Checkpoint Appeals Lawsuit by ID Security Systems

Checkpoint Systems Inc. is appealing a Federal court ruling in May that it had violated antitrust laws when it interfered with ID Security Systems’ contract to distribute anti-theft retail tags made by Tokai Electronics of Japan.  The company’s filing for a motion for post-trial relief was announced June 19.

The jury had found New Jersey-based Checkpoint guilty of attempted monopolization and consipiracy to monopolize, in addition to related state law claims. The jury however cleared Checkpoint of the charge of monopolization, the company said.

The post-trail motion means Checkpoint can request to either dismiss the verdict or order for a new trial. Both Checkpoint and ID Security Systems will be able to argue their case to the judge during this time.

“By exercising our rights of appeal, Checkpoint will have the further opportunity to assert its legal position,”  said Neil Austin, vice president, general counsel of Checkpoint. Austin added that the post-trial and appeal process will take place during the next 12 to 18 months.

With Checkpoint’s $80 million judgement in assessed damages to ID Security Systems, the federal court ordered a Stay that will remain in effect for as long as there is an appeal in process. As a condition of the Stay,  the court ordered Checkpoint to file an approximate $26 million surety bond with the United States District Court for the Eastern District of Pennsylvania and to place approximately $3.2 million of its existing treasury shares in escrow. In accordance with a Financial Accounting Standard (FAS), these shares will not be treated as outstanding for earnings per share calculations.

Checkpoint officials said the company believes it will be vindicated as a consequence of this process. “We continue to expect a favorable outcome for Checkpoint,”  said Craig Burns, executive vice president, CFO and treasurer of Checkpoint.

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