[Federal Register Volume 67, Number 203 (Monday, October 21, 2002)]
[Notices]
[Pages 64657-64666]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26631]


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DEPARTMENT OF JUSTICE

Antitrust Division

[Civil Action No. 02-888-A]


United States v. The Mathworks, Inc. and Wind River Systems, 
Inc.; Proposed Final Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed final Judgment, and 
Stipulation and Order pertaining to each Defendant individually, and a 
Competitive Impact Statement related thereto have been filed with the 
United States District Court for the Eastern District of Virginia in 
United States of America v. The MathWorks, Inc. and Wind River Systems, 
Inc., Civil Action No. 02-888-A. The proposed final Judgments represent 
a full settlement of this matter, as they resolve all issues between 
the United States and each Defendant. On June 21, 2002, the United 
States filed a Complaint against The MathWorks, Inc. and Wind River 
Systems, Inc. alleging that the Defendants entered into a series of 
agreements that had the purpose and effect of eliminating the MATRIXx 
product suite from the market in violation of Section 1 of the Sherman 
Act, 15 U.S.C. 1. Through these agreements, The MathWorks and WindRiver 
agreed to shift dynamic control system design software customers from 
Wind River to The MathWorks. The proposed Final Judgments require both 
The MathWorks and Wind River to facilitate the sale of the MATRIXx 
products and intellectual property to a buyer acceptable to the United 
States and the appointment of a trustee to effect the sale. Copies of 
the Complaint, proposed Final Judgments and Competitive Impact 
Statement are available for inspection at the Department of Justice in 
Washington, DC, in Room 200, 325 Seventh Street, NW., at the Office of 
the Clerk of the United States District Court for the Eastern District 
of Virginia, Alexandria, Virginia, and on the Antitrust Division's Web 
site at http://www.usdoj.gov/atr/cases/indx346.htm.
    Public comment is invited within 60 days of the days of the date of 
this notice. Such comments, and responses thereto, will be published in 
the Federal Register and filed with the Court. Comments should be 
directed to Renata B. Hesse, Chief, Networks and Technology Section, 
Antitrust Division, U.S. Department of Justice, 600 E Street, NW., 
Suite 9500, Washington, DC 20530.

Constance K. Robinson,
Director of Operations.

Stipulation and Order

    It is hereby stipulated by and between the undersigned parties, 
through their respective counsel, as follows:
    1. The Court has jurisdiction over the subject matter of 
Plaintiff's Complaint alleging Defendants Wind River Systems, Inc. 
(``Wind River'') and The MathWorks, Inc. (``The MathWorks'') entered 
into an agreement that violates Section 1 of the Sherman Act (15 U.S.C. 
1), and over each of the parties hereto, and venue of this action is 
proper in the United States District Court for the Eastern District of 
Virginia.
    2. The United States and The MathWorks stipulate that a Final 
Judgment in the form hereto attached may be filed and entered by the 
Court, upon the motion of either party or upon the Court's own motion, 
at any time after compliance with the requirements of the Antitrust 
Procedure and Penalties Act (15 U.S.C. 16), and without further notice 
to either party or other proceedings, provided that the United States 
has not withdrawn its consent, which it may do at any time before the 
entry of the proposed Final Judgment by serving notice thereof on The 
MathWorks and by filing that notice with the Court.
    3. The MathWorks shall abide by and comply with the provisions of 
the proposed Final Judgment pending entry of the Final Judgment by the 
Court, or until expiration of time for all appeals of any Court ruling 
declining entry of the proposed Final Judgment, and shall, from the 
date of the signing of this Stipulation, comply with all the terms and 
provisions of the proposed Final Judgment as though they were in full 
force and effect as an order of the Court.
    4. This Stipulation shall apply with equal force and effect to any 
amended proposed Final Judgment agreed upon in writing by both parties 
and submitted to the Court.
    5. In the event that the United States withdraws its consent, as 
provided in paragraph 2 above, or in the event that the proposed Final 
Judgment is not entered pursuant to this Stipulation, the time has 
expired for all appeals of any Court ruling declining entry of the 
proposed Final Judgment, and the Court has not otherwise ordered 
continued compliance with the terms and provisions of the proposed 
Final Judgment, then the parties are released from all further 
obligations under this Stipulation, and the making of this

[[Page 64658]]

Stipulation shall be without prejudice to either party in this or any 
other proceeding.

    Respectfully submitted,
    Dated: August 15, 2002.

    For Plaintiff United States of America,

James J. Tierney,
U.S. Department of Justice, Antitrust Division, Networks and 
Technology Section, 600 E Street, NW., Suite 9500, Washington, DC 
20530. Tel: (202) 307-0797. Fax: (202) 616-8544.

Richard Parker (VSB No. 44751),
Assistant United States Attorney, 2100 Jamieson Avenue, Alexandria, 
VA 22314. Tel: (703) 299-3700.

    For Defendant The MathWorks, Inc.

Thane D. Scott,
Ruth T. Dowling,
Mitchell C. Bailin,
Palmer & Dodge LL.P., 111 Huntington Avenue, Boston, MA 02199-7613, 
Tel: (617) 239-0100. Fax: (617) 227-4420.

Mark Gidley,
David A. Balto,
Jamie M. Crowe (VSB No. 37186),
601 Thirteenth Street, NW., Washington, DC 20005-3807. Tel.: (202) 
626-3600. Fax: (202) 639-9355.

Order

    It is so ordered by this Court, this -------- day of -------- 2002.

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Chief United States District Judge.

Certificate of Service

    The undersigned certifies that the Stipulation And Order was served 
by fax and U.S. Mail on the following counsel this 15th day of August, 
2002:
    Counsel for Wind River, Inc. Richard L. Rosen, Arnold & Porter, 555 
Twelfth Street, NW., Washington, DC 20004-1206. Tel: (202) 942-5000. 
Fax: (202) 942-5999.

James J. Tierney.

    In the matter of: United States District Court, for the Eastern 
District of Virginia, Alexandria Division; Civil Action No. 02-888-
A, Chief Judge Hilton. United States of America, Plaintiff, v. The 
MathWorks, Inc. and Wind River Systems, Inc., Defendants.

Final Judgment

    Whereas, Plaintiff United States of America filed its Complaint on 
June 21, 2002, alleging that The MathWorks, Inc. (``The MathWorks'') 
and Wind River Systems, Inc. (``Wind River'') entered into a series of 
agreements related to Wind River's MATRIXx product line that violate 
Section 1 of the Sherman Act;
    And Whereas the United States and Wind River on June 21, 2002, 
consented to entry of a Final Judgment that would require Wind River to 
use its reasonable best efforts to divest its interest in the MATRIXx 
assets in the event a Final Judgment is entered against The MathWorks;
    And whereas the United States and The MathWorks, by their 
respective attorneys, have consented to the entry of this Final 
Judgment constituting any evidence against, or any admission by, any 
party regarding any issue of fact or law;
    And whereas The MathWorks agrees to be bound by the provisions of 
this Final Judgment pending its approval by the Court;
    And whereas, the United States believes that entry of this Final 
judgment is in the public interest;
    Now, Therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is Ordered, adjudged and decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against The MathWorks under Section 1 of the 
Sherman Act (15 U.S.C. 1).

