United States v. Pilkington plc and Pilkington Holdings, Inc. Civil No. CIV 94-345 TUC WDB (D. Ariz.); Response of the United States to Public Comments Concerning Proposed Final Judgment

DEPARTMENT OF JUSTICE

United States v. Pilkington plc and Pilkington Holdings, Inc.

Civil No. CIV 94-345 TUC WDB (D. Ariz.); Response of the United States

to Public Comments Concerning Proposed Final Judgment

Pursuant to Section 2(d) of the Antitrust Procedures and Penalties

Act, 15 U.S.C. Sec. 16(d), the United States publishes below the

written comments received on the proposed Final Judgment in United

States v. Pilkington plc and Pilkington Holdings, Inc., Civil Action

No. CIV 94-345, United States District Court for the District of

Arizona, together with its response thereto.

Copies of the written comments and the response are available for

inspection and copying in Room 3235 of the Antitrust Division, United

States Department of Justice, Tenth Street and Constitution Avenue,

N.W., Washington, D.C. 20530, (telephone 202/514-2481) and for

inspection at the Office of the Clerk of the United States District

Court for the District of Arizona, Tucson Division, Room 202, James A.

Walsh Courthouse, 44 East Broadway Boulevard, Tucson, Arizona 85701-

1711.

Mark C. Schechter,

Deputy Director of Operations.

United States District Court for the District of Arizona, United

States of America, Plaintiff, Pilkington plc and Pilkington

Holdings, Inc., Defendants. Civil No. 94-00345 WDB.

Response of the United States to Public Comments

Pursuant to Section 2(d) of the Antitrust Procedures and Penalties

Act (the ``APPA''), 15 U.S.C. Sec. 16(b)-(h), the United States hereby

responds to public comments to the proposed Final Judgment submitted on

May 25, 1994, for entry in the civil antitrust action.

This action began on May 25, 1994, when the United States filed a

Complaint alleging that the Defendants violated Section 1 of the

Sherman Act by maintaining and enforcing licenses and other agreements

that unreasonably restrict the construction and operation of float

glass plants and the use and transfer of float glass process technology

within the United States and around the world. In addition, the

Complaint alleges that Defendant Pilkington plc violated Section 2 of

the Sherman Act by wilfully acquiring and maintaining a monopoly in the

world market for the design and construction of float glass plants.

On the same day, the United States and both Defendants filed with

the Court, pursuant to Section 2(b) of the APPA, 15 U.S.C. Sec. 16(b),

a Stipulation submitting for entry a proposed Final Judgment, and a

Competitive Impact Statement. The proposed Final Judgment embodies the

relief sought in the Complaint.

During the 60-day period provided by Sections 2(b)-(d) of the APPA,

15 U.S.C. Sec. 16(b)-(d), which expired on September 1, 1994, the

United States received three comments concerning the proposed Final

Judgment. The United States attaches hereto a copy of each comment and

of each individual response that it made thereto.

Two of the comments were submitted by counsel for PPG Industries,

Inc. (``PPG'') and International Technologies Consultants, Inc.

(``ITC''), the respective plaintiffs in two civil actions against

Defendant Pilkington plc et al. currently pending in this Court. The

third comment was submitted on behalf of an unidentified client by a

Minneapolis, Minn. lawyer.

The PPG comment asserts that ``[w]hile the Proposed Final Judgment

does make it more difficult for Pilkington to continue these [trade-

restraining] practices * * *. the public interest counsels modification

or clarification'' thereof in accordance with eleven specific

proposals. The ITC comment states that ``[t]he proposed decree

represents an important initial step in eradicating the obviously

pernicious and indefensible license provisions, but unfortunately it

stops far short of providing the competitive relief required to

definitively eradicate the Pilkington cartel * * *'' and proposes two

specific changes in it. Both comments quote press statements by

Pilkington in justification of their proposals.

In response to both of these comments the United States initially

points out that the sole issue currently under consideration is whether

it is in the public interest to enter the proposed Final Judgment

submitted to the Court by stipulation. Entry is in the public interest

if the proposed Final Judgment is adequate to remedy the antitrust

violations alleged in the Complaint. United States v. Bechtel Corp.,

1979-1 Trade Cas. (CCH) 62,430 (N.D. 1979), aff'd, 648 F. 2d 660, 665

(9th Cir. 1981), cert. denied, 454 U.S. 1083 (1982).

ITC, a U.S.-based company that never had a Pilkington license and

that has persistently but so far unsuccessfully attempted to enter the

float glass plant design and construction market, proposes to add a

broad injunction against Defendants' entering or enforcing any contract

with a U.S.-based licensee that has the purpose or effect of inhibiting

market entry by U.S.-based non-licensees. PPG, a U.S.-based Pilkington

licensee, proposes rendering null and void all of the U.S.-based

licensees' obligations under their respective Pilkington licenses.

In response, the United States agrees that Pilkington's continued

efforts to hinder entry and to enforce geographic and use restrictions

against its U.S.-based licensees must be enjoined, and points out that

the proposed Final Judgment achieves those results, albeit with more

specifically drawn injunctive provisions that those proposed in the

comments. Thus, Subparagraph IV.A. forbids Defendants to enforce

license agreements with U.S.-based licensees insofar as they contain

any contractual limitations or any payment or confidentiality

obligations with respect to any technology that Pilkington disclosed to

any U.S. licensee under its licensee agreement, subject to some narrow

exceptions that lack the potential for competitive harm. Analogously,

Subparagraph IV.B. forbids Defendants to claim that persons dealing

with U.S.-based entities that have not been licensed by Pilkington are

subject to liability under Pilkington's exclusive rights to float glass

know-how, unless such claims are in good faith based on technology that

is a misappropriated Pilkington trade secret specifically identified by

Pilkington to the Department of Justice.

The other comments offered by ITC and PPG propose specific changes

of language to the proposed Final Judgment. The United States has

considered each of these, and for the detailed reasons set forth in the

attached individual letter responses, explains why the public interest

does not justify withdrawing its consent to entry of the proposed Final

Judgment.

In the third comment, Minneapolis, Minn. lawyer John A. Grimstad,

Esq. proposed several changes to the Judgment out of concern that they

are necessary to protect the interest of his unidentified client, a

domestic float glass producer that acquired its technology by a route

not fully explained in the comment, and is uncertain as to where it

fits into the Judgment's taxonomy of actual and potential technology

users. Our individual response to Mr. Grimstad, appended hereto,

demonstrates that the Judgment fully protects his client's right to be

free of anticompetitive interference with its operations by Defendants,

and that his proposed changes are therefore unnecessary.

In sum, the United States finds no basis in any of the Comments for

concluding that the public interest would be served by withdrawing its

consent to entry of the proposed Final Judgment submitted to the Court

by stipulation on May 25, 1994. and will request that the Court enter

it forthwith.

Supplement to Response

On September 30, 1994, PPG filed an ``Additional Comment''\1\

reiterating its earlier proposal that Subparagraph IV.D. of the

proposed Final Judgment be amended to add to the injunction against

restraining float glass exports to the United States a new provision

enjoining Defendants from restraining exports of float glass from the

United States. PPG asserts that documents ``recently produced'' by

Pilkington plc\2\ ``demonstrate the need for the suggested change'' by

showing

\1\This ``Additional Comment'' was to submitted in accordance

with the APPA, 15 U.S.C. Sec. 16 (b)-(d) in that it is dated well

after the September 1, 1994, expiration of the 60-day comment

period.

\2\In its ``Additional Comment,'' PPG states that these

documents were recently produced to it ``on a restricted basis'' by

Pilkington plc in CIV-92-753-TUC-WDB, a civil action between those

parties pending in this Court, and that, because of restrictions

imposed by Pilkington, PPG can only submit the documents to the

Court under seal. PPG also states that, because of these Pilkington-

imposed restrictions, it has not served copies of the documents upon

the Government. However, the Government's remarks herein concerning

the ``Additional Comment'' have been prepared after counsel for

Defendants, in response to the Government's request for copies of

these documents, furnished copies of them to Government counsel,

albeit with the restriction that they ``are not for further

distribution outside the Department of Justice.''

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That Pilkington's conduct * * * is designed to foreclose * * *

American manufacturers from competing with Pilkington in the

construction of new plants in foreign countries and, as well, in the

export of glass from the United States to those foreign countries.

They suggest that such exclusionary conduct is continuing to the

present day.

Without suggesting that these Pilkington documents lack the probative

value that PPG asserts, the Government finds in them no reason to

supplement its prior response to this suggestion. As stated in our

individual response letter to PPG's counsel, at 3, 5-6, the need for

the proposed change is obviated by the provisons of Subparagraphs IV.A.

and IV.B., which respectively assure U.S.-based Pilkington licensees

and U.S.-based non-licensees freedom to export float glass from the

United States to any point in the world.

Dated: October 6, 1994.

Respectively submitted.

K. Craig Wildfang, Special Counsel to the Assistant Attorney

General; Kurt Shaffert, Thomas H. Liddle, Molly L. DeBusschere, John

B. Arnett, Sr., M. Lee Doane, Attorneys, Antitrust Division, United

States Department of Justice, Washington, D.C. 20530, (202) 307-

1032.

United States District Court, District of Arizona, United States

of America, Plaintiff, v. Pilkington plc and Pilkington Holdings

Inc., Defendant. No. CIV 94-00345 WDB.

Comments of PPG Industries, Inc. on Proposed Final Judgment,

Stipulation and Competitive Impact Statement

PPG Industries, Inc. (``PPG'') comments on the Proposed Final

Judgment, Stipulation and Competitive Impact Statement in United States

v. Pilkington plc as follows:

Preliminary Statement

Pilkington has repeatedly brought vexatious litigation and has

attempted to restrain trade under the guise of protecting the

confidentiality of float technology and enforcing license restrictions.

While the Proposed Final Judgment does make it more difficult for

Pilkington to continue these practices, Pilkington has already publicly

indicated in its own press releases that it intends to continue

engaging in such behavior to the degree that the consent decree allows

it.

For example, on May 26, 1994, the Pilkington press release

announcing the terms of this consent decree stated:

The Government's allegations are unproven and would not have

survived a test in court. * * * The Consent Decree * * * recognizes

the subsequent evolution of [float] technology and that recent float

bath technology developed by Pilkington will continue to be treated

through normal licensing arrangements. * * * Pilkington's protection

and licensing of its total float technology, throughout the rest of

the world, remains unaffected. * * * Pilkington is reassured that

the confidentiality of the process is protected and that the normal

licensing arrangements for current and future float glass technology

are secure.

Pilkington Press Release, May 26, 1994. As reported in the Financial

Times on May 27, 1994, Sir Robin Nicholson, Pilkington's technology

director, said:

We have got what we wanted, in that we retain a substantial

amount of proprietary knowledge which we can license in the normal

way.

``Pilkington Emerges with Advantages,'' Financial Times, p. 6, May 27,

1994.

Based on Pilkington's own statements and to prevent continued

vexations litigation and trade restraints, PPG submits that protection

of the public interest counsels modification or clarification of the

Proposed Final Judgment in the following limited respects.

Comments

1. Float License Agreements

Change: Paragraph IV.A.1. should be modified to provide: ``All

obligations of U.S. LICENSEES in all LICENSE AGREEMENTS between any

defendant and any U.S. LICENSEE are hereby declared null, void and

unenforceable. No defendant shall take any action to invoke, enforce or

assert any claim under any such agreement.'' Alternatively, at a

minimum, paragraph IV.A.1 should be modified to add: ``Moreover, no

defendant shall enter into, enforce or claim any right under any

AGREEMENT to the extent that it requires any U.S. LICENSEE to: (i)

Report and grant back to any defendant all improvement in FLOAT

TECHNOLOGY; (ii) limit exports of FLAT GLASS to any geographic areas;

(iii) litigate disputes in an arbitration, as opposed to a U.S. Court,

unless such arbitration permits the application of substantive U.S.

antitrust law, including its provisions for treble damages and

attorneys' fees awarded to a prevailing plaintiff; or (iv) prove that

the SUBJECT FLOAT TECHNOLOGY had become publicly known before being

relieved of the territorial and use restrictions.''

The references in paragraphs IV.A.2.(b); IV.A.3; IV.B.1; IV.B.2(a);

and IV.C to ``trade secret under applicable law'' should be changed to

``trade secret under applicable law, provided that any applicable non-

U.S. trade secret law will not be applied to permit the protection of

items of technology that would be unprotectable under U.S. law.''

Reason for Change: As is set forth in the complaint in United

States v. Pilkington plc, CIV 94-00345-WDB (D. Ariz.) (the

``Complaint''), defendants have used float license agreements

(``FLAs'') to restrain trade and secure monopoly power unlawfully. The

Competitive Impact Statement and the Complaint both note that

Pilkington has no intellectual property of substantial value, that,

since 1982, Pilkington's remaining secret unpatented technology

consisted largely of engineering solutions with no substantial value

over other equally efficacious engineering alternatives and that one of

the devices Pilkington has used to perpetuate its control is its FLAs,

including their burden-shifting clauses, which require licensees to

establish the nonexistence of confidential information in any

arbitration. Competitive Impact Statement (``Comp. Imp. Stat.'') at 10;

Complaint Sec. 24. If Pilkington is to be allowed to continue to

protect its alleged trade secrets, it should be required to prove that

they exist. Pilkington should not be able to shift that burden of

proof, as it has done in its FLAs.

Pilkington's grant-back clauses require licensees to report and

grant to Pilkington all improvements in float glass technology. They

thus deprive any licensee of the incentives to create innovative

technologies, precluding any competitive advantage to accrue to an

innovative licensee and, in effect, discourage efforts to create such

technologies. The grant-back clauses should be invalidated for that

reason.

