1

0810079

UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

COMMISSIONERS: William E. Kovacic, Chairman

Pamela Jones Harbour

Jon Leibowitz

J. Thomas Rosch

___________________________________

 )

 In the Matter of )

 ) 

Flow International Corp., ) Docket No. C-4231

)

a corporation )

)

____________________________________)

DECISION AND ORDER

The Federal Trade Commission (“Commission”) having initiated an investigation of the

proposed acquisition by Respondent Flow International Corporation (hereinafter “Flow

International”, “Respondent”, or “Respondent Flow International”) of OMAX Corporation, and

Respondent having been furnished thereafter with a copy of a draft of Complaint that the Bureau

of Competition proposed to present to the Commission for its consideration and which, if issued

by the Commission, would charge Respondent with violations of Section 7 of the Clayton Act, as

amended, 15 U.S.C. § 18, and Section 5 of the Federal Trade Commission Act, as amended, 15

U.S.C. § 45; and

Respondent, its attorneys, and counsel for the Commission having thereafter executed an

Agreement Containing Consent Order (“Consent Agreement”), containing an admission by

Respondent of all the jurisdictional facts set forth in the aforesaid draft of Complaint, a statement

that the signing of said Consent Agreement is for settlement purposes only and does not

constitute an admission by Respondent that the law has been violated as alleged in such

Complaint, or that the facts as alleged in such Complaint, other than jurisdictional facts, are true,

and waivers and other provisions as required by the Commission’s Rules; and

The Commission having thereafter considered the matter and having determined that it

had reason to believe that Respondent has violated the said Acts, and that a Complaint should

issue stating its charges in that respect, and having accepted the executed Consent Agreement

and placed such Consent Agreement on the public record for a period of thirty (30) days for the

receipt and consideration of public comments, now in further conformity with the procedure

described in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission hereby makes the

following jurisdictional findings and issues the following Decision and Order (“Order”):
2

1. Respondent Flow International is a corporation organized, existing and doing

business under and by virtue of the laws of the State of Washington, with its offices and principal

place of business located at 23500 64 Avenue South, Kent, Washington 98032. th

2. The Federal Trade Commission has jurisdiction over the subject matter of this

proceeding and of Respondent, and the proceeding is in the public interest.

ORDER

I.

IT IS ORDERED that, as used in the Order, the following definitions shall apply:

A. “Flow International” or “Respondent” means Flow International Corporation,, its

directors, officers, employees, agents, attorneys, representatives, predecessors,

successors, and assigns; and its joint ventures, subsidiaries, divisions, groups and

affiliates controlled by Flow International Corporation, and the respective

directors, officers, employees, agents, representatives, predecessors, successors,

and assigns of each.

B. “OMAX” means, OMAX Corporation, a corporation organized, existing and

doing business under and by virtue of the laws of the State of Washington, with its

offices and principal place of business located at 21409 72 Avenue, Kent, nd

Washington 98032; and its joint ventures, subsidiaries, divisions, groups, and

affiliates controlled by OMAX Corporation.

C. “Commission” means the Federal Trade Commission.

D. “Acquisition” means the proposed acquisition of OMAX by Flow International

pursuant to an exclusive option agreement to negotiate the acquisition of Omax

signed on December 5, 2007.

E. “Acquisition Date” means the date the Acquisition is consummated.

F. “Competitor” means any person that, during the five (5) years after this Order

becomes final, is or seeks to become engaged in the research, development,

manufacturing, marketing, or sale of Waterjet Cutting Systems or Waterjet

Cutting System Controllers in the United States.

G. “Confidential Business Information” means any information relating to the

research, development, manufacture, distribution, marketing, or sale of Waterjet

Cutting Systems or Waterjet System Cutting System Controllers by any Licensee

or Authorized Sublicensee that comes into the possession or control of the
3

Respondent as the result of the License, including, but not limited to, any

information that any Licensee is required to provide to the Respondent under the

terms of the License. “Confidential Business Information” includes, but is not

limited to, any information provided to Respondent in any License Report.

