United States v. E. I. Du Pont De Nemours & Co.

*45 TABLE OF CONTENTS.

COMPARISON OF THE ECONOMIC AND LEGAL CONCEPTS OF MONOPOLY.

THE PRESENT ECONOMIC AND LEGAL VIEWS OF MONOPOLY AND COMPETITION

a. Competition and monopoly in the economic sense.

b. The competition intended by the Sherman Act.

c. The economic view of the effect of potential competition upon monopoly.

d. The economic view of the effect of substitute products upon monopoly.

PART I — CELLOPHANE.

A. DuPONT’S POSITION DOES NOT VIOLATE § 2 OF THE SHERMAN ACT.

1. DuPONT DOES NOT HAVE MONOPOLY POWER.

a. Plaintiff must establish duPont has sufficient power arbitrarily to raise prices or to exclude competitors.

FINDINGS OF FACT.

I. Description of Defendant duPont (Findings 1-6).

II. Description of Cellophane (Findings 7-12).

III. DuPont’s Entry Into the Cellophane Business and Organization of duPont Cellophane Company (Findings 13-36).

IV. The “Market Setting” in Which Cellophane is Sold (Findings 37-79).

V. DuPont Competed by Research to Improve Quality and Lower Cost (Findings 80-122).

VI. DuPont Competed by Lowering Prices (Findings 123-149).

VII. Competition Between Cellophane and Other Flexible Packaging Materials (Findings 150-278).

SPECIFIC USES:

1. White Bread.

2. Specialty Breads.

3. Caice and Sweet Goods.

4. Meat.

5. Candy.

6. Crackers and Biscuits.

7. Frozen Foods.

8. Potato Chips, Pop Corn and Snacks.

9. Cereals.

10. Fresh Produce.

11. Paper Goods and Textiles.

12. Cigarettes.

13. Butter.

14. Chewing Gum.

15. Other Food Products.

16. Other Tobacco Products.

17. Cheese.

18. Oleomargarine.

*46 VIII. Results of duPont’s Competition With Other Materials (Findings 279-292).

IX. DuPont Competed With Sylvania (Findings 293-330).

X. The Basic Moistureproof Patents (Findings 831-339).

XI. DuPont Did Not Engage in Predatory Practices as Alleged.

A. DuPont’s decisions as to changes in its business capacity were made on the basis of proper business considerations, and not to suppress competition or to create artificial shortages (Findings 340-353).

B. Potential competitors were not excluded (Findings 354-388).

C. Distribution outlets were not controlled (Findings 389-455).

D. Patents were not abused (Findings 456-532).

XII. DuPont Did Not Conspire to Monopolize.

A. With Sylvania (Findings 533-591).

1. Patent License Agreement (Findings 533-583).

2. Prices (Findings 584-591).

B. With foreign concerns to exclude imports (Findings 592-645).

XIII. DuPont Did Not Attempt and Is Not Now Attempting to Monopolize.

A. General (Findings 646-660).

B. Olin license (Findings 661-686).

XIV. DuPont Has Not Monopolized (Findings 687-732).

CAPS AND BANDS (Findings 733-819).

OTHER FACTS (Findings 820-834).

CONCLUSIONS OF THE MASTER FACTS (Findings 835-854).

RESUMPTION OF THE OPINION.

b. Competitive conditions preclude acquisition of market control and hence of monopoly powers over cellophane.

i. “Market Setting”.

ii. Candy — A Case History.

iii. Testimony op Independent Witnesses.

c. DuPont has not “power to raise cellophane prices”.

d. DuPont has not the “power to exclude competition”.

1. General.

2. Potential Competitors.

3. Patents.

4. Sylvania Competition.

e. Application of recognized economic tests further evidences the lack of monopoly power.

*47 2. DuPONT’S POSITION IS NOT TO BE ATTACKED BECAUSE IT, RESULTS FROM TECHNICAL SKILL AND COMPETITIVE ACTIVITY.

a. The moistureproof patent is, I conclude, a defense.

b. Monopolization requires a factual showing of illegality.

c. Technical skill and other competition were responsible for duPont’s position in the field.

B. IS ORIGIN OF DuPONT’S POSITION LAWFUL?

C. WAS DuPONT’S POSITION MAINTAINED BY PREDATORY ASSERTION OF MONOPOLY POWER?

1. TESTS TO BE APPLIED.

2. ALLEGED SUPPRESSION OF SYLVANIA.

a. The Moistureproof Patent License Agreement.

b. The Alleged Price Agreement.

3. PATENT PRACTICES.

1. Ultra-Violet Light License.

2. Ribbon Licenses.

3. Ethylene Glycol License.

4. Marathon License.

5. The Sealing Licenses.

6. Interferences.

7. Tying Provisions.

4. CONTROL OF DISTRIBUTION OUTLETS.

5. EVIDENCE PLAINTIFF IGNORES.

PART II — CAPS AND BANDS.

NO FACTUAL BASIS EXISTS FOR CLAIMING A VIOLATION OF § 2 AS TO CAPS AND BANDS.

CONCLUSION OF LAW.

This is a civil suit by United States of America under § 4 of the Sherman Act, 15 U.S.C.A. § 1 et seq., charging defendant with monopolizing, attempting to monopolize and combining and conspiring to monopolize trade and commerce among the several states of the United States in cellophane and caps and bands. The Act of July 2, 1890, 26 Stat. 209, commonly known as the Sherman Act as amended, provides in part:

“Sec. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemean- or * * *. [15 U.S.C.A. § 2].

******

“Sec. 4. The several circuit courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this act; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney-General, to institute proceedings in equity to prevent and restrain such violations. * * * [15 U.S. C.A. § 4.]”

This case was instituted originally in the District Court of the United States *48 for the District of Columbia on December 13, 1947. On April 28, 1949, the case was transferred to the District of Delaware.

Defendant, E. I. duPont de Nemours and Company, is a Delaware corporation. It is successor to duPont Cellophane Company, Inc. Throughout the period covered by the complaint, it or its predecessors manufactured and sold, in interstate and foreign commerce, regenerated cellulose in the form of film (cellophane) and in the form of bands. Prior to the filing of the complaint in this case, it also manufactured and sold cellulosic caps.

DuPont entered the cellophane business in 1923. It collaborated, under written agreements with La Cellophane (a subsidiary of the Comptoir which is the largest French rayon producer), in establishing the first duPont cellophane company. In 1929 duPont Cellophane Company, Inc., was reincorporated as a wholly owned subsidiary of duPont. In 1936, duPont took over the operation of this business and dissolved duPont Cellophane Company, Inc.

In addition to La Cellophane, the following European producers have been named as co-conspirators but not party defendants: British Cellophane, Ltd. (England); Canadian Industries, Ltd. (Canada); Kalle & Co. (Germany); Viscose Francaise (France); and Viscose Development Company, Ltd. (England) .

Plaintiff’s argument and briefs treated in a highly interesting fashion the comparison of the economic and legal concepts of monopoly. But the final legal definition of the economic view of monopoly is to be left for decision by the Supreme Court.

COMPARISON OF THE ECONOMIC AND LEGAL CONCEPTS OF MONOPOLY.

Economic philosophies concerning monopoly and what should be done about it are legion; no one view can be said to be “the economic” concept. While these philosophies can not be classified into air-tight compartments, they do fall into distinct schools of thought. These schools are presently engaged in debate over the degree of monopoly power which is economically desirable and which the law should permit. The economic discussion had its genesis in an attempt to bridge what was believed to be a gap between the legal and economic concepts of monopoly. This discussion has resulted in some agreement among economists upon classifications of various types of competition which exist in the market today, but in sharp disagreement upon their significance as indicia of monopoly.

Plaintiff contrasted first the legal and economic concepts of competition and monopoly as presently understood, and as affected by potential competition and the presence of substitute products. Second, it discussed the coalescence of the old patterns of economic and legal thought. Third, it discussed the economic concepts of monopoly whose application is proposed for the future and their contrast with the existing legal tests of monopoly.

THE PRESENT ECONOMIC AND LEGAL VIEWS OF MONOPOLY AND COMPETITION.

Recent economic discussion has focused attention upon differences of opinion which exist among economists themselves and between economists and the courts as to the type and degree of competition which public policy, as expressed in the Sherman Act, contemplates. Differences also appear in the significance certain economists and courts attach to potential competition and to presence in the market of alternative or substitute products.

a. Competition and monopoly in the economic sense.

Today economists regard “perfect competition” and “pure monopoly” only as theoretical ideals of the opposite boundaries of possible market sitúat *49 ions. 1 While economists have not crystallized their terms, in a semantic sense, they recognize between the two extremes of perfect competition and pure monopoly there are “pure competition”, “imperfect competition”, “oligopoly”, and “monopolistic competition” 2 We start, Clark tells us, “with recognition that all practicable forms of competition are ‘imperfect’, and that the ‘perfect competition’ of economic theory is academic.” 3 Pure competition, sometimes defined as a less perfect form of competition than perfect competition, has been said by Mason to be that state of the market wherein “no buyer or seller could, by his own action, influence the price of the goods to be bought and sold.” 4 Mason views the concept of “pure competition of the economic theorists” as “divorced from time and space and independent of technological and other considerations.” 5

Imperfect competition in economic parlance is a term which includes all market situations falling between pure competition and pure monopoly, including what is known as oligopoly and monopolistic competition. 6 Monopolistic competition is now recognized as embracing those situations where either a few or many sellers trade in differentiated products, whereas “oligopoly” is regarded as consisting of those situations where a few sellers sell only a standardized product. 7

There is much debate among economists with respect to the significance which should be attached to market behavior in industries which are oligopolistic. 8 While some economists take the view* oligopolistic competition or oligopolies controvert the spirit of the antitrust laws, others contend oligopolies are able to pass along the benefits of efficiency of size to the consumer and are not socially disadvantageous. 9 Some admit in oligopolistic industries a considerably higher degree of competition than that which exists would be “workable” or effective. 10

*50 In attempting to evolve an economic approach to the concepts of monopoly and competition, some economists have proposed a theory of “Workable competition.” 11 This theory has, as yet, received no precise definition. 12 Rather it is an approach by which some economists propose to determine, in any given industry, whether the industry is competitive or monopolistic, and what degree of competition is obtainable by a practical policy without substantial loss of efficiency. 13

Monopoly, then, in economics, is not the simple test of perfect monopoly. In between the theoretical economic concepts of perfect competition and perfect monopoly lie various forms of imperfect competition which possess varying degrees and characteristics of monopoly. Pure monopoly which stands at the other extreme in economic thought from pure competition, has been defined by Stocking and Watkins as follows: 14

“Pure monopoly means a single seller of a product for which no substitute is available. But, like perfect competition, such a monopoly is a theoretical ideal.”

While some economists stress what they believe to be the efficiencies of oligopoly, others believe while a competitive structure may have imperfections, it is nevertheless the greater spur to progress and benefits to society. Corwin Edwards states: 15

“But although the maintenance of competition will not guarantee that the economy will work well, impairment of competition by monopolistic restrictions, public or private, increases the chance that it will work badly. Although the imperfections of the competitive process are too great to make economic adjustments quick, neat, and exact, the forces of competition tend to reduce many substantial economic maladjustments.”

Stocking and Watkins state: 16

“To maximize his earnings a monopolist must so regulate the inflow of new capital as not to impair the value of the old, whether it is a question of new processes or of new products that will compete with old. Where a monopolist can realize profits from a new product only by accepting smaller revenues from an old, he will be reluctant to introduce the new. Unless he can expect a monopoly return from the new that more than offset the losses of monopoly revenue from the old, he will not put the new product on the market. A monopolist restricts not only output but new investment as well. In this way monopoly tends to block innovation and change, to retard technological progress and to deprive society of its benefits.”

b. The competition intended by the Sherman Act.

Plaintiff shows the Sherman Act does not define the degree of competition which its policy contemplates, nor label it as either “perfect”, “pure”, “monopolistic”, or “atomistic”. The purpose of Congress in passing the Sherman Act was to preserve our system of free trade and competitive economy in order to protect the public from the evils thought to flow from undue restraints and monopolies. The object of Congress was “to secure competition and *51 preclude combinations which tend to defeat it.” International Harvester Co. of America v. State of Missouri, 234 U.S. 199, 209, 34 S.Ct. 859, 862, 58 L.Ed. 1276. The purpose of the statute was “to prohibit monopolies, contracts and combinations which probably would unduly interfere with the free exercise of their rights by those engaged, or who wish to engage, in trade and commerce —in a word to preserve the right of freedom to trade.” United States v. Colgate & Co., 250 U.S. 300, 307, 39 S.Ct. 465, 468, 63 L.Ed. 992.

As Chief Justice White remarked in Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 56, 31 S.Ct. 502, 514, 55 L.Ed. 619, both at common law and under the Sherman Act, “practical common sense caused attention to be concentrated not upon the theoretically correct name to be given to the condition or acts which gave rise to a harmful result, but to the result itself and to the remedying of the evils which it produced.”

c. The economic view of the effect of potential competition upon monopoly.

Freedom of entry of new firms into a given industry has been suggested by some economists as the distinguishing feature between competitive and monopolistic industries. As pointed out by Stocking and Watkins: 17

“Economists who believe it impracticable to change greatly the structure of American industry count on potential competition and the competition of substitute products to make the existing structure of industry workably competitive by curbing monopoly power over the long run.”

Under this approach the continuation of monopoly is condoned so long as there is sufficient likelihood potential competition will act as a brake upon the monopolist’s use of its power, and regardless of the effect which the monopoly may have upon actual competitors.

Edwards views potential competition as a curb upon monopoly power “so long as entry is easy.” 18 Clark, who thinks industries having large scale production may be competitively workable, ascribes lesser effect to the power of potential competition. He says neither potential competition nor the presence of substitutes “is a perfect check; but both together may come near it under favorable conditions.” 19 Lewis represents another view when he states: 20

“The key to the effectiveness of competition is to be found in its power systematically and predictably to compel economic decisions, and I do not believe that any such power or force characterizes the competition present in industries composed of, or dominated by either a single firm or a few large firms. * * * To speak of potential competition as a compelling regulatory force in this situation is to be blind to the strength of the factors that retard and will continue to retard the drive of potential competition to become actual competition.”

Plaintiff argues potential competition does not serve as adequate legal test of the existence of monopoly, although the ability of new firms to enter an industry may give some indication of the strength of the barriers erected by the monopolist. One eminent legal writer, Milton Handler, pointed out some time ago that a combination may be held unlawful even though it has imposed no restraints upon new competition. Handler stated: 21

“Many economists who have disagreed with the major purpose of the anti-trust laws have felt that the public is adequately safeguarded if potential competition remains free and unfettered at all times. This is not the premise on which *52 the Sherman Law is based. The instrument of control under this statute is both actual and potential competition.”

d. The economic view of the effect of substitute products upon monopoly.

Economists differ on the question of what significance should be attached to the presence in the market of products which are substitutes or alternatives for the product said to be monopolized.

In an address before the New York State Bar Association in 1950, Professor Meriam decried the action of Judge Learned Hand in United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416, both in restricting his consideration of the product involved to virgin aluminum ingot and ruling out secondary aluminum which competes with virgin, and in paying “no attention to the very significant business fact that aluminum competes with other light metals of different chemical composition.” 22

Other economists point out there are few commodities for which no substitutes are available. 23 The “monopolistic competition” school of thought is based upon the premise differentiation in products confers some degree of monopoly power. Wallace, in expressing his understanding of that school of thought, states: 24

“The theory of monopolistic competition emphasizes the significance of variation or differentiation of products. Successful differentiation confers some monopoly power by attracting a clientele which has some preference for the article of a particular seller.”

Chamberlin, a pioneer of the monopolistic competition school states: 25

“A monopoly of ‘Lucky Strikes’ does not constitute a monopoly of cigarettes, for there is no degree of control whatever over substitute brands. But if, in order to possess a perfect monopoly, control must extend to substitutes, the only perfect monopoly conceivable would be one embracing the supply of everything, since all things are more or less imperfect substitutes for each other. * •» * The term ‘monopoly’ is meaningless without reference to the thing monopolized. A monopoly of diamonds is not a monopoly of precious stones, nor, to go still further, of jewelry. Differentiation implies gradations, and it is compatible with perfect monopoly of one product that control stop short of some more general class of which this product is a part, and within which there is competition.”

After pointing out this idea was no departure from accepted doctrine, and citing as his authority both Taussig and Ely, 26 Chamberlin writes (p. 67):

“Of course, prices might be higher yet if, instead of a monopoly of each different brand, there existed a monopoly of the entire class of product. The more substitutes controlled by any one seller, the higher he can put his price. But that is another matter. As long as the substitutes are to any degree imperfect, he still has a monopoly of his own product and control over its price within the limits imposed upon any monopolist — those of the demand.”

*53 Clearly, there are different schools thought in economic circles with respect to the effect upon monopoly of the presence of substitute products. of

In general, plaintiff charges defendant maintains a monopoly position in the production and sale of cellophane and bands. It is charged defendant unlawfully acquired and maintains a monopoly position in the field of cellophane and bands — that defendant’s predatory practices in the markets for these products ■demonstrate an intent to monopolize and the exercise of monopoly power. The unlawful acquisition is traced, in the beginning, to defendant’s foreign relations with European companies, which resulted in a cartel which divided world markets. There is the charge of abuse of patents; exclusionary and oppressive acts and practices; and restraint of trade in distribution of the products in connection with both direct and indirect sales.

PART I — CELLOPHANE.

Certain issues of fact and law must ■control the decision in this case. When these controlling issues are isolated, it will be apparent there are fatal deficiencies in the Government’s proof, and the record fails to establish those facts which are essential to support the charges in the complaint.

The history of duPont’s cellophane business is a record of competitive .achievement. DuPont was the first American company to manufacture this new wrapping material. To pioneer the cellophane business required foresight, and a willingness to take risks. DuPont had little technical experience in this line of ■chemistry. The product had not been proven as a packaging material. It had had little acceptance in this country.

DuPont entered the business in the ■only manner that was practicable. It ac■quired the commercial process from the French. This process was obtained on the best terms duPont could negotiate. The two groups, American and French, had already been successful partners in rayon. No desire to limit competition was involved, for neither partner to the venture was engaged in business in competition with the other, and there is no indication anyone was interested.

DuPont saw the chance for profit and utility for cellophane if it could be introduced into the mass production packaging markets of the United States. It decided to bring a new competing material into the flexible packaging market, an established field of competitive business activity.

Cellophane was not at first acceptable in the trades to which it was offered. Manufacturing techniques were crude; quality unsatisfactory, and costs made price of cellophone prohibitive for many uses. There were distribution and merchandising problems to be met. Only by effective competition could duPont hope to gain recognition for its product in markets where other materials were entrenched. The business had to be built up by creative research.

DuPont’s technological achievements were of high order. Through research it improved manufacturing efficiency, reduced costs, improved quality, developed new types of materials and lowered prices to obtain acceptance for its product, all in the face of competition. Research results were continuously put to use in its plants.

The product obtained from the French did not meet the needs of the American market. DuPont invented a new product, moistureproof cellophane, which proved to be the product upon which the cellophane business has been built. It obtained a product patent under which all its moistureproof cellophane was produced during the period of the monopoly charged in the complaint. It then exploited that patent, well within the purposes and intentions of the patent grant. Its production expanded; it made many types of moistureproof cellophane; it gave increasing service to its customers; it neither curtailed its initiative nor restricted the capital which it *54 was willing to devote to the enterprise. DuPont achieved through business method an increasing success in its competition with other packaging materials.

As cellophane got recognition in the trade, others entered various phases of the business as converters, users, suppliers of raw materials, manufacturers of equipment, and the like. Cellophane creates competition. Throughout the flexible packaging markets this competition is felt. It stimulates efforts of other producers to manufacture more efficiently. It stimulates research. The consumption of flexible packaging materials including cellophane has grown at a rapid rate. Within these markets the competition is intense. New producers have entered. No one material or one supplier controls — certainly not duPont, which has neither the power to raise prices nor to exclude competitors.

