Mr. Attorney General: Referring to the question of violation, -- mention one of the brief matter, which is the Court's findings in this case on the fact of violation which is setout pages 706 to 707 of the record. And the Court there found that the defendant had failed to establish its contention that the agreements were subordinate to the alleged lawful -- unlawful purpose and it found on the contrary, they were designed to eliminate competition between the parties and were neither measurable by, limited to, nor subordinated to the reasonable necessities to the sale. So that wholly apart from the question of per se violation, the Court here found and we think clearly so that these agreements where unreasonable. And I now like to come to --
Felix Frankfurter: The fact that it's legal findings show that did -- there -- there was estoppel or waiver or anything else to be followed?
Mr. Attorney General: I would assume not, Mr. Justice --
Felix Frankfurter: What?
Mr. Attorney General: I would assume not.
Felix Frankfurter: Yes.
Mr. Attorney General: But --
Harold Burton: Would it be possible to establish that they were reasonable and necessary.Seemed so difficult to get evidence to that, on whether to give it a waive to that finding or not.
Mr. Attorney General: Well, I would say, Mr. Justice, that the way was open for the defendants to have introduced evidence to show he --
Harold Burton: If the burden is on him to show that they were --
Mr. Attorney General: To show the facts --
Harold Burton: -- reasonable and necessary.
Mr. Attorney General: -- relating to the execution of the agreements. And I would now like --
Felix Frankfurter: That suppose that your answer would be, that's irrelevant.
Mr. Attorney General: That is under the per se theory, Mr. Justice. But I was assuming --
Felix Frankfurter: Well --
Mr. Attorney General: -- that they were not per se. On the --
Felix Frankfurter: (Inaudible)
Harold Burton: Never can tell what happens to you. [Laughs]
Mr. Attorney General: Coming to what we think is the major question in this case, is the propriety of the provision and the decree directing the appellant to use reasonable efforts to promote the sale of its -- and distribution of its products and the territories, formerly allocated to the co-conspirators. We think that on the record in this case, there is nothing to show that there is any real likelihood or conflict between judgment of the American court, any possible judgments which may be entered by a foreign court.
Felix Frankfurter: Would that be a permissible issue? Would you have to try English law before Judge Underwood --
Mr. Attorney General: I would believe so, Mr. Justice, where the contention is --
Felix Frankfurter: -- as to law?
Mr. Attorney General: I would believe so where the contention is made that the District Court should not direct these steps because the agreements are still valid under foreign law and there is -- his real likelihood of conflict. And of course, it's not only British and French law but it's the law of 20 or 30 different countries All these countries where they have stayed out, for example, Norway, Israel, Lebanon. All of these place.
Felix Frankfurter: Can I take judicial notice for the English law for it precludes all division of territories? Or can I take also the contrary or do I have to be informed about that?
Mr. Attorney General: I would suggest, Mr. Justice that the third alternative is that information is necessary. I don't think that judicial notice can be taken in this field of law, particularly in English law, where there's change going on all the time. Now, we -- we're not suggesting before this Court that this agreements are clearly legal under English law. What we are suggesting is, that on the basis of what is before this Court, it cannot be said that the agreements are -- I'm sorry, I misspoke myself. We're not saying that the agreements are clearly legal under English law. All that we're saying is it cannot be assumed that the agreements are clearly illegal.
Felix Frankfurter: And since this involved the activity in England, under a system of law which we know and by colloquy under the Sherman law, we know that much.
Mr. Attorney General: Yes.
Felix Frankfurter: Why isn't the burden on you to establish that?
Mr. Attorney General: I think, Mr. Justice, because where the --
Felix Frankfurter: You tell these people to go in there and actively beget competition. Is that right?
Mr. Attorney General: Well, if I may address myself to that as a threshold question. This decree merely directs them to use reasonable efforts. Now, we disagree with them that reasonable efforts means they have to send salesmen necessarily into England, that they have to do all of these things. We think there are many things which they can do without physically setting foot inside of England. For example, the question of advertising, the question of sending notice to the British Government, or the French Government that these products are now available, advising engineering, professional societies in that area.
Felix Frankfurter: This Court has said on more than one occasion about Sherman or decrees. They ought not to be indefinitely framed with all the threat of litigable contempt proceedings following it, is that right?
Mr. Attorney General: Yes, Mr. Justice.
Harold Burton: Do you think we have to advertise?
Mr. Attorney General: Yes, that is specifically directed by --
Harold Burton: You -- you tell him prominent, an advertising campaign, if the advertising campaign is -- was anything, well then, they've got to go ahead of me.
Mr. Attorney General: Well, the decree assumes that if they advertise and they get orders from these advertisements, they're going to fill them and send them abroad.