II. Definitions

    As used in this Final Judgment:
    (A) ``MATRIXx Agreements'' means the February 16, 2001, 
Distribution Agreement and other elated and contemporaneous agreements 
between Wind River and The MathWorks.
    (B) ``MATRIXx assets'' means all rights and tangible and intangible 
assets, including but not limited to, all contracts, software code, 
copyrights, patents, licenses, sublicenses, trademarks and other 
intellectual property, within the scope of the MATRIXx Agreements 
(excluding Retained Rights and U.S. Patents Nos. 4,796,179, 5,133,045, 
and 5,612,866 assigned to The MathWorks in the February 16, 2001, 
Patent Assignment between ISI and The MathWorks).
    (C) ``The MathWorks'' means The MathWorks, Inc., a Delaware 
corporation with its headquarters in Natick, Massachusetts, its 
parents, successors and assigns, and its subsidiaries, divisions, 
groups, affiliates, partnerships, and joint ventures, and their 
directors, officers, managers, agents, and employees, and any other 
person acting for, on behalf of, or under the control of them.
    (D) ``Wind River'' means Wind River Systems, Inc., a Delaware 
corporation with its headquarters in Alameda, California, its parents, 
successors and assigns, and its subsidiaries (including Integrated 
Systems, Inc. (``ISI'')), divisions, groups, affiliates, partnerships, 
and joint ventures, and their directors, officers, managers, agents, 
and employees, and any other person acting for, on behalf of, or under 
the control of them.
    (E) ``Retained Contracts'' mean all Wind River and ISI contracts 
regarding the MATRIXx products that remain in effect as of the date 
this Final Judgment becomes effective and were identified and retained 
by Wind River in the MATRIXx Agreements.
    (F) ``Retained Rights'' mean (a) a worldwide, royalty-free, non-
exclusive right under the MATRIXx assets to use, modify, improve, copy, 
display, perform, create derivative work of and enhance the MATRIXx 
products and distribute the same solely in connection with Wind River's 
provision of support services (including, without limitation, the right 
to provide source code to the extent contractually obligated) related 
to Retained Contracts; (b) a worldwide, royalty-free, non-exclusive 
license under the patents included within the MATRIXx assets to make, 
have made, use, sell, offer for sale, or import (I) articles that may 
be covered by one or more claims of such patents provided such acts are 
in connection with the provision of support services related to 
Retained Contracts or (ii) any Wind River products available for 
purchase as of February 16, 2001 (except the MATRIXx products), 
including all modifications, derivatives, new versions and new releases 
of the same.

III. Applicability

    This Final Judgment applies to The MathWorks and all other persons 
in active concert or participation with the MathWorks who receive 
actual notice of this Final judgment by personal service or otherwise.

IV. Asset Sale

    The United States and the MathWorks agree as follows:
    (A) As soon as possible, but no later than 30 days from the date of 
filing of this proposed Final Judgment with the Court, the United 
States shall nominate an independent agent to serve as Trustee to 
accomplish the sale of the MATRIXx assets to a purchaser approved by 
the United States pursuant to the terms of this Final Judgment and any 
subsequent order of the Court.
    (B) The Trustee shall serve at the cost and expense of defendants, 
on such customary and commercially reasonable terms and conditions as 
the United States, in its sole discretion, proposes, subject to 
approval by the Court. The Trustee shall receive compensation that is 
customary and commercially reasonable for asset sales of the size and

[[Page 64659]]

complexity as those included herein, including a substantial success 
incentive and any reasonable and necessary legal expenses relating to 
its role as Trustee. The Trustee shall account to the Court and 
defendants for all monies derived from the sale of the MATRIXx assets 
and all costs and expenses so incurred.
    (C) Upon application of the United States, the Court shall appoint 
the Trustee nominated by the United States and approve the engagement 
letter, provided that the engagement letter's terms and conditions are 
customary and commercially reasonable and consistent with this Final 
Judgment.
    (D) The Trustee shall have the duty to attempt to sell the MATRIXx 
assets and negotiate a definitive sales and licensing agreement with a 
purchase pursuant to the terms of this Final Judgment, the terms of the 
engagement letter and any subsequent order of the Court. The Trustee 
shall promptly make known, by usual and customary means, the 
availability of the MATRIXx assets, and shall attempt to sell the 
assets in a manner consistent with its typical commercial practices, 
including protection of the defendants' confidential information. 
Defendants shall have no authority or responsibility with respect to 
the attempt to sell the MATRIXx assets or negotiate the definitive 
sales and licensing agreement, except to promptly provide any 
information relating to the MATRIXx assets requested by the Trustee in 
writing or as otherwise provided herein.
    (E) Defendants shall promptly provide to the Trustee all 
information and documents requested in order to prepare offering 
materials and provide customary due diligence information to 
prospective purchasers with respect to the MATRIXx assets. Defendants 
shall comply fully with all such requests within three business days, 
unless the Trustee, in its sole discretion, waives or extends the time 
period, or excuses defendants from providing certain specified 
information.
    (F) The Trustee shall commence offering the MATRIXx assets for sale 
immediately after certification to the Court that it has received 
adequate information from the defendants to offer the MATRIXx assets 
for sale. The certification shall be made within five business days of 
receipt of the adequate information. After the sales offering has 
commenced, the Trustee may make such additional written requests for 
information as may be reasonably necessary to perform its duties, and 
the defendants shall comply fully with such requests within 3 business 
days, unless the Trustee, in its sole discretion, waives or extends the 
time period, or excuses defendants from providing certain specified 
information.
    (G) The Trustee shall have 90 days from the date of such 
certification in which to offer the MATRIXx assets for sale and 
consummate a definitive sales and licensing agreement with a purchaser. 
There shall be no extensions of this 90-day period, except, however, 
the running of the 90-day period shall toll for any undue delay the 
Court finds is caused by defendants.
    (H) The Trustee shall negotiate a definitive sales and licensing 
agreement on customary and commercially reasonable terms, substantially 
equivalent, except for the payment terms, to the terms and conditions 
in the MATRIXx Agreements to the extent possible, and that provides to 
the purchaser representations, warranties and covenants equivalent to 
those in the MATRIXx Agreements. The defendants may allocate primary 
responsibility for and indemnification under such warranties among 
themselves as customary and appropriate to their respective rights and 
obligations concerning the MATRIXx assets on the date of such sale. The 
definitive sales and licensing agreement will provide for transitional 
support to the purchaser, equivalent to that offered under the MATRIXx 
Agreements.
    (I) The Trustee shall make written reports of its activities to the 
Court, the United States and defendants 30 days, 45 days, 60 days, 75 
days, and 90 days after initiation of its attempts to sell the MATRIXx 
assets. Such reports shall include the name, address, and telephone 
number of each person who made an offer to acquire, expressed an 
interest in acquiring, entered into negotiations to acquire, or was 
contacted or made an inquiry about acquiring, an interest in the 
MATRIXx assets, and shall describe in detail each contact with such 
person, including the terms of any offers made or received. To the 
extent such reports contain information that the Trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. The Trustee shall maintain full records of all efforts made 
to divest the MATRIXx assets. The Trustee may discuss its progress with 
the United States and defendants as it deems reasonable under the 
circumstances.
    (J) The MATRIXx assets to be conveyed shall include substantially 
all assets, rights and property interests of both The MathWorks and 
Wind River as currently exist pursuant to the MATRIXx Agreements, 
except, however, that The MathWorks may retain ownership of the three 
patents referenced in paragraph II(B), in which case the definitive 
sales and license agreement shall include a patent license to the 
purchaser. Any such patent license must:
    (1) Cover as many of the three patents as the purchaser wishes to 
license;
    (2) Be perpetual, fully paid-up, and without continuing royalties 
to either defendant;
    (3) Not contain any field-of-use restrictions whatsoever;
    (4) Permit the purchaser to sublicense the intellectual property so 
licensed (the ``IP'') in order to:
    (a) Adequately convey rights to exploit the technology to end user 
customers of any product or service that includes the IP;
    (b) Enter into development or support outsourcing or co-development 
agreements with third parties in conjunction with the purchaser's 
products or services, or joint venture agreements with third parties in 
which the purchaser and the third party both retain an interest in the 
resulting product, service, research or IP;
    (c) Effectuate transfer of the license either upon change of 
control of the purchaser, or upon sale of all or a substantial portion 
of the MATRIXx assets; and
    (d) Permit use of the IP in third-party products or services 
designed and intended for use with the purchaser's product, e.g., 
complementary softward tools;
    (5) Permit, without any restriction, grantback, or royalties, the 
ability to innovate based on the IP and to use such innovations in the 
purchaser's products or under any circumstances set forth above without 
restriction;
    (6) Permit enforcement of infringement that damages the purchaser, 
except that The MathWorks may have a first right to enforce the 
patients, provided that if it does so the purchaser has appropriate 
intervention rights to protect its license or IP rights, and may have 
the right to join the purchaser as a party to any such infringement 
suit as may be necessary to protect fully the rights of The MathWorks; 
and
    (7) Contain an appropriate covenant not to sue the purchaser with 
respect to the patents covered by the license.
    (K) Wind River shall be entitled to Retained Rights as provided in 
the proposed Final Judgment by the United States and Wind River and 
filed June 21, 2002.
    (L) The minimum price for the MATRIXx Assets shall be $2 million 
cash, plus the cost and expenses of the Trustee. The defendants may, 
with the approval of the United States, waive this