After reviewing the development of this business, plaintiff has been unable to bring a single person who says he was injured or who claims to have been denied an opportunity to participate. Prices have consistently been lowered and reflect competitive pressures. Production has expanded. Benefits from research have been passed on to consumers. DuPont has not conducted its cellophane business in a restrictive way. There are no artificial controls which it can exercise in the markets where its product is sold.

A. DuPONT’S POSITION DOES NOT VIOLATE § 2 OF THE SHERMAN ACT.

The charge here is duPont monopolizes cellophane. The charge involves two questions: 1. does duPont possess monopoly powers; and 2., if so has it achieved such powers by “monopolizing” within the meaning of the Act and under United States v. Aluminum Company of America, 2 Cir., 148 F.2d 416, 429. Unless the first is decided against defendant, the second is not reached. First, then, to the question of existence of monopoly power.

1. DuPONT DOES NOT HAVE MONOPOLY POWER.

a. Plaintiff must establish duPont has sufficient power arbitrarily to raise prices or to exclude competitors.

Ultimate determination of issues raised by a charge § 2 has been violated, involves application of established principles. The tests are clear. They have been laid down in numerous cases. The issues in this litigation are fact issues, not law issues. When facts are analyzed! in the light of established tests* result is clear.

The voluminous record in this case requires the distillation of a great mass of facts which are basic to a decision.

FINDINGS OF FACT.

I. Description of Defendant duPont.

(Findings 1-6)

1. E. I. duPont de Nemours & Co. (hereafter called “duPont”) is a Delaware corporation. It manufactures chemical products, including many types of plain and moistureproof cellophane. 27

Prior to 1936, duPont engaged in the manufacture of these products through subsidiary companies: From 1923 to 1929, through duPont Cellophane Company in which duPont had 52% interest, and from 1929 to 1936, through duPont Cellophane Company, Inc., in which duPont had a 100% interest. 28

2. Within the duPont organization responsibility for the manufacture and sale of cellophane and bands rests with the Film Department which makes and sells other products, such as cellulose acetate film, polyethylene film, cellulose sponges, and cellulose bands. 29 From *55 1936 until formation of the Film Department in April 1950, cellophane was handled with other products by the Cellophane Division of the Company’s Rayon Department. 30 The Cel-O-Seal section of the division handled caps and bands. 31

8. DuPont built cellophane manufacturing plants and commenced operations in them:

Plant and Location Operation Started

Buffalo #1 (N.Y.) April, 1924

Old Hickory #1 (Tenn.) October, 1929

Old Hickory #2 (Tenn.) August, 1930

Spruance #1 (Richmond, Va.) November, 1930

Buffalo #2 (N.Y.) February, 1932

Spruance #2 (Richmond, Va.) May, 1937

Clinton #1 (Iowa) March, 1941

Clinton #2 (Iowa) February, 1947 32

All plants are operating today except plant known as Buffalo #1 which was ■closed in 1942 and thereafter converted to manufacture of rayon for tire cord at the request of the United States to meet urgent production problems during the war. 33

4. DuPont sells types of cellophane designed to serve specific packaging needs. 34 In 1949, duPont sold 108 varieties of cellophane. 35

5. In 1950, duPont produced 202,000,-000 lbs. of cellophane 36 and its sales in that year totalled $99,181,192 of which $89,850,416 was moistureproof cellophane. 37

6. DuPont sells cellophane in interstate trade. 38 Cellophane is sold in foreign commerce. 39

II. Description of Cellophane.

(Findings 7-12)

7. Plain cellophane is a thin flexible non-fibrous film of regenerated cellulose containing glycerol as a softener. It has little resistance to the passage of moisture vapor and is used for wrapping products as to which the gain of moisture is not important. 40

Moistureproof cellophane is a different product. It is a thin transparent flexible non-fibrous film of regenerated cellulose containing a softener, one of which is glycerol, combined with a moistureproofing composition. Moistureproof cellophane is used for packaging foodstuffs; gain or loss of moisture is important. 41

Plain cellophane is manufactured in various thicknesses, colors, as well as transparent form. 42 Types of moisture-proof cellophane differ in their resistance to moisture vapor, ability to be sealed by heat and anchoring of the coating to the base film. 43 Specific types of moistureproof cellophane were developed to meet' the packaging requirements of specific products. 44

*56 8. In commercial practice moisture-proof cellophane is 100 times as impervious to the transmission of moisture vapor as plain cellophane 45

9. Plain cellophane is manufactured by extruding viscose made to specifications through a narrow slot in a hopper into a chemical bath where it coagulates in the form of a thin sheet; this sheet is run through a succession of purifying baths and while wet is immersed in a water solution of glycerol, some of which is absorbed; excess moisture is then removed from the surface of the film and the material is dried to a predetermined moisture content. 46

Moistureproof cellophane is manufactured by combining with a base thin transparent film of regenerated cellulose, containing a softener, one of which is glycerol, a moistureproofing coating composition, which may comprise waxes, resins, nitrocellulose or other film forming materials and plasticizers. 47

The manufacturing processes are chemical in nature and require for successful commercial operation a degree of technical knowledge and controls. The mechanical aspects of the operations are intricate. 48

10. Until the invention and development of moistureproof film, cellophane sales were relatively unimportant. 49

Production of moistureproof cellophane, which began in 1927, by 1930 had exceeded production of plain cellophane. 50 Subsequent growth of cellophane sales has been due to moisture-proof cellophane. 51 In 1936, United States production of plain cellophane amounted to 24,650,000 lbs. and by 1947 had increased to only 25,780,000 lbs. During the same period, United States production of moistureproof cellophane increased from 50,941,000 lbs. to 148,-769,000 lbs. 52

11. After preparation of viscose solution, cellophane is extruded through a casting machine. These machines are 200 feet long and are operated by duPont at speeds up to 120 meters per minute, carrying a film 1/1,000th of an inch thick (300 gauge) from a semi-coagulated to a coagulated condition with an allowable variation in gauge of only 1/10,000th of an inch. 53 DuPont’s moistureproof cellophane goes through the further stage of a six story coating tower in which the film running at a speed of 200 meters per minute has applied to it on each side a coating of 1/100,000th of an inch thick, with an allowable tolerance in coating thickness of approximately 1/1,000,000th of an inch. 54

12. Plain and moistureproof cellophane are separate products from cellulose caps and and bands which are made by separate processes, used for different purposes and sold to a different trade. 55

III. DuPont’s Entry Into the Cellophane Business and Organization of duPont Cellophane Company.

(Findings 13-36)

13. DuPont was the first company to manufacture plain cellophane in the United States, 56 and the first to manufacture moistureproof cellophane anywhere in the world. 57

*57 14. La Cellophane, Societe Anonyme, referred to as “La Cellophane”, is a French corporation with principal place ■of business at Paris, France. 58 Prior to 1941 it had association with an organization known as Comptoir des Textiles Artificiéis, referred to as “Comptoir”, a French organization with interests in rayon. 59 La Cellophane produces cellophane in France. 60 It was the first company to manufacture plain cellophane •on a commercial basis, and was engaged in this business in France in 1917. 61

15. Jacques Brandenberger of France invented the process and machinery for the manufacture of plain cellophane about 1912. He obtain patents both in Europe and United States on his inventions. Brandenberger’s processes and patents were transferred to La Cellophane on its formation, at which time Brandenberger joined La Cellophane. The United States patents were assigned to duPont Cellophane Company in 1923. Some of these were subsequently used in duPont Cellophane Company’s operations. 62

16. Prior to duPont’s decision to manufacture plain cellophane, duPont had been associated with Comptoir in the manufacturing of viscose rayon in the United States through a jointly owned company called duPont Fibersilk Company (later, duPont Rayon Company). This association had been profitable. The processes and technical information, including viscose chemistry, engineering and other details of manufacture of rayon, had been acquired from the Comptoir after fruitless experimentation by duPont to develop an artificial fiber. 63

17. DuPont management decided to invest money in cellophane manufacture as part of a policy determined after World War I to diversify into a broad line of chemical products. 64 In entering the cellophane business, duPont had no intention to commit any act violative of the Sherman Act. 65

18. About 1923, duPont became interested in cellophane when it learned through the Comptoir, La Cellophane had developed and was operating a commercial process for the manufacture of plain cellophane. DuPont conducted negotiations with the French interests for the American rights to this process, which culminated in the formation of duPont Cellophane Company and execution of certain technical agreements. 66 No evidence exists any other concern in the United States was interested in securing the French process at this time.

19. The French would not disclose any aspect of their cellophane process to duPont unless duPont would agree to refrain from manufacturing cellophane for five years in the event it determined after disclosure not to take a license. 67

20. The French were not willing to make their process available to duPont unless duPont agreed the French could participate in the profits of United States manufacture 68 and unless duPont was willing to confine to North and Central America its manufacture and sale of cellophane made by the French process. 69 DuPont sought to obtain ex- *58 elusive right to La Cellophane’s patents and processes and responsibility for the manufacturing operations. 70

21. By contract dated June 9, 1923, duPont and the French agreed to form duPont Cellophane Company to manufacture cellophane in the United States. Each party agreed it would not prior to December 31, 1935 except by duPont Cellophane Company become interested in any other business in North or Central America engaged in the manufacture of cellophane. 71

22. By agreement of June 9, 1923, duPont Cellophane Company was organized to manufacture cellophane in the United States. DuPont contributed $866,666.67 and received 52% of the voting stock. La Cellophane contributed its patents, processes, technical assistance, and $133,333.33, for all of which it received 48% of the voting stock. 72

23. The contribution of La Cellophane to duPont Cellophane Company in exchange for 48% of its voting stock was neither cash nor patents but its secret process and technical assistance. 73

24. On December 26, 1923, an agreement was executed between duPont Cellophane Company and La Cellophane by which La Cellophane licensed duPont Cellophane Company exclusively under its United States cellophane patents, and granted duPont Cellophane Company the exclusive right to make and sell in North and Central America under La Cellophane’s secret processes for cellophane manufacture. DuPont Cellophane Company granted to La Cellophane exclusive rights for the rest of the world under any cellophane patents or processes duPont Cellophane Company might develop. 74

25. There was no agreement between La Cellophane and duPont beyond the written agreements of June 9, 1923 and December 26, 1923. 75

26. La Cellophane had four representatives on the Board of eleven (later nine) Directors of duPont Cellophane Company. 76 La Cellophane had a minority interest and veto power over major expenditures, over obligations of the company which would alienate, mortgage or diminish the corporate assets, and over changes in the number of Directors. Similar veto powers were held by the minority over changes in the charter and by-laws. 77

27. The representatives of La Cellophane on the Board of duPont Cellophane Company attended Directors’ meetings and participated in the functions of the Board. 78 The French were most actively represented by a New York lawyer, Benjamin Paskus, and two American businessmen, Messrs. Henry Blum and Albert Blum. 79

28. In 1929 duPont purchased the shares of the French in duPont Cellophane Company, and reorganized it as du Pont Cellophane Company, Inc. In exchange for the French shareholding in the duPont Rayon and Cellophane Companies the French interests received duPont Company stock with a market value at that time of nearly $90,000,000. French interests continued their membership on the Board of duPont Cellophane Company, Inc., maintained their previous degrees of participation in the management of the affairs of the company, and technical cooperation con *59 tinued between duPont Cellophane Company, Inc. and La Cellophane. 80

29. At the time duPont decided to enter the cellophane business it had limited technical resources useful in such business, and had no knowledge as to how to make cellophane or of the chemistry of the product. 81 It was not staffed to develop the necessary chemical and engineering techniques at a cost which would have been reasonable. 82 This information was essential to commercial manufacture of plain cellophane. 83

30. Although duPont believed it was a business risk to undertake manufacture of cellophane in the United States, success of the venture was not assured. 84 The buildings for the initial casting machines at Buffalo were designed to permit conversion to use in rayon manufacture in the event the cellophane venture failed. 85

31. In France plain cellophane was sold in sheet form for hand application in the packing of luxury items, such as perfume bottles and for decorative uses. It was sold in small volume at high prices. 86 DuPont felt while the business risks were substantial, it stood a chance ■of promoting cellophane in the United States by improving its quality and manufacturing processes so it could be sold for mass packaging uses at lower cost in competition with other flexible packaging materials already established in the American market. 87

32. Evidence shows duPont could not have developed a successful process for •cellophane manufacture in less than five to eight years and then only at very substantial cost. 88

DuPont has continued to use La Cellophane’s basic process, 89 and evidence shows the only other process commercially developed for continuous manufacture, Wolff’s casting on a wheel, was inferior in cost of manufacture and quality of product. 90

'33. Technical information which La Cellophane granted duPont Cellophane Company represented the entire knowledge gained by La Cellophane as the result of years of research in developing the process. It included designs for all machinery including the hopper and all casting machine apparatus, together with information as to chemical compositions and controls from the initial step in the formulation of the viscose solution to the ultimate product. The French disclosed through plant inspection, manuals and training of personnel both in France and in the United States all phases of their own proven production line know-how. French technicians designed the initial duPone Cellophane plant, manufactured some of the machinery in France, and supervised the operations and training of essential personnel. 91

34. Communication of the process to duPont by La Cellophane was in confidence. The process for cellophane manufacture had been kept in secrecy by the French prior to its communication to duPont by a system of fences, plant guards, passes and an effort on the part of management to maintain secrecy. Following the communication of the process to duPont Cellophane Company, both it and *60 La Cellophane used similar means to maintain secrecy of the process and the interior of the plants. 92

35. Some information as to La Cellophane’s process became available through the patent literature, 93 but many key facts were not disclosed at any time prior to World War II and all phases of the process were kept secret by duPont until that time. 94

36. DuPont still employs the fundamentals of the secret process received from La Cellophane for continuous casting of an endless sheet of regenerated cellulose. 95

IV. The “Market Setting” in Which Cellophane is Sold.

(Findings 37-79)

37. The relevant market for determining the extent of duPont’s market control is the market for flexible packaging materials (judicial notice after examination and observation).

38. Both plain and moistureproof cellophane are packaging materials. 96 Only 6 percent of duPont’s cellophane production is sold or used for non-packaging purposes. 97

39. When cellophane was first made by duPont, wax paper, glassine, and sulphite paper were the flexible packaging materials in use. These products were established in the trade and accepted. 98 They remain today dominant materials sold for the end uses where cellophane is also employed by some packagers. 99

40. Since 1923 new types of flexible materials have been developed for packaging. These include, among others, rubber hydrochloride film, 100 moisture-proof cellophane, 101 polyethylene coated paper, 102 heat sealing glassine, 103 and polyethylene film. 104

41. From the beginning of duPont’s cellophane duPont has been aware of competition of other flexible packaging materials, particularly waxed paper and glassine, and has directed its price and sales policies toward selling successfully against these materials. This awareness is reflected from 1923 to the filing of this suit in correspondence and reports within the duPont organization. 105

42. Since 1923 there has been a growth in the use of flexible packaging materials; measured in millions of square yards, total United States production and imports of the principal flexible packaging materials has grown from approximately 4,170,000 in 1925 to 14,-720,000 in 1949. 106 This has resulted from improvements in all the materials themselves; the rapid development of self-service distribution with its emphasis upon retail packaging units, higher standards of living and increased consumption, emphasis upon protective and other health aspects of packaging, the development of new merchandising techniques and the increased utility of the *61 materials themselves. 107 All principal flexible packaging materials have shared in this development and much of the growth of duPont’s cellophane business is due to the factors mentioned. 108

43. There is tremendous increase in packaging since the end of World War II in both transparent and non-transparent materials. Most of this increase has been in consumer-size packages. 109

44. DuPont employs sixty men in the selling of cellophane. 110 These men are trained to have technical familiarity with packaging design, with packaging machinery, including printing and bag making machines, with physical and chemical properties of the various types of cellophane, and with the distribution, costs, sales promotion and other business problems of concerns that are direct users of cellophane and of concerns that process it for resale. 111

45. DuPont sells about 55% of its cellophane direct through its own salesmen to users who package products of their own manufacture for retail distribution such as bakers, food chains, candy manufacturers, meat packers, cereal manufacturers, and tobacco companies. 112 This cellophane is sold without printing or other processing in roll or sheet form in various sizes to suit the customer’s needs. 113 Most customers run cellophane through packaging machines to wrap their products. 114

46. DuPont sells cellophane to converters who print cellophane or process it into packaging units such as bags or special wraps and in turn sell in a form for use as a primary part of a package to concerns which package their produCts. 115 About 35% to 40% of duPont cellophane is sold in this manner. 116 The same customer often buys unprinted cellophane from duPont for certain purposes and buys converted cellophane from converters for other or the same purposes. 117

DuPont sells cellophane in quantities to jobbers and to fabricators. 118 The latter use cellophane in the manufacture of non-packaging items such as straws, pressure-sensitive cellulose tape, Christmas ornaments and ribbon. 119

47. Most companies engaged in converting cellophane into bags or printed packaging material, including all of the principal converters of duPont cellophane also convert other flexible packaging materials, such as glassine, other papers, Pliofilm, polyethylene, Saran, and others. 120 The products of such a converter made of flexible packaging materials other than cellophane are sold by the same salesmen who sell the converter’s products made of cellophane, to customers who are potential users of converted cellophane as well. 121

*62 48. Most converters who handle duPont cellophane also handle other flexible packaging materials at the same time for sale for the same end uses. 122

49. Converters produce wrappers for nearly every type of customer. 123 Converters hold themselves out to the public through advertising in trade journals, as ready to serve any type of customer with any type of flexible packaging material or combination. 124

50. Concerns which purchase cellophane from duPont, or converted duPont cellophane from converters, will purchase other packaging materials (such as glassine, foil, etc.) from manufacturers of such materials and from converters of them. 125

51. In addition to duPont two companies, American Viscose Corporation and Olin Industries, Inc., also manufacture and sell cellophane throughout the United States and in foreign commerce 126

52. Sylvania Industrial Corporation was a Virginia corporation 127 organized in 1929 and began production of cellophane at a plant in Fredericksburg, Virginia in 1930. 128 In 1946 it was acquired by American Viscose Company, a Delaware corporation, which is the largest producer of viscose and of viscose rayon in the United States, 129 with assets in 1949 in excess of $222,000,-000. 130 The term “Sylvania” is used with reference to events since that acquisition as meaning the Sylvania Division of the American Viscose Company, and prior thereto to mean Sylvania Industrial Corporation.