Pilkington also should be precluded from utilizing the FLA

arbitration clauses to enforce so-called trade secret claims. Those

clauses have permitted Pilkington to assert claims in a forum that: (a)

Is hostile to the application of U.S. antitrust law; (b) does not

recognize the extraterritorial application of U.S. antitrust law and

may not recognize even this Final Judgment; and (c) enforces

anticompetitive restrictions not permissible under U.S. antitrust law.

Any issues involving U.S. trade secret law and U.S. antitrust . . . law

should be litigated in a forum that will permit an adjudication and

award under those laws.

2. Assertion of Claims Against PPG With Respect to the Use or Licensing

of the LB Process

Change: Change paragraph IV.A.1 to provide: ``with respect to the

use, licensing or sublicensing of any SUBJECT FLOAT TECHNOLOGY or any

process developed with the use or aid of SUBJECT FLOAT TECHNOLOGY.''

Paragraphs IV.A.2.(a) and IV.A.3 also should be modified accordingly.

Reason for Change: In the Shenzhen Arbitration, which Pilkington

filed in 1985 and which continued until 1992, Pilkington asserted that

PPG's LB process was ``tainted'' because it was developed using

Pilkington float technology, irrespective of whether PPG's use was

wrongful. That ``taint,'' according to Pilkington, subjected the LB

process as a whole to an obligation of confidence coextensive with that

applicable to information that was transferred by Pilkington to PPG.

The design and effect of Pilkington's ``taint'' argument was to make it

virtually impossible for any licensee to develop competing innovative

technology free of Pilkington's aggressive claims and litigation, thus

further discouraging and inhibiting the development of innovative

technologies by those most likely and able to engage in such

developmental efforts.

Although Pilkington's ``taint'' claim was rejected by the Shenzhen

arbitrators, the language of the Proposed Final Judgment does not

clearly resolve the issue and may be used to revive Pilkington's anti-

competitive claims. The ambiguity may be easily remedied by amending

the term ``Subject Float Technology'' to encompass technologies

developed by licensees whether or not developed with the use or aid of

subject float technology.

3. Confidentiality Provisions

Change: Paragraph IV.A.3.(b) should be changed to read:

``CONFIDENTIALITY of the transferred SUBJECT FLOAT TECHNOLOGY.''

Reason for Change: The reference to FLOAT TECHNOLOGY (instead of

SUBJECT FLOAT TECHNOLOGY) appears to be an oversight because, as

drafted, the provision would require licensees to protect the

confidentiality of all float technology, whatever its source.

4. Litigation Commenced Before the Stipulation Date

Change: Paragraph IV.A.4 should be deleted and paragraph IV.A.1

should be changed to ensure that Pilkington may not enforce new

unadjudicated claims arising under any FLA regardless of whether a

proceeding was instituted prior to the date of the stipulation.

Reason for Change: In August 1992, only two days after the High

Court denied Pilkington leave to appeal from the award in the Shenzhen

Arbitration, Pilkington notified PPG of is intent to commence a new

arbitration. Although a 1978 Settlement Agreement between PPG and

Pilkington explicitly permits PPG to use the LB process in Canada and

Italy, Pilkington now alleges that PPG's operation of its LB lines in

those countries is not permitted because the width of the glass ribbons

in those lines has not always been ``from 70% to 90% of the constant

spacing between the sidewalls,'' which Pilkington argues is required

under the Agreement, notwithstanding the fact that any variation in the

width of the ribbons at those lines does not implicate any Pilkington

trade secrets or other intellectual-property interests.

United States antitrust consent decrees commonly provide that the

defendants are enjoined from any future enforcement of anticompetitive

restraints. However, paragraph IV.A.4 of the Proposed Final Judgment

would permit Pilkington to continue its monopolistic practices by

pursuing its recently commenced arbitration proceedings against PPG and

its subsidiaries to punish PPG for its efforts to end Pilkington's

monopolistic interference with United States trade in the worldwide

float technology market. No good reason exists why Pilkington's claims

in those proceedings, in which earnings have not yet commenced, should

be exempted from the Proposed Final Judgment.

5. Subsidiaries and Affiliates

Change: Paragraph II.Q should be changed to read: ``U.S. LICENSEE''

means any LICENSEE that was or is incorporated in the United States,

and shall include any subsidiaries, affiliates or parents of any such

LICENSEE. * * *''

Reason for Change: As currently constituted, the Final Judgment

offers no protection for subsidiaries and affiliates of U.S. companies,

although Pilkington's actions directed at such entities have had and

could continue to have anticompetitive effects in the United States.

PPG and other U.S. competitors often participate in float glass

manufacturing projects outside the United States through joint ventures

and through their non-U.S. subsidiaries or affiliates. The use of U.S.

licensees of subsidiaries, joint ventures and affiliates is often

necessary to accommodate participation of local investors.

Because effective competition with Pilkington by U.S. Licensees

will necessarily entail the use of subsidiaries and affiliates in

foreign countries, PPG's ability to participate in such ventures would

be impaired (and U.S. commerce thereby affected) if Pilkington were

free to continue to enforce its monopolistic restrictions against these

U.S.-related entities.

6. Protection of Flat Glass Exports

Change: Paragraph IV.D. should be changed to add ``or from'' to the

caption after the word ``to'' and in the second line of text after the

word ``to.''

Reason for Change: The Consent Decree should protect exports from

the United States as well as imports to the United States. Exports from

the United States are part of the foreign commerce of the United States

and Pilkington and its subsidiaries and affiliates have engaged in a

variety of exclusionary practices, unlawful under the United States

antitrust laws, intended to interfere with export of Float Glass from

the United States into, e.g., Mexico, Brazil, Argentina and Australia.

7. Perpetual Confidentiality Obligations Should Not Revive Upon the

Expiration of This Final Judgment

Change: Paragraph VII.(A) should be changed to provide: ``Other

than the provisions of paragraphs IV.A. and B., which provisions shall

remain in effect permanently, this Final Judgment shall expire on the

tenth anniversary of its entry.''

Reason for Change: The ten-year expiration of the Final Judgment

should not leave open an argument that the otherwise perpetual

confidentiality obligations of Pilkington's FLAs somehow revive upon

its expiration, as provided in VII(A).

8. Pilkington Should Not Be Able To Assert U.S. Trade Secret Rights

Against Any U.S. Licensee or Non-Licensee

Change: Paragraph IV.A.2 should be changed to read: ``No defendant

shall assert against any U.S. LICENSEE any proprietary FLOAT TECHNOLOGY

know-how rights that it may have or claim with respect to any FLOAT

TECHNOLOGY.''

Reason for Change: Paragraph 24 of the DOJ Complaint states that

``Pilkington's maintenance and continued enforcement of the licensee

restraints described above was not justified by any intellectual

property rights of substantial value.'' Pilkington's core float glass

technology was disclosed in numerous patents that have long expired,

placing that technology in the public domain. Moreover, unpatented

Pilkington float glass technology has been publicly disclosed in

substantial part. The Department of Justice has determined that the

remaining secret unpatented technology consists largely of

``engineering solutions with no substantial value over other, equally

efficacious engineering alternatives.'' Complaint 24. Moreover,

Attorney General Reno, in announcing the consent decree, said that

``Pilkington had agreed that much of its technology is in the public

domain.'' ``British Company Agrees to Settle Justice Department

Antitrust Suit,'' New York Times, p. 1, May 27, 1994.

If Pilkinton no longer holds intellectual property of substantial

value, there is no reason why it should be allowed to assert trade

secret rights against any United States licensee or United States non-

licensee with respect to any Float Technology in existence as of the

date of the Final Judgment.

Forfeiture of patent rights is a common remedy for the abuse of

patent rights giving rise to antitrust violations and there is no

reason that that remedy should not be applied to Pilkington's abuse of

its alleged trade secret rights, particularly in view of the

Department's view that its technical information is without redeeming

value. Comp. Imp. Stat. at 10; Complaint  26. Given Pilkington's

demonstrated propensity to pursue its monopolistic practices through

unjustified assertions of propriety trade secret rights and given the

trivial nature of Pilkington's claimed ``trade secrets,'' there is no

sufficient justification for allowing Pilkington to retain these

weapons empowering it to use threats and litigation based on asserted

trade secrets to continue to its monopolistic practices. Paragraph

IV.A.2 should be modified accordingly. This suggested change is not

meant to prevent Pilkington from seeking to protect any bona fide trade

secrets developed after the date of entry of this Final Judgment.

9. As An Alternative, Pilkington Should be Barred From Asserting Any

Trade Secret Rights Based on Information in Existence Prior to December

31, 1982 and Identify Any Other Trade Secrets on the Basis of Which

Pilkington Imposes Any Restraint of Trade

Change: Paragraph IV.A.2 should be changed to read: ``No defendant

shall assert against any U.S. LICENSEE OR U.S. NON-LICENSEE any

proprietary FLOAT TECHNOLOGY know-how rights based on information in

existence prior to December 31, 1982, the date referred to in 26 of

the Complaint. Within sixty (60) days of entry of this Final Judgment,

Pilkington shall identify and specifically describe any trade secrets

developed after December 31, 1982, which it claims may justify a

restraint of trade to the Department of Justice, Antitrust Division;

and identify such trade secret to all U.S. LICENSEES and to all U.S.

NON-LICENSEES who shall request the same in writing.

Reason for Change: Should the Department believe it inappropriate

to bar defendants from asserting any trade secrets in existence as of

the date of the Final Judgment, the Department should at least bar

defendants from imposing restraints of trade based on technical

information in existence prior to December 31, 1982, and require

defendants to identify and specifically describe any trade secret

developed after December 31, 1982, which any defendant may claim

justifies a restraint of trade, to the Department of Justice, Antitrust

Division; and identify such trade secret to any U.S. LICENSEE and any

U.S. NON-LICENSEE who requests the same.

Such relief is minimally necessary to prevent defendants from

continuing to rely on stale claims of trade secrets and refusing to

disclose with reasonable specificity any trade secret created after

December 31, 1982, upon which it may seek to impose a restraint of

trade. Without such relief, defendants will be enabled to continue

their past practice of threatening their competitors with litigation

based on some ambiguous assertion of trade secret rights. Defendants'

public announcements make it clear that they intend to continue the

assertion of some unidentified body of trade secrets, notwithstanding

the Final Judgment. (See pp. 1-2 above.)

10. Justice Department Scrutiny of Litigation Brought by Pilkington

Change: Alternatively, paragraph IV.A.2(b) should be changed to add

subparagraphs (iii) and (iv):

(iii) defendant has, within fourteen (14) days after any such

assertion:

(a) made a showing in writing to the Department of Justice,

Antitrust Division in support of the arguments described in

subparagraphs 2(b)(i) and 2(b)(ii), above;

(b) identified, enumerated, and described such item or combination

of items (in sufficient detail and with sufficient clarity to

distinguish them from information not a trade secret under applicable

law) on a list submitted to the Antitrust Division and to the U.S.

LICENSEE against whom such right is asserted; and

(iv) such U.S. LICENSEE is unwilling to make lawful and

commercially reasonable efforts to maintain the CONFIDENTIALITY of any

such item or combination of items for which it has received actual

notice of a defendant's claim of proprietary rights therein pursuant to

subparagraph 2(iii)(b), above, and for which a defendant has made the

requisite showing pursuant to subparagraph 2(iii)(a), above.

Reason for Change: The change is necessary to provide for the same

scrutiny for Pilkington suits against licensees as is provided for

suits against non-licensees (as is set forth in paragraph IV.B.2(c)).

No adequate justification exists for discriminating against licensees,

especially given that competition has been stultified principally

through use of Pilkington's licensing scheme.

11. Adjudications in Which Information Alleged To Be Confidential by

Pilkington Has Been Held To Have Been Publicly Disclosed or Otherwise

Unenforceable and Related Disclosure Obligations

Change: Paragraph IV.G.1. should be changed to replace ``public

knowledge in the FINAL AWARD'' with ``public knowledge found to have

been such or otherwise found to be not an enforceable trade secret in

the FINAL AWARD or in any other prior proceeding . . . '' Paragraph

IV.G.2(b) also should be modified accordingly.

Paragraph IV.G.2 also should be changed to replace ``public domain'' in

subparagraphs (a), (b), and (c) with ``public knowledge or otherwise

not a trade secret'' in each subparagraph.

Reason for Change: The present formulation does not account for

unenforceability arising from anything other than the public disclosure

of trade secret information. Information that is claimed as a trade

secret also may not be enforceable if it is readily ascertainable or

had not been the subject of adequate precautions to preserve

confidentiality. The change also gives effect to all proceedings to

which information alleged to be confidential by Pilkington has been

held to have been publicly disclosed or with respect to which

Pilkington's rights have been held unenforceable for any reason.

August 13, 1994.

Respectfully submitted,

Jack E. Brown,

Lawrence G.D. Scarborough, Brown & Bain, P.A., 2901 North Central

Avenue, Post Office Box 400, Phoenix, Arizona 85001-0400.

Thomas D. Barr,

Paul M. Dodyk,

Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York,

New York 10019.

By---------------------------------------------------------------------

Attorneys for Plaintiff, PPG Industries, Inc.

Paul M. Dodyk

Copies sent by Federal Express this 13th Day of August, 1994 to:

Gail Kursh, Chief,

Professions and Intellectual Property Section, Room 9903, U.S.

Department of Justice, Antitrust Division, 555 4th Street, N.W.,

Washington, DC 20001.

John H. Shenefield, Esq.

Morgan, Lewis & Bockius, 1800 M Street, N.W., Washington, D.C. 20036.

Counsel for Defendants Pilkington plc and Pilkington Holdings

Inc.

Sheila M. Frishman.

