to a system in which retail outlets are owned by the national firm. If, for example, Kentucky Fried had chosen not to franchise local outlets but rather to own them outright, the antitrust laws would leave it relatively free to supply the individual stores solely through the national office. Competition at the national level for Kentucky Fried’s supplies business would continue, just as competition to sell Kentucky Fried the supplies it will in turn sell to franchisees is currently unencumbered. But competition at thn local level would be as nonexistent under a system of national ownership of local stores as it would be under a franchise system utilizing explicit ties.

These principles are insufficient to take franchise tying out of the per se arena. The existence of the quality defense assures that if a tie is ever truly essential to maintenance of the franchise method of conducting business, the tie will be permissible. To be sure, cases will undoubtedly occur in which ties, while in no sense essential to retention of a franchise arrangement, will prove beneficial to or convenient for the franchisor, and in such cases we could speculate that the somewhat harsh treatment of ties might induce a company to opt for national ownership rather than franchising. We can safely assume, however, that for the most part the application of tying principles to franchise operations will not affect a business’s decision whether to engage in franchising.

When we turn from tying to approved-source requirements, however, the situation is somewhat different. The threat that franchisors will abandon franchising does not affect us, but the potential pro-competitive effects of franchising lead us to proceed cautiously lest we unduly shackle franchisors without achieving discernible competitive benefits. We must encourage business ingenuity so long as it is not competitively stifling. We deal here not with tie-ins, whose adverse effects and lack of redeeming virtue are by now quite familiar, but instead with approved-source requirements. When we become more familiar with large-scale franchising and with approved-source requirements, we may discern that the latter are wholly unnecessary to the former. Indeed, we may one day learn that approved-source requirements are consistently hurtful of competition or that sorting the anti-competitive provisions from the innocuous ones is a task too elusive or time consuming to warrant the effort. It will be time enough, however, to declare such requirements to be per se violations when that day arrives. It is enough to decide today’s cases today and leave fu *380 ture cases to the wisdom and experience of future years. Economic decisions derive from contemporary economic analysis.

The Supreme Court adopted this cautious approach when first confronted with vertical territorial restrictions, saying

We do not know enough of the economic and business stuff out of which these arrangements emerge to be certain. . We need to know more than we do about the actual impact of these arrangements on competition to decide whether they have such a “pernicious effect on competition and lack any redeeming virtue” [Northern Pac. R. Co. v. United States, 356 U.S. 1, 5, 78 S. Ct. 514, 2 L.Ed.2d 545 (1958)] and therefore should be classified as per se violations of the Sherman Act.

White Motor Co. v. United States, 372 U.S. 253, 263, 83 S.Ct. 696, 702, 9 L.Ed.2d 738 (1963). We think we should likewise adopt that prudent course here. We are unable at this time to declare approved-source provisions per se violations.

Our conclusion is that Kentucky Fried has not committed a per se antitrust violation: it has not established a de facto tie through coercive tactics, and its approved-source provision is not a per se violation. Container’s attack on Kentucky Fried’s arrangement is not yet exhausted, however, for the rule of reason remains. An antitrust claimant who unsuccessfully seeks to establish a per se violation may nonetheless prevail by showing that its adversary’s conduct unreasonably restrains competition. See Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 499-500, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969). The burden of proving unreasonable effects rests with the antitrust plaintiff.

In the case at bar Container has failed to carry this burden. First, Container has not demonstrated that Kentucky Fried’s arrangement adversely affects competition. Indeed, Container has presented no evidence at all of the actual competitive effect of Kentucky Fried’s system. Antitrust claims need not be established by euclidean proof, but they cannot be merely fantasized. For all that appears in this record, competition among suppliers of the franchisees is as open and vigorous as it would be under a system in which Kentucky Fried exerted no control at all over franchisees. Kentucky Fried has excluded not a single supplier from the market; it has narrowed the negotiations between franchisees and their suppliers in not a single respect. 11 The approved-source provision is hardly a boon to competition, but on this record we can only conclude that this approved-source requirement is as innocuous as any could be. Unless we were willing to condemn all approved-source requirements, we could not condemn this one. We have refused, however, to make such provisions per se violations, and Container’s failure to adduce evidence of this provision’s adverse impact therefore defeats its claim.

Moreover, Container’s proof is deficient in another respect. Even if a franchisor’s conduct adversely affects competition, the conduct does not contravene the rule of reason if it is designed to control the quality of the franchisee’s product and if the gain in quality is more beneficial than the attendant detriment to competition.

Here, Kentucky Fried seeks to justify its approved-source requirement as a device for controlling quality. Kentucky Fried’s argument possesses a substantial measure of intuitive appeal. A customer dissatisfied with one Kentucky Fried outlet is unlikely to limit his or her adverse reaction to the particular outlet; instead, the adverse reaction will likely be directed to all Kentucky Fried stores. The quality of a franchisee’s product thus undoubtedly affects Kentucky Fried’s reputation and its future success. *381 Moreover, this phenomenon is not limited to the quality of the chicken itself. Finger-lickin’ good chicken alone does not a satisfied customer make. Kentucky Fried has a legitimate interest in whether cartons are so thin that the grease leaks through or heat readily escapes, Jm whether the packet of utensils given a carry-out customer contains everything it should and in whether the towelette contains a liquid that will adequately perform the Herculean task of removing Augean refuse from the customer’s face and hands.

Kentucky Fried contends that by approving sources only if they comply with minimum standards, it ensures that the various supplies will not be of such poor quality that customers will be alienated. Container strongly counters that the quality control program is a sham, but aside from its own vociferous lamentations Container marshals no support for its contention.

In this respect it is important to note that Container bears the burden of proof; we are now analyzing quality control as an element of Container’s claim that the approved-source provision is an unreasonable restraint of trade. We must emphasize the distinction between quality control as an affirmative defense to a per se tying violation — with the defendant bearing the burden of proof and having to establish that the tie-in is the least'’burdensome method for effectively controlling quality — and quality control as a factor in determining whether the defendant’s conduct accords with the rule of reason. We deal here with the latter situation. Kentucky Fried’s reliance on the quality control rationale therefore is not necessarily misplaced solely because less burdensome alternatives for controlling quality are available. The presence of such alternatives is a factor to be considered in the reasonableness analysis, but it is not necessarily the decisive factor. 12 Container has failed to establish that Kentucky Fried’s system is not a reasonable means of controlling quality. Kentucky Fried must not be compelled to subject its chicken to the vagaries of unsuitable packaging.

We therefore conclude that Container has not prevailed on its rule-of-reason contention, both because it has failed to demonstrate adverse competitive impacts and because it has failed to show that Kentucky Fried’s system is not a reasonable method for achieving quality control. The district court correctly held for Kentucky Fried with respect to Container’s antitrust counterclai