Document: 332 U.S. 319 67 S.Ct. 1634 91 L.Ed. 2077 UNITED STATESv.NATIONAL LEAD CO. et al. NATIONAL v. STATES. E. I. DU PONT DE NEMOURS & SAME. Nos. 89, 90, 91. Argued Feb. 3, 4, 5, 1947. Decided June 23, As Amended Oct. 13, [Statement of Case from pages 319-323 intentionally omitted] Messrs. Wendell Berge, Asst. Atty. Gen., and William C. Dixon, Cleveland, Ohio, for the United States. Mr. Dwight Whitney, New York City, du Pont Co. Bethuel M. Webster, National Lead Titan Co., Inc. Justice BURTON delivered opinion Court. 1 This action was brought by The States America, 24, 1944, in District Court Southern York, against Company (a Jersey corporation, here called or NL), its wholly owned subsidiary, Company, Delaware Tinc) de Nemours due DP). It is a proceeding equity instituted under § 4 Sherman Anti-Trust Act, 26 Stat. 209, 36 1167, 15 U.S.C. U.S.C.A. to prevent restrain alleged violations §§ 2 that 50 693, 2, 1, 2. trial conducted Judge Simon H. Rifkind court. began December ended March 14, 1945. His filed July 96 findings fact two conclusions law were entered October After extended consideration terms, court counsel all parties, decree 11, are reported 63 F.Supp. 513—535. fact, much detailed discussion record. Separate appeals this Court, case No. 89 States, 90 Pont. three companies sometimes referred as 'the appellant companies.' We noted probable jurisdiction each appeal, May 20, 1946, argued together February 3—5, A partial stay had been granted REED, on January pending determination appeals. Reference made recital complex facts which it consider order reach conclusion Lead, violated Act,1 although found marked difference between conduct Inc., one hand, other. affirms judgment except original effective dates certain provisions, our will relate largely assignments error terms decree. first issue presented participation so-called 'INTERNATIONAL CARTEL' DATING BACK TO 1920, constituting combination conspiracy restraint trade commerce titanium pigments compounds, among several states with foreign nations, combination, after 1933, include such participation.2 In their brief appeal said: 3 'The Government's based series closely related agreements 1920 1944. have cancelled continuation renewal has enjoined. greatly simplified we accept cancellation injunction renewal. submit, however, went too far forbidding normal usual contractual arrangements.' Accordingly, finding violation accepted without further discussion. 5 II. second 1933. 'joined herein exist between, NL associates. DP's status rights obligations different those other members combination. DP did not thereafter withdraw.' Finding Fact 73. opinion, also stated that— 6 'At least then territorial delimitations pigment business, joined 7 'My general summary evidence member combination—true, special member, status, obligations, members, but nonetheless.' at 530, 531, see preamble page 532.3 8 contested vigorously principal subject matter careful consideration, agree following Court: 9 'In sharp contrast NL, exhibited, very beginning interest titanium, an alert consciousness anti-trust laws moved cautiously guidance trained anittrust lawyers. question whether succeeded avoiding only form substance transgression. I concluded not; * *.' Id., 527. 10 would serve no beneficial purpose review upon conclusion. Its analyzes (Id., 527—531) and, light record whole, find support necessary reached. 11 III. Related these issues third. contract offensive antitrust apart relation contract, parties thereto, producers. international situation. 12 defendants Tinc utilized patents manufacture use control regulate sale compounds States; co-operation done so throughout rest world.' 95, subparagraph 9. 13 emphasized great power they acquired' 531) indicated criticism limitations originally inserted important licenses, later removed them. 532. Added together, covered agreement gave 'domination over business U.S.' 79. 'proliferation patents' another 'inevitable consequence' agreement. explained mean multiplication patents, resulting increasing difficulty attack validity none hundreds involved litigated. 14 'These through enmeshed manner used, have, forged into instruments domination entire industry. net effect founded long since expired, today less accessible free enterprise than when launched.' Referring exchange Pont, added: 16 '. . context present case, corporations, who them controlled market, becomes instrument restraint, available continue mastery market achieved means illegal agreement.' 