Jack E. Brown,

Lawrence G.D. Scarborough, Brown & Bain, P.A., 2901 North Central

Avenue, Post Office Box 400, Phoenix, Arizona 85001-0400, (602) 351-

8000.

State Bar Attorney Nos. 001074 and 006965.

Thomas D. Barr,

Paul M. Dodyk

Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York,

New York 10019, (212) 474-1000.

Attorneys for PPG Industries, Inc.

United States District Court, District of Arizona

United States of America, Plaintiff, v. Pilkington plc and

Pilkington Holdings Inc., Defendants. No. CIV 94-00345 WDB.

Additional Comment of PPG Industries, Inc. on Proposed Final Judgment

(Exhibits Filed Under Seal)

PPG Industries, Inc. (``PPG'') submits this Additional Comment on

the Proposed Final Judgment in United States v. Pilkington plc as

follows:

Paragraph IV.D of the proposed Final Judgment provides that ``[n]o

defendant, with the intent of restraining or limiting the amount of

exports of FLOAT GLASS to the United States [etc.]''. We have suggested

[Comments at 8] that the paragraph should be changed to add ``or from''

after the word ``to.''

Enclosed are documents recently produced by Pilkington in the suit

by PPG Industries against Pilkington in the District of Arizona (No.

CIV-92-753-TUC-WDB). Those documents demonstrate the need for the

suggested change. They show, we believe, that Pilkington's conduct, as

alleged in the U.S. complaint and in PPG's complaint, is designed to

foreclose PPG and other American manufacturers from competing with

Pilkington in the construction of new plants in foreign countries and,

as well, in the export of glass from the United States to those foreign

countries. They suggest that such exclusionary conduct is continuing to

the present day. The documents are filed under seal because they were

produced to us on a restricted basis. We therefore suggest that the

Court should seek from Pilkington a statement of the reasonable terms

and conditions under which the Court may inspect the documents and

obtain comments thereon from counsel appearing for the United States.

September 30, 1994.

Respectfully submitted,

Thomas D. Barr

Paul M. Dodyk

Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New

York, New York 10019.

Jack E. Brown

Lawrence G.D. Scarborough

Brown & Bain, P.A., 2901 North Central Avenue, Post Office Box 400,

Phoenix, Arizona 85001-0400.

By---------------------------------------------------------------------

Lawrence G.D. Scarborough,

Attorneys for PPG Industries, Inc.

Copy of the foregoing (without exhibits) sent by Federal Express

this 30th day of September, 1994, to:

Gail Kursh,

Chief, Professions and Intellectual Property Section, U.S. Department

of Justice, Antitrust Division, 555 4th Street, N.W., Room 9903,

Washington, D.C. 20001, Attorneys for Plaintiff United States of

America.

Copy of the foregoing (with exhibits) sent by Federal Express

this 30th day of September, 1994, to:

John H. Shenefield, Esq.,

Morgan, Lewis & Bockius, 1800 M Street, N.W., Washington, D.C. 20036,

Attorneys for Pilkington plc and Pilkington Holdings Inc.

Lucinda F. Mason.

Judiciary Center Building, 555 4th Street, NW, Washington, DC

20001.

October 6, 1994.

Jack E. Brown, Esquire,

Brown & Bain, P.A., 2901 North Central Avenue, P.O. Box 400,

Phoenix, Arizona 85001-0400

Thomas D. Barr, Esquire,

Cravath, Swayne & Moore, 825 Eighth Avenue, New York, New York 10019

Re: Response to Comment on Proposed Final Judgment U.S. v.

Pilkington plc and Pilkington Holdings, Inc., CIV 94-345 TUC WDB (D.

Ariz.), filed May 25, 1994

Dear Messrs. Brown and Barr: This letter responds to the

Comments of PPG Industries, Inc. [``PPG''] on Proposed Final

Judgment, Stipulation and Competitive Impact Statement

(``Comments'') submitted to the Antitrust Division over your names

on August 13, 1994. The Comments include a ``Preliminary Statement''

that summarizes certain representations by Defendants to the press

that, in your words, indicate that ``Pilkington * * * intends to

continue engaging in [its prior anticompetitive] behavior to the

degree that the consent decree allows it.'' You further assert that

``[b]ased on Pilkington's own statements * * * protection of the

public interest counsels modification or clarification of the

Proposed Final Judgment'' in eleven specific ways.

Before addressing your eleven specific proposed changes, we

would point out that the text of the proposed Final Judgment

(``Judgment''), rather than Pilkington's characterization thereof in

its own press releases, controls what it will be permitted

and required to do. Thus, contrary to Pilkington's public claim,

which you quote, that the restraints Pilkington has imposed under

the guise of ``protection and licensing of its total float

technology, throughout the rest of the world, remain unaffected,''

the Judgment will in fact enjoin Pilkington from anticompetitive

practices throughout the world to the extent that those practices

are aimed at U.S.-based entities seeking to use float technology

anywhere, or are aimed at anyone else seeking to use float

technology in North America. That is, Pilkington's specified

anticompetitive conduct is enjoined insofar as it is within the

jurisdiction of the U.S. antitrust laws. The competitive effect of

Pilkington's ability, also referred to in the portion of

Pilkington's press release that you quote, to acquire ``normal

licensing'' of its ``recent float bath technology,'' must be

considered in the light of its ready concession to the United States

during settlement negotiations that very little significant

technology of that kind exists. A good measure of the near-absence

of such significant recent technology, as you must certainly

realize, in that float glass manufactured in this country by PPG and

others who have not been licensed to use this ``recent technology''

has been quite competitive with Pilkington's subsidiary's

production.

The standard we have applied in assessing your eleven specific

proposals for modification or clarification is whether it is in the

public interest to enter the Judgment that has been submitted for

entry by stipulation. Entry is in the public interest if the

Judgment is adequate to remedy the antitrust violations alleged in

the Complaint. United States v. Bechtel Corp., 1979-1 Trade Cas.

(CCH) 62,430 (N.D. Cal. 1979), aff'd, 648 F. 2d 660, 665 (9th Cir.

1981), cert. denied, 454 U.S. 1083 (1982).

1. You propose, in the alternative, to change subparagraph

IV.A.1 of the Judgment to provide that all obligations of U.S.

LICENSEES\1\ under all LICENSE AGREEMENTS are declared null, void,

and unenforceable, or alternatively ``at a minimum'' to make four

specific changes in that paragraph. As to your first proposed

alternative, the Department of Justice does not agree that it is in

the public interest to withhold entry of the Judgment on the ground

that it does not totally render these agreements null, void, and

unenforceable. We believe, rather, that the existing provisions of

subparagraph IV.A. protect the interest of the public by restoring

competition and remedying the violation with regard to the ability

of U.S. LICENSEES to compete freely in float glass process

technology and float glass markets. In that regard, we would point

out that in the Complaint in PPG Industries, Inc. v. Pilkington plc

et al., Civil Action CIV 92-753 TUC WDB (D. Ariz.) the relief you

seek is for the Court to declare null, void, and unenforceable only

``the anticompetitive restraints in the Pilkington license

agreements,'' and not the agreements themselves, relief that is

essentially like that provided in the Judgment rather than that

which now you propose.

---------------------------------------------------------------------------

\1\Capitalized terms have the meanings assigned to them in

Paragraph II of the Judgment.

---------------------------------------------------------------------------

As an alternative to the above, you make a four-part proposal,

to which we have the following responses:

(i) The first part of this alternative proposal is that

Defendants be enjoined from entering, enforcing, or claiming rights

under any AGREEMENT requiring any U.S. LICENSEE to report or grant

back rights to FLOAT TECHNOLOGY improvements. Inasmuch as all such

improvement reporting and grant-back provisions in licenses to U.S.

LICENSEES expired long ago, this proposes an unnecessary addition to

the provision of the Judgment.

(ii) The second part of this alternative proposal is that

Defendants be enjoined from entering, enforcing, or claiming rights

under any AGREEMENT requiring any U.S. LICENSEE to limit exports of

FLAT GLASS to any geographic areas. We note that Defendants have not

imposed express contractual restraints upon the export of glass from

the United States by PPG nor by any other U.S. LICENSEE.

Nevertheless, there have been instances when defendants relied upon

their patents in the destination countries to limit or prevent such

exports when the U.S. LICENSEE was unable to persuade Defendants to

grant or sell a full waiver of those foreign patent rights. The

patents on which Defendants relied for this purpose, however, have

now expired along with their counterpart U.S. patents, denying them

the means to carry on this form of export restraint.

(iii) The third part of this alternative proposal is that

Defendants be enjoined from entering, enforcing, or claiming rights

under any AGREEMENT requiring any U.S. LICENSEE to arbitrate rather

than litigate disputes unless substantive U.S. antitrust law is

applied. The Judgment will foreclose most such disputes in the

future by the prohibitions and conditions that it places on

Defendants' ability to require U.S. LICENSEES to pay FEES, observe

LIMITATIONS, or maintain CONFIDENTIALITY with respect to the use or

sublicensing of any SUBJECT FLOAT TECHNOLOGY. Moreover, even prior

to the entry of any judgment herein PPG has obtained the very result

that this request seeks. Specifically, we refer to Judge Browning's

finding

That arbitration * * * will not operate as a prospective waiver

of PPG's statutory claims due to Pilkington's express representation

and consent to the substantive arbitration or PPG's claims pursuant

to U.S. antitrust law.

PPG Industries, Inc. v. Pilkington et al., CIV 92-753-TUC-WDB (D.

Ariz. July 9, 1994) (Order Granting Stay and Compelling

Arbitration).

(iv) The fourth part of this alternative proposal is that

Defendants be enjoined from entering, enforcing, or claiming rights

under any AGREEMENT requiring any U.S. LICENSEE to bear the burden

of proving that SUBJECT FLOAT TECHNOLOGY has become publicly known

before being relieved of territorial and use restrictions.

Subparagraph IV.A. accomplishes precisely that result.

2. You propose to expand the coverage of subparagraph IV.A.1. to

include processes developed with the use or aid of SUBJECT FLOAT

TECHNOLOGY so as to preclude Defendants' future reassertion of

arguments that technology developed in minds ``tainted'' by prior

knowledge of Pilkington technology also belongs to Pilkington.

However, the Judgment precludes Defendants from making such

assertions. Any ``taint'' claim by Defendants is enjoined by

subparagraph IV.A.1., inasmuch as it would ``require * * * any U.S.

LICENSEE to * * * observe LIMITATIONS,'' LIMITATIONS being defined

in subparagraph II.K. as including ``any restriction or limitation,

or purported restriction or limitation, of the use of FLOAT

TECHNOLOGY, whether the result of an affirmative prohibition or a

limited authorization.'' In the discussions leading to the

Stipulation to submit the Judgment to the Court for entry,

Defendants' representatives repeatedly acknowledged to the

Department that the taint issue had been resolved against Pilkington

in the ``Shenzhen'' arbitration (a point you also make in your

comment) and in subsequent judicial review thereof, and that they

considered this a final determination precluding them from again

asserting ``taint'' against your client.

3. You propose limiting IV.A.3.(b) by adding the word

``SUBJECT'' just before the words ``FLOAT TECHNOLOGY,'' stating that

we appear to have omitted the word by oversight. Contrary to your

assumption, however, the text of this provision intentionally covers

all FLOAT TECHNOLOGY. By omitting the word that your proposal would

add, this provision protects against future Pilkington

misappropriation charges any U.S. LICENSEE who transfers any FLOAT

TECHNOLOGY (e.g., in connection with building a float glass plant

abroad). This protection will cover not only charges of

misappropriating SUBJECT FLOAT TECHNOLOGY, i.e., FLOAT TECHNOLOGY

disclosed to the U.S. LICENSEE under its LICENSE AGREEMENT, but also

FLOAT TECHNOLOGY that found its way to the U.S. LICENSEE via a third

party (e.g., by hiring a former Pilkington employee) as long as the

U.S. LICENSEE, when transferring such technology, includes in the

agreement of transfer ``a lawful and commercially reasonable

provision requiring the transferee to maintain CONFIDENTIALITY.''

Such confidentiality provisions are customarily included in

technology transfer agreements, so that this provision imposes no

significant burden on U.S. LICENSEES, while protecting them against

such claims by Pilkington.

4. You propose deleting subparagraph IV.A.4. and changing

subparagraph IV.A.1. to ensure Pilkington cannot pursue monetary

relief in proceedings regardless of when they were instituted,

pointing out that in 1992 Pilkington instituted an additional

arbitration proceeding against PPG on a claim growing out of a 1978

settlement concerning LB technology. Subparagraphs A.1. and A.2. of

the Judgment enjoin Defendants' further pursuit of injunctive and

declaratory relief against U.S. LICENSEES' ``violations'' of license

restrictions. Subparagraph IV.A.4. creates a narrow exception that

permits Defendants to continue to pursue solely monetary (but not

injunctive or declaratory) relief, but only for past conduct, and

only in proceedings instituted before May 25, 1994. Your comment

indicates that your concern about this exception is raised by a

single dispute that Pilkington initiated in 1992, one that arose out

of a 1978 settlement of an earlier litigated dispute. The Department

of Justice's role in this civil Sherman Act case extends to securing

prospective relief that assures open competition for the benefit of

the public. ``[T]he antitrust laws * * * were enacted `for the

protection of competition, not competitors,''' Brunswick Corp. v.