[[Page 64660]]

minimum reserve price requirement. The MathWorks shall not finance the 
purchase or retain a contingent monetary or other interest in the 
MATRIXx assets being sold, other than ownership of certain patents to 
the extent described herein. All other costs (including the 
compensation of the Trustee in the event a sale of the MATRIXx assets 
is not consummated) will be borne by the defendants, allocated between 
themselves as they may agree.
    (M) The United States shall have, in its sole discretion, the right 
to approve any prospective purchaser and the terms of any sales and 
license agreement negotiated with a prospective purchaser as follows:
    (1) The United States shall have sole discretion to determine 
whether the MATRIXx assets could be competitively viable if owned by a 
prospective purchaser identified by the Trustee. If the United States 
determines that a prospective purchaser is competitively viable, the 
Trustee shall negotiate a definitive sales and license agreement with 
such purchaser. In the event of multiple bids, the United States, in 
its sole discretion, shall decide which prospective purchaser(s) the 
Trustee should pursue for purposes of negotiating a definitive sales 
and license agreement and shall so direct the Trustee. The MathWorks 
shall not challenge any such determinations by the United States.
    (2) The United States and defendants shall have the right to 
request modifications, consistent with the terms of this Final 
Judgment, to any of the terms of any sales and license agreement with a 
prospective purchaser. The Trustee shall have discretion to approve or 
disapprove any such modifications, subject to the right of final 
approval of the definitive sales and license agreement by the United 
States. When considering any such request for modifications, the 
Trustee will take into account whether the terms and conditions in the 
proposed sales and license agreement are customary and reasonable for 
such sales and license of assets.
    (3) Should the United States disapprove any purchaser or any term 
of the definitive sales and license agreement, the United States shall 
direct the Trustee to attempt to identify an alternative purchaser, or 
negotiate an acceptable agreement, consistent with this Final Judgment.
    (N) The Trustee may seek to enforce the obligations of The 
MathWorks pursuant to this Final Judgment or the engagement agreement 
by filing a contempt motion with the Court.
    (O) If the Trustee is unable to negotiate a definitive agreement 
within the period set forth in paragraph IV(G) at or above the price 
set forth in paragraph IV(L), the case shall be dismissed upon motion 
by any party.

V. United States' Access and Inspection

    (A) For the purpose of determining or securing compliance with this 
Final Judgment or of determining whether the Final Judgment should be 
modified or vacated, and subject to any legally recognized privileged, 
duly authorized representatives of the United States Department of 
Justice, including consultant and other persons retained by the United 
States, shall, upon written request of a duly authorized representative 
of the Assistant Attorney General in charge of the Antitrust Division, 
and on reasonable notice to The MathWorks be permitted:
    (1) Access during The MathWorks' office hours to inspect and copy 
or, at the United States' option, to require The MathWorks to provide 
copies of all books, ledgers, accounts, records, and documents in its 
possession custody or control relating to any matters contained in this 
Final Judgment; and
    (2) To interview, either informally or on the record at the United 
States' discretion, The MathWorks's directors, officers, employees, or 
agents, who may have their individual counsel present, relating to any 
matters contained in this Final Judgment. The interviews shall be 
subject to the reasonable convenience of the interviewee and without 
restraint or interference by The MathWorks.
    (B) Upon written request of a duly authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division. The 
MathWorks shall submit written reports, under oath if requested, 
relating to any of the matters contained in this Final Judgment as may 
be requested.
    (C) No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    (D) If, at the time information or documents are furnished by The 
MathWorks to the United States, The MathWorks represents and identifies 
in writing the material in any such information or documents to which a 
claim of protection may be asserted under Rule 26(c)(7) of the Federal 
Rules of Civil Procedure, and The MathWorks marks each pertinent page 
of such material, ``Subject to claim of protection under Rule 26(c)(7) 
of the Federal Rules of Civil Procedure,'' then the United States shall 
give ten (10 calendar days' notice prior to divulging such materials in 
any legal proceeding (other than a grand jury proceeding) to which the 
MathWorks is not a party.

VI. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for such further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify or terminate any of its provisions, to 
enforce compliance, and to punish any violations of its provisions.

VII. Expiration of Final Judgment

    This Final Judgment shall expire upon the earlier of (1) the date 
on which The MathWorks no longer has any right, title or interest in 
any of the MATRIXx assets except with regard to ownership of patent 
rights as specified herein, or (2) the date of dismissal of this action 
as a result of the failure of the Trustee to accomplish the sale of the 
MATRIXx assets pursuant to the terms of this order. If the MATRIXx 
assets are sold pursuant to the terms of this Final Judgment, The 
MathWorks shall not purchase, license or otherwise acquire 
substantially all of the MATRIXx assets before September 1, 2007, 
without the prior written consent of the United States.

VIII. Costs

    Each party shall bear its own costs of this action.

IX. Public Interest Determination

    Entry of this Final Judgment is in the public interest.

Dated:-----------------------------------------------------------------

    Court approval subject to the Antitrust Procedures and Penalties 
Act, 15 U.S.C. 16.

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Chief United States District Judge.
    In the matter of: United States District Court for the Eastern 
District of Virginia, Alexandria Division; Civil Action No. 02-888-
A, Chief Judge Hilton. United States of America, Plaintiff, v. The 
MathWorks, Inc. and Wind River Systems, Inc., Defendants.