17 These affirming, do, passing future Act 18 IV. remaining decree, exclusive Appendix, 532—535, reference purposes, reprinted margin, there reported.4 19 represents attempt fit remedy needs case. consists large volumes testimony four larger exhibits, representing total 5,500 pages, reflecting more months f trial. t demonstrates commendable procedure. Proposed submitted behalf respective Government immediately filed, formed basis consultation argument. Court's entered, conferences held full opportunity given propose changes Much benefit reviewing 20 provisions extent, matters lying within discretion whose duty make possible. confronted obligation give patent granting valuable nature monopolies patentees licensees, effect, prohibiting any nations. believe exceeded employed fairness having especial regard keeping lines precedent thus established, although, field, cannot be guides. essential shall fair possible preventing continued particular 21 They considered separately conjunction supporting arguments. instance sustain 22 Request omit requirement compulsory, nonexclusive licenses uniform, reasonable royalties substitute requirement, either perpetual enforcement presently companies, provision compulsory issued royalties. 23 major legal 24 material follows: 25 '4. term 'patents defined' letters applications (a) listed Appendix hereof; (b) divisions, continuations reissues foregoing applications; (c) (d) cover process five years date decree; acquires years; licensee sublicense. '7. Each ordered grant applicant therefor, including defendant co-conspirator, license defined royalty. Such may, option licensor, conditioned reciprocal applicant, royalty, covering manufacture, now pending, if any, applicant. opion eit her party, contain inspection books records independent auditor report licensor amount royalty payable information. During period may party imparting writing, charge, licensee, methods processes used former commercial practice licensed connection production pigments. reserves pass reasonableness charge directed reasonable. Defendants restrained attempting enforce licensees exportation country.' 27 assignment Government, point 28 '1. erred failing require existing until determined, application defendant, effects defendants' set forth court's law, fully dissipated.' 29 Later amend read 30 enter perpetually enjoining enforcing them.' 31 postponed above motion hearing merits. On oral argument, supported proposal that, satisfactory, prefer request errors accordingly granted. assigns orders contained paragraph briefs, argues refusing royalty-free licensing judgment.' both proposals considered. 32 While contended because decision Hartford-Empire 323 386, 65 373, 322, issuance feel reaching permissible exercise sound judicial discretion. 33 civil, criminal, proceeding. therefore, enforcement, punishment. An understanding appreciation reasons 34 Pure represent product comparatively recent development value. 35 'Titanium possessed opacity, hiding chemical inertness, displacing lithopone white lead. Titanium paints rubber, glass, paper, vitreous enamels, many products. before substantial in, of, paint, products; 33. 37 risen 100 tons (on pure Ti2 content) approximately 110,000 1943 peak 128,000 1941. outside shown growth, estimated being 1,1000 23,000 1938.' 35. 38 There producers products States—National American Zirconium (here Zirconium), subsidiary Glidden Virginia Chemical Chemical), Cyanamid Company. cross-licensed patents. field 1935 canceled. 1937 42. 39 assets $100,000,000 largest manufacturer world. manufactured sold 76.5% composite 46.4% TiO2 3. Du $1,000,000,000. manufacturers 23.5% 45.1% 40 took early lead promoting acquired Pigment organized Alloy Manufacturing Niagara Falls, York. patented developed Barton Rossi. At about time, Norwegian chemist, Gustav Jebsen, similar investigations along Norway. He his associates perfected producing relatively dioxide costly Falls. not, 1922, Joseph Blumenfeld, chemist managing director French company, obtained relating compounds. 34. 41 30, (affiliated Lead) A/S (representing Jebsen interests) still uncanceled. principles became 60 subsequent cartel5 features 44 517, 518. 42 Briefly stated, applied substances containing 2% unless weight 5% metal purely metallic form. apparatus, useful obtaining manufacturing compound field. 