H. “Controller” means computer software and hardware that direct the cutting head.

I. “License” means:

1. the license with a Licensee for the Licensed Patents attached as Exhibit A

to this Decision and Order; or,

2. a license that substantially complies with Exhibit A, that achieves the

purposes of this Order, and that receives the prior approval of the

Commission. 

J. “Licensed Patents” mean the OMAX ‘596 Patent and the OMAX ‘345 Patent. 

K. “Licensee” means any signatory (other than Respondent) to any License.

L. “License Reports” means any report or information provided by any Licensee to

Respondent under the terms of any License.

M. “OMAX ‘345 Patent” means United States Patent No. 5,892,345, including all

related patent applications, extensions, current or future United States patents that

share a common parent application with or that claim a priority from an

application for U.S. Patent No. 5,892,345, and all other rights included in the term

Patent as it is defined in this Order.

N. “OMAX ‘596 Patent” means United States Patent No. 5,508,596, including all

related patent applications, extensions, current or future United States patents that

share a common parent application with or that claim a priority from an

application for U.S. Patent No. 5,508,596, and all other rights included in the term

Patent as it is defined in this Order.

O. “Patent” means the United States patent and all related patent applications and

includes all reissues, divisions, continuations, continuations-in-part, substitutions,

reexaminations, restorations, and/or patent term extensions thereof, all inventions

disclosed therein, all rights therein provided by international treaties and

conventions, and all rights to obtain and file for patents and registrations thereto in

the United States.
4

P. “Person” means any individual, partnership, joint venture, firm, corporation,

association, trust, unincorporated organization, joint venture, or other business or

governmental entity, and any subsidiaries, divisions, groups or affiliates thereof.

Q. “Waterjet Cutting System” means a system that uses a high pressure stream of

water to cut plastic, metal, composite, and other materials. A Waterjet Cutting

System contains one or more of each of four main parts: (1) pump, (2) cutting

head, (3) cutting table, and (4) controller.

II.

IT IS FURTHER ORDERED that:

A. Respondent Flow International shall grant a License to any and all Competitors

that, during the five (5) years after this Order becomes final, request a License. 

Respondent shall execute the License not more than thirty (30) days after

Respondent receives a written request from a Competitor.

B. At the request of a Licensee, and subject to the prior approval of the Commission,

the Respondent shall enter into an agreement to modify the License if the

modification reasonably is related to achieving the purpose of this Order. 

C. Respondent Flow International shall not threaten to file, file suit, or make any

claim for damages against any Licensee relating to any actual or claimed

infringement of any of the intellectual property that is the subject of and within the

scope of the License.

D. Respondent shall comply with all terms of each License, and any breach by

Respondent of any term of a License shall constitute a violation of this Order. If

any term of the License varies from the terms of this Order (“Order Term”), then

to the extent that Respondent cannot fully comply with both terms, the Order

Term shall determine Respondent’s obligations under this Order. Notwithstanding

any paragraph, section, or other provision of the License, any modification of the

License, without the prior approval of the Commission, shall constitute a failure to

comply with this Order.

E. The purpose of the License required by Paragraph II.A. of this Order is to create

viable, independent Competitors to develop, manufacture, and sell Waterjet

Cutting Systems or Waterjet Cutting System controllers, using the Licensed

Patents, and to remedy the lessening of competition resulting from the Acquisition

as alleged in the Commission’s Complaint.
5

III.

IT IS FURTHER ORDERED that:

A. Respondent shall:

1. not provide, disclose or otherwise make available any Confidential

Business Information to any Person except as set forth in Paragraph III.B.

of this Order; 

2. not use any Confidential Business Information for any reason or purpose

other than as otherwise required or permitted by the License and this

Order; and,

3. require all License Reports to be sent to the attention of Flow’s general

counsel, who shall not provide, disclose, or otherwise make available any

information contained in any License Report except to persons whose

duties relate solely to providing legal services and representation to

Respondent.

