Plaintiff SPX Corporation ("SPX") brought a patent infringement action against Master Cool U.S.A. ("Master Cool"). Master Cool answered and counterclaimed. In its counterclaim, it alleged that SPX had violated Section 2 of the Sherman Act by its utilization of short term exclusive dealing incentive contracts with distributors, which allegedly foreclosed competitive opportunities to Master Cool, SPX's direct competitor. Both SPX and Master Cool sell automotive refrigerant recycling and recovery machines ("ARRR equipment") through distributors. The distributors market the ARRR machines and related services to consumers through catalogs. Through a series of one year distributor contracts with dealers, SPX provided advertising funds that were exclusive to certain SPX products and that were unavailable should a distributor advertise competing products.

Each of the distributor and service contracts was for a one-year duration. Either party could terminate the contract "for any reason" upon thirty days written notice. Similarly, a distributor could terminate a contract "with or without cause" upon ninety days notice.

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