Pueblo Bowl-O-Mat, 429 U.S. 477, 488 (1977), quoting Brown Shoe Co.

v. United States, 370 U.S. 294, 320 (1962). To that end, the

Judgment enjoins Defendants not only from prospective enforcement of

previously obtained equitable relief but also from the imposition of

FEES, as defined in subparagraph II.C., for the prospective use or

sublicensing of SUBJECT FLOAT TECHNOLOGY. Contrarily, the claim to

which you allude is limited strictly to monetary relief for your

client for past conduct. Thus, no matter how ill-founded or unjust

this Pilkington monetary claim against PPG may be, its assertion is

a private matter and consequently concerns only the private parties

involved.

5. You propose including within the definition of U.S. LICENSEE

(subparagraph II.Q.) the licensees' subsidiaries, affiliates, and

parents, pointing out that participation by U.S. LICENSEES in off-

shore float glass manufacturing projects is often likely to occur

through their subsidiaries or affiliates. While this is undoubtedly

correct, such subsidiaries or affiliates participate in such

projects under sublicenses granted to them by their respective U.S.

LICENSEE parents or affiliates. Your proposal is unnecessary since

subparagraph IV.A. of the Judgment expressly enjoins Defendants from

conduct interfering with U.S. LICENSEES' sublicensing activities to

the same extent as it enjoins interfering with their use of SUBJECT

FLOAT TECHNOLOGY. It may be noted that, in the course of discussions

leading to the Stipulation to submit the Judgment to the Court,

Pilkington's representatives acknowledged that under the Judgment

U.S. LICENSEES will be free, through subsidiaries or affiliates, to

participate in the design, construction, and operation of overseas

float glass plants such as the Shenzhen plant.

6. You propose broadening the injunctive provisions of

subparagraph IV.D., which deal with exports of float glass from

abroad into the United States, to cover exports of float glass from

the United States as well. Subparagraph IV.A. leaves U.S. LICENSEES

free to export float glass from this country. Subparagraph IV.B.

analogously protects U.S. NON-LICENSEES from interference with their

export of float glass from this country.

7. You propose that the injunctive provisions of subparagraphs

IV.A. and IV.B. be made perpetual by exempting them from the ten-

year Judgment duration provision of subparagraph VII.A. because, in

your words, the ``Judgment should not leave open an argument that

otherwise perpetual confidentiality obligations'' revive upon the

Judgment's expiration. Trade secrecy obligations are, of course,

never perpetual; they last only while the information to which they

pertain has value and is not public. As set forth in Paragraph 24 of

our Complaint, the SUBJECT FLOAT TECHNOLOGY, all of which had been

communicated by Pilkington to U.S. LICENSEES by no later than 1982,

no longer has substantial value. The prospect that Defendants would

be able to resume interfering with open competition by assertions of

confidentiality for the, by then, even more highly superannuated

technology, especially in view of the pro-competitive effects that

this Judgment can be expected to confer during the next decade, are

too remote to justify your proposal. Consequently, the Department

does not consider such a change necessary.

8. You propose, in effect, to remove the exceptions to the

injunction in Subparagraph IV.A.2. against Defendants' asserting

know-how rights against U.S. LICENSEES with respect to any FLOAT

TECHNOLOGY on the ground that we have determined that Pilkington's

core float glass technology currently lacks substantial value. We

continue strongly to believe that this assessment of the value of

Pilkington's technology is correct, of course. For that reason,

Subparagraph IV.A.2.(a) enjoins Defendants from asserting against

all U.S. LICENSEES that are not subsidiaries of Defendants any

proprietary claims as to the FLOAT TECHNOLOGY disclosed to the

licensees under the license agreement (except for the reservation in

Subparagraph IV.A.4. of money damage claims for past conduct that,

as has already been discussed in Item 4, above, does not affect the

public interest). In addition, Subparagraph IV.A.2.(b) enjoins

Defendants from asserting any proprietary claims against such

licensees as to other FLOAT TECHNOLOGY, (i.e., technology that the

licensee did not obtain under the license but that Defendants

nevertheless claim is theirs, unless the claim is based on a good

faith argument that the technology in question is a legally

cognizable trade secret and that it was unlawfully acquired).

Subparagraph IV.A.2. therefore properly protects U.S. LICENSEES from

unjustified assertions of know-how rights by Defendants.

9. You propose, as an alternative to your Proposal No. 8,

changes to the language of Subparagraph IV.A.2. that would

categorically bar Defendants' assertion against U.S. LICENSEES of

(1) rights in pre-1983 know-how and (2) trade secrets developed

after that date that a Defendant, in your words, ``claims may

justify a restraint of trade,'' unless such trade secrets have been

disclosed to the Department and to all U.S. LICENSEES and U.S. NON-

LICENSEES who request it. You state that without such a provision

Defendants will be able to continue to threaten competitors with

ambiguous assertions of trade secret rights. We agree that it is

important that Defendants be prevented from continuing such illegal

conduct, but are certain that the Judgment will enjoin it.

Subparagraph IV.A.2. absolutely bars Defendants from making such

claims against U.S. LICENSEES with respect to SUBJECT FLOAT

TECHNOLOGY (which in view of the already-discussed 1982 cut-off of

improvement disclosures to all U.S. LICENSEES refers to pre-1983

technology), and limits such assertion by Defendants, when dealing

with other FLOAT TECHNOLOGY, to instances where they have good faith

arguments that they are asserting rights to subject matter that

qualifies as legally recognized trade secrets and also that the U.S.

LICENSEE in question has obtained the subject matter unlawfully.

Subparagraph IV.B.2. similarly protects U.S. NON-LICENSEES from such

future conduct. Given the protection afforded by subparagraphs

IV.A.2. and IV.B.2., the additional disclosure requirements are

unnecessary.

10. You propose to add to subparagraph IV.A.2. requirements that

Defendants must satisfy before asserting know-how rights against

U.S. LICENSEES that are as exacting as the subparagraph IV.B.2.

requirements that apply when Defendants assert such claims against

U.S. NON-LICENSEES. Although it may initially seem appropriate to

impose the same requirements on Pilkington regardless of whether it

asserts such alleged rights against U.S. LICENSEES or U.S. NON-

LICENSEES, the differences in how the two groups gain access to

Pilkington technology provides the basis for imposing different

requirements in the two situations. U.S. LICENSEES originally

obtained the SUBJECT FLOAT TECHNOLOGY under their respective

licenses, an information flow, as we have already noted herein, that

ended in 1982. Subparagraph IV.A.2.(a) absolutely bars Defendants'

claims against U.S. LICENSEES based on such old technology; thus,

Defendants would have to establish that any claim they make against

a U.S. LICENSEE not only meets the requirements of subparagraphs

IV.A.2.(b) but also that the technology in question was obtained by

the U.S. LICENSEE after 1982. The requirement for such a showing

substantially diminishes the need for the kind of additional showing

in claims against U.S. LICENSEES that you propose. By contrast,

claims that Defendants might make against U.S. NON-LICENSEES could

cover pre-1983 technology as well as that of later origin, making

the provisions of IV.B.2. (c) and (d) far more important as

safeguards against anticompetitive assertions of such know-how

rights.

11. Finally, you propose to extend Defendants' obligation

pursuant to subparagraph IV.G.1. to identify the FLOAT TECHNOLOGY

found to be public knowledge in the FINAL AWARD entered in the

Shenzhen arbitration so that it also requires such identification

for material ``otherwise found not to be a trade secret in the FINAL

AWARD or in any other proceeding.'' You further propose a similar

change for subparagraph IV.G.2(b). Such changes would be

counterproductive. Contrary to loose assertions made on Defendants'

behalf that the Shenzhen arbitrators determined what Pilkington

technology still merits trade secret status, they made no such

determination but rather determined only that certain items had not

been proven to be in the public domain. There is no basis in law for

the assertion implied by the proposed change, i.e., that any subject

matter not in the public domain is entitled to trade secret

protection. Such a formulation would ignore, inter alia, the

requirement that alleged trade secrets must have value to merit

legal or equitable protection. PPG, having been a party to this

arbitration, already knows what this provision of the Judgment

requires Defendants to disclose; it is thus primarily for the

benefit of PPG's competitors.

For the reasons noted above the Department of Justice does not

believe that it would be in the public interest to forego entry of

the Judgment for failure to incorporate any of your proposed

changes. We nevertheless greatly appreciate your interest in this

matter.

Sincerely,

K. Craig Wildfang,

Special Counsel to the Assistant Attorney General, Antitrust Division.

Kurt Shaffert,

Attorney, Antitrust Division.

Steven M. Edwards,

Thomas J. Sweeney, III,

George F. Hritz,

Paul B. Sweeney

Davis, Scott, Weber & Edwards, P.C., 100 Park Avenue, New York, New

York 10017, (212) 685-8000.

Kenneth C. Anderson,

Anderson, Aukamp & Gingold, 1201 Pennsylvania Avenue, N.W., Suite 821,

Washington, D.C. 20004, (202) 662-6776.

Attorneys for Plaintiff, International Technologies Consultants, Inc.

United States District Court, District of Arizona, International

Technologies Consultants, Inc., Plaintiff, v. Pilkington plc and

Pilkington Holdings, Inc., Defendants. Civil Action No. CIV-94-

00345-TUC-WDB.

Comments of International Technologies Consultants, Inc. Regarding

Proposed Final Judgment, Stipulation and Competitive Impact Statement

International Technologies Consultants, Inc. (``ITC'') comments on

the Proposed Final Judgment, Stipulation, and Competitive Impact

Statement in United States v. Pilkington plc and Pilkington Holdings,

Inc. as follows:

Preliminary Statement

ITC, in the parlance of the proposed final decree, is a U.S. NON-

LICENSEE. ITC competes in the sale of float process technology on a

worldwide basis, using float technology which it independently

developed from information in the public domain, supplemented by sound

engineering practice and extensive expertise in the construction of

float process facilities. ITC is not, nor has it ever been, a

Pilkington licensee. ITC's business activities are confined to the

worldwide marketing of float process technology and associated

engineering and technical services. ITC has no involvement in the

production or distribution of manufactured glass.

The government complaint, proposed decree and the competitive

impact statement evolved from a CID investigation of the license

arrangements between Pilkington and its licensees, the principal focus

of which was the variety of license provisions utilized by Pilkington

illegitimately to perpetuate its patent monopoly of float process

technology. (See complaint,  27.) The Department's conclusion that the

Pilkington licensing scheme constitutes an illegal effort to perpetuate

and maintain its monopoly far beyond the expiration of the core float

process patents and its consequent decision to confront this deeply

entrenched, aggressive foreign-based cartel is to be commended. The

proposed decree represents an important initial step in eradicating the

obviously pernicious and indefensible license provisions, but

unfortunately it stops far short of providing the competitive relief

required to definitely eradicate the Pilkington cartel, thereby finally

permitting a competitive environment to exist in the flat glass

industry.

The need to revisit and rethink the efficacy of the proposed decree

with a view to tightening its provisions was amply demonstrated by the

reaction of senior Pilkington officials to the filing of the

litigation. The company's May 26, 1994 press release dismisses the

government case as unprovable, and unworthy of the cost and time

required to achieve judicial vindication. The Release then describes

the official Pilkington interpretation of the decree as follows:

The Consent Decree * * * recognizes the subsequent evolution of

float technologies and that some recent float bath technology

developed by Pilkington will continue to be treated through normal

licensing arrangements. Pilkington's protection and licensing of its

total float technology throughout the rest of the world, remains

unaffected. * * * Pilkington is reassured that the confidentiality

of the processes is protected and that the normal licensing

arrangements for current and future float glass technology are

secure.

These comments must be read against the evidentiary record developed by

the Division via its CID investigation which unambiguously demonstrates

that Pilkington deliberately, and with full knowledge of the illegality

of its actions under United States antitrust law, proceeded to adopt

and aggressively implement its illegal licensing scheme in order to

shore up its monopoly position to combat the erosion of its patent

base. Given its longstanding distaste for antitrust law as enforced in

the United States (a common malady among British corporate officials),

which continues unabated as evidenced by the above referenced reaction

of its senior officials to the instant litigation, common sense and

prudence dictates that the Department must take unusual precautions to

ensure that the substantial time and public monies expended in the

investigation and prosecution of this worldwide cartel translates into

lasting and meaningful pro-competitive results.

Because ITC is a U.S. NON-LICENSEE, its specific comments relative

to the proposed decree reflect its perspective as one as one of the few

non-Pilkington licensees to make a sustained effort to enter the float

process design market in competition with Pilkington and its licensees.

ITC defers to the U.S. LICENSEES in respect of the efficacy of the

proposed decree in addressing the anti-competitive license provisions

of particular concern to them.

Specific Comments

1. Agreements or Understandings Between Defendants and U.S. LICENSEES

Aimed at Preventing. Handicapping or Otherwise Interfering With Efforts

by U.S. NON-LICENSEES to Enter the Float Process Technology Market

Worldwide

a. Discussions

Part B--Litigation of the Competitive Impact Statement (``CIS'') at

pp. 12 and 13 describes the litigation by Pilkington against AFG and

Guardian, respectively, to prevent them from violating the territorial

provisions of their respective licenses with Pilkington, thereby

eliminating (or at least carefully controlling) competition between

each of them and Pilkington. The CIS alludes to the fact that both

cases were settled on the basis, inter alia, that each licensee

defendant would abandon its aggressive competition with Pilkington,

thereby preserving the Pilkington cartel against uncontrolled

competition from its own licensees.\1\ Significantly, the CIS omits any

mention of another important element of the aforesaid settlement,

namely agreements with each such defendant licensee to cooperate

(conspire) with Pilkington to forestall the emerging competition from

non-licensees which threatened to undermine the Pilkington cartel by

entering the float process technology market and ending the cartel's

control over both the production and sale of flat glass.

---------------------------------------------------------------------------

\1\PPG thus remained the sole Pilkington licensee to persist in

an effort to become an independent competitive factor in the

industry, thereby engendering a sustained counterattack by the

cartel which has effectively blocked PPG's entry date.