Harold Burton: Then they've got to find the capital some place and fill them.
Mr. Attorney General: Well, we -- we assume that there's no contention made that they have to expand. They don't contend that they have to expand their production in order to fill these orders from abroad.
Harold Burton: How can you say that you have allowed them? They shall within one year by a sentence as available, sufficient quantities of unmarked glass.
Mr. Attorney General: Well, this may contemplate some expansion. This may contemplate the having availability -- available some unmarked glasses and glass with another trade mark, but there's nothing here to show that they'd have to, for example, build a new plant or something like that.
Harold Burton: Well, at least some money to that respect.
Mr. Attorney General: I -- I would assume that. Yes, I think that inevitably, when you attempt to develop business in a new market, it's going to entail some cost.
Harold Burton: That way, they must have good faith and try to develop the business. That way you --
Mr. Attorney General: That is correct.
William J. Brennan, Jr.: Now, Mr. Friedman, something more than the specific steps is contemplated, is it not? By reasonable efforts?
Mr. Attorney General: Well, I assume that -- we assume that reasonable efforts includes a specific steps, plus a little more.
William J. Brennan, Jr.: Well, what's the little more?
Mr. Attorney General: Well, such things as I have suggested which are not specifically spelled out. Such as -- what -- whatever steps they might feel reasonably would be required to try to develop the sales in this product, such as notifying possible purchases in the foreign country, notifying the Government --
William J. Brennan, Jr.: But aren't -- aren't the notifications that you suggest embraced within the specific circularization required?
Mr. Attorney General: We are suggesting that over and above, these are the specific circularizations, only to people who have requested an order who -- whose made an inquiry from the appellant, and the appellant has turned it down.
William J. Brennan, Jr.: When I look at c (2), inserted advertisements.
Mr. Attorney General: In trade journal.
William J. Brennan, Jr.: Now, what other kind of advertisings affect the cost?
Mr. Attorney General: Well, such as direct mail solicitation of other people, advising various trade societies and governmental groups in these territories.
William J. Brennan, Jr.: Should they join what passes for Chambers of Commerce in England and France?
Mr. Attorney General: Pardon me, sir, I didn't hear it.
William J. Brennan, Jr.: Should they join what passes for Chambers of Commerce in England and France?
Mr. Attorney General: Well, they -- they think this is necessary and reasonable to develop their business, the decree doesn't direct them to do that, at least a measure of flexibility to them.
William J. Brennan, Jr.: How about warehouses? The storage of the products and those kinds?
Mr. Attorney General: Well, there again, there's nothing to show that's it's necessary for them to warehouse the products. We assume that they can fill the orders from this country. Nothing in this record to show that it's necessary for them to warehouse products in those countries.
William J. Brennan, Jr.: How about exhibits, affairs and things of that nature?
Mr. Attorney General: Well, if they fail that it -- it's appropriate for them to participate in these things, they -- certainly, I don't think there -- they would be held in contempt for not joining -- participating in the trade fair in London, say.
William J. Brennan, Jr.: Well, the collection entails quite an expense, doesn't it?
Mr. Attorney General: Well, I think it -- it entail something of an expense but I think that there are provisions in antitrust decrees which entail considerable expense. And at the possible expense involved in complying with this decree has to be weighed on the other hand with the benefits which we think will result to the Commerce of the United States from this decree. I'd like to advert briefly to those benefits.
Felix Frankfurter: May I before you do that.
Harold Burton: Before you -- what's -- what is this, a penalty on them for their misconduct?
Mr. Attorney General: No, Mr. Justice. This is designed to help pry oven -- open the avenues of competition which have been closed but --
Harold Burton: Where -- what -- what competition?
Mr. Attorney General: The fact that the foreign companies have never come into this country --
Harold Burton: We're locked up to them, isn't it?You can't compel them to do that.
Mr. Attorney General: No, we can't but we help to stimulate them.
Harold Burton: You mean by attacking them abroad, you stimulate them to come over here and fight this company?
Mr. Attorney General: We -- we hope. The hope is that the -- the theory of this decree is --
Felix Frankfurter: But you don't mean that, do you? You don't meant that. That the -- one of the motives or one of the justifications for the decree is to stimulate foreign competition to come in the United States. That seems to me a new economic policy for an estoppel.
Mr. Attorney General: No, Mr. Justice. What I'm suggesting is that --
Felix Frankfurter: I'm not saying it isn't desirable but the thing strikes me as not the kind of a thing that you could urge before most courts.