53. Olin Industries, Inc., referred to as “Olin”, is a Delaware corporation having a place of business at East Alton, Illinois. 131 Ecusta Paper Corporation is a Delaware corporation having its principal place of business at Pisgah Forest, North Carolina. 132 Ecusta is owned and controlled by Olin and carries on the entire cellophane business of Olin. 133 Ecusta began production of cellophane in June 1951 at its plant in Pisgah Forest, North Carolina. 134

54. Manufacturers of flexible packaging materials other than cellophane promote their products by many of the means employed by duPont to promote cellophane. 135

55. Manufacturers of flexible packaging materials hold themselves out to the trade, through advertising as able to satisfy the packaging requirements of *63 the principal customer trades. This advertising material appears in the principal packaging periodicals such as Modem Packaging, Package Parade, and the Modem Packaging Encyclopedia and in trade journals representing various end uses, such as Bakers Weekly, The Confectioner's Journal, Food Industries National Provisioner, etc. These advertising appeals constitute claims each material, including cellophane, has the desirable degree of protective property (against moisture, dirt, rough handling, etc.), consumer appeal and reasonable price to act as an economical merchandising medium and protective package for food and other products. 136

56. For any specific end use there is available a variety of flexible packaging materials that will satisfy the requirements of packaging a product. A number of materials can provide the combination of properties. It is solved by choosing combination of qualities and price which is considered most profitable to the purchasing concern at the time of the particular purchase. Persons who use cellophane for packaging a product regard cellophane as only one of several possible packages and often change to others on short notice 137

57. A customer for packaging materials is in the market for additional packaging material within a few weeks. All such customers are open to change from one packaging material to another at any time. 138

58. Cellophane is not a unique flexible packaging material in any functional or economic sense. In terms of uses for which cellophane is sold, and the qualities it brings to each use as a wrapping material, cellophane is interchangeable and in fact continually interchanged with many flexible packaging materials 139

59. The accompanying Table 140 compares, descriptively, physical properties of cellophane and other flexible packaging materials:

*64

*65 60. Users and converters of these flexible packaging materials purchase materials principally on the basis of two criteria: (a) the composite of physical properties of a particular material, and (b) the price, or cost of using, a particular material. Neither price alone nor a single quality governs selection 141

61. Different purchasers of flexible packaging materials make different appraisals of the composite of properties and the importance of cost, and make widely varied selections of materials. 142

62. Other flexible packaging materials are sold to the same customers who buy cellophane from duPont and for the same uses. 143 These materials include without limitation:

Aluminum foil is a thin aluminum sheet. The gauges used for packaging are from .0015 to .00035 inches. The foil is used as a packaging medium. It is laminated to glassine, paper or tissue, to other films, or to cellophane. It is opaque, brilliant of surface, highly moistureproof, and readily takes a semi-permanent set, known as “dead folding”. It can be printed and like cellophane can be sealed by heat when coated. 144

Cellulose acetate is a film made by the flowing of a solvent solution of cellulose acetate onto a large diameter, slow moving casting wheel, or metal belt. The solvent evaporates, and the dry film is stripped from the wheel or belt as it turns. The film can be made by an extrusion process. It is waterproof. It can be printed, and sealed by heat, if coated. It has a high surface gloss. 145

Cry-O-Rap is the trade name of a film made from a modified polyvinylidene chloride resin. Its chief characteristics are chemical inertness, transparency, durability, and flexibility at low temperatures. It can be shrunk around irregularly shaped objects by application of moderate heat. 146

Greaseproof paper is made by beating wood pulp in a vat filled with water until the fibers become saturated and gelatinous in texture. Resulting product is translucent and resistent to oil and grease. 147

Glassine is produced by finishing greaseproof paper between highly polished metal rollers under heat and at pressure. This process develops the transparency and surface gloss which are characteristic of glassine. It is greaseproof, and can be sealed by heat, if coated. It is made moistureproof by coating and with appropriate lacquers or waxes and may be printed.

Glassine and waxed paper are the two materials which have been sold in the largest quantities in direct competition with cellophane for the longest period of time. 148

Pliofilm is a trade name of a film produced by flowing a solvent solution of rubber hydrochloride onto a moving web. The web passes through a heated chamber, which evaporates the solvent and leaves a transparent film. Pliofilm is *66 tough, can be stretched to 5 or 6 times its original dimensions.. It is moisture-proof, and is capable of weldtype heat sealing. Heavier gauges are cloudy. It can be shrunk around an object by application of moderate heat, and can be printed. 149

Polyethylene film is made from a solution formed from high-pressure polymerization of ethylene gas. This solution can be cast or extruded to produce the film. Principal characteristics of the film are chemical inertness, flexibility at low temperatures, and good inherent moistureproofness. Polyethylene film is transparent, but slightly hazy. 150

Saran is the trade name of a film made from polyvinylidene chloride.. It is characterized by strength, toughness, flexibility, transparency, and chemical inertness. It has'the highest moistureproofness of all the packaging materials. 151

Sulphite Paper is high grade, machine-glazed paper used as wrapping, for the packaging of food and other merchandise. It is the usual basis of wrappers (e. g. paper component of cigarette pack), waxing stock (for waxed paper) and other uses where moderate strength, flexibility and good coating and printing surface is required. 152

Vegetable Parchment is made by passing unsized raw paper through a sulphuric acid bath, and drying on regular paper machine dryers. This “parehmentizing” covers the paper with a thin layer of gelatinous cellulose which fills the interstices of the fibres and cements them into a cohesive mass. Vegetable parchment is highly greaseproof, has wet strength, and is slightly translucent. 153

Waxed Paper is made by applying melted wax to sulphite or sulphate paper.Waxed paper is made in various degrees of transparency, and is sealable by heat. Resins are added to the wax to enhance surface gloss, heat-sealing properties and low-temperature flexibility. In the printed forms, print is usually applied prior to waxing. 154

63. There are respects in which other flexible packaging materials are as satisfactory as cellophane:

Waxed Paper — for an instance.

Transparency is not necessarily desirable in a wrap, 155 although waxed papers can be made with a degree of transparency. 156

Waxed paper wraps have eye appeal arrived at through gloss, opacity, and colored printing. 157

. Waxed paper is not difficult to heat-seal, and is as good as cellophane, in this respect. 158

Waxed paper runs on high speed machines as well as cellophane. 159

Better printing effects are available with waxed paper than with cellophane. 160

Waxed paper affords as good moisture protection as cellophane. 161

*67 Moistureproof coating of moisture-proof cellophane will separate more readily in contact with fats and oils than waxed paper coatings. 162

Waxed paper is cheaper than cellophane. 163

Waxed paper is superior to cellophane in resistance to rancidity-inducing ultraviolet rays. 164

Waxed paper is superior to cellophane in durability under rough handling," at low temperatures. 165

Printing is applied to waxing papers prior to coating. 166

Glassine.

Glassine is, in some types, about 90 % transparent, so printing is legible through it. 167

Glassine affords low cost transparency. 168

Moisture protection afforded by waxed or lacquered glassine is as good as that of moistureproof cellophane. 169

Glassine has greater resistance to tearing and breakage than cellophane 170

Glassine runs on packaging machinery with ease equal to that of cellophane. 171

Glassine can be printed faster than cellophane, and can be run faster than moistureproof cellophane on bag machines. 172

Glassine has greater resistance than •cellophane to rancidity-inducing ultraviolet rays. 173

Glassine has dimensional stability superior to cellophane. 174

Glassine is more durable in cold weather than cellophane. 175

Printed glassine can be sold against cellophane on the basis of appearance. 176

Glassine may be more easily laminated than cellophane. 177 .

Glassine is cheaper than cellophane in some types, comparable in others. 178

Aluminum Foil.

Aluminum foil is most commonly used in .00035 gauge which is comparable to cellophane. 179

In .00035 gauge aluminum foil is cheaper than moistureproof cellophane in cents per 1,000'sq. in. 180

Aluminum foil after laminating' and coating is within competitive range of .the price of moistureproof cellophane. 181

Moisture resistance of coated aluminum foil, even in .00035 gauge, is comparable with moistureproof cellophane, and is one -of the selling points for aluminum foil. 182

Heat-sealing foil gives a heat-seal comr parable with cellophane. 183

Aluminum foil has dimensional stability in the presence of humidity changes, and offers protection against water *68 absorption. Cellophane is susceptible to water . absorption and dimensional change. 184

Aluminum foil has a degree of eye appeal, and can be attractively printed 185

Foil has a dead-folding property which cellophane lacks, which enables foil to give more complete protection to the contents of a package. 186

Aluminum foil, being opaque, is superior to cellophane in resistance to rancidity-inducing ultraviolet rays. 187

Cellulose Acetate. 188

• There is no evidence the water-insensitivity of CA is a disadvantage. This feature is the basis of CA’s superior shrink .resistance and dimensional stability. 189 ,

CA is less susceptible than cellophane to softening by water, and is a superior wrap for fresh produce. 190

CA permits free passage of moisture and gases more readily than cellophane, and is a superior wrap for fresh produce, fruit, iced cakes and doughnuts, and pies. 191

CA is made in heat-sealing type, selling at the same price as ordinary CA film. 192

Improvements have been made in elimination of static electricity when running CA film on machines. Static eliminators can be obtained for as little cost as 15‡. 193

Largest producer of CA is attempting to reduce the price gap between CA and cellophane. This policy is intended to reduce a competitive disadvantage of CA and to stimulate sales. 194

CA is superior to cellophane in clarity, luster and eye appeal 195

CA is used on a variety of food and other products including: fresh produce, bacon, tomatoes, fresh meat, pies, rolls, iced cakes, laminations, window boxes. 40% of CA film made by its largest producer is sold for packaging food. 196

CA’s major competition is cellophane. 197

It is not more expensive to run CA on packaging machinery than cellophane. 198

Cry-O-Rap.

Cry-O-Rap can be shrunk around irregular objects, unlike cellophane, and for this reason is used to wrap frozen poultry. 199

Cry-O-Rap is superior to cellophane as a wrap for frozen poultry because of its durability at low temperatures. 200

Cry-O-Rap is superior to cellophane in its resistance to tearing, to water absorption, and in its dimensional stability. 201

*69 Pliofilm.

Pliofilm, although 5 or 10 points less transparent than cellophane, is not cloudy when stretched. 202

The odor of Pliofilm was a characteristic of the early years, and never a serious technical problem. 203

Pliofilm is superior to cellophane in moistureproofness, resistance to tearing and heat-sealing. 204

Static electricity can be inexpensively eliminated from machines using Pliofilm. 205

The heat-sealing range of Pliofilm is not a narrow one. 206

Pliofilm may be printed on the same presses that print cellophane. 207

Pliofilm is tough, tougher than cellophane. 208

Pliofilm is more flexible than cellophane at low temperatures 209

Pliofilm’s resistance to shrinkage and resistance to water absorption are greater than cellophane. 210

90% of Pliofilm production goes for packaging, most of this for food packaging. In this field it competes with cellophane. 211

It is not more expensive to run Pliofilm on packaging machinery than cellophane. 212

Polyethylene.

Problems in heat-sealing and machine running of Polyethylene have been solved; it is now handled' on packaging machines with no difficulty. Polyethylene has excellent heat-sealing properties. It is now printed by converters. 213

Polyethylene has only appeared commercially since World War II, and has a promising sales potential. 214

In resistance to tearing, resistance to water absorption, and dimensional stability, Polyethylene is superior to cellophane. 215

Polyethylene is more durable and flexible than cellophane, particularly at low temperatures. 216

Saran.

Saran is superior to cellophane in moisture protection, resistance to tearing, resistance to water absorption, and dimensional stability. 217

Saran can be run and heat sealed on the same model of the Hayssen machine that handles cellophane. 218

Electronic sealing can be used where heat-sealing Saran raises technical difficulties. 219

64. Fresh meat turned black in a few hours if wrapped in MSAT. MSAT 80 film was developed, with the coating applied only to one side of the film, as an answer to the technical problem posed by fresh meat. This film will hold the color of fresh meat over a period of several days, which is something none of the previous types would do. 220

*70 ’65. Varieties of cellophane manufactured by duPont have different properties or degrees of the same properties. Varieties have more properties, and are .capable of more specific functions, in common with some types of glassine and other materials, than with other types of cellophane. 221

66. The principal'manufacturers of flexible packaging materials include established concerns with assets which are competent to compete for flexible packaging business. The following list. of companies indicates name, date of organization, and total assets in 1949 in thousands of dollars.

Name Date of Organization Total Assets in 1949 in Thousands of Dollars

Riegel Paper Corp................. 1873 $15,285

Rhinelander Paper Co.............. 1903 14,720

Kalamazoo Vegetable Parchment Co, 1909 29,269

Marathon Corp.................... 1909 61,888

Goodyear Tire & Rubber Co......... 1898 ' ■ 424,126

Celanese Corporation of America ..'.. . 1918 254,886

Aluminum Corporation of America... ,1888 . 525,870

American. Viscose Corp............. 1910 222,396 222

6.7. Ten companies in the United States produce glassine and greaseproof papers. Their volume of output increased since 1941 and since 1946. Dernand exceeded their ability to supply during World War II, from early 1947 to mid-1948 and from mid-1950 to November 1951. 223

68. Some of the companies making glassine, waxed paper and other packaging papers are: 224

, . Company Material

Riegel Paper Corporation Glassine and greaseproof, waxing paper, other specialty papers

Rhinelander Paper Company Glassine and greaseproof

Westfield River Paper Company, Inc. Glassine

Deerfield Glassine Company Glassine

Paterson Parchment Paper Company ■ Vegetable parchment and greaseproof

Kalamazoo Vegetable Parchment Company Vegetable parchment and greaseproof

Marathon Corporation Sulphite and sulphate paper and paperboard

Consolidated Water Power & Paper Company Sulphite, wrapping tissue and coated papers

Fraser Companies Ltd. (owns Fraser Paper Co.) Sulphite and groundwood specialty papers

Nicolet Paper Company (subsidiary of Milprint, Inc., a major cellophane converter) Glassine 225

*71 69. There are three domestic manufacturers of cellulose acetate film: Celanese Corporation of America, duPont, and Eastman Kodak Company, and two smaller producers. 226 Celanese produces more than all others combined. 227 DuPont manufactures less than 20% of the total domestic production of cellulose acetate packaging films. 228

70. Aluminum foil is manufactured in U. S. by Aluminum Company of America, Reynolds Metals Co., Johnson Aluminum & Metal Co., Cochrane Foil Co., Republic Foil Co., Stranahan Foil Co., Kaiser Chemical & Aluminum Co., Aluminum Foils Co., and Standard Rolling Mills. 229

71. There are 300 firms in the United States manufacturing polyethylene film, 230 including Visking Corporation, Plax Corporation, Fabricon Products, Inc., duPont, and the Harwid Company. 231 DuPont manufactures less than 10% of the polyethylene film made in the United States. 232

72. Goodyear Tire and Rubber Company is the producer in the United States of rubber hydrochloride film, which Goodyear calls Pliofilm. 233 The Dow Chemical Company is" the domestic producer of Saran, and Dewey, and Almy Chemical Company is the producer of Cry-O-Rap. 234

73. All other flexible packaging materials are, like cellophane, sold direct to the packager by the manufacturer 235 and are sold indirectly through converters. 236

74. Cellophane and other flexible packaging materials are sold for packaging retail merchandise, particularly food products. 237

75. The converting business is competitive both as among converters and among alternative materials. Converters selling wraps to a certain trade compete with wraps of the same or different materials sold by other converters to the same trade, and business gained by one converter is denied to the rest. In addition, converters compete with each other in the development of new uses for packaging materials in trades where no packaging is used. 238

76. Elements of competition among converters include: price differentials, technical service to customer’s' production departments, merchandising' service to the customer’s sales departments, quality of printing or mánufacture of *72 converted products, degree of protection afforded by the converted wrap to customer’s product, advertising, direct salesmanship brought to bear upon individual customers or potential customers, and degree of cooperation that can be obtained from the manufacture of the packaging materials used by any given converter. 239

77. About 4,000 converter salesmen are engaged in selling converted flexible packaging materials to customers in the food industry and other trades. 240 Most converter salesmen sell a full line of materials, but concentrate upon a single trade. Some salesmen are specialists in the baking industry, or the meat packing industry, but each salesman sells cellophane and other flexible packaging materials to his trade. Each type of wrap may be sold separately or in combination with others, according to the needs and desires of each customer at the time. 241

78. Some of the principal converters of flexible packaging materials are:

American Paper Goods Co.

Benj. C. Betner Co.

Dixie Waxpaper Co., Inc.

Dobeckmun Co.

Fabricon Products, Inc.

Forbes Lithograph Mfg. Co.

Kalamazoo Vegetable Parchment Co.

Marathon Corporation

Munson Bag Co.

Milprint, Inc.

Nashua Gummed & Coated Paper Co.

Oneida Paper Products, Inc.

Reynolds Metals Co.

Shellmar Products Corp.

Traver Corporation

Union Bag and Paper Corp.

U. S. Envelope Co.

Waxide Paper Co.

Western Waxed Paper Co. 242

None of these companies converts cellophane exclusively.

An analysis of the 1949 sales by these companies of concerted flexible packaging materials showed cellophane to be 19.3% of the total business of these companies. The other 80.7% of their sales comprised aluminum foil, glassine, Pliofilm, polyethylene, cellulose acetate, waxed paper, sulphite, vegetable parchment, a small amount of kraft paper and all combinations and laminations of these materials. 243

79. Converters sell two or more flexible packaging materials in combination to produce a particular wrap or package. Nineteen major representative converters produced the following combinations in 1949: 244

Cellophane and Combinations

Cello MT

Cello PT

Duplex Cello MT

Coated Cello, MT

Cello MT & Glassine, Window Type

Duplex Cello PT

Cello MT & Kraft, Window Type

Cello PT & Kraft, Window Type

Laminated Cello MT

Coated Laminated Cello MT

Duplex Cello MT & Glassine

Cello MT & Vellum, Paper Window Type

Laminated Cello MT to Foil

Laminated Cello MT to Kraft

Cello PT & Greaseproof, Window Type

Laminated Cello MT to Waxed Sulphite

*73 Laminated Cello MT to Opaque Glassine

Miscellaneous Cellophane Combinations

Foil and Combinations (Except with Cellophane)

Foil

Laminated Foil to Tissue

Laminated Foil to Waxed Tissue

Laminated Foil to Glassine

Laminated Foil to Bond

Laminated Foil to Glassine to Coated Foil

Laminated Foil to Acetate

Laminated Coated Foil to Parchment

Laminated Coated Foil to Tissue

Laminated Foil to Kraft

Laminated Foil to Tissue to Tissue

Laminated Foil to Parchment

Laminated Foil to Acetate to Pliofilm

Miscellaneous Foil Combinations

Laminated Foil to Sulphite

Glassine and Combinations (Except with Cellophane or Foil)

Glassine

Waxed Glassine

Laminated Glassine

Duplex Glassine & Kraft

Duplex Glassine & Bleached Kraft

Laminated Glassine to Kraft

Duplex Waxed Glassine

Coated Glassine

Duplex Laminated Glassine & Bleached Kraft

Duplex Glassine

Duplex Laminated Glassine & Kraft

Opaque Glassine

Waxed Laminated Glassine

Duplex Glassine & Sulphite

Laminated Glassine to Opaque Sulphite

Duplex Waxed Glassine & Sulphite

Triplex Glassine & Kraft & Kraft

Miscellaneous Glassine Combinations

Films and Combinations (Except with Cellophane, Foil, Glassine or Other Papers)

Pliofilm

Polyethylene

Cellulose Acetate

Coated Pliofilm

Visten 10

Vinyl

Laminated Pliofilm

Miscellaneous Synthetic Films

Papers and Combinations (Except with Cellophane, Foil or Glassine)

Waxed Bleached Sulphite

Waxed Opaque Sulphite

Waxed Kraft

Parchment

Sulphite

Kraft

Waxed Clear Transparent

Moldproofed Sulphite

Bleached Kraft

Kraft & Mesh, Window Type

Waxed Parchment

Waxed Twisting

Laminated Waxed Sulphite

Dry Waxed

Waxed Manila

Greaseproof

Duplex Kraft

Laminated Sulphite

Waxed Tissue

Duplex Kraft & Waxed Kraft

Waxed Opaque Twisting

Manila

Casein Coated Sulphite

Tissue

Duplex Wet Strength Kraft

Duplex Kraft & Asphalt Laminated Kraft

Duplex Kraft & Bleached Kraft

Coated Sulphite

Laminated Waxed Sulphite to Tissue

Waxed and Treated Sulphite

Laminated Waxed Manila

Triplex Kraft & Kraft & Kraft

Asphalt Laminated Sulphite

Waxed Bleached Kraft

Miscellaneous Papers

*74 $V 'DuPont Competed by Research 'to ■ Improve Quality and Lower Cost.