---------------------------------------------------------------------------

ITC recognizes that the Department opted to file suit against

Pilkington before it had proceeded very far with its broader

investigation of the above-described collusive conduct among Pilkington

and various key licensees designed to protect the cartel against the

entry of NON-LICENSEE competitors over whom the cartel would have no

control. Through discovery undertaken largely subsequent to the filing

of the government suit, ITC gained access to and reviewed many of the

documents previously submitted to the Department in response to the

CIDs. The CID documents pertaining to the conspiracy issue deeply

implicate two of the U.S. LICENSEES--AFG and Guardian--who are

principal beneficiaries of the proposed decree, along with various

other U.S. NON-LICENSEES. This documentary record is sufficiently

compelling that in the normal course the Division would have been

expected to proceed with CID depositions and otherwise aggressively

pursue the investigation. In our view, had the Division completed the

comprehensive formal investigation justified by the evidence in its

possession before filing its complaint, not only would there have been

a broader complaint involving more parties, but the proposed decree

would of necessity have been much more comprehensive. As it is, ITC

must now secure relief against this broad conspiratorial conduct

through its own litigation efforts.

Be that as it may, the complaint and proposed decree as filed

nonetheless represents an important first step in a long overdue attack

upon longstanding anti-competitive license provisions which Pilkington

used in its increasing futile effort to prop up its monopoly position

vis-a-vis its own licensees as its key patents expired. As noted, the

principal beneficiaries of the lawsuit and the decree as currently

structured are the U.S. LICENSEES who have finally achieved an

important measure of freedom to engage in meaningful competition with

Pilkington. However, neither the complaint nor the proposed decree

displays any understanding of the critically important competitive role

played by the U.S. NON-LICENSEES, nor does the decree contain

provisions essential to enable U.S. NON-LICENSEES to freely enter and

compete in the float process technology market, thereby achieving an

even broader pro-competitive effect. It is, in short, all well and good

for the government to take action which permits AFG, Guardian and other

U.S. LICENSEES to free themselves from the anti-competitive constraints

central to the Pilkington licensing scheme. However, U.S. NON-LICENSEES

also have a right to expect their government to protect them from

blatantly anti-competitive conduct undertaken by certain U.S.

LICENSEES, albeit at the insistence of a foreign cartel manager

desperate to protect itself against the competitive in-roads of NON-

LICENSEE competitors. Indeed, one would expect that the Department

would have a particularly acute interest, not to mention a solemn

obligation, to ensure that, at the very least, Pilkington is enjoined

from enforcing or implementing any agreements or understandings

extracted from any of its Licensees as a condition to the settlement of

litigation it initiated. Further, given what the evidence in the

government's possession reveals, it is incumbent upon the Department to

take corrective action to eliminate the remaining barriers to entry by

U.S. NON-LICENSEES, thereby finally achieving and creating a truly

competitive marketplace.

b. Proposed Corrective Language

ITC proposes that a new paragraph 5 be added at the end of IV A at

page 7, to wit:

5. Defendants shall neither enter into any agreement or

understanding, whether written or oral, and any U.S. LICENSEE, nor

enforce or implement any existing such agreement or understanding,

having the purpose or effect of preventing, interfering with, or

otherwise handicapping efforts by U.S. NON-LICENSEES to enter the

float process technology market anywhere in the world.

In addition, the Department should accelerate this critically

important phase of its investigation and indicate via issuance of a

press release that the investigation of alleged conspiratorial conduct

among Pilkington and its licensees is continuing. The Department would

be derelict in its duties were it to stand idle given the evidence in

its possession.

2. Preventing Defendants From Using Assertions of Proprietary Float

Technology Know-How Rights or Claims of Confidentiality To Preclude or

Retard Efforts by U.S. NON-LICENSEES To Enter the Float Technology

Process Market

a. Discussion

For decades Pilkington has been highly successful in discouraging

prospective clients from dealing with U.S. NON-LICENSEES simply by

asserting that Pilkington had been the first to develop float process

technology and thus had the exclusive worldwide right to use or license

that technology, and that for anyone to secure such technology from

non-Pilkington sources was to invite litigation. This mantra has been

repeated so often and so categorically by Pilkington and its allies

that at this point in time many potential clients simply accept the

primacy of Pilkington in float process-technology as an immutable

given--baseless though it may be. This pattern of Pilkington conduct--

fraudulent claims of exclusivity and confidentiality, accompanied by

threats of litigation (should the use of non-Pilkington float process

technology be contemplated) to prospective customers, competing sources

of technology and float technology and sources of capital, materials

and supplies, has continued at least through the spring of 1994.

Given this unbroken record of illegal conduct, the resulting deeply

entrenched cartel, and the substantial economic harm caused thereby, it

is obvious that the relief proposed in Section IV.B.2 of the proposed

decree falls woefully short of the mark. In the first place, defendants

having such a record of illegal conduct are hardly entitled to any

benefit of the doubt regarding their alleged good faith in asserting

proprietary float technology know-how rights and claims of

confidentiality; to the contrary, the burden of proof regarding such

assertions must necessarily rest upon Pilkington, rather than upon the

victims of its repeated acts of illegality. Indeed, as proposed, the

decree language invites precisely the sort of protracted exercise which

places prospective new entrants at a fatal disadvantage. Further, the

decree must contain a mechanism for fairly, quickly and effectively

resolving any disputes regarding proprietary know-how or

confidentiality in a neutral setting, and defendants must be enjoined

from making any assertions regarding know-how rights and

confidentiality unless and until their position is vindicated through

the dispute resolution mechanism.

More particularly, Section IV.B.2 should be replaced in its

entirety by the following:

2. No defendant shall assert against U.S. NON-LICENSEES (other

than in respect of Agreements referred to in subparagraph B.1.

above) any alleged proprietary FLOAT TECHNOLOGY Know-how rights

(including any claim of Confidentiality) that it or any U.S.

LICENSEE claims to have with respect to any FLOAT TECHNOLOGY offered

by U.S. NON-LICENSEES anywhere in the world, or communicate to third

parties regarding any such assertions or claims, unless for each

such claim the following occurs:

a. Defendants shall have the burden of describing in writing

with specificity the item of float technology covered by each claim

and shall provide a detailed statement setting forth the basis for

the claim;

b. a copy of the aforesaid statements shall be served upon the

Court, the U.S. NON-LICENSEE involved and the Department of Justice;

c. the U.S. NON-LICENSEE and the Department shall serve any

reply thereto to the court and Pilkington within fourteen (14) days

of receipt of the Pilkington specification of allegations;

2d. unless the matter is resolved via negotiations between or

among the defendants and the U.S. NON-LICENSEES within five (5)

days, the court shall appoint a special master knowledgeable in

float technology to conduct an inquiry to determine whether

defendants have met their burden, and will promptly file a written

report and recommendation to the court;

e. the court will enter an appropriate order;

f. only if the court order supports the claim will defendants

then be permitted to notify others of the trade secrets rights and

claims of confidentiality against any U.S. NON-LICENSEE; and

g. Pilkington will pay all costs should it not prevail.

ITC recognizes that such a dispute resolution mechanism has a

regulatory flavor and that the Department often disfavors regulatory

decrees. However, several factors militate strongly in favor of such an

approach in the unique circumstances here presented. First, the

proposed truth seeking process would be triggered at the earliest stage

of the dispute, before the invariably corrosive and damaging false

accusations circulate among prospective clients, sources of financial

support and suppliers. A somewhat similar approach proved potentially

useful in evaluating Guardian's trade secrets claims against ITC and

Euroglas. Procedural ambiguities, confusion about the format and

Guardian's reluctance to participate at the critical early stage in the

process substantially compromised the proceeding, but all such

potential problems have been eliminated from the mechanism proposed

above. The clean bill of health ultimately achieved by ITC in the

Euroglas situation unfortunately had little practical effect because

Guardian had had a year to fraudulently disparage the ITC design before

the report was issued. This difficulty is avoided in the proposed

mechanism by enjoining Pilkington from making such characterizations

until and unless it had met its burden of proof, which both creates an

incentive for Pilkington to cooperate in seeking an early resolution of

the dispute and prevents the circulation of fraudulent assertions until

the process has been completed.

Second, there is little danger that the court and the parties will

be inundated by a flood of hypertechnical disputes about know-how and

confidentiality claims. Once the burden of proof is placed upon

Pilkington--where it obviously belongs, coupled with the requirement

that a detailed specification of the basis of the claim be prepared and

shared with the accused party, the era of generalized and vague

allegations of impropriety and veiled threats of litigation will

finally end. Indeed, there is every likelihood that the dispute

resolution mechanism would need to be used perhaps only once, to

initially and definitively clear the air regarding the usual litany of

Pilkington allegations of impropriety by U.S. NON-LICENSEES. Once the

U.S. NON-LICENSEE passed its initial litmus test, there is little

likelihood that Pilkington would have much stomach for insisting upon

rematches, and the U.S. NON-LICENSEE would be free to immediately enter

the market place and would do so. Apart from the sui generis Muliaglass

situation, the Pilkington cartel, aided by various U.S. LICENSEES and

others, has succeeded in preventing every effort by U.S. NON-LICENSEES

from entering the float process technology market, all of which

entrenches the myth that Pilkington, by virtue of divine right, is the

exclusive worldwide source of such technology. In sum, once the

Pilkington canards about know-how rights and confidentiality are

exposed for the empty shells they are, as ITC is confident they would

be by the proposed procedure, the walls of the cartel will finally

crumble and the forces of competition will finally prevail.

Conclusion

ITC recognizes that the proposed decree is the product of

considerable negotiations between the Department and Pilkington and

that to press Pilkington further in hopes of achieving the additional

relief described above may jeopardize the deal. So be it. The Antitrust

Division has rarely been exposed to a cartel with the reach, longevity

and anti-competitive consequences of the Pilkington cartel. The

evidence of willfulness and of liability, as we both know, is unusually

rich and unambiguous. The world business community, upon whom the

Antitrust Division quite properly devotes considerable time and public

resources in order to both demonstrate the commitment of the U.S.

government to aggressive enforcement of the U.S. antitrust laws and the

important public benefits to be derived therefrom, has long been aware

of Pilkington and its success in creating and maintaining its worldwide

cartel. Thus, should the Division lack the tenacity and commitment to

principle to insist that the decree be amended in order to meaningfully

eradicate this particularly pernicious, long-lived cartel, the message

received by the many observers of the antitrust scene will be most

unfortunate. That message, however unfair from your perspective, is

that the Antitrust Division lacks the will to litigate potentially

protracted cases, preferring instead to settle for the appearance of

progress by accepting what has been characterized as a ``sleeves off

the vest'' type of decree. At some point, in some case, the Department

must demonstrate that this message is incorrect; that in the

appropriate circumstances, the Division will litigate aggressively and

fearlessly in order to fully vindicate the public interest. ITC submits

that the Pilkington case--should Pilkington be unwilling to renegotiate

the decree to satisfy the concerns expressed above--is the perfect

vehicle for the Division to use for this purpose and ITC urges it to do

so.

Dated: Washington, DC, September 1, 1994.

Anderson, Aukamp & Gingold

By---------------------------------------------------------------------

Kenneth C. Anderson,

1201 Pennsylvania Avenue, NW., Washington, DC 20004, (202) 662-6776 and

Davis, Scott, Weber & Edwards, P.C., 100 Park Avenue, New York, New

York 10017, (212) 685-8000.

Attorneys for Plaintiff, International Technologies Consultants.

Judiciary Center Building, 555 4th Street, NW., Washington, DC

20001.

October 6, 1994.

Kenneth C. Anderson, Esq.,

Anderson, Aukamp & Gingold, 1201 Pennsylvania Avenue, N.W., Suite

821, Washington, DC 20004

Re: Response to Comments on Proposed Final judgment U.S. v.

Pilkington plc and Pilkington Holdings, Inc. Civ 94-345 TUC WDB (D.

Ariz.), filed May 25, 1994

Dear Mr. Anderson: This responds to the Comments of

International Technologies Consultants, Inc. Regarding Proposed

Final Judgment, Stipulations and Competitive Impact Statement

(``Comments'') submitted to the Antitrust Division over your

signature on September 1, 1994. The Comments, in addition to making

a Preliminary Statement that characterizes the proposed Final

Judgment (``Judgment'') and summarizes certain representations by

Defendants to the press concerning the effect that they expect it to

have on their future conduct, proposes two specific changes to be

made before the Judgment is entered.

Before addressing your specific proposals for change, we would

point out that the text of the proposed Final Judgment

(``Judgment''), rather than Pilkington's characterization thereof in

its own press releases controls what it will be permitted and

required to do. Thus, contrary to Pilkington's public claim, which

you quote, that the restraints Pilkington has imposed under the

guise of ``protection and licensing of its total float technology,

throughout the rest of the world, remain unaffected,'' the Judgment

will in fact enjoin Pilkington from anticompetitive practices

throughout the world to the extent that those practices are aimed at

U.S.-based entities seeking to use float technology anywhere, or are

aimed at anyone else seeking to use float technology in North

America. That is, Pilkington's specified anticompetitive conduct is

enjoined insofar as it is within the jurisdiction of the U.S.

antitrust laws. The competitive effect of Pilkington's ability, also

referred to in the portion of Pilkington's press release that you

quote, to continue ``normal licensing'' of its ``recent float bath

technology,'' must be considered in the light of its ready

concession to the United States during settlement negotiations that

very little significant technology of that kind exists. A good

measure of the near-absence of such significant recent technology is

that float glass manufacture by those who have not been licensed to

use this ``recent technology'' has been quite competitive with

Pilkington's and its subsidiaries' production.