Competitive Impact Statement

    Pursuant to Section 5(b) of the Clayton Act, as amended by Section 
2 of the Antitrust Procedures and Penalties Act (codified at 15 U.S.C. 
16(b)-(h) (``Tunney Act'')), the United

[[Page 64661]]

States files this Competitive Impact Statement relating to the proposed 
Final Judgments against Wind River Systems, Inc. and The MathWorks, 
Inc., submitted on June 21, 2002 and August 15, 2002, respectively, for 
entry in this antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On June 21, 2002, the United States filed a civil antitrust 
Complaint alleging that The MathWorks, Inc. (``The MathWorks'') and 
Wind River Systems, Inc. (``Wind River''), head-to-head competitors in 
the sale of dynamic control system design software products, restrained 
competition in violation of Section 1 of the Sherman Act, 15 U.S.C. 1.
    The complaint alleges that, on February 16, 2001, the MathWorks and 
Wind River entered into a number of agreements that eliminated 
competition between Wind River's MATRIXx products and The MathWorks' 
Simulink products. These agreements (hereinafter, collectively, the 
``MATRIXx Agreement'') give The MathWorks the exclusive worldwide right 
to price and sell Wind River's MATRIXx for two years, transfer the 
customer support of MATRIXx to The MathWorks, require Wind River to 
stop developing and selling MATRIXx, and give The MathWorks an option 
to acquire MATRIXx in 2003. The MathWorks announced at the time it 
entered into the MATRIXx Agreement that there would be no further 
development of the MATRIXx products. As result of the MATRIXx 
Agreement, competition has been eliminated between The MathWorks and 
Wind River in the sale of dynamic control system design software. The 
Complaint seeks divestiture of the MATRIXx products to an independent 
and viable third party to restore the competition eliminated by the 
MATRIXx Agreement.
    Defendants in this action have now agreed to cooperate fully to 
offer the MATRIXx products for sale. On June 21, 2002, the United 
States filed a proposed Final Judgment in this matter containing 
injunctive relief against Wind River, the nominal owner of the MATRIXx 
assets, that will require Wind River to fully cooperate with any court 
order requiring the divestiture of MATRIXx to a competitively viable 
third party. Because the MathWorks had previously acquired significant 
rights in the MATRIXx assets under the MATRIXx Agreement, Wind River's 
consent alone was insufficient to effectuate fully the relief sought by 
the United States in the Complaint. The lawsuit therefore continued 
against The MathWorks. On August 15, 2002, the United States and The 
MathWorks filed a proposed Final Judgment that will lead to either the 
prompt and certain divestiture of the MATRIXx assets to a competitively 
viable third part or the dismissal of the Complaint in this action. By 
the proposed Final Judgment against The MathWorks, in combination with 
the proposed Final Judgment previously filed against Wind River, the 
United States has now received consent from all necessary parties 
sufficient to effectuate a judicially-supervised sale of the MATRIXx 
products. The proposed Final Judgments filed with the Court will 
terminate this action against the Defendents.

II. Actions Giving Rise to the Alleged Violations

A. Dynamic Control System Design Software

    An integral part of the control system of many complex devices is 
the ``controller''--the on-board computer and software programs that 
govern a device's operation. In aircraft, for example, the controller 
works by receiving pilot input plus input from various sensors (such as 
speed and altitude), processing the input, and providing outputs that 
optimize the aircraft's handling and operation through the use of 
various components (such as engines, flaps and the rudder).
    Control system design tools were introduced approximately fifteen 
years ago and they provide significant benefits to control system 
design engineers. Before such tools were developed, engineers had to 
manually create equations that mathematically represented the behavior 
of the control system, write the appropriate software code to be 
installed in the on-board computers, and then build prototypes to test 
the system. Modern control system design tools have automated the 
analysis and modeling, as well as the code generation and simulation. 
With a mathematical engine at their core, and enhanced by graphical 
user interfaces, control system design tools are used by engineers to 
create ``virtual'' models of the control system. For very complex 
systems, the analytical process (model, analyze, design, test, produce) 
can only be accomplished efficiently with the help of computers and 
specialized software.
    The initial modeling step is extremely important. The better the 
model is at simulating reality, the better and more robust the control 
system will be. Yet, a model is still an abstraction. So, after the 
analyzing and designing steps, the engineer still needs to test the 
controls in real or near-real situations. If the controls fail the 
testing, then the initial steps of the analytical process are repeated 
with small design tweaks and the process repeats until the control pass 
final testing. The final product is computer code that can be embedded 
in a computer or on a chip.
    MATRIXx and The MathWorks' Simulink are dynamic control system 
design toolsets providing functionality that addresses each of the 
engineer's tasks and aids in rapid control systems development. For 
example, both toolsets have:
    (1) Graphical interfaces and high level scripting languages for 
modeling and simulation, and mathematical engines with advanced control 
design modules, or libraries, for design and analysis;
    (2) Automatic efficient code generation suitable for testing and 
production; and
    (3) Tools for real-time simulation and testing.
    The tools in the Simulink toolset, numbered by functionality, are 
called: (1) Simulink and MATLAB; (2) Real Time Workshop; and (3) xPC. 
The tools in the MATRIXx toolset are called: (1) Systembuild and xMath; 
(2) Autocode; and (3) RealSim.
    MATRIXx and Simulink are considered ``suites'' or ``toolsets'' of 
control design software. Suite products from a single vendor offer not 
only full functionality, but also seamless integration between tools 
used throughout the analytical process. As a result, no time is lost by 
a need to convert designs or data from one tool to another. Utilizing a 
suite or toolset of control design software facilitates the ability to 
make changes anywhere in the modeling and design process. Seamless 
integration is one of the keys to the rapid development of complex 
control systems.
    MATRIXx and Simulink were developed from common source code in the 
early 1980s. Because of their common origin, the products are similar. 
However, the products have been independently developed by different 
companies for more than fifteen years. The competing development 
efforts represent one critical way that the Defendants compete. For the 
last ten to fifteen years. MATRIXx and Simulink have competed head-to-
head for sales, not only by competing on price, but also by adding 
features to lure customers away from one another.

B. Illegal Agreement To Allocate Markets, Fix Prices, and Unreasonably 
Reduce Competition

    In April 2000, Wind River acquired Integrated Systems, Inc. 
(``ISI''). At the

[[Page 64662]]