Mr. Attorney General: We -- we stop --
Earl Warren: (Inaudible)
Harold Burton: Well, my -- my theory was directed at -- I'd understood that the purpose of a decree was to do away with the illegal actions that have taken place in this country and to restore competition if -- if there was other competition here. Now, you were directing this to the shift to other countries that are in the competition there.
Mr. Attorney General: Well, the --
Harold Burton: Bit -- and I just don't understand the purpose of that but --
Mr. Attorney General: The -- the restraints which we had in this case, our agreements under which the American company refuses to ship abroad and concomitantly, the foreign companies refuse to ship into this country. Now, the theory of the judge was that if you merely canceled the agreements, merely said, “These illegal agreements are canceled.” In view of this well-settled pattern that these companies had, this would not be enough to open up competition. They would be inclined to say the agreements have been canceled, we'll just go on about our way without the agreements.
Harold Burton: Were decrees suggested to the judge?
Mr. Attorney General: Yes, Mr. Justice.
Harold Burton: Did the Government suggested this decree?
Mr. Attorney General: The Government suggested this decree with one modification. The Government's proposed decree did not have the fist sentence in paragraph (11) A, the use of reasonable efforts. The judgment merely suggested the specific provisions set forth in paragraph c of (11).
Felix Frankfurter: Mr. Freidman, under this decree, would it be open for the appellant to go before the Court and say, in view of the fact as that in full political parties that are going in for a high carat? We would seek our satisfactions by keeping the foreigners out and we don't want to engage in foreign practice, in foreign affairs. That they -- would -- would the Government cooperate with that condition --
Mr. Attorney General: No.
Felix Frankfurter: -- or say, “No, he must fight in foreign market?
Mr. Attorney General: No, when we -- well, we certainly wouldn't cooperate in that position but I think --
Felix Frankfurter: You'd oppose it, wouldn't you?
Mr. Attorney General: That's right. Because I think the question of whether they have to go out in the abstract and do business abroad is not presented by this case. The question in this case is what they have to do when they have stayed out of the foreign markets as a result --
Felix Frankfurter: I understand that but they stayed out in part because they are protected against competition. Now, they say that you're in the judgment, they will get different barriers. They all erect different barriers against competition, namely, the -- they're not unfamiliar and not untraditional American territories. We don't want to go. There is the labor government on the horizon in England, and that will -- beget us difficulties, in various reasons, America is a big enough economic playground for us to cultivate. That this -- this decree says just the opposite, doesn't it?
Mr. Attorney General: That's right because we think those are not proper considerations.
Felix Frankfurter: They are not for a business concern?
Mr. Attorney General: Their proper considerations in determining where it wants to do business, certainly. But we don't have their proper considerations for the Court to take into account in determining whether it requires a company to take reasonable steps to compete abroad.
Felix Frankfurter: But what is it the Court's business whether they should compete abroad or not so long as you throw off the shuttle against their restrictions to do so, their self-imposed restrictions.
Mr. Attorney General: Because, Mr. Justice, the Court felt that the self-imposed restrictions, merely removing those, would not be enough to stimulate the American Foreign Commerce which has been a restrained by this conspiracy.
Earl Warren: Well, Mr. Freidman, does this -- does this decree go any farther than to -- to require the appellants to give notice in other countries through the -- in -- in the trade to the effect that its policy is changed and that it is now willing to do business with them if they want to do business with this company. And that -- and requiring them to maintain themselves in the positions so far as their product is concerned to supply it if those people wan it. Now, does it move farther than that?
Mr. Attorney General: I would say that it goes a little bit further than that.
Earl Warren: And how much? That's what I'm asking you. [Laughter]
Mr. Attorney General: I would say it's required them to give notice and also to make efforts to try to develop that trade to stimulate it. Now, the question as to how far they have to go to stimulate whether particular things might be done. That, it seems to us, comes within the broad area of business judgment.
William J. Brennan, Jr.: Suppose for example -- now, the company were to say, “We can't manufacture in America and ship to France and England, our product and tries that competitively was a British and French product. Are they, nevertheless, to go through all this advertising and a little more that this suggest but to me at least, you haven't defined. In that circumstance, are they required to do all these?
Mr. Attorney General: I don't think so, and I would suggest, Mr. Justice, in most circumstances, the appropriate procedure for them would be to go back to the District Court and either ask for modification or for a construction of the decree, that under the showing which they make, taking reasonable efforts did not require those steps.
Harold Burton: That's what they're doing now.
Mr. Attorney General: No, I don't think so, Mr. Justice, because their contentions are predicated on no factual basis. The -- they just make these statements. They say that the agreements, for example, are clearly valid under foreign law. That is not established. They suggest --
Hugo L. Black: I suppose that is true, where whether they stand or they're valid under foreign law.