The standard we have applied in assessing your specific

proposals for modification or clarification is whether it is in the

public interest to enter that Judgment that has been submitted for

entry by stipulation. Entry is in the public interest if the

Judgment is adequate to remedy the antitrust violations alleged in

the Complaint. United States v. Bechtel Corp., 1979-1 Trade Cas.

(CCH) 62,430 (N.D. Cal. 1979), aff'd, 648 F. 2d 660, 665 (9th Cir.

1981), cert. denied, 454 U.S. 1083 (1982).

Your first proposed change is to add, at the end of Subparagraph

IV.A., a provision enjoining Defendants from entering, enforcing, or

implementing any contract having the purpose or effect of

preventing, interfering with, or otherwise handicapping efforts by

U.S. NON-LICENSEES\1\ to enter the float process technology market

anywhere in the world. It is the Department's view that, although

the conduct proscribed by the proposed amendment would clearly be

unlawful, this proposed amendment would be redundant inasmuch as

Subparagraph VI.B. adequately protects against such conduct by

enjoining Defendants from employing the means it heretofore relied

upon to achieve its anticompetitive ends, i.e., making unjustified

assertions of intellectual property rights against putative entrants

and their customers, financing sources, suppliers, and the like.

---------------------------------------------------------------------------

\1\Capitalized terms have the meanings assigned to them in

Paragraph II of the Judgment.

---------------------------------------------------------------------------

Second, your Comments propose different conditions than those

contained in Subparagraph IV.B.2. of the Judgment to govern the

circumstances under which Defendants can avoid violating that

provision's injunction against asserting certain know-how rights

vis-a-vis U.S. NON-LICENSEES. The proposed amendment would require

this Court, each time such an assertion is made, to appoint a

Special Master to determine whether Defendants have proven an

adequate basis for the assertion unless the matter is resolved by

negotiation. (Your proposal would require ``Pilkington [to] pay all

costs should it not prevail'' in such a proceeding, but is silent as

to who would pay the Special Master's costs if Defendants do

prevail.) Your proposal would thus delete from the Judgment

provisions that require defendants to justify in writing to the

Department of Justice assertions of the kind that your proposal

would submit to Special masters. In the Department's view, requiring

this Court to appoint a Special Master whenever such an assertion

fails to be resolved by negotiation would not assure, to a

sufficiently greater extent than the provisions of the proposed

Final Judgment, that Defendants will henceforth desist from claiming

know-how rights that are unjustified.

For the reasons stated above the Department of Justice does not

believe that it would be in the public interest to forego entry of

the Judgment for failure to incorporate any of your proposed

changes. We nevertheless greatly appreciate your interest in this

matter.

Sincerely,

K. Craig Wildfang,

Special Counsel to the Assistant Attorney General, Antitrust Division.

Kurt Shaffert,

Attorney, Antitrust Division.

August 10, 1994.

Ms. Gail Kursh,

Chief, Professions and Intellectual Property Section, Room 9903,

U.S. Department of Justice, Antitrust Division, 555 4th Street, NW.,

Washington, DC 20001

Dear Ms. Kursh: These comments are given to the proposed Final

Judgment set out in the Notice of the Department of Justice,

Antitrust Division, dated June 14, 1994, respecting United States v.

Pikington plc and Pilkington Holdings, Inc., United States District

Court for the District of Arizona, Civil Action No. 94-345, filed

May 25, 1994 (the ``Civil Action'').

Definitions

Capitalized terms used in these comments without definition will

have the meanings accorded to them by the proposed Final Judgment.

The ``Competitive Impact Statement'' is the Competitive Impact

Statement filed in the Civil Action pursuant to Section 2(b) of the

Antitrust Procedures and Penalties Act (15 U.S.C. 15(b)).

Introduction

In Article I.A. of the Competitive Impact Statement, the

Department of Justice (``DOJ'') summarizes the seven (7) categories

of activity allegedly engaged in by the Defendants in violation of

the antitrust laws and the three (3) categories of relief sought by

the Complaint to eliminate such activities. At Article III of the

Competitive Impact Statement, DOJ summarizes how the competition

favorable elements of the Final Judgment will, in effect, stop the

seven (7) categories of activity and thereby ``* * * eliminate any

residual anticompetitive effects of the restrictive license

agreements and other conduct challenged by the Complaint.''

The competition favorable elements are:

Element Number 1: * * * [T]he Final Judgment would eliminate all

territorial and use limitations [Defendants] imposed on [their] U.S.

licensees and allow them to manufacture on their own or sublicense

any third party to do so anywhere in the world * * *.''

Element Number 2: The Final Judgment will create ``* * * a

similar `safe harbor' for any other American individual or firm who

is not a Pilkington float glass licensee to use any float technology

in its position without liability to [Defendants]. (Emphasis

supplied).

Element Number 3: The Final ``* * * Judgment would enjoin

certain conduct having the purpose or effect of restricting exports

of float glass to the United States * * *.''

Element Number 4: The Final ``* * * Judgment would enjoin the

[D]efendants from making certain adverse representations * * * and

would require [certain disclosures].

DOJ has wrongly concluded that the issuance of an order

embodying these four (4) elements will achieve the goal of ``* * *

eliminat[ing] any residual anticompetitive effects of the

restrictive license agreements and other conduct challenged by the

Complaint * * *.'' because its selection of the elements rests upon

flawed premises, including at least the following:

1. The Pilkington License Agreements have terminated and no

valuable rights other than ``know-how'' rights may be obtained under

them by assignees or sublicensees.

2. The ``safe harbor'' as to Pilkington know-how created for

U.S. Non-Licensees offers sufficient protection for prospective

assignees and/or sublicensees of U.S. Licensees and their lenders to

cause them to risk tens of millions of dollars in the construction

of float glass plants.

3. The Defendants will take no retributive action after the ten

(10) year term of the Final Judgment.

4. The Pilkington float technology that is in the public domain

(expired Patents and proprietary know-how), if known to prospective

competitors, is sufficient to enable prospective competitors to

construct and/or operate competitive float plants. See Article

II.A.2. of the Competitive Impact Statement which states ``* * *

Pilkington has no intellectual property rights of substantial value

* * *.''

Commenting Party is One of the New Entrants Sought by DOJ

Our client (the ``Commenting Party'') is an entity formed under

the laws of one of the States of the United States which now owns a

Float Glass plant at which it manufactures and sells Float Glass.

Commenting Party is an assignee and/or sublicensee of two License

Agreements entered into between a subsidiary and/or predecessor of

one of the Defendants and one of AFG, Ford, Guardian, PPG or LOF

(the ``named Licensees'').

Under the License Agreements as to which the Commenting Party is

an assignee and/or sublicensee, the ``Licensed Patents'' covered by

such License Agreements are expansively defined to include all U.S.

Patents issued during the ``Term'' of the relevant License

Agreement, U.S. Patent applications filed during such Term and the

U.S. Patents that may be issue thereunder, Patents as to which the

contracting Pilkington entity has the right to grant a license or

sub-license and continuations, divisions and reissues of such

Patents. The Terms of License Agreements ``expire'' after 1985 but

the license rights concerning the License Patents become ``paid up''

and remain vital. This vitality extends for the life of each of the

License Patents and reaches into the 21st century.

The Commenting Party regarded and still regards these acquired

and/or sublicensed rights to be essential to its continued operation

of its Float Glass plant. It would not have expended the tens of

millions of dollars it did for its Float Glass plant in the absence

of its rights under such License Agreements.

The Final Judgment Does Not Adequately Protect New Entrants

In obtaining these valuable license rights by assignment and/or

sublicensing, Commenting Party in effect stepped into the shoes of

its assignor/sublicensor and may have inherited certain other

features of the License Agreements that DOJ has described as

characteristic of Defendents' allegedly unlawful activities. These

features include:

1. Purported limitations on assignment and/or sublicensing.

2. Restrictive confidentiality provisions respecting allegedly

confidential information i.e. know-how (confidentiality provisions

do not apply to technology disclosed in Patents laws restrict

competitive uses).

3. Choice of law provisions invoking the laws of England. (All

Agreements deriving important rights from the Defendants, their

predecessors or subsidiaries presumably invoke the laws of England

as the ``applicable law.'').

4. Arbitration provisions requiring arbitration venued in

England for all disputes. (All Agreements deriving important rights

from the Defendants, their predecessors or subsidiaries presumably

require arbitration in England.)

Commenting Party believes that other prospective entrants into

the Float Glass industry will conclude, as Commenting Party did,

that the construction and operation of a competitive Float Glass

plant requires such entrant to become an assignee and/or sublicensee

of Patent and other rights under a License Agreement derived from

the Defendants, their predesessors or subsidiaries (the ``Pilkington

Group''). When they do so they may become subject to restrictive

provisions like those described above. The Final Judgment appears to

permit the enforcement of these allegedly anti-competitive

provisions.

If a prospective entrant into the Float Glass industry requires

institutional financing in order to construct a Float Glass plant

having a cost, according to DOJ, of between $100 and $150 million

dollars, will the protections allegedly afforded by the Final

Judgment resolve the issues that institutional lenders,

institutional lawyers and borrower's counsel will find in the

License Agreements as modified by the Final Judgment? The answer

simply stated is no.

Commenting Party believes the flawed assumptions have led to a

flawed result. This conclusion is illuminated by the application of

the elements of the Final Judgment to the facts of Commenting

Party's case.

What Is Commenting Party's Assignor's/Sublicensor's Status?

Does the Final Judgment classify the Named Licensee with whom

Commenty Party contracted (``Commenting Party's Assignor/

Sublicensor'') as a ``U.S. Licensee''? To be a U.S. Licensee, one

must first be a person, company or entity who is a ``Licensee.'' A

person, company or entity is not a Licensee unless they have ``* * *

entered into a License Agreement with Pilkington.'' (Emphasis

added'').

The phrase ``* * * entered into * * * with Pilkington * * *''

appears to require privity of contract. This privity is restricted,

apparently, to persons, companies or entities in privity with

``Pilkington.'' Since ``Pilkington'' is only Pilkington plc, this

privity must be with the Defendant Pilkington plc.

Pilkington plc is not the name of the member of the Pilkington

Group with whom Commenting Party's Assignor/Sublicensor contracted

in the License Agreements. Therefore, it is possible that Commenting

Party's Assignor/Sublicensor is neither a ``Licensee'' nor a ``U.S.

Licensee'' because its contractual privity is with a subsidiary or

predecessor of ``Pilkington'' instead of with Pilkington plc.

What is Commenting Party's and What Will Be Future Assignees'/

Sublicensees' Status?

Even if a reader is to assume that the definitional flaw noted

above does not exist, Commenting Party's and any other future

assignee's/sublicensee's status apparently will not change because

none of them will have privity of contract with ``Pilkington'' no

matter how ``Pilkington'' is defined. Therefore, unless the Final

Judgment is changed, Commenting Party and all future assignees/

sublicensees will only be ``U.S. Non-licensees.''

Why Are U.S. Non-licensees Who Enter Into Assignments/Sublicenses

Under Pilkington License Agreements Not Expressly Protected Against

The Enforcement of Limitations?

It appears that DOJ believes that the prohibitions involving the

enforcement of ``Limitations'' will result in the assignment/

sublicensing of ``Float Technology'' required to construct and

operate competitive Float Glass plants. These prohibitions, however,

apply only to the allegedly anti-competitive activities of the

defendants against U.S. Licensees. See Final Judgment Article IV.A.

The protections relevant to U.S. Non-licensees are set out in

Article IV.B. of the Final Judgment. Article IV.B. does not prohibit

the Defendants asserting Limitations against U.S. Non-licensees!

Thus, if Article IV.A. permits U.S. Licensees to assign/sublicense

Float Technology, nowhere does Article IV.B. enable the prospective

assignees/sublicensees who may become new owners/operators of Float

Glass plants to exercise free from suit the rights they might hope

to acquire in an assignment/sublicense.

Article IV.B.1 appears to apply only to a subclass of U.S. Non-

licensees e.g. employees, contractors, suppliers, consultants, etc.,

who, as a group, have entirely different interests than prospective

owner/operators of Float Glass plants. In substance Article IV.B.1.

addresses only provisions of Agreements respecting Confidentiality

or non-competition. Since only the protections of Article IV.B.2.

appear to apply to assignees/sublicensees, the only subjects that

the Defendants can't make claims about against such U.S. Non-

licensees relate to proprietary Float Technology know-how rights

that Pilkington has in fact disclosed to someone who in fact fits

the definition of U.S. Licensee, and which are not bona-fide trade

secrets under ``applicable law'' (as to which Pilkington may still

enforce its rights under Article IV.B.2.). The protected class of

intellectual property is far less than the body of intellectual

property encompassed by the License Agreements under which

Commenting Party and others similarly situated would want to derive

rights.

If the Final Judgment is to be read these ways, the Defendants

will be able to claim against assignees/sublicensees that their

assignment/sublicense agreements and/or practice of Patents covered

by such assigned/sublicensed Pilkington License Agreements are,

among other things: wholly invalid, were obtained in breach of

Pilkington's Patent rights. (Article IV.H. of the Final Judgment

expressly preserves all of Pilkington's Patent claims).

Why Do the Protections Intended By The Concept of Limitations Not

Expressly And Literally Include Assignments and Sublicenses?

As noted above, DOJ appears to believe that the elements of the

final judgment will lead to assignment/sublicense agreements

concerning Float Technology. Surprisingly, the Final Judgment does

not literally say anything of the kind. We could not find any

reference to assignments or sublicenses. As DOJ has noted, the

License Agreements with members of the Pilkington Group contain

express, literal prohibitions respecting assignment and

sublicensing. The Defendants have reserved their rights respecting

matters not ``expressly'' covered by the Final Judgment. See Article

IV.I. of the Final Judgment. Institutional lenders or investors who

may be asked to lend to or invest in prospective Float Glass

industry entrants can be expected to look for express, literal

language in the Final Judgment to counter the express, literal

provisions of the License Agreements. Finding them absent, they will

refuse to lend or invest.