(Findings 80-122)

80. When duPont commenced sale of cellophane, it was not of a quality which would enable it to compete for flexible packaging business. Cellophane was brittle, not available in the roll form essential for machine ■ packaging operations, non-moistureproof. 245 It was necessary for duPont to engage in research to overcome these deficiencies, and, as they were overcome to continue research looking toward a quality improvement so cellophane would remain competitive with other flexible packaging materials in meeting the requirements of buyers of flexible packaging materials. 246

81. DuPont did not engage in cellophane research with the intent of monopolizing the manufacture of cellophane. 247

82. In duPont organization there were no chemists skilled in viscose chemistry. Research facilities were inadequate and research chemists were difficult to find. 248

83. DuPont by research 249 improved efficiency of its manufacture, 250 reduced cost of production, 251 improved quality of cellophane, 252 and developed new types. 253

DuPont cellophane technical activities expense totalled $24,361,065 during the period 1924-1950. Annual amounts expended for such activities by duPont increased : 254

1924 ......................$ 9,139

1931 ...............'...-....... 471,374

1939 ..................-..... 793,195

1944 ' . .v.......... 1,131,790

1949 ................-....... 2,289,507

1950 ........................ 2,782,706

84. Research projects by duPont originate in problems of sales group, from production problems in plants, or as idea of one of the. research men. Research relating to specific problems was discussed with sales, technical and production management in Wilmington before projects were-approved. 255

85. The purpose of duPont’s research has been to enable it to improve profits and to compete with other manufacturers of flexible packaging materials, including other makers of cellophane, by reducing cost, improving quality and developing types of moistureproof cellophane designed to meet specific packaging needs. 256 This research has involved developments at all stages of the manufacturing processes, and improvement in every phase of cellophane quality. 257

86. Cellophane and other flexible packaging materials are sold to and used interchangeably on packaging- machines and converters' equipment. DuPont's efforts by research to improve quality and broaden cellophane markets not only gave impetus to cellophane sales but also stimulated improvements in other materials and caused improvement in utility *75 and acceptance of flexible packaging materials generally. 258

87. DuPont’s research to improve quality of cellophane was for purpose of enabling it to meet competition of waxed paper and glassine, and its research to reduce costs of cellophane manufacture was for purpose of lowering costs so prices might be reduced and markets broadened. 259

88. DuPont did not engage in research for purpose of blocking competitors. DuPont’s research has not been channelled into any emphasis for anti-competitive reasons. 260

89. Results of duPont’s research are reflected in manufacturing efficiency of film, and solution of problems in the use of cellophane. Following are illustrations typical of these various results.

(a) Quality: Uniformity of sheet flatness, which is essential to printing; and uniformity of film thickness, which is essential to production of rolls that will handle on high speed machines. 261

(b) Manufacturing Efficiency: Average pounds cast per casting machine day increased from 3,292 in 1931 to 9,963 in 1950; maximum casting machine speeds increased from 30 meters per minute in 1932 to 120 meters per minute in 1952; average pounds coated per coating tower day increased from 3,-956 in 1931 to 15,371 in 1950; finishing waste dropped from 15.7% in 1924 to 3.5% in 1950, 262 and solvent -recovery in-, creased from 83% to 97%. 263

(c) New Types: ■ Basic moistureproof-' cellophane; moistureproof coatings with; greater resistance to passage of moisture; types of moistureproof cellophane-tailored for dry or humid climates;’’ types with coating anchored to permit use on wet products; special formula-: tions of moistureproof ' cellophane for ■ fresh meats, differing types of breads ■ and candies, milk bottle hoods and other specialized types. 264

(d) Solution of Problems in the Use of ■ Cellophane: Development of adhesives’ for sealing moistureproof cellophane; • heat-sealable coatings; improvement of-slip and other machine running characteristics; determination of type best’ suited for a particular product; deter-' mination of qualities in a wrap for a new product. 265 Research work on the ex-; ampies given in most cases was conducted over a number of years. 266

90. High speed packaging machines' require material in roll form for continuous operation. 267 Uniformity of the-rolls is important at all speeds and be-’ comes critical as speeds of the packaging' machines increase. 268

. 91. When duPont began production’ of cellophane, packaging machinery was’ in existence that handled waxed paper and glassine satisfactorily. 269 Such machinery would not handle cellophane. 270 *76 Shortly after the start of its manufacture of cellophane, duPont promoted development and use of packaging machinery that could handle both cellophane and other flexible packaging materials interchangeably. 271 This program included work with the manufacturers of packaging machinery to assist them with problems created by the attempt to use cellophane on their machines, 272 promotion of use of such machinery for cellophane by customers, 273 and technical service to customers who encountered difficulty in use of cellophane on packaging machinery. 274 The work was done by a group of mechanical engineers employed and retained by duPont. 275 DuPont’s work in the development of packaging machinery and its use has contributed to the growth of sales of cellophane. 276

92. Mechanization of wrapping enabled duPont to obtain new cellophane customers, in industries where cost of hand wrapping prohibited use of the material. 277

93. When duPont commenced manufacturing cellophane the product was not of adequate quality for sale in roll form. Since cellophane has a thickness of 1/1000 of an inch, when wound in commercial rolls of 9" outside diameter, consisting of thousands of layers of film, irregularities of thickness in cellophane as then manufactured created a lumpy, unusable roll. DuPont recognized need for roll cellophane if sales in volume were to be obtained. 278 The characteristic of cellophane for sales in rolls is uniformity of gauge to fine tolerance.

DuPont offered rolls in 1925. 279 By 1930 approximately 50% of its production was sold in roll form. 280 Not much of the production in that period would be salable today for slit rolls. 281 Currently, duPont sells 90% of its production in roll form. 282

DuPont’s development of quality rolls was for the purpose of increasing sales, and had that effect. 283

94. DuPont’s development of moistureproof cellophane was stimulated by duPont’s inability to sell non-moisture-proof cellophane in competition with waxed glassine and waxed paper for wrapping cookies, crackers, candies, biscuits and baked goods. 284

95. DuPont still strives to improve quality of its product and reduce cost of production by the application of research to its manufacturing processes. 285

96. DuPont’s sales efforts increased competition between flexible packaging materials. Through technical research and market analysis, and development of new types of film duPont was able to penetrate markets previously dominated by other materials, and to enter markets that did not use flexible wrapping materials. This stimulated technical developments by other producers of flexible wrapping materials to produce new types that would better compete in the same markets. General development of the market of flexible wrapping materials has stimulated development of new types of films. 286

*77 97. DuPont after years of development produced a type of cellophane that would retain, the natural color of fresh meat for the necessary period of sales life. In 1947, when this film was introduced, Pliofilm was unsuitable for wrapping fresh meat. 287 After duPont’s success, Goodyear was stimulated to research which resulted in development of a type of Pliofilm satisfactory for fresh meat packaging. 288 Fresh meat became one of the most important markets for Pliofilm. 289

98. Cellophane has been successful as a packaging medium. Continued success in the sale of cellophane for pack-, aging depends upon further research to improve quality. 290

99. Plain cellophane was not suitable for wrapping where moisture protection was necessary. 291 DuPont’s experience in attempting to sell plain cellophane for packaging such products as hard candies and bakery goods confirmed plain cellophane could not compete for these uses. 292 In 1924, the same year it began • production of plain cellophane, duPont commenced research to discover moistureproof cellophane. 293 This work was successful and experimental production of moistureproof cellophane began by 1926. 294 Prices for moistureproof cellophane were regularly listed for the first time in November, 1928. 295 The basic product patent on moistureproof cellophane, U. S. Patent No. 1,737,187 was issued on November 26, 1929. 296

100. Invention of moistureproof cellophane enabled sales to customers who were mass producers of low cost products requiring moisture protection. 297 These included most foods and tobacco products., Earliest of such industries was the cigarette and cigar industry, which' in the early 1930’s changed to cellophane 298 as a protective wrapper in place of waxed glassine and other materials previously used. 299

101. After invention of moisture-proof cellophane much of duPont’s research was directed to improvements of the basic product moistureproof cellophane. 300 Forty different types of moistureproof cellophane were developed by duPont. 301 Research work connected with moistureproof cellophane included development of adhesives, 302 development of coatings that could be sealed by heat without the use of adhesives, 303 development of anchoring the coating, 304 and development of coatings with special characteristics required by different *78 products. 305 DuPont was issued patents from time to time on various of its inventions. 306 Validity of patents is not challenged. 307

102'. DuPont developed over fifty types of cellophane tailored for end uses. 308 For example, different types are manufactured for fresh vegetables, 309 for cigarettes, 310 for hot hard candies, 311 for cold hard candies, 312 for wet products, 313 for frozen products, 314 for prepared meats, 315 and for fresh meats. 316

103. Since entering cellophane, duPont has produced 174 varieties of cellophane. 317 In 1949, duPont made sales of 108 different varieties of cellophane. 318

104. Original moistureproof cellophane could not be sold for mass-produced bakery products, 319 which were packaged by machines in heat sealing materials, especially waxed paper and waxed glassine. 320 Moistureproof cellophane, since not sealable by heat, would not work on these machines. 321 Adhesives necessary to seal moistureproof cellophane had an objectionable reaction on bakery products. 322 DuPont research developed a heat sealing moistureproof cellophane by 19 32. 323 This enabled penetration of the bakery industry to which duPont had been unable to sell in volume. 324 During 1933 duPont direct sales to that industry amounted to 4,500,000 lbs. 325 and in 1934 to 7,000,000 lbs. 326 This increased over 13,000,000 lbs. in 1937, and continued to grow. 327 The bakery industry is now the largest single consumer of cellophane, accounting for 52,700,000 lbs. of duPont cellophane in 1949. 328

105. Moistureproof coatings unless anchored have tendency to slough off in the presence of considerable moisture, 329 and unanchored moistureproof film is unsuitable for packaging such products as frozen foods and fish, fresh produce, and meats. 330 Research on anchoring the coating was undertaken by duPont in 1928 to obtain a film adaptable to such uses. 331 DuPont’s research resulted in an anchored coating, 332 and research has continued for the purpose of improving quality of product and reducing cost of its production 333 A further development by duPont of a film for fresh meat opened that market to cellophane. 334 Du *79 Pont’s research oh anchoring the moistureproof coating led to substantial improvement in duPont’s sales. 335

106. Development of anchoring for the moistureproof coating on duPont cellophane was stimulated by loss of business to glassine, resulting from loss of cellophane’s moistureproofness when the coating came into contact with greasy or wet products. 336

107. Manufacturing process obtained by duPont from the French was sound from engineering standpoint. 337 However, duPont made improvements by placing the process under control for quality purposes, improving machine efficiencies and redesigning machines to enable more continuous operation. 338

108. DuPont by its efforts made improvements in the efficiency and cost of each step in the manufacture of plain cellophane and of moistureproof cellophane. Phases of manufacture át which improvements were made include steeping the wood pulp, shredding the pulp into alkali cellulose, ripening the ■ alkali cellulose, xanthation, mixing xanthate with caustic soda to form into viscose, control and design of easting hopper and lips, handling of film through baths of the casting machine, design of rolls, drying film, application and drying of moistureproof coatings, recovery of solvent, and slitting of finished film into commercial rolls. 339

109. The amount of raw materials required to make one-pound of cellophane has been reduced as follows:

wood pulp ......................20% caustic soda.............. 40% carbon bisulphide................33% sulphuric acid...................60% 340

Finished product output per payroll hour has been increased 380%. 341

Finished'waste has been reduced from 15.3% to 3.5%. 342

; Maximum casting speeds have increased from 30 meters per minute to Í20 meters per minute in 1952. 343

Speed of film in the coating towers has increased from 30 meters per minute to upwards of 200 meters per minute. 344

- Solvent recovery has been increased from 83% up to 97%. 345

The speed at which rolls are slit increased from 150 feet a minute to 1,000 feet a minute. 346

DuPont’s productive capacity in 1941 for 56 machines was 110,000,000 pounds, while in 1952 with the same number of machines, its production capacity was 218,000,000 pounds. 347

The average pounds of film produced per casting machine day by duPont increased from 3,292 in 1931 to 5,698 in 1944 and 9,963 in 1950. Average pounds of film coated per coating tower day by duPont increased from 3,956 in 1931 to 8,107 in 1944 and 15,371 in 1950. 348

All of this indicia of the efficiency of manufacture is .persuasive. 349

110. .In the last two years there has been one lost time accident among the 4,000 employees in duPont’s cellophane *80 plants, despite the existence of dangerous elements in cellophane manufacture. 350

111. Since duPont commenced manufacture of cellophane, it has carried out laboratory analyses of flexible packaging materials which compete for the same end uses as cellophane. These tests cover physical and chemical properties that are important in packaging. 351 They are not made with any anti-competitive intent, but for the purpose of appraising the characteristics of competing materials as a guide to improvements in duPont’s products. DuPont tries to maintain as high performance in its cellophane, relative to the performance of other flexible packaging materials, as it can. 352

112. Since invention of moisture-proof cellophane duPont has improved cellophane as to uniformity of gauge, degree of moistureproofness, ease of heat sealing, reduction of the brittleness of the film when exposed to humidity changes, and facility of operating of cellophane on high speed presses and converting and packaging machinery. 353

113. Waxed paper, glassine, Pliofilm, foil, Saran polyethylene and other flexible packaging materials have been improved for packaging use in the last 20 years. These improvements include strength, printability, ease of use on packaging machinery and variation of characteristics to serve specific uses. 354 Competition of cellophane has stimulated these improvements in other flexible packaging materials. 355

114. Improvements with respect to glassine since 1924 include:

1. An increase in strength, both bursting strength and strength when wet. 356

2. Improvement in flexibility and folding qualities so as to make it less brittle and more acceptable as a wrap for a small merchandise where creases and corners in a wrap occur. 357

3. Development and improvement of more transparent types. 358

4. Development and improvement of new coatings for glassine to provide better protection against moisture, grease, vapors, etc. 359

5. Improvement of printing. 360

6. Improvement of transparency. 361

7. Improvement in variety of types produced for- different packaging use. 362

115. Improvements in waxed paper since 1924 include:

1. Development and improvement of translucent types of waxed sulphite. 363

2. Development and improvement of highly opaque types of waxed paper for better background to printing. 364

*81 3. Development of hard crystalline waxes which are not sticky, will not rub off, and are glossy. 365

4. Development and improvement of process printing methods which enable highly decorative effects, including direct color photographic reproductions, to be obtained with waxed paper wraps. 366

5. Improvement of moisture resistance. 367

6. Improvement of ease and strength of seal. 368

116. Polyethylene film produced had disadvantages in limpness, sealability, printability and other factors. 369 Many of these deficiencies could be corrected through research, 370 and were. 371 These improvements made it an effective competitor for uses previously served by cellophane and other flexible wrapping materials. 372

117. Although duPont in January, 1949, thought cellophane was secure against competition from other transparent films for self-service merchandising of fresh meat, luncheon meats, and fresh produce, 373 in fact Goodyear in 1950 developed a type of Pliofilm satisfactory for fresh meats, which became a major Pliofilm market. 374 Polyethylene and cellulose acetate were being improved, and making increased penetrations in the fresh produce field. 375 DuPont’s development of specialized types for self-service selling of meats and fresh produce gave it a start over other materials, but improvements in the other materials enabled them to capture part of these markets from cellophane.

118. Saran, Pliofilm and polyethylene when first on the market were difficult to heat seal and run on packing machines, but are now heat sealed and mechanically run on a commercial basis on commonly used equipment. 376

119. Qualities of types of Pliofilm have been improved since its appearance in the 1930’s. 377 Odor has been eliminated, and the film has been made durable at low temperatures. 378 Important to Pliofilm sales are improvements in adaptability of machines to convert and package with Pliofilm. 379 Types have been developed that enabled penetration of new markets, notably fresh meat and dried fruit packaging. 380

120. Cellulose acetate has been improved as to toughness of film. Improvements have been made in handling cellulose acetate film mechanically to avoid generation of static electricity. 381 Heat sealing cellulose acetate film is now under development. 382

121. Sales of cellophane bags are vulnerable to competition from polyethylene. 383

*82 122. Other manufacturers of flexible packaging materials engage in research to improve their products and sales. DuPont does not have power to subvert use or to engross trade secrets and technical knowledge either as to cellophane or as to flexible packaging materials. 384

VI. DuPont Competed by Lowering Prices.

(Findings 123-149)

.123. The objective of duPont was to reduce price to a level where cellophane could compete with other flexible packaging materials. Price of cellophane in relation to prices of other flexible packaging materials was such that only luxury items would use it as a wrap. It was necessary to develop volume, lower cost and improve quality and bring the price of cellophane down to a point where it would receive acceptance in the packaging markets. DuPont sought a low profit per unit of sale in effort to achieve lower prices which would develop volume sales and increase profits. 385

124. From start of production of cellophane in 1924 until 1947 duPont made 21 price reductions which lowered price of plain cellophane (300 gauge) per pound from $2.65 to 330. 386 During period from the first commercial offer of moistureproof film to 1947 duPont reduced the price per pound (300 gauge) from $1.60 to 410. 387 Since 1947 duPont’s prices for these types have increased to 490 and 510, respectively, as of December 35, 195 0. 388

125. Above price reductions cellophane customers enjoyed reductions in cost of using duPont cellophane during the period 1924 to date as the result of improvement in quality of duPont cellophane 389 without any increase in price per pound. 390

126. Annual average prices received by duPont per pound of cellophane sold have been: 391

Year Average Price

1924 ' 2.508

1925 1.927

1926 1.713

1927 1.431

1928 1.211

1929 1930 1.066 .863

1931 .643

1932 .556

1933 .504

1934 .481

1935 .431

1936 .413

1937 .415

1938 .416

1939 .398

1940 .380

1941 .382

1942 .396

1943 .404

1944 .419

1945 .416

1946 .401

1947 .419

1948 .460

1949 .483

1950 .490

127. DuPont’s price reductions were made by improvement, in .efficiency of manufacturing and by increased volume *83 of sales attained by improvements in the quality of duPont’s cellophane. 392

128. All types of duPont moisture-proof cellophane are sold at prices different from those of duPont plain cellophane. 393

129. ' Types of duPont moistureproof cellophane are sold at different prices, and have different characteristics. 394

130. 1949 average wholesale prices of flexible packaging materials in the United States were: 395

Packaging Material Price per 1,000 sq. in. (cents) Price per lb. (cents) Yield per. lb. (sq. in.)