time, ISI was a well regarded vendor of software, tools, and 
engineering services for the embedded systems market. Its embedded 
real-time operating system, deployed in more than 38 million devices 
worldwide as of 2000, addressed the telecom/datacom, consumer 
electronics, automotive, aerospace, and emerging Internet appliance 
marketplaces. Among its software portfolio it also produced the MATRIXx 
family of software products. Although ISI had spent considerable 
resources developing MATRIXx since the mid-1980s, its primary business 
continued to revolve around the embedded systems market.
    Wind River, itself a significant vendor of software for embedded 
systems, pursued the acquisition of ISI, in large part, to obtain a 
skilled pool of embedded system software developers that it hoped would 
shorten the time to market for critical new embedded system products. 
Wind River soon came to view MATRIXx as a struggling product line 
within ISI with small revenue and no growth potential. More 
importantly, the MATRIXx market was neither within Wind River's core 
competency nor central strategic focus for the future. Thus, Wind River 
decided not to devote any of its resources to the continued development 
and sale of MATRIXx.
    Shortly after Wind River's acquisition of ISI, The MathWorks 
approached Wind River and began vigorously negotiating to acquire the 
MATRIXx assets. On February 16, 2001, The MathWorks and Wind River 
entered into the MATRIXx Agreement under which Wind River granted The 
MathWorks exclusive distribution and license rights to the MATRIXx 
toolset and the MATRIXx intellectual property (including the right to 
incorporate MATRIXx source code into The MathWorks products) during a 
thirty-month license period beginning on February 16, 2001. Following 
the expiration of the thirty-month license period, The MathWorks would 
have the option to acquire MATRIXx.
    Under the MATRIXx Agreement, The MathWorks is required to provide 
two years of customer support (ending in February 2003) for existing 
MATRIXx users.\1\ While Wind River agreed to continue fulfilling its 
existing customer support obligations, as well as provide ``critical'' 
bug fixes during the license period, the MATRIXx Agreement provides 
that Wind River will not produce new versions of MATRIXx with feature 
enhancements. The MathWorks and Wind River also agreed on the pricing 
of Simulink when purchased by MATRIXx customers. The companies agreed 
that The MathWorks would give customers with current MATRIXx licenses, 
who switched to The MathWorks suite of products, a discount amounting 
to 50% off the list price of The MathWorks products for those who 
switched in the first year of the MATRIXx Agreement and 25% off for 
those who switched in the second year of the MATRIXx Agreement.
---------------------------------------------------------------------------

    \1\ Wind River retained rights to the MATRIXx intellectual 
property during the license period in order to provide support 
service to two International Space Station customers.
---------------------------------------------------------------------------

    The MathWorks agreed to make payments to Wind River totaling 
$11,500,000 over a three-year period. These payments are to be made on 
a set schedule and are not contingent on the volume of MATRIXx products 
MathWorks sells. Further, Wind River granted The MathWorks an option to 
purchase MATRIXx and certain MATRIXx intellectual property (e.g., the 
source code, customer lists, trademarks and copyrights) twenty months 
after closing for an additional sum of $2,000,000. Wind River has 
retained exclusive ownership of the optioned assets during the interim 
and until The MathWorks exercises its right to acquire them. Finally, 
the MATRIXx Agreement assigned certain patent rights to The MathWorks 
for $500,000.

C. Effect of the Illegal Agreement

    The MATRIXx Agreement eliminated competition between The MathWorks 
and Wind River in the simulation software, automatic code generation, 
and testing software markets. The MathWorks now has complete control 
over the development and pricing of the products of its closest 
competitor in these dynamic control systems design software markets, 
thus depriving customers of the benefits of competition between 
Defendants' products, including competition based on price, service, 
and product innovation.
    Further, many customers value tight integration of the products in 
each of the dynamic control system design software markets. Both The 
MathWorks and Wind River cooperated with a small number of companies to 
facilitate interfaces between the Defendants' products and those 
companies' products that compete with the Defendants' products in 
individual software markets. The competition between the MATRIXx 
toolset and the Simulink toolset provided Defendants an incentive to 
facilitate interoperation with third-party products, as an 
unwillingness by one to do so would likely advantage the other. As a 
consequence of the elimination of competition resulting from the 
MATRIXx Agreement, The MathWorks will have less incentive to provide 
such technical cooperation to competitors selling individual products, 
thus further reducing competition for consumers who value integrated 
products.
    The MATRIXx Agreement allocates MATRIXx customers between Wind 
River and The MathWorks, fixes price terms for those customers ceded to 
The MathWorks who subsequently switch to Simulink, and permits The 
MathWorks to control the future of, and enables the elimination of, the 
MATRIXx products. As the MATRIXx products are the principal competitive 
products to The MathWorks' own dynamic control system design software, 
the overall effect of the MATRIXx Agreement is to eliminate competition 
between Defendants in the three separate dynamic control system design 
software markets: (1) Simulation software market, where products in the 
MATRIXx and Simulink suite are used by engineers to design, analyze, 
and simulate dynamic control system behavior; (2) automatic code 
generation software market, where products in both suites are used to 
automatically generate code from models developed with simulation 
software; and (3) testing software market, where products in both 
suites are used by engineers to test their models and then 
automatically generate code by simulating the function of the control 
system in a real time environment. Consumers are harmed both by the 
elimination of the MATRIXx products as a competitive alternative, as 
well as the resulting reduction of competitive pressure on The 
MathWorks to lower prices, improve service, continue product innovation 
and development of its own dynamic control system design software 
products, and cooperate with companies selling individual products.

III. Explanation of the Proposed Final Judgments

    During the course of an investigation, customers complained to the 
Antitrust Division that the MATRIXx Agreement had eliminated Wind 
River's MATRIXx--the only significant products that competed directly 
with The MathWorks' Simulink products--as a competitive alternative in 
the market. Because customers indicated that, due to the present lack 
of development of MATRIXx and its uncertain future, they would soon 
have to begin a costly migration to The MathWorks' Simulink products, 
the United States ultimately concluded that a quick and effective 
remedy was necessary to reestablish MATRIXx as a viable alternative. 
The

[[Page 64663]]

United States further concluded, however, that simply rescinding the 
MATRIXx Agreement would not restore the competition it had eliminated 
in light of Wind River's genuine desire to exit the markets for the 
MATRIXx family of software products. At the same time, the principal 
defense offered by Defendants for their conduct was a contention that 
no competitive buyer would be interested in purchasing the MATRIXx 
assets. Taking into account customer concerns and the The MathWorks' 
arguments, the United States pursued an enforcement approach that would 
both test Defendants' assertions as to MATRIXx market value and 
maximize the possibility of restoring effective competition in a timely 
manner.
    The United States and Defendants entered into an April 26, 2002, 
letter agreement that required an attempted sale of the MATRIXx product 
line in an effort to restore the competition eliminated by the MATRIXx 
Agreement. Under the April 26 letter agreement, Defendants were given 
the opportunity to test their assertion that no other viable purchaser 
existed by agreeing to ``shop'' the MATRIXx assets through an 
independent agent. The United States believed that one or more viable 
purchasers existed and that an independent agent would succeed in 
finding a buyer. The United States acknowledged, however, that, if no 
alternative viable purchaser emerged from the ``shop,'' remedying the 
competitive harm caused by the MATRIXx Agreement would be difficult. 
The United States thus agreed that, should the ``shop'' fail following 
a good faith effort, and given Wind River's decision to discontinue the 
sale and development of the MATRIXx products, it would close its 
investigation without taking any enforcement action. However, the 
Defendants did not comply with the terms of the April 26 letter 
agreement and the United States, on June 21, 2002, filed its Complaint 
seeking a judicially-enforced sale of the MATRIXx assets.
    Contemporaneously with the filing of the Complaint, the United 
States and Wind River filed a proposed Final Judgment that would settle 
the case against Wind River on the condition that it fully cooperate 
with any court order requiring the divestiture of the MATRIXx assets. 
As noted above, because both Wind River and The MathWorks retain rights 
in the MATRIXx products, Wind River's consent alone was insufficient to 
effectuate fully the relief sought by the United States in the 
Complaint. The lawsuit, therefore, continued against The MathWorks. On 
August 15, 2002, the United States and The MathWorks filed a proposed 
Final Judgment that would resolve the case against The MathWorks. The 
proposed Final Judgment between the United States and The MathWorks 
contains injunctive relief that is intended to promptly offer the 
MATRIXx assets for sale to a competitively viable third party approved 
by the United States. It further establishes a structure and time line 
for the sale that will be supervised by the court. Thus, the proposed 
Final Judgments against Wind River and The MathWorks will lead to 
either the prompt and certain divestiture of the MATRIXx assets or the 
dismissal of the Complaint in this action.