Mr. Attorney General: If they're valid under foreign law, that still does not necessarily mean that a foreign court would enter a judgment which would enjoin them from reaching the agreements there. And the first --
Hugo L. Black: Suppose they were valid over there to the extent that a man who was bought this felon could set up as defense, he didn't have to pay him and those are contracts (Inaudible) what would be the offense? Do they have take and jeopardize their judgments on him?
Mr. Attorney General: I would think, Mr. Justice, they could protect themselves against that.
Hugo L. Black: By getting cash?
Mr. Attorney General: By getting cash, by selling the goods FOB New York or wherever they ship from.
Hugo L. Black: Well, if they -- if they have any business over there, they could -- the Government could go after him if it's illegal. I think you have to meet that.
Mr. Attorney General: Well --
Hugo L. Black: It would be the same, wouldn't it as though you -- an injunction under those circumstances were mandatory injunction for full-sale liquor business somewhere to do business in a State where there's -- against a law to sell liquor at all.
Mr. Attorney General: We -- we don't construe this judgment as requiring him to do anything which is illegal under foreign law in the sense that a foreign law provides a penalty for it. If there's any foreign ordinance or decree, which prohibits it, or if a foreign court enjoins them from -- before carrying on business in this countries. We think the direction to use reasonable efforts does not -- obviously, does not require that they violate the judgment of a foreign court.
Felix Frankfurter: But it does leave open the fact that the English court may hold to say guilty of a breach of contract and the decree of Judge Underwood is no defense. That's nothing new. We've had this in experience in the English courts, vis-à-vis Judge Ryan's decree.
Mr. Attorney General: That the Court may still hold, we don't know.
Felix Frankfurter: But if --
Mr. Attorney General: Court -- the courts may state that the type of disruption with contractual rights here involved is significantly different from that in the Nylon Spinners case. In the Nylon Spinners case, what they did was they directed them to reassign patents that had been assigned. Here, the only thing involved is a contractual, an executory contract not to do business there.
Felix Frankfurter: Well, its -- doesn't -- unless my lawyer is awfully arrested here, that well may be but it doesn't go beyond my legal imagination as an English court may hold that this contract is valid.
Mr. Attorney General: It may well but the mere fact that the English court holds that this contract is valid --
Felix Frankfurter: And therefore, subjects the appellant to a breach of -- to a suit for breach of contract. If it behold it then it may enforce it in the way which breaching a contract are enforced.
William J. Brennan, Jr.: Well, is it the Government's position, Mr. Freidman, that even if the appellant maybe subjected successfully in England, or France, or both to a judgment for damages that that would not be a reason. The appellant should not do the same as now directed.
Mr. Attorney General: No. We think that the -- the judgment does not require him to take steps which create a real likelihood of being subjected to judgment for pecuniary damages but I'd like to point out that that is, we think extremely conjectural. Mr. Stevens had spoken about this entry of appearance was a -- which is available. The entry of appearance however, was not made in the basic contract which was found illegal in this suit, the basic 1925 sharing agreement. The entry of appearance related only to the agreement to sell the business and subsequent agreements modifying the basic agreement. And I would assume that under these circumstances, the argument at least could be pressed by appellant before the English court that there is no entry of appearance.
Felix Frankfurter: But if you -- if they do what the decree requires them -- them to do, namely to do business in England, it bring themselves within the jurisdiction of the English courts.
Mr. Attorney General: If, Mr. Justice, the question of how they do business may well determine whether they have to go into the English court. They may find that they can effectively sell products in England without ever setting foot in England.
Felix Frankfurter: Well, but -- but the English courts may follow this Court's decision, even one of Due Process Clause in the case like the Washington case as to what constitutes subservience to jurisdiction.
Mr. Attorney General: But -- once again, I would like to emphasize that --
William J. Brennan, Jr.: Mr. Friedman, I hope -- I hope you didn't suggest in that last answer that maybe they can do just enough things not to get caught by an English court, and that's all right.
Mr. Attorney General: No, I wasn't suggesting in that sense, certainly, Mr. Justice. I was suggesting that before they subjected to any real likelihood of being held liable here, we have to have -- we think there has to be something more than a mere statement that they are threatened with suit by one of these companies, a threat made at a time when the matter was pending before the District Court and which obviously was designed in attempt to influence the judgment of the District Court. They may -- we don't know the British company may well conclude that would see advertisements beginning to appear in British territory. It adheres that the American company is attempting -- getting business in England that they're better off to forget this territorial allocation. They may decide -- we've had enough of this cartel. We can undersell the American company, the American -- let the American company come in here. We'll go into America and we'll take over most of their market. That --
Felix Frankfurter: May I suggest that it doesn't comfort very well with the dignity of this country. And to me, it doesn't seem desirable in international relation to wait in the suit as broad and an English court says, “No, we don't have to respect or to threaten -- threaten (Inaudible) in an English court would allow the suit -- suit for damages, and then rush to Judge Underwood's court and say, (Inaudible) the English court as you restrict it, so let's change decree. I don't think that's a very dignified attitude for this country or for this -- for the judicial system of this country to take.