Saran 100 Gauge #517....... 6.1 99.0 16,300

Cellulose Acetate .00088" ............... 3.3 82.0 25.000

Polyethylene .002" — 18" Flat Width.. 5.4 81.0 15.000

Pliofilm 120 Gauge N 2........ 3.8 80.8 21.000

Aluminum Foil .00035" ............... 1.8 52.2 29,200

Moistureproof Cellophane 300 MST-51 .......... 2.3 47.8 21,000

Plain Cellophane 300 PT............... 2.1 44.8 21,500

Vegetable Parchment 27# .................. 1.4 22.3 16,000

Bleached Glassine 25# .................. 1.0 17.8 17.280

Bleached Greaseproof 25# .................. .9 15.8 17.280

Plain Waxed Sulphite 25# Self-Sealing ..... ' 1.1 15.2 14,400

Plain Waxed Sulphite 25# Coated Opaque ... .7 11.9 17.280

Cry-O-Rap ............. . Sold only in converted form, converted quotations. No un-

131. December 15, 1950, the latest date for which list prices are in the record, duPont’s price for 300 gauge moistureproof heat sealing cellophane was 51# per lb.; for 300 moistureproof heat sealing anchored cellophane, 59^ per lb.; for 300 gauge non-moistureproof cellophane, 49?5 per lb.; ■ and for 300 gauge non-moistureproof rancidity resistent colored cellophane, 67?! per lb. 396

132. The price of cellophane is today an. obstacle to its sales in competition with other flexible packaging materials. 397

*84 133. Cellophane has always been higher priced than the two largest selling flexible packaging materials, wax paper and glassine, and this has represented a disadvantage to sales of cellophane. 398

134. DuPont considered as a factor in the determination of its prices the prices of waxed paper, glassine, greaseproof, vegetable parchment, and other flexible packaging materials. 399

135. DuPont, in reducing its prices, intended to narrow price differential between cellophane and packaging papers, particularly glassine and waxed paper. 400 The objective of this effort has been to increase the use of cellophane. Each price reduction was intended to open up new uses for cellophane, and to attract new customers who had not used cellophane because of its price. 401

136. The ratio between moisture-proof cellophane prices and glassine prices, and between moistureproof cellophane and waxed paper prices, diminished during 1929-1949. In January, 1929, the price of MT cellophane was seven times that of glassine; in June, 1934, 4 times the price of glassine and 4% times the price of waxed paper. In January, 1949, MST cellophane price was little more than twice that of glassine, and only twice that of waxed paper 402

137. Relationship between prices for various types of cellophane and prices for various types of glassine affects ability of the producers of the respective materials to sell their products. 403

138. DuPont’s proportion of the United States production of flexible packaging materials has increased in almost direct relation to the steady decrease of the ratio of cellophane prices to glassine and waxed paper prices. 404

139. Steady narrowing of price gap between cellophane and glassine and waxed paper enables duPont to get new marginal business from time to time, i. e., accounts who had previously not used cellophane because of its relatively high price compared to the price of waxed paper and glassine. 405

140. Some users are sensitive to the cost of flexible packaging materials; 406 others are not. 407 Users to whom cost is important include substantial business: for example, General Foods, Armour, Curtiss Candy Co., and smaller users in the bread industry, cracker industry, and frozen food industry. 408 These customers are unwilling to use more cellophane because of its relatively high price, 409 would use more if the *85 price were reduced, 410 and have increased their use as the price of cellophane has been reduced. 411

141. The cost factor slips accounts ■away from cellophane. This hits at the precarious users, whose profit margins •on their products are low, and has been put in motion by competitive developments in the user’s trade. Examples in-•elude the losses of business to glassine in candy bar wraps in the 30’s, 412 frozen food business to waxed paper in the late 40’s, 413 and recent losses to glassine in cracker packaging 414

142. The price of cellophane was reduced to expand the market for cellophane. DuPont did not reduce prices for cellophane with intent of monopolizing manufacture or with intent of suppressing competitors. 415

143. DuPont reduced cellophane prices to enable sales to be made for new uses from which higher prices had excluded cellophane, and to expand sales. Reductions were made as sales volume •and market conditions warranted. In •determining price reductions, duPont considered relationship between its manufacturing costs and proposed prices, possible additional volume that might be gained by the price reduction, effect of price reduction upon the return duPont would obtain on its investment. It considered the effect its lowered price might have on the manufacture by others’ but this Possible result of a price reduction ^was never a motive for the reduction. 416

144. DuPont never lowered cellophane prices below cost, and never dropped cellophane prices temporarily to gain a competitive advantage 417

145. As duPont's manufacturing costs declined, 1924 to 1935, duPont reduced prices for cellophane. 418 When costs of raw materials increased subsequent to 1935, it postponed reductions until 1938 and 1939. 419 Subsequent increases in cost of raw material and labor brought about price increases after 1947. 420

146. During period 1932-35, duPont made reductions in cellophane prices, but was unable to sell productive capacity of its cellophane plants. 421

147. In May 1930, it made an announcement of a reduction and of further reductions to be effective in August and October. 422 DuPont’s principal reasons for advance announcement were to influence consumers to use up their inventories rather than to place further orders, since new productive capacity was expected to come into operation in *86 October, 1930, and to stimulate interest on the part of users who were not interested in cellophane at the current price but would be interested in anticipation of lower future prices. The advance announcement would give anyone contemplating cellophane manufacture notice of duPont’s idea of the proper price level. 423 The price reductions made by duPont in August and October 1930 were greater than had been announced in advance. 424

When a second advance announcement was suggested in 1936, management rejected the suggestion because business conditions which impelled the 1930 announcement did not exist; i. e., in 1936 customers were purchasing only for immediate use, and not to build up inventory. 425

148. Same individuals were the prin-' cipal duPont executives in duPont Rayon Co. and duPont Cellophane Co. 426 Same policies of improving quality, lowering cost of production, and reducing unit price to gain greater volume of sales were followed as to both companies. 427

149. When duPont commenced manufacture of viscose rayon, it made a low percentage of the United States output, and for years its percentage of domestic sales was 20%. During that period its price policy for rayon was the same as for cellophane, which was the more the price could be reduced within limits the more of the article could be sold. 428

VII. Competition Between Cellophane and Other Flexible Packaging Materials.

(Findings 150-278)

150. DuPont has promoted sale of cellophane for packaging material for products previously wrapped in other materials or not packaged. Growth of cellophane industry has been due to development of new uses, rather than an increase of volume in established uses. 429 The baking industry, the tobacco industry and the meat industry, each of which accounted for less than 2% of the small total sales in the early years, have become end uses of major importance, consuming millions of pounds annually. 430

151. DuPont did not promote the sale of cellophane with intent of monopolizing the manufacture and sale of cellophane, or with intent of monopolizing the manufacture and sale of flexible packaging materials. 431

152. DuPont promoted use of cellophane under an idea of developmental sales. DuPont acted on belief to increase volume of cellophane sales it was necessary to promote it for uses where advantages to the user were sufficient to offset the price advantage of competing flexible packaging materials. From selling standpoint, duPont’s implementation of the developmental concept involved these activities: 432

(a) Reduction of price per pound to reduce cost of cellophane. 433

*87 (b) Development of packaging machinery and promotion of its use to reduce cost of application of cellophane. 434

(e) Detailed study of the products and distribution practices of industries that appeared to be potential volume users, in order to determine what characteristics . cellophane would require to function effectively, and to determine in what ways cellophane could justify its cost by increasing sales of product, reducing distribution costs for product.- 435 •

(d) Packaging development -service to assist customers in designing practical packages with cellophane. 436

(e) Technical services to assist customers in solving problems created by the use of cellophane. 437

(f) Market studies to determine purchasing habits of retail consumers of packaged products. 438

(g) Marketing studies to. determine effect on sales of packaging a given product in cellophane. 439

(h) Consumer advertising to popularize products packaged in cellophane. 440

(i) Sales and technical assistance to converters engaged in the manufacture and sale of cellophane processed for packaging purposes. 441

153. To . increase use of cellophane duPont urged installation by customers of packaging machinery, wrapping and bag making machines. Use of such machines lowered cost of using cellophane, and tended to increase amount used. Purpose of such promotion by duPont of the use of packaging machinery was to lower the cost of packaging with cellophane and to enable cellophane to compete with other materials and to encourage use of cellophane by various types of customers. 442

154. DuPont provided service to machine use of cellophane to users and prospective users without imposing obligation they purchase duPont cellophane, and without regard to size of possible purchases. Such services were rendered to persons using only Sylvania cellophane, to persons using both duPont and Sylvania cellophane, and to ■persons using no cellophane at all. 443

155. Users of flexible packaging materials redesign packages seeking new ways of advertising their products, increasing protection or reducing cost. All manufacturers of such materials compete by rendering in varying degree technical services to these users including aid in package design, 444 development of material to meet special needs. 445

156. DuPont considered as part of the future market for cellophane much of the business enjoyed by waxed paper and glassine. This is reflected in estimates by duPont of the potential for cellophane- sales. 446

157. In uses which account for 75% of'duPont cellophane sold (packaging in food industries, textiles, paper goods, tobacco products) cellophane competes with . aluminum foil, cellulose acetate, Cry-O-Rap, greaseproof paper, glassine, Pliofilm, polyethylene film, Saran, sulphite paper, vegetable parchment and *88 waxed paper. DuPont cellophane competes with waxed paper and glassine, and with one or more of the balance of these materials in every subdivision of the food industry. 447

158. Cellophane is forced to meet competition of other flexible packaging materials. The competition between the materials is intense and duPont cannot exercise market control or monopoly powers.

159. These are elements considered by users of flexible packaging materials in the selection of a material:

1. Type of protection the contents of the package will require, e. g., protection against dirt, handling, moisture transmission, flavor contamination, etc. 448

2. Degree of protection required. 449

3. Facility of materials that satisfy considerations to run on the type of machinery operated by the user of the material. 450

4. Degree of tradition of a certain package appearance. This must be judged by the user of the material against the nature of the market in which he sells his product. 451

5. Degree of merchandising appeal. 452

6. Economy offered by various materials. Both the selling price of materials and economies or expenses resulting from their use must be weighed. 453

160. Packaging application presents problems arising from the nature of the product to be wrapped. 454

161. Manufacturer of packageable products has a choice of materials from which to choose. Purchase price, cost of application, service available, and functional qualities of each material are factors which control choice, and control volume of material that can be sold in competition with others. 455

162. Throughout the period of sale of cellophane, it has been at a price disadvantage as against flexible packaging materials of other kinds. Evidence is throughout the period of duPont Manufacture and sale of cellophane the price of cellophane, including both purchase price and cost of use, has been a factor in its competition with other flexible packaging materials. 456

*89 163. Evidence is throughout the period of duPont manufacture and sale of cellophane, it has competed with other flexible packaging materials on the basis of the composite physical properties of each material and the degree of each such property. 457

*90 164. Throughout the period of duPont sale of cellophane, as result of operation of competitive factors as between duPont cellophane and other flexible packaging materials, duPont cellophane has gained part or all of the packaging *91 business of certain' specific accounts from other flexible packaging. materials and vice versa. Evidence is shifts of business between duPont cellophane and other flexible packaging materials'have been frequent, continuing and contested. 458

*92 165. Identical consumer products of a producer are available on the market at the same time in different packaging materials. Illustrations of this situation *93 in the market include products such as bread, 459 candy, 460 Campfire marshmallows, 461 M & M candies, 462 Beechnut gum, 463 Kleenex, 464 Armour’s bacon, 465 General Food’s coconut, 466 and varieties of National Biscuit Company’s cookies. 467

166. As cellophane sales increased it was useful in packaging operations of smaller companies. In 1950 duPont had 5,000 customers of which only 2% were large companies, such as national bakers, cigarette manufacturers, major meat packers, etc. 468

167. Glassine 469 and waxed paper 470 are both made in a number of varieties. These types vary in transparency, opacity, moistureproofness, price, gloss, and sealability. Additional varieties are engineered for specific customers on particular orders. 471

168. Glassine offers a degree of transparency greatest per unit of cost of all packaging materials. Its degree of transparency is all that is needed and its cost is low. 472

169. Glassine and greaseproof papers compete with other wrapping and packaging materials. Cellophane is the product with which they compete directly. 473

170. Glassine and greaseproof papers are sold on the ability of the different types to furnish protective packaging for various products. This is the same approach as that of selling moisture-proof cellophane. 474

171. Eye appeal in the flexible packaging business is any appearance that arrests the eye. It is not transparency and luster of the wrap. It is obtained by printing to achieve a colorful wrapper. 475

*94 . 172 From 1924, duPont engaged in developmental selling program for the bakery industry. 476 This work contributed to duPont’s volume of sales to that industry, which has become its largest outlet. This creative selling involved:

(1) Invention of moistureproof cellophane, followed by development of a heat sealing type and of special types for different bakery products. 477

(2) Work with bakeries and machinery manufacturers to modify wrapping machines to handle cellophane and service the use of cellophane on such machines. 478

(3) Development of standard formulae for sweet dough and promotion of manufacture of sweet dough goods by bakers. 479

(4) Market research as to distribution of bakery products in retail stores and by house to house trucks. 480

(5) Engineering work on. mechanization of soft cake manufacture and on machines to wrap soft cake in cellophane or other wraps. 481

(6) Studies of the characteristics- of particular bakery products, such as doughnuts, to determine what characteristics cellophane must have to package them satisfactorily 482

(7) Comparative studies of the efficiency of cellophane, waxed paper and glassine as a wrap for bakery products. 483

(8) Energetic customer by customer selling. 484

SPECIFIC USES.

1. White Bread.

(Findings 173-189)

173. DuPont undertook promotion of cellophane for white bread in the early 1930’s and has been selling cellophane for white bread since 1933. 485 It is used to some extent for that purpose in every section, of the country. 486 DuPont’s progress has been salesmanship rather than meeting spontaneous demand, since the disadvantage of cellophane’s higher initial cost over waxed paper must be overcome by sales arguments that emphasize its ability to increase sales and the hidden savings which result from its use. 487 In 1951 duPont sold between 8,000,000 and 9,000,000 pounds of cellophane for white bread. 488

174. For packaging of white bread the wrapping material used besides moistureproof cellophane is waxed paper. Some waxed glassine is also used. 489 Waxed paper was being widely used for wrapping white bread when cellophane was first sold for this purpose. 490 Plain cellophane is not a satisfactory wrap for baked goods. 491

175. Principal obstacle to be overcome by duPont in selling moistureproof cellophane for the packaging of white bread was its price in relation to waxed *95 paper and glassine. Depending on how the materials were used, cellophane bread wraps cost in the early 1930’s between three to five times the cost of waxed paper and from two and one-half to four times the cost of glassine. The low profit margin on white bread and the competition between bakers made the higher cost of cellophane a serious obstacle. 492

176. A deterrent to use of cellophane by a white bread baker was the lack of wrapping equipment which could mechanically apply cellophane. To use cellophane the baker had to wrap it by hand which increased his costs, or convert existing equipment to handle cellophane, or invest as much as $3,000 in a new wrapping machine designed to handle cellophane as well as the papers. 493

177. To minimize difficulty of wrapping white bread in cellophane on wrapping machines, duPont salesmen in the thirties made efforts at adapting bakers’ installed wrapping machines to handle cellophane, by modifying the behavior of the machine by piano wire. 494 DuPont engineers contributed to the development of machines which would handle cellophane or waxed paper with equal efficiency by adjustment. 495

178. Another deterrent to use of cellophane by a baker to wrap white bread was the inferior durability of cellophane and its tendency to shrink and break in dry or cold weather. 496

179. One selling point made by duPont promoting its cellophane for use in the white bread trade was its moisture protection. Many bakers found waxed paper provided adequate protection against moisture during the 48 hour turnover period allotted to white bread and did not believe there was need for moistureproofness in any greater degree. 497

180. In the thirties, duPont emphasized transparency of cellophane as a selling point. Many bakers believed glassine when wrapped closely about a loaf of- bread was sufficiently transparent to enable their product to be inspected through the wrap. Others considered transparency a disadvantage. 498

181. In the thirties white bread bakers were accustomed to the distinctive appearance of a bread wrap in their advertising. Waxed paper lent itself more readily than cellophane to the advertising practices of that trade. 499

182. To sell cellophane to white bread bakers in the face of its disadvantages vis-a-vis waxed paper and glassine, duPont had to develop a sales method which minimized high price-of cellophane. This method was to analyze distribution, production, selling costs of the baker and to associate suggested reductions in these costs with the use of higher priced cellophane.

DuPont salesmen would discover a baker who was a prospective customer, had an attenuated distribution route, and was making a low return because of high distribution costs per dollar of sale on that route. The salesmen would plan a rerouting for the baker in an effort to gain a greater volume of sale on a shorter distribution route, and tie it to the argument cellophane wraps on his white .bread would gain for him a greater volume of sale on a -shorter route. DuPont salesmen would find improper production methods in the baker’s plant produced a high proportion of badly sealed waxed paper wrappers. These loaves could not be sold either because of the appearance of the unsealed wrap or be *96 cause the loaf would get stale. DuPont salesmen would inspect the production methods, suggest methods to improve the sealing of the wraps, and seek to persuade the baker cellophane as the wrap would produce this greater efficiency and lower production cost. 500

188. DuPont’s sales methods for promoting the use of cellophane for white bread met with success and white bread bakers were induced to use cellophane wraps for part or all of their white bread in lieu of the previously used waxed paper or glassine wraps. Many bakers switched to cellophane from waxed paper or glassine and then shifted back, having lost money either because the higher cost cellophane wraps did not increase their volume of sales or because the baker overestimated the amount of increase he could get by using cellophane and lost money on large unsold production. 501

184. White bread bakers shift from cellophane to waxed paper or glassine because of changes in the level of price of ingredients of bread: flour, sugar, shortening, etc. The profit margin in white bread can be reduced by rises in costs of these materials to a point at which the baker believes his return will increase if he shifts to a cheaper wrapping material. An example of this occurred in the mid-thirties when nearly every baker in northwest Pennsylvania discontinued the use of cellophane and reverted to waxed paper because of a 50-60fi increase per barrel in the price of flour. 502

185. A new promotion gains greater volume for one baker but tends to reduce volume of others. In many cases bakers whose business suffered, abandoned cellophane wrappers and reverted to waxed paper in order to prevent the loss of profit. This brought about losses of business for duPont. 503

186. Shifts of business between waxed paper and glassine and duPont cellophane for wrapping white bread have occurred from the early thirties up to the present. These shifts of packaging business have been caused by the operation of competitive factors stressing advantages and disadvantages of cellophane as against waxed paper and glassine, and by fluctuating emphasis, in the baking industry, upon cost savings. 504

187. Cellophane is still at a price disadvantage to waxed paper and glassine. 505 Profit margins in the white bread trade are still low and ability of bakers to use cellophane and return a profit remains in a narrow range. 506 Machines have been developed, which will wrap automatically with cellophane at high speeds. 507 Improvement of process printing of waxed paper and in the opacity of waxed paper have made waxed paper a more commercially desirable wrapper. 508 Improvements in the transparency of glassine and wax sulphite have narrowed this advantage cellophane once held over these wraps. 509

188. DuPont has promoted sales of cellophane for wrapping white bread, except that during the period of cellophane shortage from 1941 through 1948, duPont did not attempt to increase the use of cellophane for this purpose. DuPont could not supply an industry-wide demand for cellophane for wrapping white bread and stated this to the baking trade and to converters who were active in *97 promoting printed cellophane for white bread. 510

189. Sales methods used by dúPont to sell cellophane to various trades for packaging of many different products are the same as those applied to the white bread trade. They are variations upon the central theme of attempting to persuade the individual customer cellophane packaging will increase sales of his product and his profits. 511

2. Specialty Breads.

(Findings 190-196)

190. Breads other than white, such as rye, whole wheat, raisin, etc. are known as specialty breads. 512 Flexible packaging materials used to wrap specialty breads are: Waxed paper, glassine, moistureproof cellophane, and some aluminum foil. 513

191. Prior to 1933-1934 no specialty bread was produced by wholesale bakers. DuPont, in order to provide a market for cellophane, promoted the development of specialty bread. DuPont urged production of specialty loaves by bakers, on the basis specialty loaves would be novel when introduced and could be changed to remain novel; that absence of standardization of specialty breads would permit each baker to set his own price and not have to meet the competition of a standard price and product, and specialty loaves marketed in cellophane would attain substantial volume and profit. The amount of cellophane sold for wrapping specialty bread increased from nil in the early thirties to its present volume, 15,700,000 pounds. 514

192. As sales of specialty breads increased, much of the volume of these breads was wrapped in waxed paper, glassine and aluminum foil. 515

193. Advantages or disadvantages of cellophane as against waxed paper and glassine for the wrapping of specialty breads were much the same as in the case of white bread. 516

194. Operation of advantages and disadvantages of cellophane as a wrap for specialty bread produced shifts of specialty bread bakers between cellophane and waxed paper or glassine, which have continued up to the present. 517 Considerable business duPont once built up for wrapping specialty bread in Oklahoma and Kansas has completely gone, and the bakers have gone back to waxed paper, seeking to increase their profit by cutting their costs. 518

195. Some business on specialty breads lost by cellophane to wax paper and glassine has been regained, for example in the Minneapolis area. On the other hand, certain important bakers of specialty breads such as Pepperidge Farms have never used cellophane but always waxed paper. 519

196. A proportion of the duPont cellophane sold for wrapping specialty bread is sold by converters to the bakers in printed form. 520

*98 3. Cake and Sweet Goods.