A. Proposed Final Judgment Against Wind River

    On June 21, 2002, the United States filed a Stipulation and Order 
and a proposed Final Judgment that resolved the allegations in the 
Complaint against Wind River. Pursuant to the proposed Final Judgment, 
Wind River agreed to facilitate the United States' efforts to divest 
the MATRIXx assets. Wind River's agreement to assist the United States 
in a divestiture of the MATRIXx assets, however, was expressly 
conditioned on the Court entering a Final Judgment against The 
MathWorks ordering the divestiture of the MATRIXx assets.
1. Wind River Covenants
    Section IV of the proposed Final Judgment against Wind River sets 
forth the substantive injunctive provisions and is designed to assist 
the United States in its efforts to promote continued competition in 
the markets for dynamic control system design software. Thus, Section 
IV(C) of the proposed Final Judgment states that the United States is 
seeking a judgment that would require, among other things, the prompt 
and certain divestiture of all MATRIXx assets to a buyer acceptable to 
the United States and the appointment of a trustee to effect the 
divestiture. Wind River is expressly prohibited from contesting the 
entry of such a judgment. In addition, Section IV(C) requires Wind 
River to use its reasonable best efforts to assist in effectuating such 
an order by divesting all of its rights, title, and interests in the 
MATRIXx assets. Section IV(D) further requires Wind River to take steps 
to ensure the prompt and certain divestiture of any rights in the 
MATRIXx assets currently held by The MathWorks that revert to Wind 
River. Wind River shall retain certain rights to use and distribute the 
MATRIXx products and intellectual property related to specific 
contracts it retained in the MATRIXx Agreement and any Wind River 
products available for purchase as of February 16, 2001 (except for the 
MATRIXx products). These Retained Rights, as outlined in the proposed 
Final Judgments, are all current rights held by Wind River.
2. Termination of Action, Compliance, and Expiration of Final Judgment
    Insofar as Wind River's consent alone was insufficient to achieve a 
full divestiture of the MATRIXx assets, and because the United States 
had neither an order from the Court requiring The MathWorks to divest 
the MATRIXx assets nor had reached an agreement with The MathWorks on a 
proposed Final Judgment requiring the divestiture of the MATRIXx 
assets, Wind River remained a party to this action under Section IV(A) 
for the sole purpose of effectuating any relief ordered by the Court or 
agreed to by the United States and The MathWorks. Wind River also 
agreed to permit the United States to monitor its compliance with the 
Final Judgment under Section V of the proposed Final Judgment under 
substantially the same terms as agreed to by The MathWorks and 
discussed in subsection III(B)(2) below.
    Under Section VII of the proposed Final Judgment against Wind 
River, the Final Judgment does not have a fixed term or date of 
expiration. Because Wind River's obligations were dependent upon the 
United States gaining a Final Judgment against The MathWorks requiring 
divestiture of the MATRIXx assets, the Final Judgment against Wind 
River was made contingent upon a Final Judgment against The MathWorks 
and will expire upon the earlier of: (1) Wind River's completion of all 
obligations imposed upon it pursuant to Section IV of this Final 
Judgment in light of the proposed Final Judgment against The MathWorks; 
or (2) the date on which Wind River no longer has any right, title, or 
interest in any of the MATRIXx assets (except for the Retained Rights).

B. Proposed Final Judgment Against the MathWorks

    Subsequent to the proposed Final Judgment filed in this case 
against Wind River, the United States reached agreement with The 
MathWorks on a proposed final Judgment that will facilitate the offer 
for sale of the MATRIXx assets to a competitively viable third party. 
Defendants' compliance with the terms of the proposed Final Judgments, 
filed on June

[[Page 64664]]

21, 2002 and August 15, 2002, will terminate this action.
1. Divestiture Provisions
    Section IV of the proposed Final Judgment agreed to by The 
MathWorks contains substantive provisions setting forth the terms on 
which the MATRIXx assets will be offered for sale. It is designed to 
lead expeditiously to the identification of competitively viable third 
parties who are interested in acquiring the MATRIXx assets, negotiation 
of a definitive sales and licensing agreement, and restoration of 
competition in the markets for dynamic control system design software. 
Thus, Sections IV(A)-(C) provide that the United States will, as soon 
as possible, but in no event later than 30 days from the date the 
proposed Final Judgment was filed with the Court, select an independent 
agent to serve as Trustee for the purpose of accomplishing the sale of 
the MATRIXx assets to a purchaser approved by the United States. The 
United States will have the sole discretion, subject to approval by the 
Court, to negotiate the terms and conditions on which the Trustee shall 
serve and the Trustee shall serve at the cost and expense of the 
Defendants.
    Sections IV(D) and (E) direct the Trustee to attempt to sell the 
MATRIXx assets and negotiate a definitive sales and licensing agreement 
with a prospective purchaser. To this end, the Trustee is required to 
promptly make it known that the MATRIXx assets are available for 
purchase. In order to assist the Trustee in preparing offering 
materials and to provide prospective purchasers with customary due 
diligence information with respect to the MATRIXx assets, the 
Defendants must provide the Trustee with all requested information and 
documents within three business days. Section IV(D) expressly provides 
that Defendants shall have no authority or responsibility with respect 
to the sale of the MATRIXx assets, except promptly to provide any 
information relating to the MATRIXx assets requested by the Trustee.
    Sections IV(F)-(H) provide that the Trustee shall have 90 days from 
the date on which it certifies to the Court that the Defendants have 
provided adequate information to offer the MATRIXx assets for sale and 
to consummate a definitive sales and licensing agreement with a 
purchaser approved by the United States. During this 90-day period, the 
Trustee may request additional information and documents from the 
Defendants who shall comply with any such request within three business 
days. If a divestiture of the MATRIXx assets is to occur under the 
proposed Final Judgment, it must be consummated within the 90-day 
period prescribed by Section IV(G), as the 90-day period may only be 
extended for undue delays fond by the Court to be caused by Defendants. 
A definitive sales and licensing agreement, negotiated by the Trustee, 
shall be on customary and commercially reasonable terms and 
substantially equivalent, except for the payment terms, to the terms 
and conditions in the MATRIXx Agreement, to the extent possible. For 
example, the definitive sales and licensing agreement should include 
representations, warranties, covenants, and transitional support to the 
purchaser equivalent to those in the MATRIXx Agreement.
    Pursuant to Section IV(M), the United States shall have the sole 
discretion to approve both prospective purchasers and the terms of any 
sales and licensing agreement negotiated with an approved prospective 
purchaser. If the United States determines that a prospective purchaser 
is competitively viable, it will direct the Trustee to negotiate a 
definitive sales and licensing agreement with that prospective 
purchaser. In the event of multiple prospective purchasers, the United 
States, in its sole discretion, will direct the Trustee as to with 
which prospective purchaser(s) the Trustee should negotiate. The 
MathWorks is expressly prohibited from challenging any decisions made 
by the United States regarding the selection of prospective purchasers 
or approval of specific terms. While each Defendant has the right to 
request modifications to the terms of any sales and licensing agreement 
with a prospective purchaser, the Trustee is permitted to approve or 
deny such modifications. The United States, however, retains the right 
of final approval over all terms and conditions of the definitive sales 
and licensing agreement. Should the United States reject any purchaser 
or any term of the definitive sales and licensing agreement, the United 
States will direct the Trustee to attempt to identify an alternative 
purchaser, or negotiate an acceptable agreement, consistent with the 
proposed Final Judgment.
    Section IV(J) expressly provides that The MathWorks may retain 
ownership of three patents subject to the MATRIXx Agreement, so long as 
the purchaser is offered a comprehensive license to the patents that 
permits unimpeded use. Any patent license issued under the Final 
Judgment:
    [sbull] Must be perpetual, fully paid-up, and without continuing 
royalties to either Defendant;
    [sbull] Must not limit the purchaser's ability to use the patents 
in any of purchaser's current or future products or service;
    [sbull] Must permit the purchaser to sublicense the intellectual 
property contained in the patents so as to:
    [sbull] Convey rights necessary to exploit the technology to end 
user customers of any product or service that includes the intellectual 
property;
    [sbull] Enter into joint development, joint marketing, and other 
joint ventures with third parties in which the purchaser and the third 
party retain an interest in the resulting product, service, research or 
intellectual property;
    [sbull] Permit transfer of the license either upon change of 
control of the purchaser, or upon sale of all or a substantial portion 
of the MATRIXx assets; and
    [sbull] Permit the use of the intellectual property in products or 
services designed and intended for use with purchaser's products or as 
a complement to purchaser's products:
    [sbull] Must permit the purchaser the ability to innovate based on 
the intellectual property and to use such innovations in the 
purchaser's products or under any circumstance set forth above without 
restriction, grantback, or royalty;
    [sbull] Must permit the purchaser to enforce infringement claims 
that damage the purchaser in circumstances where The MathWorks fails to 
enforce intellectual property rights under the patents; and
    [sbull] Must contain an appropriate covenant not to sue the 
purchaser with respect to the patents covered by the license.
    Under Section IV(I), the Trustee is required to file written 
reports with the Court, the United States, and the Defendants after 
thirty days, and each 15 days thereafter, describing the Trustee's 
activities to date. Section IV(K) provides that Wind River is entitled 
to retain certain rights to defined in Section II of the proposed Final 
Judgment. Section IV(L) establishes a minimum price of $2,000,000, plus 
the cost and expenses of the Trustee, for which the MATRIXx assets may 
be sold unless the Defendants, with the approval of the United States, 
waive this minimum reserve price requirement. Section IV(N) expressly 
gives the Trustee the ability to enforce the obligations of the 
MathWorks under the proposed Final Judgment or the Trustee's engagement 
letter by way of filing a contempt motion with the Court. Finally, 
Section IV(O) provides that if the Trustee is unable to negotiate a 
definitive sales and licensing agreement with the period set forth in 
Section IV(G), the United