43 Both agreed license, others 'existing future' party. divided globe territorially. company North continent. world, reciprocal, reserved South America. Detailed copies licensees. Neither ever contest described. 45 agent Norweigian America vice versa Sales prices determined agent. Notwithstanding agencies, importations 'finished articles'—that is, etc.—containing principal, sublicensees, permitted provided constitute part finished articles sales agent's territory interfere substantially own 46 impart semiannually information detail knowledge applicable 'licensed field,' permit inspect study operations plants (exclusive research laboratories). grants extend 31, 1936, periods ten each, termination notice end period. particular, agreement, right sublicenses other's condition, nevertheless, every sublicensee (other licensor), field' identical character, scope, duration technical same extent licensor. 47 1929, assumed Lead. 48 Other world carrying out program establish trade. complaint lists co-conspirators does defendant. recognized circumstance difficulties effectively restraining pursuan i nternational well domestic program. To accomplish purpose, adjudged unlawful canceled addition, enjoined defendants, performance amendatory thereof supplemental thereto. Pars. 533, 534. 49 87% A/S, retaining 13%. intended acquisition TAS utilize competition markets States.' 47.6 interstate developing 1931, center, unconnected it. initiated independent, unsuccessful, efforts develop, research, new patentiable commercially feasible convinced undertake promptly going Commercial Pigments That Solvents Corporation 1928 Blumenfeld operating plant Baltimore, Maryland, where (the affiliate Lead). July, Krebs Color Corporation, some increased Findings 70, 12, 71. 'Both good faith claimed infringed denied infringement caiming, am ong things, doubtful validity. October, 1932, should questioned last resort try arrive understanding.' 72. 51 Finally, (by time 100% Lead), (subsidiary Pont) prevented (National entering (du latter subscribed subscription required export territories Lead's associates, Krebs' Pont's) extensive negotiations, formulated dated executed August 28, summarized 73 lower court, 520, 521. By cross-licensing provide restrictive agency specified Certain particularly Interessengemeinschaft Farbenindustrie Aktiengesellschaft (usually I.G. Farbenindustrie), insisted commitment subsidiary. insistence never abandoned. negotiations letters, 528, 529, reached strength this, evidence, 52 'DP, Rupprecht (President Corporation) corporation), assurances Exhibit E 1933), 53 finding, accept, throws conditions applied. Furthermore, exchanged April, 1940, discontinued 1940. 1933 respectively, amended 1941, eliminate 75. extender pigments, theretofore included implication practice. 76. six filing, instead immediately. 77. 54 'From active customers. vast increase sales; repeated reductions price taken place few increases. 1931 frequent expansions manufactureof d 20,027 50,674 1941 decreased 42,843 1943. 55 'NL endeavored match manufactures 56 'There allocation customers DP; maintains large, highly force engaged endeavoring sell salesmen chemists contact consumers (that etc.) demonstrate merit acceptance superiority. buyers mainly well-in-formed, experienced purchasing agents. prices; identity collusion.' 78. 57 disclose framing vigorous, young, world-wide industry 90% equal shares. balance hands smaller companies. affiliated organizations, show vigorous apparently profitable producers, intimation gaining ground rather losing Keen existed elimination, understanding, advantages weapons competition. carried supports while strongly complete dismissal proceedings contends event, payment 58 Assuming, justified, consisted primarily misuse placing commerce, secure immediate discontinuance prevention. accomplished strict prohibition agreements. Further assurance restraints therefor appendix also, others, to, by, applies become 59 us, neither nor permanent Act. do face constitutionality order. arise appropria te here. absence showing contrary, obvious entitle owners receive higher others. Also, clear value, ordinarily return alone. follows reduce automatically zero, regardless number, appears, face, inequitable proof computed nominal might zero rate. conclusion, depend Recognizing computing royalty,7 conception already Congress Court.8 frequently Anti-trust consent decrees.9 charged paid enough indicate often confront faced task. Cf. Sinclair Refining Jenkins Petroleum Process 289 689, 697, 698, 736, 739, 77 1449, 88 A.L.R. 496. growing royalty-paying demonstrated progress even past conditions. paragraphs retain sufficient enable vacate modify fixing rates finds appropriate. hold, modified enjoin involved. 