(Findings 197-204)

197. Flexible packaging materials used for wrapping cake are waxed paper, moistureproof cellophane, glassine, and cellulose acetate used as a window in paper board boxes. These materials are also used in the wrapping of “sweet goods” (coffee cakes, sweet rolls, and buns) . 521

198. In the early thirties sweet goods were not baked by wholesale bakers in any quantity. DuPont set about to create such a wholesale business as an outlet for cellophane. DuPont obtained for this purpose formulae for sweet dough and made an analysis of the market for wholesale sweet goods. DuPont sought to interest wholesale bakers in the considerable demand forecast for sweet goods, and made the formulae available to them. Result of this was the creation of a large wholesale sweet goods business and with it the creation of a considerable cellophane business for duPont. 522

199. In spite of duPont’s efforts to expand sales for packaging of baked sweet goods, it does not supply more than 50% of the packaging to this trade. 523 Of cellophane sold for sweet goods packaging, much is sold by duPont to converters, and sold to the bakers in converted form. 524 Almost all of the remainder of the flexible packaging in this field is glassine or waxed paper. Many bakers divide their packaging for sweet goods between cellophane and glassine and waxed paper, often using as much as three times as much glassine and waxed paper as cellophane. 525

200. Principal factors adverse to duPont’s sale of cellophane to wrap cake and sweet goods have been the higher cost of cellophane wrap as against wraps of other materials, 526 and improvement in transparency of glassine. 527

201. Operation of competitive factors in the baking industry enabled cellophane to take packaging business for sweet goods away from waxed paper and glassine, and has enabled the latter to take business from cellophane. These shifts have been frequent and are continuing. 528

202. A number of large bakers of sweet goods never used cellophane, including the Tasty Baking Company in Philadelphia, the most successful cake baker in the United States. 529

203. DuPont exerted efforts to develope a demand for cellophane in the house to house bakery business. Among these efforts was an analysis of selling methods used at the door by house to house bakery truck drivers. DuPont made a training motion picture for bakery salesmen, based upon these observations, which it made available to bakers. Many bakers who used the motion picture and accepted duPont’s selling suggestions, do not use cellophane, but use waxed paper, glassine and window boxes to package their products. 530

204. A special doughnut film was developed to avoid the excessive condensation of moisture within the package and the consequent sogginess of the doughnut and dissolution of sugar coating. A

*99 special cake film was developed by duPont (MST-52) to eliminate shrinking and puckering of the previously used type of moistureproof cellophane. 531 ■

4. Meat.

(Findings 205-220)

205. Since 1924, duPont has sold cellophane to the meat industry. 532 The first use of cellophane in this industry was the wrapping of bacon, and other types of processed meats. 533 Processed meats continued to be the area for the use of cellophane in the meat industry, until after World War II when cellophane packaging of fresh meat for self-service food markets reached substantial proportions. 534

206. During the 1930’s and ever since, other flexible packaging materials used to wrap types of processed meat products for which cellophane was used were: greaseproof paper, vegetable parchment, glassine, waxed paper, foil and Pliofilm. Most packaging of processed meats is done with those materials. 535

207. When duPont commenced to sell cellophane for packaging of processed meats, glassine, greaseproof paper and vegetable parchment were already being used in quantity and at lower cost. DuPont had to sell in the face of this price disadvantage. Every purchaser at every stage of meat distribution purchased at as low a figure as he could, and competition in the meat industry was that of price. 536

208. When duPont was first selling an appreciable volume of cellophane to the meat industry, meat packers depended upon achieving a maximum volume of sale in order to keep a profit in the low price framework of the meat industry. Packers and wholesalers of meat had an insufficient profit margin to absorb the added cost of cellophane for processed meats, and had difficulty meeting prices of their competition if they passed the cost of cellophane along. Result was most meat packers and wholesalers could better achieve high volume of meat sales if they sold in unpackaged form or if their products were packaged in cheaper greaseproof paper, glassine, or parchment. Price disadvantage of cellophane in the meat industry was particularly severe. 537

209. Prior to World War II, between 5 and 10% of baked and smoked meats were wrapped in duPont cellophane, at the peak of duPont’s penetration of that business. 538 The pre-war peak was 1933 when duPont sold about two million pounds of cellophane for packaging smoked and processed meats. 539 Thereafter duPont’s business in this industry declined and did not again attain the 1933 volume until 1947. 540

210. DuPont was unable to hold its 1933 peak of cellophane business in the bacon and processed meat trade for these reasons: (1) Sylvania sold a sizeable quantity of second quality cellophane to the meat trade at a substantially reduced second quality price. DuPont did not sell second quality cellophane to this trade, and did not sell first quality material at a reduced price. DuPont also charged a higher price than Sylvania for shipments under 500 pounds. (2) Con *100 verters could make converted Sylvania film available to the meat trade at a lower price than the prices of converters who purchased from duPont. (3) The use was reduced around 1935 by the introduction of a bacon package of parchment or greaseproof paper. This so-called "Platter Pack” was cheaper than cellophane and was used for a time by nearly every bacon packer in the United States. 541

211. During the mid-thirties duPont made a market study of the meat industry to discover opportunities for sales of cellophane. The cost emphasis of the meat industry’s distribution system, lower prices of other flexible packaging materials and lower prices charged by Sylvania and its converters made duPont conclude there was no opportunity to expand sale of cellophane in that industry. 542

212. The growth of duPont’s cellophane sales to the meat industry from the low point of the mid-thirties to the present rate of 19,000,000 pounds annually is attributable to the rise of self-service retailing of fresh meat. 543

213. The growth of cellophane sales for wrapping self-service fresh meat did not commence until after World War II. Prior to that, obstacles to development of this outlet for cellophane were: (1) lack of a type of cellophane that would hold the color of red meat for a 72 hour turnover period; (2) design and development of refrigeration cases for the display of packaged meats had received no attention from refrigerator companies; (3) consumers were bound by habit of butcher service, and there was no consumer acceptance of selling fresh meat by display and self-service of package cuts. 544

214. DuPont experimented with wrapping fresh meat cuts in cellophane in cooperation with retail stores, and collected information from this work, on it to base improvements in the cellophane, refrigeration, and retailing. Self-service retailing of other types of food had increased by 1940, and self-service retailing experiments for fresh meat cuts wrapped in cellophane were successful at that time, though the refrigeration equipment was makeshift. In the early 1940’s duPont developed a type of moistureproof cellophane specifically designed to hold the color of fresh meat for 72 hours, and enable it to be wrapped for self-service selling in retail stores. DuPont then induced retailing organizations to install equipment for testing this method of retailing meat, and cooperated with these organizations in training employees, designing installation, revising accounting procedures, achieving uniformity of cut. There are now 42,000 stores in the United States that sell fresh meat only by self-service, in packaged form. Prior to World War II, there were none. 545

215. Since acceptance of self-service retailing of fresh meat in packaged form, duPont has lost a considerable proportion of such packaging business to Goodyear’s Pliofilm. Shifts of meat retailer’s packaging business occur between duPont cellophane and Pliofilm continually, and Pliofilm is increasing its proportion of this packaging business. Specific retailing accounts, e. g., the A & P, Safeway, American Stores, have increased their proportionate use of Pliofilm, though they continue to use Pliofilm and duPont cellophane concurrently. 546

216. Pliofilm’s acceptance as a self-service meat wrap is attributable to certain characteristics: (1) It is tougher than cellophane. This reduces the cost to the retail store of rewrapping cuts on *101 which the wrap has broken. (2) A single type of Pliofilm can be used for red meat, luncheon meat, cheese, etc., as against three different types of cellophane. This makes the job simpler for the wrapping crew, and eliminates wrapping cheese or meat in the wrong type of film. (3) Cellophane used for wrapping fresh meat is coated on only one side. The coated side of cellophane must be kept away from the meat, or else the film will lose its protective properties and the meat will discolor. In the case of Pliofilm, either side may be wrapped next to the meat. This again makes for a simpler wrapping job and eliminates the cost of spoilage and rejects. The somewhat higher price of Pliofilm is offset by economies resulting from these physical characteristics. 547

217. During the year 1951, the amount of Pliofilm used for self-service meat wraps was approximately 30 to 40% of the quantity of duPont cellophane used for the same purpose. 548

218. Materials used today to package processed meats and bacon are: Saran, Cry-O-Rap, Pliofilm, cellulose acetate, polyethylene, greaseproof paper, cellophane, parchment, glassine, and waxed paper. 549 Most of the meat sold in the United States is sold through stores where meat is not on a self-service basis. 550 The use of greaseproof paper, waxed paper, and glassine for processed meats is heavy in these non-self-service stores. 551 There is acceptance in self-service stores of bacon packages made of paperboard and glassine, completely opaque. 552

219. DuPont developed different types of moistureproof film in the early 1940’s which had the correct degree of moistureproofness to enable luncheon meats and frankfurters to be packaged. 553 These items had never before been packaged because packaging materials then available had too much moistureproofness and turned the meat slimy, or else had too little moistureproofness and permitted it to become dried out. 554

220. There is competition between converters for the business of converted wraps for meat and meat products. Armour and Company have purchased cellophane meat wraps from Daniels, Shellmar, Cellu-craft, Milprint, Inc., Traver Corporation, Standard Cap and Seal, Marathon Corporation, and Wraps, Inc. There is no uniform pattern of prices as between converters of any given type of wrap. 555

5. Candy.

(Findings 221-233)

221. Flexible packaging materials used for packaging by the candy industry are: Glassine, waxed paper, cellophane, greaseproof, aluminum foil, Pliofilm, cellulose acetate and polyethylene. 556

222. 40% or more of the production of the candy industry is accounted for by chocolate or chocolate coated candy bars. 557

223. In the early thirties duPont was able to obtain a volume of business in cellophane candy bar wrappers. This business was in the form of printed wrappers. Most important brands of *102 candy bars, in volume of business, were wrapped in duPont cellophane. These candy bars had previously been wrapped in glassine and duPont obtained this business by displacing the glassine wrap in favor of printed wraps of its own cellophane. 558

224. Obstacles to sale of cellophane by duPont for use as candy bar wrappers have been: (1) higher price of cellophane as against glassine; (2) desirability in the candy bar trade of a highly printed “billboard” type of wrap; (3) transmission of light through a cellophane wrap tends to turn chocolate gray; (4) in the early days of duPont’s candy bar wrap business, wrapping machines were not available to handle cellophane, and cellophane wraps had to be applied by hand, adding greatly to the cost of production. 559

225. DuPont was unable to maintain its early volume of candy bar wrap business, and the major brands of candy bars in the United States returned to printed glassine wrappers. 560 None of the major sellers in the candy bar field are wrapped in cellophane today although certain brands of candy bars are still wrapped in duPont cellophane, e. g., those made by the Elmer Candy Company of New Orleans, Donaldson Chocolate Company of Kansas City and General Foods Corporation of New York. 561 Gains and losses of candy bar business between duPont cellophane and glassine continue. 562

226. In recent years duPont developed some cellophane business in the overwrap of cardboard trays containing a number of chocolate bars. These are sold in food stores as “take-home packages.” 563

227. Shifts of business occurred and still do between duPont cellophane and aluminum foil in segments of the candy industry. These include: (1) candy bars, 564 (2) seasonal specialties such as Easter candies and chocolate Easter eggs, 565 ( 3) mints, 566 (4) Lifesavers and other packages. 567

228. Moistureproof cellophane has displaced some waxed paper and vice versa in the wrapping of plastic types of candy such as kisses and caramels, and certain children’s penny goods such as lollipops. Shifts of business are frequent. 568

229. Manufacturers of this type of candy goods have frequently discontinued cellophane for a period because profits could not stand the higher price of the cellophane wrap. 569

230. In the early years of duPont’s efforts to sell cellophane for the low priced line of candy goods, kisses and caramels were individually wrapped by machine in waxed paper. Volume of this class of goods prohibited hand wrapping in cellophane, and this business was obtained by duPont only after development of wrapping machines that would handle cellophane. 570

*103 231. In 1938, duPont believed maximum volume of cellophane possible was being sold to the candy industry as it was then conducted, with no prospect of new uses for cellophane. It decided to attempt to increase the volume of cellophane sales to the candy industry. It found food stores provided the greatest human traffic of any type of retailing outlet, and held the greatest promise as a new candy market. Since most food stores did not then carry candy, duPont made a market study of the kind of candy that would sell, the size of package that would sell, and the price at which it would sell in greatest volume. The price range of 19 to 290 per package was found to be promising. This range eliminated high priced box candy and indicated packages of cheaper types of candy were best prospects for home consumption. DuPont presented the results of this market study to candy manufacturers and to food stores, and recommended cellophane packaging for this type of unit. Sales of candy expanded as a result. This market development was largely responsible for the growth of duPont cellophane sales to the candy industry to the present figure of 20 million pounds annually. 571

232. DuPont did not gain all of the food store business for candy packages. Glassine, aluminum foil, and cellulose acetate window boxes are all used to wrap types of candy sold in food stores. 572

233. Moistureproof cellophane, Pliofilm, polyethylene, aluminum foil, and glassine are all used for packaging hard candies, 573 and business for this type of wrapping is lost and gained between each of these materials and cellophane. 574

6. Crackers and Biscuits.

(Findings 234-243)

234. The cracker and biscuit industry is divided into the sponge cracker trade and the sweet cracker trade. The former includes soda crackers such as Saltines and Ritz, and the latter includes sweet biscuits and crackers such as vanilla wafers, cookie sandwiches, ginger snaps. 575

235. Since early 1930’s some sweet crackers and biscuits have been packaged in moistureproof cellophane bags, and the majority in cartons lined with glassine or waxed paper and overwrapped with printed sulphite paper. Some cartons have been overwrapped in cellophane. DuPont has taken packaging business from other materials for certain cracker and biscuit accounts and has lost business back to these materials. Customers package part of their production of specific sweet goods in cellophane packages and the remainder of their production of the identical goods in other flexible packaging materials. 576

236. In duPont’s effort to sell cellophane for wrapping sweet crackers it encountered obstacles; (1) Cellophane cost the cracker and biscuit manufacturer more than glassine liners or sulphite carton overwraps. (2) Machines were in use for packaging with glassine, sulphite and cartons, but not with cellophane. 577 In this period (early 1930’s) these factors limited duPont’s sales for wrapping sweet crackers and biscuits to relatively high priced lines of goods. 578 Durability of cellophane was poor and frequency of breakage of cellophane bags and overwraps of sweet cracker packages was high. 579

*104 237. Factors described caused loss of cellophane business for duPont to other flexible packaging materials. Some of this business has been regained. Cellophane is still at a price disadvantage; cellophane bags still must be filled by hand; the introduction of lithographing and process printing on sulphite and waxed paper has increased acceptance of those materials in the trade. All factors continue to cause losses of business for duPont in the cracker and biscuit industry, although some of it has been regained. 580

238. To displace glassine, waxed papers and sulphite wrappers and liners on sweet goods, duPont made an effort to sell cellophane for the packaging of sweet crackers which were then sold in bulk, and displayed in large cartons known as caddies. These accounted for 65% of the sweet cracker business in 1931. 581 This type of selling was prevalent until 1938, at which time duPont had about two million pounds of business annually in cellophane overwraps and liners for sweet crackers and biscuits. 582 DuPont persuaded a substantial part of the cracker and biscuit industry and its retailing outlets to adopt display fixtures for sweet crackers and cookies to afford permanent display of these products and recommended cellophane packaging to promote display. Much of the sweet crackers previously sold in bulk were sold from these display fixtures. 583 When self-service food merchandise became general a few years later these display factors for crackers and biscuits remained as part of the self-service arrangement. 584 Today bulk selling of sweet crackers and biscuits has been eliminated, and cellophane bags, cellophane-wrapped trays, glassine lined trays overwrapped in Saran, printed and unprinted waxed paper, sulphite, glassine, foil and Pliofilm are used to package consumer size units. 585

239. Until 1947 duPont’s sales of cellophane for the packaging of sponge crackers, i. e., soda crackers, saltines, etc., were limited to cracker carton over-wraps. This business depended upon the displacement of waxed paper over-wraps. 586 Shifts of business have occurred back and forth for specific accounts such as Keebler-Weil Biscuit Company and Union Biscuit Company between duPont cellophane and waxed paper carton overwraps. 587

240. In recent years development of process printing on waxed paper and improvements in waxed paper coatings have become factors in the overwrapping of cartons of sponge crackers and sweet biscuits. 588 DuPont has lost cellophane business in this trade to waxed paper for this reason. 589

241. In 1947, duPont sold its first account for the use of cellophane for “fractional packaging” of sponge crackers. 590 Fractional packaging is the division of the contents of a carton into halves or quarters, each of which is separately wrapped, so that the opening of the carton exposes only a fraction of the contents. 591 DuPont tried unsuccessfully to get this method of packaging adopted for nearly twenty years prior to 1947. 592 At the present time about 26 cracker and biscuit bakers have a *105 fractional packaged soda cracker on the market. 593 Other items such as graham crackers have been similarly packaged. 594 DuPont estimates about two million pounds annually of its cellophane goes into fractional packaging of crackers. 595

The principal flexible packaging materials used for fractional packaging of crackers and biscuits are waxed glassine and waxed paper. 596 A small percentage of fractional packaging crackers and biscuits are wrapped in duPont cellophane. Certain individual cracker manufacturers use more waxed glassine for fractional packaging than duPont’s total sales for that purpose. 597

242. Profit margins are narrow and price competition intense in the sponge cracker business. 598 As any cracker manufacturer reduces price others follow to remain competitive and give up cellophane for fractional packaging in favor of a cheaper material, e. g., a recent price reduction of National Biscuit Company forced a general reduction of saltine prices and duPont received cellophane order cancellations from several accounts. 599

243. Certain cracker manufacturers began using glassine for fractional packaging during the postwar cellophane shortage because of the unavailability of cellophane. By April of 1952, when cellophane was in ample supply, those accounts had not been won over to cellophane. 600

7. Frozen Foods.

(Findings 244-250)

244. The frozen food and vegetable industry is of recent origin. In the early thirties when cellophane was first used on frozen food packages, Birdseye was the packer. A few additional concerns entered this business prior to World War II, but the industry grew slowly. During World War II the frozen food and vegetable packing business grew with emergence of dozens of major concerns, to a point at which it became one of the largest process food industries in the United States. Its growth is continuing. 601

245. Cellophane is used in the frozen food industry for direct wraps or liners inside a carton, for carton overwraps and for direct wraps used alone. As a liner or direct wrap inside a carton it is used for frozen fish filets 602 and small consumer units of frozen fruits and vegeta bles. 603 It is used as an overwrap for cartons of frozen fruits and vegetables. 604 Cellophane is used as a direct wrap for frozen poultry. 605

246. Cellophane has displaced some vegetable parchment as a direct wrap for frozen fish, and vice versa. Shifts of business continue between cellophane and parchment for this use. 606

247. Waxed paper has displaced cellophane in some instances as a carton overwrap for frozen fish filets, and vice versa. Displacement continues back and forth in important fish packing accounts. 607

*106 248. Birdseye (now a division of the General Foods Corporation) adopted cellophane on its frozen foods packages in the early thirties. For a period after that time duPont cellophane was used in 100% of the frozen food packages sold in the United States. To get this business duPont cellophane displaced waxed paper which Birdseye had previously used. 608 With growth of the frozen food industry during World War II converters of cellophane developed a highly attractive multi-colored process printed opaque cellophane carton overwrap which became widely accepted in the industry by such leaders as Libby McNeill and Libby, Dulany, Pictsweet and others, 609 displacing cellophane.