[[Page 64665]]

States' Complaint in this action may be dismissed upon motion by any 
party.
2. Compliance
    Section V of the proposed Final Judgment requires The MathWorks to 
provide documents and information within its control necessary for the 
purposes of determining and securing compliance with the Final 
Judgment. Upon written request and on reasonable notice, The MathWorks 
shall provide the United States with access to all records and 
documents in its possession or control, make available its employees, 
and submit written reports related to matters contained in the Final 
Judgment.
3. Jurisdiction, Termination, and Acquisition of MATRIXx
    Pursuant to Section VI of the proposed Final Judgment, the Court 
retains jurisdiction over this matter in order to enable any party to 
the Final Judgment to apply to the Court at any time for further orders 
and directions as may be necessary or appropriate to carry out the 
Final Judgment, to modify or terminate any of its provisions, to 
enforce compliance, and to punish any violations of its provisions.
    Because the outcome of the sale is uncertain, the Final Judgment 
does not have a fixed term or date of expiration. The Final Judgment 
sets out a procedure and time line under which a trustee will offer the 
MATRIXx assets for sale, but recognizes that such sale may not be 
accomplished, in which case the lawsuit will be dismissed. Because 
divestiture of the MATRIXx assets is dependent upon the Turstee's 
success in identifying a suitable prospective purchaser and negotiating 
a definitive sales and licensing agreement acceptable to the United 
States within a prescribed period of time, Section VII provides that 
the Final Judgment shall expire upon the earlier of: (1) the date on 
which The MathWorks no longer has any right, title or interest in any 
of the MATRIXx assets except with regard to the ownership of patent 
rights specified in Section IV(J); or (2) the date of dismissal of this 
action as a result of the failure of the Trustee to accomplish the sale 
of the MATRIXx assets pursuant to the terms of the Final Judgment.
    Finally, Section VII further expressly provides that if the MATRIXx 
assets are sold pursuant to the terms of the Final Judgment, The 
MathWorks is prohibiting from purchasing, licensing, or otherwise 
acquiring all or substantially all of the MATRIXx assets before 
September 1, 2007, without the prior written consent of the United 
States.

IV. Alternatives to the Proposed Final Judgments

    The United States considered, as an alternative to the proposed 
Final Judgments, a full trial on the merits against the Defendants. The 
United States is satisfied, however, that a trial would not result in 
injunctive relief against Defendants beyond what is contained in the 
proposed Final Judgments against Wind River and The MathWorks, filed on 
June 21, 2002, and August 15, 2002, respectively. Moreover, the 
proposed injunctive relief is designed to more quickly achieve the 
primary objective of the litigation--preserving MATRIXx as a viable 
competitive alternative in the relevant markets for dynamic control 
system design software to the extent it is possible to do so.

V. Remedies Available to Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages suffered, as well as costs and reasonable attorneys' fees.
    Entry of the proposed Final Judgment will neither impair nor assist 
the bringing of any private antitrust damage action. Under the 
provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the 
proposed Final Judgment has no effect as prima facie evidence in any 
subsequent private lawsuit that may be brought against defendants.

VI. Procedures Available for Modification of the Proposed Final 
Judgments

    The parties have stipulated that the proposed Final Judgments may 
be entered by this Court after compliance with the provisions of the 
Tunney Act, provided that the United States has not withdrawn its 
consent. The Tunney Act conditions entry of the decree upon this 
Court's determination that the proposed Final Judgments are in the 
public interest.
    As provided by Sections 5(b) and (d) of the Clayton Act, 15 U.S.C. 
16(b) and (d), any person may submit to the Department written comments 
regarding the proposed Final Judgments. Any person who wishes to 
comment must do so within sixty days of publication of this Competitive 
Impact Statement and the proposed Final Judgments in the Federal 
Register.
    The Department will evaluate and respond to the comments. All 
comments will be given due consideration by the Department, which 
remains free to withdraw its consent to the proposed Final Judgments at 
any time prior to entry. The comments and the responses of the 
Department will be filled with the Court and published in the Federal 
Register.
    Written comments should be submitted to: Renata B. Hesse, Chief, 
Networks and Technology Section, United States Department of Justice, 
Antitrust Division, 600 E Street, NW., Suite 9500, Washington, DC 
20530.
    The proposed Final Judgments provide that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for modification, 
interpretation, or enforcement of the Final Judgments.