61 B. add requiring year, plan divestiture plants, physical property. urged 89. opposed discussed length 62 reason requirement. cases pooling commerce. allegation properties violative incidental mentioned. Paragraph goes further. requires present, divesting themselves stockholdings financial interests purchase interests, direct indirect, corporations plan, completion go toward effective. operated, adapted operation. Presumably, requested providing competing However, Company) Company), able concerns divested plants. No comparable precedents presented. 64 units preferable two, or, Chemical, better four. Likewise, necessity practicality fairness. manager department characterized 'tough' 'plenty tough.' suggests remove handicaps demnstrates n o weakening competitors courts realign redirect lawful exists released violate laws. separate need for, feasibility separation abuse furnish during years, desired supersede which, makes license. 91, omission requirements compelling 66 altogether based, part, experience emphasizes matured ceased. exchange. Zirconium, 1934, 1935, received 84 shows 1935—'* cross acquired, experience. render engineering assistance installation imparted refused convey technology doing. 68 'On occasions 1940 relative Zirconium's production.' 69 8, contains disputed Pont: 70 secured monopoly apparatus equipment exclusion detriment ceased exchanging information, mature industry.' merely 7, 71 'During writing pigments.' 72 limited scope access apprent. he can vital giving value central feature put Just pay privilege patent, so, him accompany newcomer, testified repeatedly. If need, availability hard deny. evidencing importance following: 74 wished pool settle controversies obtain facilities jointly dominate compounds; *. TP extensively 1932 claims company. Blemenfeld furnished aid approximate commenced 1932.' 75 'DP 1940.' 76 Ex. purposes: '1) For year prior making officials concerned expiration relied. DP, powerful facilities, expected strengthen jointly, newcomers business. 78 'DP's were: 79 '3) NL's 80 81 achievement purposes. 82 '2) 83 takes middle ground. Apparently opposes expansion proposed Government. expressly endorses basis. approves basis, hardly object 85 eliminated discussion, 24(c) controlling supra, 413, 418, 387, 389, 322. reprehensible persuasive punitive. justification rests appropriateness effectiv e available, 24(a) (without royalties), 24(b) (with cost, plus profit, 'all drawings patterns 'relating machinery glass-ware' embodied inventions Id. 414, deleted 24(c). statement deletion 24(c), deletion, announced disapproval, decrees, supplying charge. 86 argument practically improved pigments: thus, grades (i.e. products) unexpired patents.' 37. Therefore, newcomer 87 strong disclosure leading competitor, industry, especially terminated pre-existing supply apply, force, situations directed. Under circumstances view narrow limits written judged public private concerned. produce most generally devise simultaneously relies breadth shared throw wide-open competitive parties. discourage encourage research. contrary conformity with, policy force. Changes underlying policies Congress,10 Congress, failure changes, added detracted from, traditional policies. D. described nd concrete illustration what suggested happen 'Otherwise you situation conceivably simply change places becoming dominating factor extraordinary advantage take everything itself has.' distinguished latter, inserting dealing organization consequently, derived cross-licenses. clause includes appropriate five-year limit clause, *' 92 Here again, seeking relief always inherent laws.11 93 six-months' imposed options briefs 1945, stayed suspended, Reed passed prejudicing affected. suspension pursuant ample terms. 94 F. language claimed, enjoins arrangements precise strike margin text italics insert word 'producer' capital letters.12 agreements, injunction, 6, (namely, division territory, markets, limitation imports exports, restrictions use, insure subjecting undue hardship losses. asks 95 agree, interpretation deals solely enforceability contracts words barriers contracts. Clause adhering 'which continuing renewing Since imposes unjustified restriction contract. 