B. Respondent may use Confidential Business Information only (i) for the purpose of

performing Respondent’s obligations under this Order; and, (ii) for the purpose of

exercising Respondent’s rights explicitly granted to Respondent by the License. 

IV.

IT IS FURTHER ORDERED that:

A. If the Commission finds that Respondent has failed to grant a License as required

by Paragraph II. of this Order within the time periods specified therein, then the

Commission may appoint a Licensing Trustee to grant the License to any

Competitors to satisfy the requirements of Paragraph II of this Order. 

B. Neither the decision of the Commission to appoint a Licensing Trustee, nor the

decision of the Commission not to appoint a Licensing Trustee, to grant the

License under this Paragraph IV shall preclude the Commission or the Attorney

General from seeking civil penalties or any other relief available to it, including a

court-appointed trustee, pursuant to § 5(l) of the Federal Trade Commission Act,

15 U.S.C. § 45(l), or any other statute enforced by the Commission, for any failure

by the Respondent to comply with this Order.
6

C. If a Licensing Trustee is appointed by the Commission or a court, Respondent

shall consent to the following terms and conditions regarding the Licensing

Trustee’s powers, duties, authority, and responsibilities:

1. The Commission shall select the Licensing Trustee, subject to the consent

of Respondent, which consent shall not be unreasonably withheld. If

Respondent has not opposed, in writing, including the reasons for

opposing, the selection of any proposed Licensing Trustee within ten (10)

days after notice by the staff of the Commission to Respondent of the

identity of any proposed Licensing Trustee, Respondent shall be deemed

to have consented to the selection of the proposed Licensing Trustee. 

2. Subject to the prior approval of the Commission, the Licensing Trustee

shall have the exclusive power and authority to grant the License to a

Competitor pursuant to the terms of this Order. 

3. Within ten (10) days after appointment of the Licensing Trustee,

Respondent shall execute a (or amend the existing) trust agreement

(“Licensing Trustee Agreement”) that, subject to the prior approval of the

Commission and, in the case of a court-appointed trustee, of the court,

transfers to the Licensing Trustee all rights and powers necessary to permit

the Licensing Trustee to grant the License to a Competitor pursuant to the

terms of this Order. 

4. The Licensing Trustee may grant the License to any Competitor pursuant

to the terms of this Order at any time after the Licensing Trustee

Agreement is effective. 

5. The Licensing Trustee shall have full and complete access to the

personnel, books, records and facilities of Respondent related to each

License, as the Licensing Trustee may request. Respondent shall develop

such financial or other information as the Licensing Trustee may request

and shall cooperate with the Licensing Trustee. Respondent shall take no

action to interfere with or impede the Licensing Trustee’s accomplishment

of his or her responsibilities.

6. The Licensing Trustee shall serve, without bond or other security, at the

expense of Respondent, on such reasonable and customary terms and

conditions as the Commission or a court may set. The Licensing Trustee

shall have the authority to employ, at the expense of Respondent, such

consultants, accountants, attorneys, investment bankers, business brokers,

appraisers, and other representatives and assistants as are necessary to

carry out the Licensing Trustee’s duties and responsibilities. The
7

Licensing Trustee shall account for all monies derived from the divestiture

and all expenses incurred. Respondent shall pay the Licensing Trustee’s

fees and expenses in accordance with the Licensing Trustee Agreement.

7. Respondent shall indemnify the Licensing Trustee and hold the Licensing

Trustee harmless against any losses, claims, damages, liabilities, or

expenses arising out of, or in connection with, the performance of the

Licensing Trustee’s duties, including all reasonable fees of counsel and

other expenses incurred in connection with the preparation for, or defense

of, any claim, whether or not resulting in any liability, except to the extent

that such losses, claims, damages, liabilities, or expenses result from gross

negligence, willful or wanton acts, or bad faith by the Licensing Trustee.

8. If the Commission determines that the Licensing Trustee has ceased to act

or failed to act diligently, the Commission may appoint a substitute trustee

in the same manner as provided in this Paragraph IV of this Order.