VII. Standard of Review Under the Tunney Act, for the Proposed Final 
Judgments

    The Tunney Act requires that injunctions of anticompetitive conduct 
contained in proposed consent judgments in antitrust cases brought by 
the United States be subject to a 60 day comment period, after which 
the court shall determine whether entry of the proposed Final Judgments 
are ``in the public interest.'' In making that determination, the court 
may consider--
    (1) The competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration or relief sought, anticipated effects of alternative remedies 
actually considered, and any other considerations bearing upon the 
adequacy of such judgment.
    (2) The impact of entry of such judgment upon the public generally 
and individuals alleging specific injury from the violations set forth 
in the compliant including consideration of the public benefit, if any, 
to be derived from a determination of the issues at trial.
15 U.S.C. 16(e) (emphasis added). As the Court of Appeals for the 
District of Columbia has held, the Tunney Act permits a court to 
consider, among other things, the relationship between the remedy 
secured and the specific allegations set forth in the Government's 
Complaint, whether the decree is sufficiently clear, whether 
enforcement mechanisms are sufficient, and whether the decree may 
positively harm third parties. See United States v. Microsoft Corp., 56 
F.3d 1448, 1458-62 (D.C. Cir. 1995).
    In conducting this inquiry, ``the Court is nowhere compelled to go 
to trial or to engage in extended proceedings which might have the 
effect of vitiating the benefits of prompt and less costly

[[Page 64666]]

settlement through the consent decree process.'' \2\ Rather,
---------------------------------------------------------------------------

    \2\ 119 Congressional Record 24,598 (1973). See United States v. 
Gillette Co., 406 F. Supp. 173, 715 (D. Mass. 1975). A ``public 
interest'' determination can be made properly on the basis of the 
Competitive Impact Statement and Response to Comments filed pursuant 
to the Tunney Act. Although the Tunney Act authorizes the use of 
additional procedures, those procedures are discretionary (15 U.S.C. 
16(f)). A court need not invoke any of them unless it believes that 
the comments have raised significant issues and that further 
proceedings would aid the court in resolving those issues. See H.R. 
Rep. No. 93-1463, 93rd Cong. 2d Sess. 8-9 (1974), 1974 U.S.C.C.A.N. 
6535, 6538.

absent a showing of corrupt failure of the government to discharge 
its duty, the Court, in making its public interest finding, should * 
* * carefully consider the explanation of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.\3\
---------------------------------------------------------------------------

    \3\ United States v. Mid-America Dairymen, Inc., 1977-1 Trade 
Cas. (CCH) ] 61,508 at 71,980 (W.D. Mo. 1977); see also United 
States v. Loew's Inc., 783 F. Supp. 211, 214 (S.D.N.Y. 1992); United 
States v. Columbia Artists Mgmt, Inc., 662 F. Supp. 865, 870 
(S.D.N.Y. 1987).

    Accordingly, with respect to the adequacy of the relief secured by 
the decree, a court may not ``engage in an unrestricted evaluation of 
what relief would best serve the public.'' United States v. BNS, Inc., 
858 F.2d 456, 462-63 (9th Cir. 1988), quoting United States v. Bechtel 
Corp., 648 F.2d 660, 666 (9th Cir.) cert. denied, 454 U.S. 1083 (1981); 
---------------------------------------------------------------------------
see also Microsoft, 56 F.3d at 1458. Precedent requires that

[t]he balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be let, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest,'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.\4\
---------------------------------------------------------------------------

    \4\ United States v. Bechtel Corp., 648 F.2d at 666 (citations 
omitted) (emphasis added); see United States v. BNS, Inc., 858 F.2d 
at 463; United States v. National Broadcasting Co., 449 F. Supp. 
1127, 1143 (C.D. Cal. 1978); United States v. Gillette Co., 406 F. 
Supp. at 716. See also United States v. American Cyanamid Co., 719 
F.2d 558, 565 (2d Cir,. 1983), cert denied, 465 U.S. 1101 (1984).

    The proposed Final Judgments, therefore, should not be reviewed 
under a standard of whether it is certain to eliminate every 
anticompetitve effect of a particular practice or whether it mandates 
certainty of free competition in the future. Court approval of a final 
judgment requires a standards more flexible and less strict than the 
standard required for a finding of liability. A ``proposed decree must 
be approved even if it falls short of the remedy the court would impose 
on its own, as long as it falls within the range of acceptability or is 
`within the reaches of public interest.' '' \5\
---------------------------------------------------------------------------

    \5\ United States v. American Tel. & Tel. Co., 552 F. Supp. 131, 
151, (D.D.C. 1982) (quoting Gillette, 406 F. Supp. at 716), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); United 
States v. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 
1985); United States v. Carrols Dev. Corp. 454 F. Supp. 1215, 1222, 
(N.D.N.Y. 1978).
---------------------------------------------------------------------------

    Moreover, the Court's role under the Tunney Act is limited to 
reviewing the remedy in relationship to the violations that the United 
States alleges in its Complaint, and does not authorize the Court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459. Since the ``court's 
authority to review the decree depends entirely on the Government's 
exercising its procsecutorial discretion by bringing a case in the 
first place,'' it follows that the Court ``is only authorized to review 
the decree itself,'' and not to ``effectively redraft the complaint'' 
to inquire into other matters that the United States might have but did 
not purse. Id.

VIII. Determinative Material/Documents

    No materials and documents of the type described in the Section 
5(b) of the Clayton Act, 15 U.S.C. 16(b), were considered in 
formulating the proposed Final Judgments. Consequently, none are being 
filed with this Competitive Impact Statement.

    Dated: September 19, 2002.

    Respectfully submitted,
James J. Tierney,
Patricia A. Brink,
Kenneth W. Gaul,
Jeremy West,
J. Robert O. Hizon,
David E. Blake-Thomas,
Patrick O'Shaughnessy,
Trial Attorneys.

Paul J. McNulty,
United States Attorney, U.S. Department of Justice, Antitrust 
Division, Networks & Technology Section, 600 E. Street, NW., Suite 
9500, Washington, DC 20530. Tel: 202/307-6200. Fax: 202/616-8544.

Richard Parker,
Assistant United States Attorney, VSB No. 44751, 2100 Jamieson 
Avenue, Alexandria, VA 22314. Tel: 703/299-3700.

Certificate of Service

    I certify that on September 19, 2002, a true and correct copy of 
the United States' Competitive Impact Statement, related to the 
proposed Final Judgments in this matter against Defendants and agreed 
to by Defendants pursuant to the Stipulations And Orders filed with the 
Court, was served on the following counsel:
    Counsel for Wind River Systems, Inc.: Richard L. Rosen, Arnold & 
Porter, 555 Twelfth Street, NW., Washington, DC 20004-1206. Fax: 202/
942-5999.
    By: hand delivery.
    Counsel for The MathWorks, Inc.: Thane D. Scott, Palmer & Dodge, 
LLP, 111 Huntington Avenue, Boston, Massachusetts 02199-7163. Fax: 617/
227-4420.
    By: fax and Federal Express.
    J. Mark Gidley, White & Case, LLP, 601 Thirteenth Street, NW., 
Washington, DC 20005-3807. Fax: 202/639-9355.
    By: hand delivery.

David E. Blake-Thomas.

[FR Doc. 02-26631 Filed 10-18-02; 8:45 am]
BILLING CODE 4410-11-M