Earl Warren: Mr. Friedman, is there anything in that decree either so worded or by implication that would require this company to go over to England or any other foreign country and submit itself to the jurisdiction of that country as distinguished from holding itself out in this country as being willing to serve customers in any of those countries who might want to do business with it on -- on reasonable terms here under the jurisdiction of the United States.
Mr. Attorney General: Well, in the -- Mr. Justice -- Chief Justice, in the first instance at least, we think that they can comply with it's judgment by staying in this country. Now, if it turns out that they merely hold themselves out. They put ads in and they wait here and they get no business, I suppose the question might well then arise whether they have complied with the provisions of the decree. I would suggest at that point, they may well go back to Judge Underwood and say, “This is what we've done, nothing has happened, isn't this reasonable effort?” And if the judge agrees in the point if he says no, then, it seems to me that is the time -- that point to challenge any of the further step, which the decree contemplates.
Felix Frankfurter: Are you prepared, on behalf of the Government, to state whether you will accept the Chief Justice's rephrasing of what this decree does? Then they'd all have to do is to pull their arms here and say, we're willing to take any business that is solicited from us?
Earl Warren: Well, he didn't put it exactly that way. [Laughter]
Felix Frankfurter: Well, on [Laughter] --
Mr. Attorney General: But that's the word --
Felix Frankfurter: -- Chief Justice were, will you substitute those -- that rephrasing for what is in this decree? After reflection, you think about it and then tell (Voice Overlap) --
Mr. Attorney General: I'd -- I'd like to reflect upon it and --
Felix Frankfurter: Yes.
Earl Warren: [Laughter]
Mr. Attorney General: -- and -- and then with -- with your kind permission, Mr. Justice, I would like if possible to consult with my superiors as to that but I don't I think I'm quite free to make this concession. I think that --
Felix Frankfurter: Well, I --
Mr. Attorney General: I think the suggestion does go back a little from what the decree suggest and I think in all candid, I should say that I don't think I can read the decree in its present languages contemplating only that. On the other hand, we think that it is necessary that -- and we -- we believe it's very important that the -- a decree should be entered which goes beyond merely canceling the agreements. And if this Court naturally feels that the decree is presently -- and it goes too far, we certainly would have no objection for a modification along those --
Felix Frankfurter: You -- you -- would you agree -- would you agree that I can barely read the decree and say, “Free the -- an error of activity demanded from the appellant?”
Mr. Attorney General: I would say it does, Your Honor.
Harold Burton: Is there any doubt in the mind of the Government to -- you wouldn't and is a case and there's power to -- to repel activities, actual activities in foreign -- on foreign soil of these companies?
Mr. Attorney General: We -- we don't think there's any -- any question of power. We think the real issue here is whether the Court has gone beyond its proper discretion. Court of equity --
Harold Burton: The equitable power is sufficiently great to -- so far as if they go to whatever point in the world may be necessary --
Mr. Attorney General: We -- we think so that --
Harold Burton: -- to carry its activities.
Mr. Attorney General: -- that a court of equity has the power to direct the defendant to take steps beyond its borders and --
Harold Burton: But that's the general equity power and not power that flows from the Sherman Act?
Mr. Attorney General: That is correct. We think that Sherman Act court, as a court of equity has that power, plus the power in the Court of -- in the Sherman Act to take steps to restrain and prevent.
Harold Burton: Do you have any decision that it proves a decree in this form even in this country?
Mr. Attorney General: In a substantially similar provision, Mr. Justice Burton, was contained in the decree in the I.C.I. case. Not the aspect of it that was litigated in the British court but another provision, which we have set out in page 48 of our brief. And in addition to that, we have set out in a footnote that there's been several recent consent decrees in which provision is directing the -- the parties --
Harold Burton: That on page 48, has that been judicially approved?
Mr. Attorney General: That has not been reported but that is the paragraph as entered in the I.C.I. case.
Felix Frankfurter: Mr. -- Mr. Friedman, may I trouble to ask you whether the cases noted in the footnote, in your footnote 32. Will I find the terms of the decree and those citations or the Department says we must have to the -- if they're not to be had, they're not available in some publications. Would it be convenient for the Department to say the -- what this means to prior analogous decree?
Mr. Attorney General: We will be happy to, Mr. Justice. These particular citations do contain the text --
Felix Frankfurter: They do? All right.