``Limitations'' is defined by Article II.K. of the Final

Judgment without any use of the words ``assignment'' or

``sublicensing.'' The word ``use'' appears in the definition but as

Commenting Party has shown above, the word ``Limitations'' is used

only in Article IV.A. with respect to U.S. Licensees and not their

contracting parties, i.e. their prospective assignees/sublicensees

are U.S. Non-licensees.

Article IV.A.1. of the Final Judgment uses the word

``sublicensing'' but appears to do so only in connection with

``Subject Float Technology.'' As defined, ``Subject Float

Technology'' appears to encompass only ``know-how'' (see above

discussion). Therefore, Float Technology that is Patent technology

or that was subject to disclosure by Pilkington but not in fact

disclosed is not encompassed by Article IV.A.1. of the Final

Judgment.

Commenting Party notes, in passing, that Article IV.A.3.(b)

curiously refers to ``transferring'' and ``transferees'' of Float

Technology without thereby telling the reader what such words

encompass or connecting them to other Articles of the Final

Judgment. This creates further ambiguity.

Assignments/sublicenses and the role DOJ expects them to play

are too important for the Final Judgment to treat them ambiguously

or even silently. As noted above, the Defendants seem to retain

important rights to sue. These rights appear to be strongest on

subject relating to Patents and provisions of the Final Judgment

that are not ``express'' enough. Commenting Party believes that

without changes to the Final Judgment no prospective assignee/

sublicensee can be given any clear assurances that the Final

Judgment prohibits the Defendants from suing them for attempting to

enter the Float Glass industry. Why would anyone risk investing in

or lending to an entity which cannot receive or provide assurances

that its ostensible assignment/sublicense under a Licensee Agreement

with a member of the Pilkington Group protects it from suits by the

Defendants?

Unfortunately, even if ``Limitations'' is changed to literally

permit assignments/sublicenses, under Article IV.A. its protections

extend only to U.S. Licensees. As Commenting Party has shown above,

the protections afforded to U.S. Non-licensees appear in Article

IV.B. of the Final Judgment. Again, the needed words of art

``assignment'' or ``sublicense'' do not appear there.

In short, DOJ may intend that the Final Judgment will be

interpreted to permit assignment/sublicensing of Float Technology

that is either or both licensed Patent technology or know-how

technology, but, under the express, literal terms of the Final

Judgment, the assignee/licensee clearly has protection only with

respect to non-Patented know-how that was in fact disclosed by

Pilkington plc to a person, company or entity that is a U.S.

Licensee. In Commenting Party's case, it appears the Final Judgment

is too narrow in application to encompass Commenting Party's rights

under its assignment and/or sublicense agreement. If Commenting

Party were to consider further assigning/sublicensing its rights

under the relevant Agreements, Commenting Party could not assure any

prospective sub-assignee/sub-sublicensee that the Final Judgment

affords them any protection against the restrictions contained in

such Agreements.

Finally, the ambiguous phrase ``* * * other than Float

Technology * * *'' in the definition of ``Subject Float Technology''

threatens the entire concept. Is it intended that if the Pilkington

Group disclosed Flat Technology to LOF, then such Float Technology

is not ``Subject Float Technology'' even though such Float

Technology was also disclosed to AFG, PPG or Ford? This shouldn't be

the case. Presumably, the intent was to exclude only the Float

Technology that was only disclosed to a U.S. Licensee who was also a

Pilkington plc subsidiary at the time of disclosure.

Commenting Party does not believe that DOJ intended any of these

unfavorable interpretations. If DOJ wants there to be assignees and/

or sublicensees of License Agreements deriving from Agreements

between any of the named Licensees and any member of the Pilkington

Group, then the prohibitions respecting ``Limitations'' must be

extended to this class of persons, companies and entities. The

defects noted in this analysis can be eliminated by modest changes

to the definitions of ``Pilkington'', ``U.S. Licensee'', ``U.S. Non-

licensee'', ``Limitations'' and ``Subject Float technology.''

Change #1. The Final Judgement should be changed so that the

Named Licensees listed in Article II.A.2. of the Competitive Impact

Statement are in fact encompassed by the definition of ``Licensee/''

This is best accomplished by expanding the definition of

``Pilkington.''

Article II.N. of the Final Judgment should be changed in its

entirety to read as follows:

N. ``Pilkington'' means Defendants Pilkington plc, Pilkington

Holdings Inc. and their past, present and future predecessors,

affiliates and subsidiaries.

Change #2. If DOJ intends to vest in prospective assignees/

sublicensee of U.S. Licensees the benefits of Agreements that grant

rights under License Agreements entered into with a member of the

Pilkington Group, then the term ``U.S. Licensee'' should include all

persons, companies or entities who derive rights from any chain of

Agreements that extend ultimately to a License Agreement with a

member of the Pilkington Group. This will enable contracting parties

to obtain licenses under patents whose vitality extends into the

next century and protect such parties from any anti-competitive

assertion of the Patent rights expressly reserved to the Defendants

at Article IV.H. of the Final Judgment.

Article II.I. of the Final Judgment should be changed in its

entirety to read as follows:

I. ``Licensee'' means any person, company, or entity that has

either (1) entered into a License Agreement with Pilkington; (2)

become an assignee and/or sublicensee under a License Agreement with

Pilkington; or (3) become an assignee and/or sublicensee under a

License Agreement with any Licensee.

Change #3. The definition of ``Non-licensee'' contains the

overly restrictive concept of privity of contract, i.e. ``* * * not

entered into a[n] * * * Agreement with Pilkington.'' The definition

should merely encompass all persons, companies or entities who are

not in a chain of Agreements extending ultimately to an original

Pilkington License Agreement.

Article II.L. of the Final Judgment should be changed in its

entirety to read as follows:

L. ``Non-licensee'' means any person, company, or entity which

is not a Licensee.

Change #4. Article II.K. of the Final Judgment should be changed

in its entirety to read as follows:

K. ``Limitations'' means: (1) Any limitation or restriction, or

purported restriction or limitation under any License Agreement with

Pilkington or other Agreement or in any other form respecting

territories, fields, markets, or customers for the design and

construction, or supervision of construction, or ownership of Float

Glass plants, or the manufacture and sale of Float Glass; and/or (2)

any restriction or limitation, or purported restriction or

limitation under any License Agreement with Pilkington or other

Agreement or in any other form respecting the assignment, licensing,

sublicensing or other use of Float Technology, whether the result of

an affirmative prohibition or a limited authorization.

Change #5. Article II.P. of the Final Judgment should be changed

in its entirety to read as follows:

P. ``Subject Float Technology'' means Patented or Unpatented

Float Technology that in relation to any given Licensee was

licensed, was subject to disclosure or was in fact disclosed to that

Licensee under an Agreement with either Pilkington or any other

Licensee other than Float Technology disclosed by Pilkington plc

only to any U.S. Licensee while such U.S. Licensee was a subsidiary

of Pilkington plc.

Why Will English Law Be Permitted To Govern All Important Questions

of Law?

Persons, companies and entities who become assignees/

sublicensees under License Agreements with a member of the

Pilkington Group may become subject to the choice of law provisions

contained in the original License Agreements. While DOJ has

challenged the Pilkington Group's contracting practices, the Final

Judgment does nothing to change a central feature of the License

Agreements. Even more ominously, the Final Judgment introduces

vagueness and ambiguity concerning these features leaving the

Defendants free to argue entirely different meanings in venues

outside the jurisdiction of the District Court.

Throughout the proposed Final Judgement, particularly in

reference to the issue of Confidential Information, the phrase

``applicable'' law appears. Under the License Agreements available

to Commenting Party, the Pilkington Group chose the laws of England

to govern the interpretation and application of such License

Agreements. It is highly likely that this choice of law appears in

all relevant License Agreements and will through the assignment/

sublicensing process sought by DOJ run through any future relevant

Agreements.

For example, the words ``applicable law'' appears in the

phrase'' * * * trade secret under applicable law * * *.'' What does

this mean? The learned treatise The Legal Protection of Trade

Secrets (the ``English Treatise''), at Section 2.2.5 says ``The term

trade secret is not really a term of art in English law in contrast

with its usage in American law * * *. Thus, the effect of the Final

Judgment appears to be that the laws of England will apply to the

interpretation of the concept of ``trade secret'' and such English

law does not use such words as a ``term of art.'' Does this mean

that Defendants' lawyers will be free to fill in for English

arbitrators (the Final Judgment makes no attempt to eliminate the

London venue and English arbitrators that have apparently been used

with such anti-competitive effect in litigation with licensees) what

the term means?

The English Treatise offers two (2) formulations of the concept

of ``confidential information.'' Which of the two rules will apply?

Which of them, if either, furthers the purposes of the Final

Judgment? Why will the Defendants be left with the power to argue

their interpretation of what ``trade secret under applicable law''

means to arbitrators sited in London? Why should the District Court

be confident that the purposes of the Final Judgment will be given

effect by English arbitrators interpreting the vague and ambiguous

language of an order of, to them, a foreign court?

The issue also is raised in another context by Final Judgment

Article IV.B.1. which refers to restrictions on competition under

``applicable law.'' If English law governs this issue too, how will

the District Court be assured that such law is consistent with the

purposes of the Final Judgment?

In sum, these vague and ambiguous formulations favor the

Defendants and the perpetuation of the contractual regime challenged

by DOJ. The Final Judgment obscures this issue by not disclosing

that English laws governs every Agreement that is important in the

future assignment/sublicensing activity sought by DOJ. Nothing in

the Final Judgment purpose to guide (much less control) the

arbitrators in their interpretation of the License Agreements and

assignments/sublicenses under them in light of the Final Judgement.

Change #6. The Final Judgment should expressly reserve

jurisdiction to the District Court to decide what laws are

applicable in any future litigation involving the Defendants and any

person, company or entity that is an assignee/sublicensee under any

Agreement derived from a License Agreement with a member of the

Pilkington Group. The Final Judgment could permit interlocutory

appeals to the District Court of any questions of interpretation and

expressly subject the arbitrators to the District Court's

jurisdiction. The Final Judgment could permit de novo judicial

review by the District Court of any decisions of arbitrators

respecting any such assignees/sublicensees.

Change #7. The Final Judgment could also replace the arbitration

venue provisions of the License Agreements with the venue of the

District Court. This would ensure that any arbitrators are subject

to the District Court's jurisdiction. The Defendants are already

subject to the District Court's jurisdiction and venue and there is

no hint in the Stipulation that the venue is inconvenient to the

members of the Pilkington Group.

Why Is Retributive Conduct Not Prohibited After Expiration of the

Final Judgment?

Article VII.A. of the Final Judgment provides that the Final

Judgment will expire on the tenth anniversary of its entry. What

happens then to persons, companies or entities who have invested

millions of dollars in obtaining the purported benefits of the Final

Judgment by assignment and/or sublicensing under License Agreements?

There will then be no prohibition against the Defendants enforcing

their contract and other rights. Upon such expiration, can the

Defendants enforce all of their suspended rights to the extent that

they haven't lapsed by application of any applicable statute of

limitations? What is the applicable statute? Does the phrase

``applicable law'' mean that this issue is governed by the laws of

England. If English law governs, The Limitation Act of 1980 provides

for a six (6) year statute of limitations for breach of contract

claims. Will this not mean that assignments and/or grants of

sublicenses by U.S. Licensees in year five (5) after the entry of

the Final Judgement are subject to suit in year eleven (11)?

Is the applicable statute of limitations tolled during the

effectiveness of the Final Judgment? Is it the intention of the

Final Judgment to bar certain claims, not to suspend them? The Final

Judgment should make this clear, whether by providing that the

Defendants shall not assert that the Final Judgment has tolled any

statute of limitations, or otherwise. Alternatively, the Final

Judgment could simply be made permanent with respect to all facts

and circumstances arising during the ten (10) year period the Final

Judgment is effective.

Change #8. At the least, Article VII.A. of the Final Judgment

should be changed in its entirety to read as follows:

A. This Final Judgment shall expire on the tenth anniversary of

its entry provided, however, that not withstanding such expiration,

the Defendants and their present and future affiliates and

subsidiaries shall not thereafter take any action prohibited by this

Final Judgment with respect to any License Agreement or any other

Agreement entered into by any Licensee respecting assignment and/or

sublicensing under any License Agreement prior to such expiration

date. This Final Judgment does not toll any statute of limitations

as to any existing claims or claims of the Defendants that, but for

this Final Judgment, would have risen during the time this Final

Judgment is in force.

Is the Necessary Float Technology Really in the Public Domain?

Change #9. What is the basis for the conclusion set our in press

statements by DOJ that the Float Technology embodied in Patents

expiring in 1982 and before and other technology in the public

domain is sufficient to enable a prospective entrant to construct

and operate a competitive Float Glass plant? There appear to be

hundreds of Pilkington Group Patents in the United States and

hundreds of others in foreign countries. Has DOJ in consultation

with anyone in the Float Glass industry or who is a prospective

entrant, determined that none of these Patents describes Float

Technology needed for a competitive Float Glass plant?

Notwithstanding the Final Judgment and in the absence of an

assignment or sublicense of rights under a License Agreement with a

member of the Pilkington Group, a prospective entrant into the Float

Glass industry will have to engage Patent lawyer(s) to understand

each of the unexpired Patents and determine what Float Technology

cannot be practiced. The review of hundreds of unexpired Patents

promises significant costs to parties who cannot obtain rights by

assignment or sublicensing.