249. DuPont cellophane was once used to wrap 100% of frozen poultry. Displacement of much of this business has been effected by polyethylene, Pliofilm, and Cry-O-Rap. Among accounts who shifted to one of these films from cellophane for the wrapping of frozen poultry are the “Big 4” meat packers: Swift, Armour, Cudahy and Wilson. 610

250. In the late 1940’s, waxed paper manufacturers and converters developed waxed paper with a “hard wax” coating containing a polyethylene resin. This wrap is glossy, durable and resistant to moisture and liquids. It is a great deal cheaper than cellophane. Simultaneously converters developed process printing methods on this type of paper, which made a wrap of this material indistinguishable from printed cellophane. This wrap was widely accepted in the frozen food industry as a carton overwrap for fruits and vegetables, because of its low cost, 611 its ability to be handled at higher machine speeds than cellophane, 612 and for its great decorative 613 and protective qualities. 614 The polyethylene wax wrap has largely displaced cellophane in five of duPont’s largest frozen food accounts. 615 DuPont is attempting to regain this business and still holds the business of certain other accounts of this type of wrap. 616

8. Potato Chips, Pop Corn and Snacks.

(Findings 251-253)

251. Flexible packaging materials used as wraps for potato chips, popcorn and cocktail snacks of various types are: waxed paper, glassine, aluminum foil, moistureproof cellophane, and Pliofilm. 617

252. Cellophane has displaced other flexible packaging materials with certain accounts for packaging snacks and. has been displaced by them in other cases. This displacement back and forth continues. 618

253. Obstacles to sale of cellophane as wraps of bags for potato chips and other types of “snacks” have been: (1) higher price of cellophane over waxed paper and glassine; (2) passage of ultraviolet rays through cellophane which produces rancidity in the oils used in the packaged product. This latter obstacle has been particularly severe in the case *107 of potato chips. 619 Aluminum foil does not permit the passage of any light, and waxed paper and waxed glassine can be made opaque to prohibit rancidity effect of ultraviolet rays. 620

9. Cereals.

(Findings 254-255)

254. Flexible packaging materials used as cereal wraps are glassine, waxed paper, and cellophane both as liners and overwraps. 621 Aluminum foil is also used for packaging a small quantity of cereal. 622

255. DuPont had little success in selling cellophane for use as a cereal package. Obstacles to the sale of cellophane as a cereal wrap have been: (1) higher price than waxed paper or waxed glassine; (2) major cereal producers found cellophane gave less satisfactory protection against either moisture or rancidity than did wax paper; (3) cellophane bags required more cumbersome filling methods; and they stacked poorly on display shelves. 623

10. Fresh Produce.

(Findings 256-258)

256. Flexible packaging materials used for packaging of fresh fruits and vegetables are cellophane, cellulose acetate, polyethylene, Pliofilm, glassine and parchment. 624 Acetate is used for the wrapping of spinach, tomatoes, and certain other green vegetables. 625 Poly-

ethylene and Pliofilm are used for packaging vegetables and fruits in package sizes up to five or ten pounds. 626

257. Cellophane has displaced cellulose acetate for the packaging of fresh produce such as spinach and tomatoes in some instances and cellulose acetate has displaced cellophane in others. 627 On the West Coast, cellulose acetate is used to package 100% of packaged spinach. On the East Coast it is not used in any quantity to package spinach. 628

258. Certain types of fruits and vegetables are packed in consumer-size units by the grower in quantities in lieu of shipment in bulk and packaging by the retailer. In these cases cellophane has been displaced by polyethylene and Pliofilm. These durable materials are superior to cellophane for shipment at low temperatures for long distances, and for handling without breakage during long shipments. A shift from retail packaging by retailer, or wholesaler to packaging by the grower frequently involves displacement of cellophane by polyethylene and Pliofilm. This development is taking place in the case of carrots and apples. 629

11. Paper Goods and Textiles.

(Findings 259-260)

259. Flexible packaging materials used for wrapping paper goods (tissues, paper napkins, paper tablecloths, cups, etc.) are waxed paper, glassine, cellophane, sulphite, and cellulose acetate. 630

*108 260. Principal flexible packaging ma terials used to wrap textiles are cellophane, Pliofilm, polyethylene and glassine. 631 Obstacle to the sale of cellophane for wrapping of heavy textiles such as sheets, blankets and pillow cases is absorption of moisture by the hydroscopic textile in the package and consequent shrinkage and breakage of the cellophane wrap as it dries out. Polyethylene and Pliofilm combine a higher degree of toughness with less tendency to shrink, and have found increasing acceptance for the wrapping of heavy textiles, displacing much cellophane. 632

12. Cigarettes.

(Finding 261)

261. Cellophane was first accepted as an overwrap for cigarette paper-foil package for novel appearance, lending itself to a large advertising campaign. 633 Glassine had been used. 634 Since general acceptance of cellophane as a cigarette package overwrap, there have been periods of its displacement: a period of cellophane shortage in the mid-forties, and merchandising experiments of the Brown and Williamson Tobacco Company who, for a period, sold Kools and Raleigh cigarettes in a one-piece foil package. 635 Manufacturers of Pliofilm, glassine and aluminum foil have made and continue to make determined efforts to displace cellophane as a wrap for cigarettes. 636

13. Butter.

(Finding 262)

262. DuPont in the mid-thirties made a selling effort in the butter industry. This met with no success, since butter in contact with cellophane tended to separate the coating and because the butter industry could not pass the higher cost of the cellophane wrap on to dealer. DuPont is attempting to sell cellophane as a butter wrap. Vegetable parchment and aluminum foil have been and are the materials used as a direct wrap for butter. 637

14. Chewing Gum.

(Findings 263-264)

263. Flexible packaging materials used for the packaging of chewing gum are: aluminum foil, waxed paper, cellophane, laminations of aluminum foil and waxed paper, and laminations of aluminum foil to cellophane or to waxed paper. These materials carry a variety of printed effects and coatings. 638

264. Chewing gum packages are shifting to an opaque outer wrapper. 639 This opacity is achieved by a solid overprinting of cellophane film, and in other instances by using opaque foil or paper. Producers of foil, waxed paper and cellophane have attempted to promote package designs upon converters and chewing gum manufacturers which utilize a maximum of their material. 640 Increase of one material is at the expense of another. 641

*109 15. Other Food Products.

(Findings 265-273)

265. Other food products on which cellophane is used as a packaging material are: powdered drink mixes, macaroni, noodles, rice, dried fruits, dried vegetables, cheese, cake mixes, sandwiches. For each of these products other flexible packaging materials are used. In each case duPont must sell against a physical property of another packaging material, against lower cost of another material, or against both. 642

266. Noodles and macaroni have been sold in cellophane bags, Pliofilm, paper wraps and window boxes. 643 Cellophane bags have been displaced by specific accounts wholly or in part by window boxes. 644 Many accounts prefer window boxes because of lower breakage, and because of their more regular shape <and facility of use on display counters. 645

267. Dried fruits are packaged in blocks wrapped in Saran film, moisture-proof cellophane or Pliofilm, and in cartons overwrapped with waxed paper, 646 and sometimes lined with glassine or greaseproof paper. 647

268. Shifts of specific accounts between cellophane and other flexible packaging materials have occurred and now occur for the packaging of dried fruits. 648 DuPont’s business in this end use was gained from glassine. 649

269. Saran film is preferred by dried fruit packers to cellophane for its superior moistureproofness, although Saran is more costly. 650 Pliofilm is preferred by many for the soft appearance it imparts to the contents of the package. 651 Cellophane costs less than either Pliofilm or Saran film and is preferred by many packers for that reason. 652

270. DuPont developed a Saran coated cellophane film “K-202” in order to provide the dried fruit trade with a film that can compete with Saran and Pliofilm in moisture resistance. 653 K-202 is also used for wrapping certain types of cookies and other products that absorb moisture readily 654

271. Rice is packaged in cartons, paper bags, cellophane bags and window boxes. Shifts of business for packaging of rice have occurred between duPont cellophane and various forms of rice packaging 655

272. Dried vegetables are packaged in laminated foil, Pliofilm, Pliofilm and paper laminations, cellophane, cellophane and paper laminations, depending upon degree of transparency desired, degree of protection against moisture required, display conditions, and other factors of choice. 656

273. Powdered mixes including cake mixes, dessert mixes, and beverage mixes have been packaged in foil, foil and *110 paper laminations, cellophane pouches, glassine pouches, cartons lined with a glassine bag and glassine laminations. 657 Some accounts have displaced cellophane for powdered mixes because of the moisture resistance of foil or a glassine, 658 others because of the breakage of cellophane. 659 These are factors against which duPont must sell for that use.

16. Other Tobacco Products.

(Findings 274-275)

274. Aluminum foil and moisture-proof cellophane are both used for the wrapping of individual cigars. Both afford protection against moisture loss of the cigar, and accounts have been gained and lost by duPont cellophane from and to aluminum foil. 660

275. Glassine, waxed paper, sulphite and cellophane have been used for packaging of smoking and chewing tobacco. 661 Major obstacles to sale of cellophane for this use is its high cost in relation to cost of waxed paper and glassine, and the superior production facility of glassine and waxed paper on wrapping machines. Accounts have been regained and lost by cellophane from and to these materials. Recently Pliofilm has been adopted on some tobacco packages for its lack of shrinkage and consequently the superior appearance of the package. 662

17. Cheese.

(Findings 276-277)

276. Flexible packaging materials used for the packaging of cheese include: cellophane, a converted cellophane coated with a rubber wax compound, Pliofilm, glassine, aluminum foil, lead foil and Saran. 663

277. Processed cheese was once wrapped in tin foil or in aluminum foil but this wrap has been displaced by a rubber coated opaque cellophane cheese wrap. 664 American cheese is wrapped in Pliofilm, Saran or cellophane. 665 Swiss cheese is generally wrapped in transparent cellophane. 666 Cream cheese and Camembert cheese are generally wrapped in aluminum foil. Cellophane has been tried for the wrapping of crearrfi cheese and Camembert but has been displaced by aluminum foil. 667

18. Oleomargarine.

(Finding 278)

278. Oleomargarine is wrapped in aluminum foil, greaseproof, and vegetable parchment applied directly about the quarter pound bars. Aluminum foil dominates 668 recently printed cello *111 phane has been adopted on certain brands for a full pound overwrap. DuPont had attempted to gain acceptance of this wrap for years and has succeeded only in 1952. 669

VIII. Results of duPont’s Competition With Other Materials

(Findings 279-292)

279. During the period duPont entered the flexible packaging business, and since its introduction of moisture-proof cellophane, sales of cellophane have increased. 670 Total volume of flexible packaging materials used in the United States has also increased. 671 DuPont’s relative percentage of the packaging business has grown 672 as a result of its research, price, sales and capacity policies, 673 but duPont cellophane even in uses where it has competed has not attained the bulk of the business, due to competition of other flexible packaging materials. 674

280. Of the production and imports of flexible packaging materials in 1949 measured in wrapping surface, duPont cellophane accounted for less than 20% of flexible packaging materials consumed in the United States in that year. The figures on this are: 675

Thousands of Square Yards

Glassine, Greaseproof and Vegetable Parchment Papers..... 3,125,826

Waxing Papers (18 Pounds and over) ...................... 4,614,685

Sulphite Bag and Wrapping Papers ....................... 1,788,615

Aluminum Foil............... 1,317,807

Cellophane ................... 3,366,068

Cellulose Acetate............. 133,982

Pliofilm, Polyethylene, Saran and Cry-O-Rap ............ 373,871

Total ................ 14,720,854

Total duPont Cellophane Production .................... 2,629,747

DuPont Cellophane Per Cent of of Total United States Production and Imports of These Flexible Packaging Materials 17.9%

281. 80% of cellophane made by duPont is sold for packaging in the food industry. Of this quantity, 80% is sold for packaging baked goods, meat, candy, crackers and biscuits, frozen foods, fresh vegetables and produce, potato chips, and “snacks”, such as peanut butter sandwiches, popcorn, etc. A small amount is sold for wrapping of textiles and paper products, etc. Largest nonfood use of cellophane is the overwrapping of cigarette packages.

*112 The breakdown of duPont cellophane sales for the year 1949 was 676

Sales Use (M pounds) % of Total Sales

Tobacco

Cigarettes .................... 20,584 11.6

Cigars ....................... 3,195 1.8

Other Tobacco................ 1,657 0.9

Total .................... 25,436 14.3

Food Products

Candy & Gum................. 17,054 9.6

Bread & Cake................. 40,081 22.5

'Crackérs & Biscuits............ 12,614 7.1

Meat......................... 11,596 6.5

Noodles & Macaroni........... 2,602 1.5

Tea & Coffee................. 1,380 0.8

Cereals....................... 2,487 1.4

Frozen Foods................. 5,234 2.9

Dried Fruit................... 333 0.2

Nuts ......................... 2,946 1.7

Popcorn & Potato Chips....... 6,929 3.9

Dairy Products ............... 3,808 2.1

Fresh Produce................ 4,564 . 2.6

Unclassified Foods ............ 8,750 4.9

Total .................... 120,478 67.7

Miscellaneous

Hosiery ...................... 1,370 0.7

Textiles ...................... 3,141 1.8

Drugs ........................ 1,031 0.6

Rubber....................... 317 0.2

Paper ........................ 2,736 1.5

Unclassified .................. 18,602 10.5

Total .................... 27,197 15.3

Domestic Total .................. 173,011 97.3

Export .......................... 4,820 2.7

Grand Total..................... 177,831 100.00

*113 282. Sales of cellophane by duPont in 1951, by principal uses, were approximately as follows:

White bread..................... between 8 and 9,000,000 lbs. 677

Specialty breads ................ .............15,700,000 “ 678

Cake and other baked sweet goods .............22,000,000 “ 679

Meat ........................... .............19,000,000 “ 680

Candy (including chewing gum) . .............20,000,000 “ 681

Crackers and biscuits............ .............17,000,000 “ 682

Frozen foods .................... ............. 5,800,000 “ 683

Cigarettes ...................... .............23,000,000 “ 684

283. 1949 sales of 19 major representative converters whose business covered a substantial segment of the total converting of flexible packaging materials for that year showed the following as to their sales of flexible packaging materials, classified by end use. 685

Quantity Per Cent (Millions of Total End Use sq. in.) End Use

Bakery Products

Cellophane 686 .... 109,670 6.8

Foil ............. 2,652 .2

Glassine ......... 72,216 4.4

Papers .......... 1,440,413 88.6

Films............ 215 .0

1,625,166 100.0

Candy

Cellophane ....... 134,280 24.4

Foil ............. 178,967 32.5

Glassine ......... 117,634 21.4

Papers .......... 119,102 21.6

Films ........... 484 .1

550,467 100.0

Snacks

Cellophane ....... 61,250 31.9

Foil ............. 1,571 .8

Glassine ......... 120,556 62.8

Papers .......... 8,439 4.4

Films ........... 79 .1

191,895 100.0

Meat and Poultry

Cellophane....... 59,016 34.9

Foil ............. 88 .1

Glassine ......... 4,524 2.7

Quantity Per Cent (Millions of Total End Use (Cont’d) sq. in.) End Use

Meat and Poultry (Cont'd)

Papers .......... 97,255 57.5

Films ........... 8,173 4.8

169,056 100.0

Crackers and Biscuits

Cellophane ....... 29,960 26.6

Foil ............. 192 .2

Glassine ......... 11,253 10.0

Papers .......... 71,147 63.2

Films............ 8 .0

112,560 100.0

Fresh Produce

Cellophane....... 52,828 47.2

Foil ............. 43 .1

Glassine ......... 96 .1

Papers .......•... 51,035 45.6

Films ........... 7,867 7.0

111,869 100.0

Frozen Food Excluding Dairy Products

Cellophane ....... 31,684 33.6

Foil ............. 629 .7

Glassine ......... 1,943 2.1

Papers .......... 56,925 60.3

Films ........... 3,154 3.3

94,335 100.0

*114 284. About 96% of packaged white bread produced in the United States is wrapped in waxed paper or glassine, and about 6% in cellophane. The , cellophane figure includes sales by all U. S. producers. 687

285. 48% of specialty breads are wrapped in duPont cellophane, the remainder in other cellophane or other materials. 688 Most of this balance is wrapped in waxed paper and glassine. 689

286. Approximately 45% of cake and baked sweet goods packaged by wholesale bakers is wrapped in duPont cellophane. The balance is wrapped in other cellophane or in waxed paper or glassine. 690

287. Between 25 and 85% of packaged candy units sold in the United States are wrapped in duPont cellophane. 691

288. Of sponge and sweet crackers and biscuits combined approximately 25% to 30% of the packaged units produced in 1951 were wrapped in duPont cellophane. 692

289. DuPont cellophane at the present time is used on approximately 20 to 30% of packaged retail units of frozen foods. 693 The remainder use waxed paper, waxed glassine, polyethylene, Pliofilm, Cry-O-Vae, or vegetable parchment. 694

290. Approximately 20 to 30% of packages of potato chips and other snacks are wrapped in duPont cellophane. Most of the remainder are packaged in glassine and other flexible wraps. 695

291. Approximately 4 to 6% of the packaged units of cereal are wrapped in duPont cellophane. 696 The principal flexible packaging materials used are waxed paper and glassine. 697

292. DuPont cellophane is used as an outer wrap on the paper-foil packages for approximately 75 to 80% of cigarettes sold in the United States 698 Sales for this use represent about 11.6% of duPont’s total sales of cellophane. 699

IX. DuPont Competed With Sylvania

(Findings 293-330).

293. Competition existed between duPont and Sylvania, and later Olin, for the sale of cellophane. Many customers have shifted back and forth between the producers, or divided their purchases between producers in changing proportions. Illustrative examples of such shifts in business are:

1930 GX 435, p. 5729, 7/21/30. GX 436, pp. 5741-42, 1/27/31.

1931 GX 437, p. 5751, 7/28/31. GX 438, p. 5761, 2/9/32.

1932 GX 439, p. 5766, 7/28/32. DX 29, p. 48, 1/1/32. DX 539, pp. 995-98, 8/25/32. GX 440, p. 5774, 1/27/33.

1933 DX 77, p. 174, 9/18/33. DX 584, p. 1118, 5/22/33. GX 442, p. 5784, 1/23/34.

1934 GX 443, pp. 5794-5801, 1/29/35. DX 543, pp. 1004-35, 1935.

1935 GX 76, pp. 237-40, 243, 2/11/36. GX 77, p. 261, 2/10/36. GX 78, p. 270,1938.

1936 GX 78, pp. 272-73, 1938. GX 444, pp. 5809-18, 2/9/37.

1937 GX 78, pp. 270-75, 1938.

1938 GX 79, p. 280, 2/9/39. GX 80, p. 295, 2/9/40. - GX 493, pp. 6577, 6582, 1/20/39. GX 5517, pp. 629-95. 9/19/38.

1939 GX 80, pp. 295-300, 2/9/40.

*115 1940 GX 81, pp. 305-08,1941. GX 5040, p. 4526, 7/19/40. DX 85, pp. 199-200, 2/7/40. DX 582, p. 1115, 6/20/40. DX 86, pp. 201-02, 10/28/40. GX 82, pp. 312-13,1942.

1941 GX 82, pp. 312-13, 1942. GX 495, p. 6657.

1946 DX 562, pp. 1083-87, 10/46.

1947 DX 132, p. 287, 9/8/47. DX 155, p. 328, 11/6/47. DX 156, p. 329, 7/18/47. DX 563, pp. 1088-92, 2/47.

1948 DX 122, pp. 269-70, 12/33/48. DX 208, p. 433, 6/25/48. DX 435, p. 845, 5/17/48.

1949 DX 102, p. 220,1/7/49. DX 141, p. 300, 5/19/49. DX 209, p. 435, 5/4/49.

General: R. R. Smith, Tr. 5835-37.