Mr. Attorney General: -- of the decrees in those cases.
Felix Frankfurter: Yes. I agree can agree.
Tom C. Clark: Did you take the DuPont and listed it here at page 48?
Mr. Attorney General: Sir?
Tom C. Clark: Did you (Inaudible) Would you be willing to take the DuPont language?
Mr. Attorney General: Well, the only difficulty I have would be sound business judgment concept, is the difficulty of determining what is sound business judgment. In other words, if this company should conclude that in its sound business judgment, it is not warranted in doing business in any of these countries, under the terms of the DuPont decree, I assume they're not required to go abroad. Now, sound business judgment, if it were in the sense that -- I -- I think to some extent at least, that is covered by the reasonable efforts provision. If it's something that just wouldn't make much sense from a business point of view at all. For example, to sell in a territory just not economically feasible because of the distance and because of the transportation difficulties, I think there is sound business judgment and reasonable efforts to coalesce.
William J. Brennan, Jr.: Well now, don't you think there that reasonable efforts is more an objective test, whereas DuPont's sound business judgment is largely subject?
Mr. Attorney General: I think so but I think that again, the two do coalesce because in determining what are reasonable efforts, you have to look to what is a sound business judgment. The thing -- to be quite frank that I'm afraid of under this provision, this would leave the way open for these people to reach the same result as they had in the past without the arrange -- benefit of this cartel arrangement. They would -- could well determine as a matter of a sound business judgment but they didn't want to go into these countries. Now, I think that --
Tom C. Clark: DuPont can give no (Inaudible)
Mr. Attorney General: I believe so, Mr. Justice.
Earl Warren: Well, Mr. Friedman, may I ask this -- this question. What would you think of a combination of -- of the -- these two things. One, the portion of the decree requiring these advertising features in -- in other lands, plus this provision to make such efforts as unreasonable according to their sound business judgment. Now, would -- would that take care of the little you were talking about?
Mr. Attorney General: I would think it would, Mr. Chief Justice. I might mention --
Tom C. Clark: What's your position is -- is -- let me see if I understand it. Suppose the decree was to stand and the Government came in (Inaudible) in fact they haven't made any legal efforts. Then, would be the time for them to raise their -- and to introduce their evidence, proved that they have a legal reference, is that your position? And not now under this --
Mr. Attorney General: That is correct. With this further suggestion that if in the intervening period they determined that it just isn't feasible for them and they just can't carry this thing out, they can then go before the District Court. I think it's -- it's rather significant here that this company is -- indicates that it has no wish to try to sell abroad and yet quite significantly, it felt it was worth $40,000 to it to purchase the rights to do business in South America. So that when they say they have no desire to go abroad but we think it's pretty clear and it's also shown by the way in which they keep referring orders to these foreign companies unless the foreign company agrees. In situations where they get the consent of the foreign company, they have no hesitancy in shipping an order into the territory of that company. So that, we think it's pretty clear from this record that this company is staying out of these territories not because as a matter of business judgment. It doesn't think it wants to do business in these areas but rather because these agreements are bound to it to stay out and in turn, the other companies are giving it absence of competition in the domestic market. Now, we think, Mr. Chief Justice, that a combination of the giving them some measure of discretion in the exercise of business judgment where it's appropriate that they should not take certain steps in combination with these specific steps, would be a admirable solution to this -- what seems to be this dilemma or one hand, a need for something to be done and on the other hand, the problem of -- we -- we don't want to put them in the position where they feel they've got a club hanging over them that they -- we -- we're not suggesting they had to go abroad and get themselves subjected to serious damage suits. That they have to -- to do something which is basically more than is required under the circumstances of this case to dissipate these restraints on trade.
Hugo L. Black: Supposed they were charged with contempt as you suggested or was suggested to you. They came in and said, “We haven't been doing business (Inaudible) we've been advised that the contract is illegal over there, almost an illegal over here and subject ourselves to (Inaudible) They said as -- and that's the result before we can file with the decree in trying to get this. We file a proceeding in court over there to -- until the matter is adjudicated. Do you think that any court was doing things over for subpoena.
Mr. Attorney General: In England, you mean?
Hugo L. Black: I mean here.
Mr. Attorney General: Well, Well, I would think --
Hugo L. Black: Suppose you came up it that statement that they were worried about it, they thought was uneven. They'd gone over there and had filed a proceeding in order to get the matter adjudicated before they attempted to do business. Do you think that would be -- relieve them from punishment under the contempt --
Mr. Attorney General: In the -- in the --
Hugo L. Black: -- charge?