6. unduly restricted, apply modification judgment. G. approval, urge decree.13 deletion. approval. words, stock acquisitions parcel probably element establishment arrangement.' directly 97 disposing points relied appeals, remain excepting result dissolution 9, thereof, deemed, purposes running thereunder, mandate 98 forth, affirmed. 99 Affirmed. BLACK JACKSON cases. 101 DOUGLAS, whom MURPHY RUTLEDGE concur, dissenting part. 102 flagrant persuade us approve desire inventions. Nor think sustained frame unembarrassed ruling 322; 324 570, 815, 1198. 'reasonable' applicants. unacceptable law.1 assume district judge deference rule reflection judgment.2 103 instance, aware, incorporation greatest administration laws, Court,3 remains open one, followed 104 stressed notspecifical ly authorized forfeiture actions. thought 'if, must record, owns valid difficult say however abused thereby conferred, dedicate public.' 415, proves much. sanctioning licensing, serious inroad rights. gives patentee assignee 'exclusive make, vend invention discovery R.S. 4884, 40, 40. could rights, mandatory consistent Again, specifically prevents directing token bar also. 105 criterion choosing remedies Congressional silence. task putting monopoistic practices restoring magnitude complexity; broadest powers cope statute mould additional ones. See Porter Warner Holding 328 395, 1086, 1332. And though enumerated, thwart plans build empires, how imaginative undertakings subtle techniques. transgressions. impairment property barrier fashioning relief. Union Pacific R. 226 470, 476, 477, 162, 165, 306. Divestiture spite hardship, inconvenience, loss. Crescent Amusement 173, 189, 254, 262, 160. Devices instrumentalities legitimate ends nevertheless outlawed entirely create 187, 188, 261, aim repetition undo done, neutralize unlawfully acquiring fruits condemned project. Standard Oil 221 78, 502, 523, 619, L.R.A.,N.S., 834, Ann.Cas.1912D, 734. 106 here, forbid monopolistic competitors. 513, allowed indeed, reap dividends activities. dissent 'Every dollar hereafter, heretofore, illegally aggregated combina tion's money participants entitled virtue conspiracy.' 443, 400, 107 But beyond commanding impregnable position. dominated suppressed restored measures adopted maximum ventures compete established giants permitting apparent. adds costs competitor fight 108 'National way frees because, disadvantage.' 109 'Compulsory alone restore healthy, condition. position 110 world's producer expects disadvantage fate independents small statute?4 111 approved stops short refused. Compulsory ordered, willing reciprocally respect dominant get benefits up advantages—the possess. misused 'reasonable,' odds restoration 112 Except mentioned, join 'Section 1. Every trust otherwise, conspiracy, hereby declared illegal: ** person engage deemed guilty misdemeanor, conviction punished fine exceeding $5,000, imprisonment said punishments, court.' 694, Beginning co-conspirator (Titan successor interest) various Tinc, times continuously nations contracts, understandings '2. Plaintiff decree.' D.C., 527, note infra. 'This cause came heard answers thereto counsel. pendered wherein Section 1; 'Now, plaintiff Assistant Attorney General, Herbert Berman Special Assistants Julian Caplan Ephraim Jacobs, Attorneys, John X. McGohey, Attorney, accordance prayer complaint, severally appeared counsel, follow s: 'titanium pigments' percent (2%) chemically, mechanically physically combined state mixtures uses, extenders product. 'defendants' hereinafter identified designated abbreviations: E.I. '3. 