Commenting Party believes that changes must be made in the Final

Judgment if DOJ's goal is to be achieved. Commenting Party believes

that without modification of the Final Judgment no prospective

entrant will be able to provide the assurances that commercial

lenders and institutional investors require on the serious issues

raised by the express, literal provisions of the Pilkington License

Agreements.

Sincerely yours,

John A. Grimstad.

Judiciary Center Building, 555 4th Street, NW, Washington, DC

20001.

October 6, 1994.

John A. Grimstad, Esq.,

Fredrikson & Byron, P.A., 1100 International Centre, 900 Second

Avenue South, Minneapolis, MN 55402-3397

Re: U.S. v. Pilkington plc et al. (D. Ariz., filed May 25, 1994),

Civ 94-345 TUC WDB

Dear Mr. Grimstad: This letter responds to your letter of August

10, 1994, commenting on and proposing changes in the proposed Final

Judgment (``Judgment'') in the above-captioned matter. You

complained that (i) the Judgment rests on several ``flawed

assumptions'' listed in your letter that you said ``have led to a

flawed result''; (ii) contrary to the Department of Justice's

conclusion, the relief the Judgment provides does not eliminate the

residual anticompetitive effects of the challenged agreements or

behavior; and (iii) the Judgment is ``too narrow in application to

encompass [the] rights'' of a domestic glass manufacturer you

represent but declined to identify. In trying to support those

complaints, you applied the precise provisions of the proposed

Judgment to your anonymous client's vaguely and ambiguously

described licensing arrangements, and then concluded there are gaps

in the Judgment's coverage that do not in fact exist. We have

addressed separately below each of the changes you recommended to

the proposed Judgment. For the reason indicated, we believe there is

no basis for modifying the Judgment. The standard applied in

assessing your specific proposals is whether it is in the public

interest to enter the Judgment submitted by stipulation. Entry is in

the public interest if the Judgment is adequate to remedy the

antitrust violations alleged in the Complaint.

1. You proposed expanding the definition ``Pilkington'' to

include the two named defendants' ``past, present and future

predecessors, affiliates and subsidiaries,'' so that the ``named

licensees (AFG, Ford, Guardian, PPG, and LOF) ``are in fact

encompassed by the definition of `Licensee'.'' This change is

necessary, you said, because your client is ``an assignee and/or

sublicensee of two license agreements * * * between [i] a subsidiary

and/or predecessor of one of the defendants'' and (ii) one of the

``named licensees,'' and because the Judgment's definition of

Licensee requires contractual privity with Pilkington itself.

We believe the change is unnecessary to achieve your stated

objective since each of the ``named licensees'' already is clearly a

Licensee as defined in the proposed Judgment. All five of those

companies entered into float licensee agreements with defendant

Pilkington, not with a predecessor, affiliate, or subsidiary of

Pilkington. Since execution of those agreements, only Pilkington's

corporate name has been changed from ``Pilkington Brothers Limited''

to ``Pilkington plc.'' Thus, Pilkington plc is the same corporate

entity as, not a successor of, Pilkington Brothers Limited.

2. You also proposed expanding the definition of ``Licensee'' to

include not only anyone who has entered into a license agreement

with Pilkington, but also anyone who is ``an assignee and/or

sublicensee'' under a license agreement with either Pilkington or

any of the ``named licensees.'' That is necessary, you said, so that

anyone ``who derive[s] rights from any chain of agreements that

extend ultimately to a license agreement with [Pilkington]'' will

get the benefits of such a license agreement with Pilkington as

``prospective assignees/sublicensees of U.S. Licensees'' under the

proposed Judgment. But this change, too, is unnecessary.

Subparagraph IV.A.1. of the proposed Judgment, subject to a

narrow exception and certain conditions relating to maintaining the

confidentiality of legitimate trade secrets, expressly permits any

U.S. Licensee (including each of the five ``named licensees'') to

sublicense anywhere in the world (including the U.S.) the float

glass technology Pilkington disclosed and licensed to it, free of

any license restrictions or limitations and without payment of any

royalties, lump sum, or line fees for such sublicensing. Clearly

then, for that provision of Subparagraph IV.A.1. to have any

meaningful effect, anyone acquiring rights to use such technology

under such a sublicense must be as free to use it anywhere without

restriction or limitation by Pilkington or payment of royalties or

fees to Pilkington, subject to the same conditions concerning

confidentiality, as the U.S. Licensee from whom such rights were

obtained. The same would be true too for any further sublicensing by

such a sublicensee. Anything less than that, if the result of any

action taken by Pilkington, would be a clear violation of the

proposed Judgment, with which Pilkington is required by stipulation

to comply pending its approval by the court.

It seems clear to us that the result would be the same, insofar

as Pilkington is concerned, whether such a sublicense agreement were

executed before or after entry of the proposed Judgment. As for

assignments, the result should be the same, assuming, as a matter of

law, the assignee effectively stands in the shoes of or is

substituted for the assignor, and the rights involved are

assignable. However, the proposed Judgment does not purport to

address specifically the consequences of such assignments since they

were not the principal focus of the challenged agreements or conduct

involved here. Moreover, we cannot be any more definitive on their

implications for your client because you have not provided enough

information about its current licensing arrangements.

3. You proposed changing the definition of ``Non-Licensee'' from

anyone who has not entered into a license agreement with Pilkington

to anyone who is not a Licensee, because, you said, the current

definition ``contains the overly restrictive concept of privity of

contract * * *.'' But since anyone who is not in contractual privity

with Pilkington is not a Licensee, your proposal is the equivalent

of the current definition. Moreover, since a Licensee is anyone who

is in contractual privity with Pilkington, the proposed Judgment's

definitions of ``Licensee'' and ``Non-Licensee'' together cover the

entire universe of persons entitled to the benefits of the Judgment,

without any gap between them. For purposes of the proposed Judgment,

your client is either a ``Licensee'' or a ``Non-Licensee,'' whatever

else it may be (assignee, sublicensee, etc.) by reason of its

current licensing arrangements. Thus, no need for the proposed

change has been shown.

4. The change proposed in the definition of ``Limitations'' is

to include references to sublicensing and assignment so as to permit

those activities. But including such references in the definition of

``Limitations'' does not provided the authorization you seek and

confuses the concept of ``Limitations,'' which are restrictions on

the exercise (e.g., in certain territories or for certain uses) of

rights already granted. Whether the separate right of sublicense or

to make assignments also is authorized is, as noted above, already

controlled by Subparagraph IV.A.1. of the proposed Judgment in the

case of sublicensing and by operation of law for assignments.

You also complained that ``the needed words of art `assignment'

or `sublicense' do not appear'' in Subparagraph IV.B., which

provides certain injunctive relief for U.S. Non-Licensees (i.e.,

those who have not entered into float glass license agreements with

Pilkington). As you correctly observed, however, Subparagraph IV.B.

does not enjoin Pilkington from enforcing limitations against them.

But there is no need to do so; since U.S. Non-Licensees by

definition are not in privity of contract with Pilkington, there is

no contractual or other legitimate basis for Pilkington to enforce

any license-agreement limitations against them. For the same reason,

it is not necessary that Subparagraph IV.B. enjoin Pilkington from

restricting or prohibiting the exercise of the right to sublicense

or make assignments against persons with whom it is not in

contractual privity under any float license agreement. Thus, neither

the word ``assignment'' nor the word ``sublicensee'' is ``needed as

part of the definition or concept of ``Limitations.''

5. You proposed to expand the definition of ``Subject Float

Technology'' to include patented as well as unpatented float

technology and to include float technology that was ``subject to

disclosure'' as well as that actually disclosed to any given

Licensee. In support, you claimed, incorrectly, that ``the protected

class of intellectual property is far less than the body of

intellectual property encompassed by the License Agreements * * *''

(p. 6, your letter). Indeed, they are the same.

The purpose and effect of Subparagraph IV.A.1. of the proposed

Judgment is to free U.S. Licensees from any restraints (other than

confidentiality) concerning all intellectual property rights

acquired from Pilkington, to the extent that has not already

occurred. As noted in the Competitive Impact Statement (p. 9), all

U.S. Licensees' float license agreements have terminated, and the

royalty obligations thereunder have become fully paid up. Also,

Pilkington has acknowledged that its basic patent protection

relating to the original form of float process has largely expired,

and has represented that all mutual exchanges between Pilkington and

its U.S. licensees (whether patented or not) have been terminated,

the latest ten years ago. Pilkington has represented further (as

have some of its U.S. Licensees) that all of the U.S. float glass

patents licensed by Pilkington to any U.S. Licensee, either under

the original grant or the improvement exchange provisions of the

licenses, have expired. It is simply unnecessary, therefore, to

cover patented rights that essentially no longer exist.

As for technology that was ``subject to disclosure,'' that

language is so vague and indefinite it would be impossible to

identify the technology involved. In any case, it seems wholly

unnecessary. According to the relevant float glass license

agreements, Pilkington was obliged to disclose to each licensee (i)

all ``necessary or useful'' know-how Pilkington developed, owned, or

controlled at the time and (ii) all patented and unpatented float

process improvements Pilkington discovered, owned, or controlled

during the term of the mutual exchange provisions. Together, those

obligations likely covered whatever might have been ``subject to

disclosure.'' Of course, the proposed Judgment does not apply to any

technology disclosed by a U.S. Licensee to your client (or to anyone

else) that belongs to that U.S. Licensee rather than to Pilkington.

Finally, as you correctly observed (p. 8, your letter), the

exclusionary language of the definition of ``Subject Float

Technology''--other than float technology disclosed by Pilkington to

any U.S. Licensee while Pilkington owned 50% or more of that U.S.

Licensee--excludes float technology disclosed to a U.S. Licensee who

was a Pilkington subsidiary at the time of disclosure (e.g., LOF)

and not also disclosed to any other licensee who was not then a

subsidiary (e.g., AFG, PPG, or Ford). We believe that intent is

clear from the plain meaning of the exclusion (especially

considering the included language, ``in relation to any given

licensee,'' which limits the excluded technology), and so it is

unnecessary to add the word ``only'' to the definition as you

propose.

6/7. You objected to (i) language in the proposed Final Judgment

for resolving trade secret issues under ``applicable law,'' and (ii)

the arbitration provisions of Pilkington's float license agreements

plus the application of English law to disputes involving those

agreements; accordingly, you proposed that the Judgment expressly

reserve to the District Court jurisdiction over questions of

applicable law in future litigation involving the defendants

(including provisions for interlocutory appeals) and over any

designated arbitrators (including de novo review of their

decisions). Alternatively, you also proposed replacing the choice of

law provisions of the licenses with, for example, the Uniform Trade

Secrets Act and replacing the arbitration provisions with the venue

of the District Court.

Your proposal seems far too sweeping insofar as it would reach

future litigation. Moreover, the proposed Judgment (Subparagraph

VII.B) already provides that the Court retains jurisdiction over

this action and the parties. In addition, any court can, as this

Court did in a related case in which it referred antitrust claims to

arbitration, retain jurisdiction over arbitration proceedings for

purposes of reviewing the decisions in those proceedings. Finally,

the language (``under applicable law'') in the Judgment to which you

objected requires application of the relevant conflict of laws rule,

as to both U.S. Licensees and U.S. Non-Licensees, in determining the

nature and existence of trade secrets, rather than, in the case of

U.S. Licensees, merely following the license provision that requires

application of English law. In any case, contrary to the implication

of your letter based on the treatise cited therein (p. 10), we

believe there is little, if any, substantive difference between the

trade secret law of the United States and the comparable body of

English law. Thus, we are unpersuaded that either of the alternative

changes you propose should be adopted.

8. You proposed changing Subparagraph VII.A., which sets the

term of the Judgment, in ways that effectively extend its duration

beyond 10 years. In concluding that a period of 10 years is the

appropriate life for most consent judgments, the Department has

recognized that the anticompetitive effects of any challenged

conduct or practices usually are fully dissipated within that time

and that, because of the market changes likely to occur within that

period, the operation of the judgment itself can have an undesirable

competitive impact after 10 years. In this case, the Department

believes that Pilkington technology is to a very substantial extent

publicly known and therefore no longer of sufficient value to

justify any restraints on its use, including obligations to maintain

its confidentiality. Even more so would that be the case 10 years

from now. Clearly, Pilkington would be subject to renewed antitrust

challenge in the event it reinstituted, after expiration of the

Judgment, the practices and conduct that led to this case in the

first place. Thus, we believe Subparagraph VII.A. should remain

unchanged.

9. You complained that a prospective entrant into the float

glass industry who cannot obtain rights by assignment or

sublicensing would incur significant costs to the extent it was

necessary (i) to review what you said are hundreds of unexpired

relevant Pilkington float glass patents not licensed to U.S.

Licensees, and (ii) to determine what float glass technology in the

public domain is sufficient to construct and operate a competitive

float glass plant. By failing to propose a specific change to

address this complaint, you implicitly acknowledged that there are

none that would avoid this task entirely or eliminate all risks

associated with entry. Of course, without any modification, the

proposed Judgment will allow U.S. Licensees to sublicense the

requisite technology they used to construct and operate competitive

float glass plants in the United States.

In sum, we do not believe it would be in the public interest to

forego entry of the proposed Judgment for failure to include therein

any of your proposed changes. Nevertheless, we appreciate your

interest in this matter and in the enforcement of the antitrust

laws.

Sincerely,

K. Craig Wildfang,

Special Counsel to the Assistant Attorney General, Antitrust Division.

Thomas H. Liddle,

Attorney, Antitrust Division.

[FR Doc. 94-25820 Filed 10-18-94; 8:45 am]

BILLING CODE 4410-01-M