Mr. Attorney General: Mr. Justice, the --
Hugo L. Black: Would that be reasonable? Would that -- in other words, would that be reasonable?
Mr. Attorney General: I would think so. That if -- if they went to, as Mr. Justice Frankfurter had suggested --
Hugo L. Black: Yes.
Mr. Attorney General: -- earlier. If they went to an English court and sought a -- some sort of declaratory relief, I don't know whether the court would give it to them. But if they did and the court said no, we still would consider this agreement valid under English law. You attempt to do business in this country, you're going to get in trouble. I think that would constitute a showing of, having taken a reason --
Hugo L. Black: What I mean to -- suppose they -- suppose they had enacted what they were citing for contempt before the -- this got action. Would you consider that they were doing -- implying with the decree and the reason (Voice Overlap) --
Mr. Attorney General: I would -- I would think they were using reasonable efforts if they attempted in good faith to try to ascertain or just what the consequences would be of the various competitive steps. And I want to emphasize once again that there's nothing in this decree which directs the appellant specifically to go abroad in the sense of sending personnel abroad, of sending goods abroad, of setting up warehouses, of taking any steps which may actually subject them to any damages. That at least as far as it appears in the first instance, we think all that is required under reasonable efforts is to stay right within the boarders of the United States and try to reach out and see to what extent they can stimulate this foreign commerce, and then to go forward from that point. Thank you.
Earl Warren: Mr. Stevenson -- Stevens, you may proceed.
Richard F. Stevens: If the Court please. It seems to me that the discussion of counsel for the Government has ignored one vital fact. That is that the record already shows in this case how this company deems it reasonable to conduct its business. And it is incontrovertible on the record that we deem it reasonable, in fact necessary in the conduct of our business to sell through skill-trained engineers. In other words, the product, the physical product of Holophane Company Inc. is sold 75% in conjunction with the engineering service which it renders. Indeed, engineering service, scientific lighting service is the chief product of Holophane Company. Therefore, to have on hand, even unmarked or newly marked glass to say nothing of the shadiness of circumvention implied in that resort. To have on hand that glass when the Government says, “You are not expected to send somebody abroad to sell it,” is imposing upon this small company a financial burden which it should not be required to assume. Because in order to have newly marked or unmarked glass, cutting right across its whole inventory, it must make an entirely new set of glass for expert -- export purposes and would be subjected to an irretrievable cost in doing that upon the theory that we are not expected to send somebody abroad.
Harold Burton: Does the record show that?
Richard F. Stevens: I believe it does, Your Honor. Now, I -- I --
Harold Burton: (Voice Overlap) possibly into just explaining to us the --
Richard F. Stevens: Now --
Harold Burton: -- that manufacturing glass, which now is in molds and so forth --
Richard F. Stevens: That's correct.
Harold Burton: You have to have both.
Richard F. Stevens: That's correct.
Harold Burton: Is that -- you don't know where that appears in the record, do you?
Richard F. Stevens: There is no extensive discussion of that in the record. I'm sure, Your Honor. It is in the record that we do so through the engineers, as I have said.
Earl Warren: Well, Mr. Stevens, do you -- assume that the Court finds that your contracts were illegal. Do you have any -- any great objection to doing the advertising things that this decree required, just the advertising?
Richard F. Stevens: We -- we do, Your Honor.
Earl Warren: Now, on what legal basis do you --
Richard F. Stevens: And we -- we say that --
Earl Warren: -- object to that?
Richard F. Stevens: We say that the District Court has no right to order this defendant to take any affirmative steps in England or in France, or in foreign territories. We say that it is the responsibility of the Government in this case when it asks for relief, which may impinge upon the sovereignty of another country to have shown to the District Court that there would be no impingement in the type of order which it has sought and presented to the Court. We say that the specific requirement of advertising, even though a less tangible impingement upon the sovereignty of another nation is such an impingement because it is a thrusting into the territory of another country of activities by the sole defendant in an American case of conduct contrary to the law of those countries. And we say that it is a violation of international law so to do, and if it were not a violation of international law, if it were not in conflict with the law of England or the law of France, the burden on that matter rested with the Government and they should have carried the bar. They did not do it.
Earl Warren: But what -- what provision of international law or what principle of international law does it violate for American company to say, “We will sell our product in every part of the world. We will sell it -- we're willing to sell it in England, or France, or Germany, or wherever -- wherever people -- wherever there might be customers, we our willing to sell to them.” Now, what --
Richard F. Stevens: Starting de novo, Mr. Chief Justice. There would be no interference.
Earl Warren: What?
