[Federal Register Volume 59, Number 201 (Wednesday, October 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25820]


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[Federal Register: October 19, 1994]


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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