'co-conspirators' listed, IG TG Titangesellschaft m.b.H. SIT Societe Industrielle Titane ICI Imperial Industries, Ltd. GW Goodlass Wall ISC Smelting BTP British Products NTP Pigments, Laporte CIL Canadian CTP Kokusan Kogyo KK Kabushiki Kaisha TK Terres Rares des Produits Chimiques Thann Fabriques Mulhouse Montecatini Societa Anonima Aussig Verein fur Chemische und Metallurgische Produktion '5. persons acting claiming act through, successors subsidiaries thereto: 'Agreement (Exhibit A); (Exhibits E—3); 'Agreements TP, A—1 A—2); 1927 B); C); signed C—1); C—3); C—7); C—8); 16, ICI, ISC, TINC F); TINC, SIT, TERRES RARES, 17, G—1 G—2); IG, Rares, TG, Thann, Doitsu (Doitsu Senryo Gomei Kaisha, Kobe/Japan) 18, 1936 J J—2); K); 1937, 27, 1939 K—1 K—5); 1938, April 21, 1939, 10, M, N, Q, R S), 'License Field Extender' O); provided, E—3) nine '6. directors, officers, agents, employees, acting, under, into, maintaining furthering, indirectly, themselves, co-conspirators, person, partnership undertaking, dealer (1) divide territories, (2) allocate (3) (4) third (5) keep market; nothing subdivision prohibit subsidiaries, distributor, co-conspirator; restricting purchaser thereof. non-exclusive nuiform, country. '8. Within approval holdings interest, BTP, CTP, TK, transfer corporation will, consummation preclude GW, them, CIL. '9. Either assigns, option, exercised 7. event Corporation. collecting exercising exercise. bringing, threatening bring, defined. '10. General proper representative shall, securing compliance access, office hours books, ledgers, accounts, correspondence, memoranda, documents possession legally privilege, interference interview officers employees regarding matters; divulged Department duly course otherwise law. '11. Judgment taxed '12. cancellation, injunctions executory operative ninety days '13. Jurisdiction cause, hereto, retained enabling hereafter bound, whole orders, modifications, vacations directions '(1) construction '(2) therewith punishment thereof.' 'Appendix A' identification patents; Inc.'s application; A/S's Farbenindustrie's Titangesellschaft's Pont's 175 applications. references Exhibits refer exhibits 'Cartels foremost advocates bodies. Sir Alfred Mond, organizer Industries: "I cartel fusion, arrangement, quota arrangement convention, protean ultratechnical way, regulating, rule, production, frequently, prices. Felix J. Pole, chairman Associated Electrical Ltd.: "A association usually sections common interests. designed extreme unfair interchange scientific standardization products, etc. Competition eliminated, reguated. Comp etition quality, efficiency, service crude method cutting." Monograph Subcommittee War Mobilization Committee Military Affairs, Senate, 78th Cong., 2d Sess., Part I, p. Quoted 5. accomplished. subsequently industrial countries local firm contemplated contribute threatened TAS, interest. Any exports NL. refrain America) associated formation bound adhere placed A. (The 1920.) All belonging organized, exclusively 48. Hearings Patents H.R.23,417, 62d Sess. (1912), XII, pp. 10—11; H.R.Rep.1161, 8; Report Bar Association appointed King Bill, S. 383, 74th Cong. 1935), 38. recognition test Chapter 726 79th Session: '* rendered complainant recover damages compensation making, using, selling invention, costs, fixed (Italics supplied.) 4921, 778, estimate damages. outstanding example 413—417, 388, accounting suits, profits ascertained standard comparison allow 'But, kept close monopoly, proving considering invention. utility advantages, Not improbably produce, quite admissible royalty.' Dowagiac Mfg. Minnesota Moline Plow 235 641, 648, 221, 224, 398. Sheldon Metro-Goldwyn Pictures Corp., 309 390, 404, 681, 686, L.E. 825; Suf folk Hayden, Wall. 315, 320, 76; Walker 833 (Deller's ed. 1937) (Id. 1945 pocket supp.); Yale L.J. Owens-Ill. Glass CCH Trade Reg.Serv. 57,498 (D.C.N.D.Calif.1946); Air Filter 57,492 (D.C.W.D.Ky.1946); Libbey-Owens-Ford 57,489 (D.C.N.D.Ohio 1946); Diamond Match 57,456 (D.C.S.D.N.Y.1946); Elec. 57,448 (D.C.N.J.1946); Bendix Aviation 57,444 Crosby Steam Gage Valve Manning, Maxwell Moore, 57,336 (D.C.Mass.1945). H.R.20,388, 60th 1st (1908); H.R.11,796, 61st (1909); H.R. 2930, (1911); 16,828, (1912); 23,417, amended, 1700, 63d (1913); 14,865, (1914); 2783, 70th (1928): 2491, 77th (1942). Provisions incorporated decrees. 52.777 (D.C.N.J.1942); Bosch 52,888 (D.C.S.D.N.Y.1942). "5. hereaby ca ncelled (followed list agreements) "6. amony PRODUCER, thereof." supra. 'That property, protected appropriation boty individuals government, settled. quality courts, arising leases, abstained amounted urges justified decisions doctrine owner using problem whether, discontinued, could, relief, forfeit violation. Lower federal rightly decrees provisions.' 416, He, determine royalties: 'I liked felt hadn't green that.' point. remembered consequences unhealthy condition dearth ordinary litigation. burden testing potentially invalid unwilling

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