Richard F. Stevens: But starting with the situation which we have in this case where there are contractual agreements binding upon limited in Francaise. And obviously and inherently untouched by any decree, unilaterally entered by Judge Underwood. We say that to require us to advertise is only a somewhat more subtle way of directing us to conduct our business affirmatively in that territory. In other words, we are no less violating the contractual rights of -- limited in Francaise by advertising and saying that Barcus is willing from these shores. Then we are -- if we send our men abroad, assuming we could find them and train them to sell the product in the only way we really know how to sell it.
Hugo L. Black: What practical objections do you have and -- and do the record show that you have in a business way to advertising if you could actually get customers over there. I'm not talking about your contract now, which suffice your concern in this country is illegal.
Richard F. Stevens: The -- the --
Hugo L. Black: But what practice is --
Richard F. Stevens: The -- the practical objection, Your Honor, would be that our business experience is that 75% of this product is sold in conjunction with the engineering services, which we render. And that we would be sitting in this country when they cross the Board's inventory, designed to meet the requirements of this decree in newly marked or unmarked glass. And would at most achieve a 25% result on the inventory which we could have if we in fact sold.
Hugo L. Black: Suppose you could sell 25% more. I guess you're in business to sell though --
Richard F. Stevens: Right.
Hugo L. Black: That's what I don't understand.
Richard F. Stevens: We -- we are -- but if -- what I am saying is that in order to sell that 25%, we would be subjected to the penalty of making an entirely new inventory of glass, unmarked or newly marked for sale in the territories of limited in Francaise. In other words, the regular Holophane inventory of glass with the Holophane trademark on it cannot be sold abroad.
Hugo L. Black: Well, the glass would be the same glass, wouldn't it?
Richard F. Stevens: It would be the same glass but it would have to be cast in new molds in order to have it without mark or bearing a new mark.
Hugo L. Black: What you're saying now is that -- as I gather, that the practical business objection you would have under those circumstances would be that the culture would be more than the profits you can get from the business.
Richard F. Stevens: That's correct. There would be a penalty inflicted upon us.
Harold Burton: Mr. Stevens, in answering the Chief Justice, you rested your case on this being active as abroad. What is your position as to this kind of a decree to -- limited to this country? Is there any precedent for making this kind of an affirmative decree here?
Richard F. Stevens: I know of none. I know of none and I think that -- I think that the suggestion that -- that the DuPont decree, the I.C.I. DuPont decree is comparable, is wholly beside the point because that inserted an entirely subjective test. That is DuPont in -- in the exercise of its business judgment. There is no such provision here.
Harold Burton: Well, what is your legal objection to a provision such as they put in the DuPont case, the one on page 48 of the Government's brief, that's the one providing that they make such efforts that are reasonable according to DuPont sound business judgment, not arrived at and not influenced by unlawful motives or purposes.
Richard F. Stevens: Well, the legal objection, Your Honor, is back on the point of a violation of international law. That is, that such an order, even with a subjective test, impinges upon the sovereignty of other nations. And that whether we like or not, as a matter of jurisdiction, it just doesn't exist.
Earl Warren: Have you quoted such cases in your brief?
Richard F. Stevens: We have quoted authorities which we believe support that point.
Earl Warren: Where are they found?
Richard F. Stevens: In the -- the appellants brief, Your Honor. Those cases are found, beginning at page 36, I believe. We say that the Banana case indicated that the Sherman Act applies within this country, as recently as Steele v. Bulova Watch, it was so cited. And we say that this country simply cannot impose its antitrust laws and its concept there under upon foreign countries.
Earl Warren: Well, it did -- it did that exercise some extra territorial authority, did they not in the Bulova Watch case?
Richard F. Stevens: Yes, and that is most interesting because in the exercise of that, if Your Honor will look at the footnote 17 in which Imperial Chemicals and the British Nylon Spinners litigation is cited, is made perfectly clear that it was when as in this case, there is no interference for the sovereignty of another nation. And that case, Your Honor, was decided in this Court after the Supreme Court of Mexico had set aside the registration of the Bulova trademark by the defendant in that case in Mexico. And so, it was approached with the Mexican law being in complete accord with our law and therefore, no infringement upon its sovereignty.
Hugo L. Black: Well, I understand you to explain as the Banana case held that the constitution of the United States forbids this country if it wants to, to sell its goods anywhere it can?
Richard F. Stevens: I did not, sir. No, sir.
Hugo L. Black: Well, I -- I understood you --
Richard F. Stevens: No, no. I -- I said that the Banana case, as I have read it and as was cited as recently as Steele v. Bulova says that the Sherman Act --
Hugo L. Black: Oh, yes.
Richard F. Stevens: -- applies to Acts within this country.
Hugo L. Black: Well, I understood that.
Richard F. Stevens: That is a territorial record.
Earl Warren: Thank you.