9. The Commission or, in the case of a court-appointed trustee, the court,

may on its own initiative or at the request of the Licensing Trustee issue

such additional orders or directions as may be necessary or appropriate to

comply with the terms of this Order.

10. The Licensing Trustee shall report in writing to Respondent and to the

Commission every two (2) months concerning his or her efforts to grant

Licenses under this Order, and Respondent’s compliance with the terms of

this Order.

D. Respondent shall comply with all terms of the Licensing Trustee Agreement, and

any breach by Respondent of any term of the Licensing Trustee Agreement shall

constitute a violation of this Order. Notwithstanding any paragraph, section, or

other provision of the Licensing Trustee Agreement, any modification of the

Licensing Trustee Agreement, without the prior approval of the Commission,

shall constitute a failure to comply with this Order.

V.

IT IS FURTHER ORDERED that Respondent shall notify the Commission at least

thirty (30) days prior to:

A. any proposed dissolution of Respondent;

B. any proposed acquisition, merger or consolidation of Respondent; or 
8

C. any other change in the Respondent, including, but not limited to, assignment and

the creation or dissolution of subsidiaries, if such change might affect compliance

obligations arising out of the Order.

VI.

IT IS FURTHER ORDERED that:

A. Within thirty (30) days after the date this Order becomes final and every thirty

(30) days thereafter for one hundred and eighty (180) days, Respondent shall

submit to the Commission (with simultaneous copies to the Licensing Trustee(s),

as appropriate) verified written reports setting forth in detail the manner and form

in which they intend to comply, are complying, and have complied with Paragraph

II of this Order. Respondent shall include in the reports, among other things that

are required from time to time, the name, address, and phone number of each

person who has inquired about receiving a License (whether or not Respondent

granted a License to such person), the name, address, and phone number of each

Person to whom Respondent granted a License, and a full description of any

dispute between Respondent and any person to whom Respondent granted a

License concerning any claimed actual or alleged breach (whether or not

Respondent believes there has been a breach) of any License. Respondent shall

include in the reports:

1. Copies of all Licenses executed in each reporting period, together with

copies of all written communications to and from each Licensee; and,

2. The name, address, and phone number of each person who requested a

License, but to whom Respondent did not grant a License, together with a

description in reasonable detail of the reasons why Respondent did not

grant the person a license.

B. One (1) year from the date this Order becomes final on the anniversary of the date

this Order becomes final, annually for the next nine years on the anniversary of

the date this Order becomes final, and at other times as the Commission may

require, Respondent shall file verified written reports with the Commission setting

forth in detail the manner and form in which it has complied and is complying

with this Order. Respondent shall include in the reports, among other things that

are required from time to time, the name, address, and phone number of each

person who has inquired about receiving a License (whether or not Respondent

granted a License to such person), the name, address, and phone number of each

Person to whom Respondent granted a License, and a full description of any

dispute between Respondent and any person to whom Respondent granted a

License concerning any claimed actual or alleged breach (whether or not
9

Respondent believes there has been a breach) of any License. Respondent shall

include in the reports:

1. Copies of all Licenses executed in each reporting period, together with

copies of all written communications to and from each Licensee; and,

2. The name, address, and phone number of each person who requested a

License, but to whom Respondent did not grant a License, together with a

description in reasonable detail of the reasons why Respondent did not

grant the person a license.

 

VII.

IT IS FURTHER ORDERED that for the purpose of determining or securing

compliance with this Order, upon written request, Respondent shall permit any duly authorized

representative of the Commission:

A. Access, during office hours and in the presence of counsel, to all facilities and

access to inspect and copy all books, ledgers, accounts, correspondence,

memoranda and other records and documents in the possession or under the

control of Respondent relating to any matters contained in this Order; and,

B. Upon five (5) days' notice to Respondent and without restraint or interference

from it, to interview officers, directors, employees, agents or independent

contractors of Respondent relating to any matter contained in this Order.

VIII.

IT IS FURTHER ORDERED that this Order shall terminate on August 15, 2018.

By the Commission.

Donald S. Clark

Secretary

SEAL:

ISSUED: August 15, 2008