294. Comparative dollar volume of sales of plain cellophane by duPont and Sylvania in illustrative years is as follows : 700

Year DuPont Sylvania

1932 ............ $5,052,442 $1,916,449

1935 ............ 5,126,685 2,131,884

1938 ............ 5,907,989 2,547,850

1941 ............ 8,960,865 4,029,240

1947 ............ 7,741,573 2,093,250

1950 ............ 9,330,776 2,674,961

295. Comparative dollar volume of sales of moistureproof cellophane by duPont and Sylvania in illustrative years is as follows : 701

Year DuPont Sylvania

1932 .......... $10,325,539 $ 1,091,158

1935 .......... 13,581,480 3,906,913

1938 .......... 19,667,671 6,284,401

Year DuPont Sylvania

1941 .......... 31,013,706 8,799,764

1944 .......... 34,350,852 10,671,004

1947 .......... 47,598,053 14,388,668

1950 .......... 89,850,416 26,809,793

296. DuPont sales of cellophane increased or decreased from year to year at rates different from those at which Sylvania sales increased or decreased. The rate of increase (or decrease) of sales for each company for illustrative years over the respective preceding year is as follows : 702

Year DuPont Sylvania

1933 ............... 19.6 36.8

1935 ............... 11.0 26.7

1938 ............... 1.8 14.0

1941 ................ 28.3 23.9

1943 ............... 11.0 ( 9.0)

1946 .'.............. 11.3 19.0

1947 ............... 24.1 10.6

1949 ............... 10.8 8.1

1950 ............... 13.8 29.7

297. DuPont and Sylvania acting independently of each other have increased production during the history of their operations. In 1931, duPont produced 24,619,988 pounds of cellophane while in 1950 it produced 202,826,066 pounds. Sylvania increased its production from 3,751,151 pounds in 1931 to 59,845,816 pounds in 1950. Following tables indicate production of each company during the period 1924-1950, together with relative and changing rates of growth of production. 703

*116 DuPont Sylvania

Pounds % Increase Or (Decrease) From Previous Year Pounds % Increase Or (Decrease) From Previous Year

1924 361,249

1925 944,441 161.4

1926 1,910,286 102.3

Sylvania began production in 1930

1927 1,889,599 (1.1)

1928 3,181,069 68.3

1929 6,056,128 90.4

1930 14,804,941 144.5 Not available

1931 24,619,988 66.3 3,751,151

1932 27,008,687 9.7 7,032,089 87.5

1933 33,962,048 25.7 8,366,602 19.0

1934 39,357,997 15.9 11,212,407 34.0

1935 43,807,451 11.3 13,788,529 23.0

1936 •55,593,780 26.9 19,999,655 45.0

1937 61,021,870 9.8 20,690,482 3.5

1938 61,386,582 0.6 21,291,072 2.9

1939 74,147,443 '20.8 25,860,639 21.5

1940 81,676,848 10.2 29,142,503 12.7

1941 106,349,907 30.2 34,351,301 17.9

1942 87,099,471 (18.1) 30,498,388 (11.2)

1943 97,651,419 12.1 30,079,593 ( 1-4)

1944 94,350,906 ( 3.4) 29,238,796 ( 2.8)

1945 96,401,673 2.2 30,612,355 4.7

1946 107,185,838 11.2 35,516,404 16.0

1947 133,502,858 24.6 41,046,308 15.6

1948 160,616,693 20.3 46,679,266 13.7

1949 178,666,169 11.2 50,171,066 7.5

1950 202,826,066 13.5 59,845,816 19.3

298. Sylvania’s competition has been strong. It took business from duPont in some of the largest accounts. Without exception, Sylvania attempted to sell duPont’s customers and vice versa. 704

299. DuPont competed with Sylvania but never sought to suppress it. Yet it never held back from developing new business in order to leave it for Sylvania. 705

300. Sylvania’s customers included large and small organizations. Among its important customers were Reynolds Tobacco Company, American Tobacco Company, P. Lorillard, Ward Baking Company, Great Atlantic & Pacific Tea Company, and Quality Bakers of America. 706

301. No proof was presented duPont excluded Sylvania from the cigarette industry.

302. Sylvania prospered during 1930-40 when duPont was making price reductions. 707

303. Sylvania and duPont competed for the business of converters. Sylvania since 1930 had adequate converters. 708 Plaintiff conceded the number of convert *117 <ers sold by Sylvania kept pace with the number sold by duPont. 709 Converter sales have been an important proportion of Sylvania’s business, in 1947 and 1948 approximating 40% of total sales. 710 Instances of the competition for business of converters are:

(1) American Paper Goods, duPont’s first converter, began using Sylvania cellophane in 1930, 711 and in 1935 began purchasing Sylvania cellophane exclusively. 712

(2) U. S. Envelope Co. shifted from duPont to Sylvania in 1934. 713

(3) In 1940 duPont’s first two converters, American Paper Goods Co. (1925) and Alexander Hurtz (1926) purchased ten times as much cellophane from Sylvania as from duPont. 714

(4) From 1942 to 1947 Shellmar and Dobeckmun were among Sylvania’s ten most important converter customers. 715

(5) Sylvania sold to 45 converters in 1935, 53 in 1940, 63 in 1945 and 93 in 1948. 716

304. In its existence, Sylvania has expanded its productive capacity to the extent of its financial resources. 717 Its growth has been substantial. 718

305. Sylvania has conducted its cellophane operations at a profit. 719 Its Board of Directors approved plans to expand its capacity to 100,000,000 pounds and these plans are advanced. 720

306. Sylvania was able to sell its cel-lophane output and expanded its productive capacity as fast as it could afford. It was not easy to borrow money during the 1930’s. Sylvania borrowed a million dollars in 1938. 721

307. During the 1930’s Sylvania used part of its earnings to enter manufacture of viscose caps, artificial horse hair, viscose staple fiber, sausage casings, rubber thread, and textile finishes. Of these only the sausage casing venture was successful. Use of its funds for these projects limited Sylvania’s funds available for expansion of its cellophane capacity. 722

308. During the period 1931-1950, inclusive, duPont produced and sold 75% of the total amount of cellophane manufactured in the United States in the twenty years and Sylvania about 25%. In the individual years this ratio rarely varied more than 1% or 2%. During this period annual production in the United States expanded from 28,000,000 lbs. to 263,000,000 lbs. Each company’s expansion of sales was achieved by its own efforts, and similarity of proportions of the ■ total business sold by the two companies during this expansion was not the result of any agreement or understanding. 723 Business of each company increased and decreased with particular customers, and for particular products; and the rate of growth of the two companies varied from year to year. 724

309. DuPont was able to gain the greater share of the cellophane business because of efficiency as a manufacturer, the superior quality of duPont cellophane, and value to its customers of its creative merchandising and technical service. 725

*118 310. Vigorous competition existed between duPont and Sylvania on the basis of quality. This competition included the development of types of moistureproof film 726 with characteristics adapting to particular products, as well as the quality of each type. 727 Shifts of business continually took place as result of such competition. 728

311. DuPont manufactures a wider variety of specialized types of moisture-proof cellophane than does Sylvania. This is an advantage to a converter, since the variety gives a complete line of wraps adapted for particular applications. 729

312. Quality of duPont cellophane has improved over the years. Quality improvements have been a factor in the purchase of duPont cellophane by customers as opposed to Sylvania cellophane and other packaging materials. 730

313. DuPont and Sylvania engaged in competition on the basis of quality for business in the cigar trade. Shifts of business of particular customers resulted from this competition. 731 Soon after duPont’s introduction of moistureproof cellophane in 1930, most cigars shifted to a moistureproof cellophane wrap. Commencing in 1932, Sylvania made increasing gains in sales to the cigar industry because of the preference of customers for the characteristics of its cigar film. 732 By 1935 Sylvania’s sales to the cigar industry were over 40% of all cellophane sold to that industry. 733 To compete, duPont engaged in research to improve its cellophane in the qualities desired by customers. 734 A new type was sold commencing by 1935, but was not able to recapture much business from Sylvania. 735 Further research which resulted in a further improved type sold commercially in 1938 enabled duPont in 1939 and 1940 to regain substantial cigar business from Sylvania. 736

314. Prior to 1930 cigarette packages were overwrapped with glassine. 737 With availability of moistureproof cellophane the cigarette companies adopted it as the overwrap for their packages. 738 Cigarettes were a negligible factor in duPont sales in 1930, 739 but accounted for 20% of its total volume in 1931, 740 and contributed to the doubling of moisture-proof sales in 1931 as compared with 1930. 741 Up to 1933 the cigarette industry used duPont film exclusively. 742 Commencing about 1934, Sylvania began to sell quantities of moistureproof cellophane to the cigarette industry. 743 By 1938 its customers in that industry included Reynolds, American Tobacco Co., Brown & Williamson, and Stephano Co. 744 Thereafter Sylvania obtained additional business from P. Lorillard. 745

315. DuPont rolls have been of better quality than those produced by Sylvania, *119 and this superiority has contributed to the greater sales of duPont. 746

316. The quality of duPont cellophane has been generally superior to that produced by Sylvania. 747 This superiority has lessened since the acquisition in 1946 of Sylvania by American Viscose Company. 748 The superiority of duPont quality in large part is due to its research. 749

317. Superior quality of duPont’s cellophane as compared with that of Sylvania has been the determining factor in the purchase by customers of all or almost all of their cellophane from duPont. Such customers include Curtiss Candy Company, 750 General Foods, 751 Kraft Foods, 752 and National Biscuit Company, 753 among users, and Shell-mar, 754 Milprint, 755 Cellu-Craft 756 and Marathon, 757 among converters.

318. Quality of cellophane, particularly the uniformity of thickness, is of importance to converters. The high speed printing and bag making they perform requires cellophane with almost no variation in thickness. 758

319. DuPont’s manufacturing efficiency as to cellophane is greater than Sylvania’s, 759 due to duPont’s research program. 760

Sylvania casts film at slower speeds, has greater waste, less efficient solvent recovery, requires more employees per casting machine, and produces less poundage per casting machine. 761

320. DuPont invested more money per casting machine than Sylvania. Due to duPont’s productivity and manufacturing efficiency, duPont’s investment per pound of sales was smaller than that of Sylvania. 762

321. A casting machine is the basic unit for manufacture of cellophane. 763 The following table indicates number of casting machines in operation by duPont and Sylvania during the period 1924-47. 764 Neither duPont nor Sylvania has put additional casting machines into operation since 1947. 765 Olin in 1951 put an eight casting machine plant into operation and thereafter put a ninth casting machine into operation. 766

Year DuPont Sylvania

1924 .................. 2 —

1926 .................. 4 —

1928 .................. 6 —

1930 .................. 29 3

1932 .................. 36 8

1934 .................. 40 12

1936 ............:..... 40 17

1938 .................. 48 19

1940 .................. 48 19

1942 .................. 56 21

1944 .................. 48 21

1946 .................. 48 21

1947 .................. 56 21

*120 822. United States cellophane producers competed on the basis of packaging-service. 767 DuPont established a packaging development department in 1929 which has assisted customers to create packages employing cellophane. 768 Purpose of the project was to promote the sale of cellophane, particularly that of. duPont. 769 Up to 1946, Sylvania had not established any organized packaging development section. 770

323. DuPont’s cooperation in constructive work with packaging machinery manufacturers has been greater than that of Sylvania. Sylvania began cooperation after most of the developments were worked out and has made no substantial technical suggestions to machinery manufacturers. 771 DuPont’s efforts to widen the use of packaging machinery for cellophane were much greater than those of Sylvania. 772 DuPont’s work in the development and promotion of packaging machinery improved the sales of Sylvania and other packaging material manufacturers, whose products can be used on the same machines as well as duPont sales. 773

324. Since January 1, 1947, duPont list prices for its cellophane and Sylvania prices for its cellophane have differed in the following respects:

(a) Different list prices per pound on orders of 500 pounds or more of roll cellophane of comparable types. 774

(b) Sylvania at all times allowed direct customers 1% cash discount whereas duPont- allowed none until August 1949, when it adopted a 1% discount to compete with Sylvania. 775

(c) Differences in area per pound until November, 1947. 776

(d) DuPont’s only price was for orders of 500 pounds or greater until Sylvania had different and higher prices for quantities under 500 pounds. 777

325. Despite existence of similar list prices for cellophane during the period 1930 to 1946, on numerous occasions there was competition between Sylvania and duPont on the basis of price. Sylvania departed from its list prices by supplying first quality film at second quality prices, 778 by quantity discounts on small volume orders, 779 by combining printed and unprinted cellophane in the determination of the rate of quantity discount, 780 by allowing quantity discounts at a rate based on aggregate purchases of bakers purchasing through a cooperative group, 781 by billing less than case orders at the lower case price, 782 and by granting a converter discount to an important customer that was not manufacturing converted cellophane for resale. 783

326. From 1941 to 1949 the cash discount allowed by Sylvania was 1% to customers and 2% to agents. 784 During *121 the same period duPont allowed no cash discounts to either customers or agents. 785

327. Sylvania’s actual sales at less than list prices resulted in numerous shifts of customer’s business from duPont to Sylvania. 786

328. Sylvania did not engage in developmental selling to the same extent as duPont. 787 Its sales and technical service to customers could not compare with that rendered by duPont. 788 It had no organized package development service, did no consumer advertising, and did not undertake market research essential to the initial development of new uses. 789

329. DuPont cellophane has had uniformity of gauge. This quality makes for uniform tension on the film, diminishes breakage in packaging and converting machines, and enables printing to be precisely in register. 790

330. DuPont has furnished customers, both users and converters, with technical assistance. DuPont’s service was superior in this respect to Sylvania’s. 791

X. The Basic Moistureproof Patents.

(Findings 331-339)

331. Moistureproof cellophane was a duPont invention. No other party made any contribution to its development. 792

332. DuPont got five basic patents upon its inventions of the product moistureproof cellophane and methods for its manufacture. Basic product patent, U. S. Patent No. 1,737,187, which issued November 26, 1929, claimed as a new product a sheet or film of regenerated cellulose combined with a moistureproofing composition and having a resistance to the transmission of water vapor at least seven times as great as plain cellophane. It claimed specific embodiments of that invention. 793 The remaining four patents, issued October 6, 1931, covered duPont’s method of operation and coating compositions discovered by duPont inventors. No. 1,826,696 claimed coating compositions for moistureproof cellophane consisting of four named ingredients in modifications and combinations. No. 1,826,697 was an apparatus patent on machinery used by duPont for applying the coating to regenerated cellulose film. No. 1,826,698 was concerned with the method of coating, particularly the humidifying of the base sheet. No. 1,-826,699 was concerned with the method of moistureproofing regenerated cellulose film in a process in which the coating compositions were heated above a stated melting point. 794 Validity of these patents is not challenged, and is conceded by plaintiff for purposes of this suit. 795

*122 333. DuPont employed the processes covered by its U. S. Patents Nos. 1,826,-698 and 1,826,699, which were among the four basic process patents issued in 1931. 796 It was not operating under apparatus patent No. 1,826,697 when it expired in 1948, since that apparatus had since been displaced by better technology. 797

334. Throughout the life of the basic moistureproof cellophane product patent, No. 1,737,187, no transparent regenerated cellulose film that resisted transmission of water vapor at least 7 times as well as plain cellophane could be made or sold in the United States without infringement of the claims of that patent. 798

335. Principal growth in the cellophane industry occurred after duPont’s invention of moistureproof cellophane, 799 which by 1940 accounted for over 80% of all cellophane sales in the United States. 800

336. Relative proportions of U. S. production of plain cellophane and moistureproof cellophane reversed from 3.9 % moistureproof and 96.1% plain in 1927 to over 85 % moistureproof and less than 15% plain by 1943. For the period 1943-47, inclusive, national production was 86.4% of moistureproof types and 13.6% of plain cellophane. 801 For the year 1950, on a dollar basis over 90% of all domestic sales were moistureproof cellophane, whereas plain cellophane accounted for less than 10% of dollar sales. 802

337. Principal growth in cellophane sales has been in moistureproof cellophane. 803 This is shown by the following table of dollar sales, duPont and Sylvania, broken down by plain and moistureproof, for the period 1924-1950. 804

*123 DuPont Moisture-Plain proof Total Plain Sylvania Moisture-proof Total

1924 $1,306,662 $ $ 1,306,662 $

1925 1,942,373 1,942,373

1926 2,982,542 2,982,542

1927 * 2,869,014 2,869,014

Sylvania began production in 1930

1928 3,131,608 603,222 3,734,830

1929 4,228,777 1,990,843 6,219,620

1930 4,306,440 6,588,489 10,894,929 N.A. N.A. N.A.

1931 4,918,294 11,149,513 16,067,807 N.A. N.A. N.A.

1932 5.052.422 10,325,539 15,377,961 1,916,449 1,091,158 3,007,607

1933 4,981,306 11,686,804 16,668,110 2,114,506 1,759,572 3,874,078

1934 5,359,327 13,459,023 18,818,350 2,120,12 7 3,095,148 5,215,275

1935 5,126,685 13,581,480 18,708,165 2,131,884 3,906,913 6,038,797

1936 6,012,868 16.674.063 22,686,931 2,371,318 4,987,109 7,358,427

1937 6,204,768 18.850.063 25,054,831 2,241,066 5,438,522 7,679,588

1938 5,907,989 19,667,671 25,575,660 2,547,850 6,284,401 8,832,251

1939 6,561,206 22,778,550 29,339,756 3,283,310 6,650,291 9,933,601

1940 6.721.422 24,327,492 31,048,914 3,365,902 6,866,069 10,231,971

1941 8,960,865 31,013,706 39,974,571 4,029,240 8,799,764 12,829,004

1942 4,535,340 30,115,596 34,650,936 2,163,165 11,204,888 13,368,053

1943 4,297,047 34,937,420 39,234,467 1,664,011 10,677,563 12,341,574

1944 5,006,154 34,350,852 39,357,006 1,432,947 10,671,004 12,103,951

1945 4,453,135 35,361,199 39,814,334 1,785,954 10,524,162 12,310,116

1946 4,984,310 37,665,221 42,649,531 2,037,739 12,202,521 14,240,260

1947 1948 7,741,573 9,483,247 47,598,053 64,255,320 55,339,626 73,738,567 2,093,250 2,885,008 14,388,668 17,399,474 16,481,918 20,284,482

1949 8,234,870 77,701,608 85,936,478 2,711,094 19,074,254 21,785,348

1950 9,330,776 89,850,416 99,181,192 2,674,961 26,809,793 29,484,754

338. The important protective quality of cellophane, resistance to transmission of moisture vapor, 805 was confined in the years 1929-1946 to products falling within the claims of duPont’s United States product patent No. 1,737,187, 806 validity of which is conceded. 807

339. Moistureproof cellophane in the period subsequent to its commercial introduction in 1927 made the buying public package conscious and its growth stimulated use of light weight papers. Cellophane sales increased from about 28,000,000 pounds in 1931 to approximately 204,000,000 pounds in 1948, while during the same period the total sales of packaging papers, cellophane and other films together, rose from 300,000,000 pounds to approximately 1,500,000,000 pounds. 808

XI. DuPont Did Not Engage in Predatory Practices as Alleged.

A. DuPont’s decisions as to changes in its capacity were made on the basis of business considerations, and not to suppress competition or to create artificial shortages.

(Findings 340-353)

340. DuPont expanded cellophane capacity to meet reasonably foreseeable demand. 809 In most cases sales achieved *124 were in excess of the amount forecast at the time of plant expansion. 810

Capacity was not expanded with the purpose of stifling competition, creating excess capacity to overhang the market, or forestalling potential competitors. 811

341. DuPont’s plant expansions have been based on range estimates of possible sales. Projects for expansion are prepared and submitted to management stating reasons in support. These reasons have not included forestalling competitors. 812

342. DuPont expanded its capacity for cellophane when it had more business than it could supply and forecasted additional business in the future. Expansion was not undertaken with idea of obtaining any predetermined percentage of domestic cellophane production or of the flexible packaging market. 813

343. Most of the increase in duPont’s capacity to produce cellophane has resulted from improved efficiency of manufacturing with existing equipment rather than installation of new plant. 814 Better efficiency resulted in increased output per unit of existing plant. 815

344. In determining whether to expand duPont followed business methods. It considered estimates of sales in the next few years, and the relation between the estimated cost of expanding production and the revenue from the projected increased output. 816 The effect of the expansion on the entry of other manufacturers of cellophane was not a principal factor in duPont’s decision to expand. 817

345. Plaintiff conceded duPont’s expansion of productive capacity was not illegal. 818

346. DuPont has never sought to create a shortage of cellophane and has not closed down plant nor taken any other action with the intention of creating a shortage. 819

For ten years before 1941, duPont production increased at the compound rate of 15% 820 and in March 1941 its eight machine Clinton #1 plant came into production. 821

Production of both duPont and Sylvania was curtailed during World War II as the result of Government action to preserve manpower and raw materials. Supply available for civilian consumption was further curtailed by use of cellophane for War purposes, and by Governmental limitations on the use of cellophane. 822

Cellophane plants could not be built during the war. Work on duPont’s Clin *125 ton #2 plant commenced almost immediately after V-J Day, and it began production in February 1947. 823

347. In May, 1942, the Governmental restrictions on the use of cellophane had caused demand to drop to the extent duPont had twenty casting machines idle. 824 It decided to close down Buffalo #1 plant, consisting of eight casting machines. 825 Thereafter at plaintiff’s request and pursuant to a contract with plaintiff, the plant was converted to production of rayon tire yarn. 826 It has never been reconverted to cellophane manufacture.

348. During World War II, war uses took an increasing percentage of duPont’s cellophane output. This percentage rose steadily from 1941 to a high of about 75% of all duPont cellophane by 1945. 827

349. Since World War II, there has been expansion in packaging, particularly in consumer size units, and hence increase in demand for flexible packaging materials. 828 Producers of such materials, including cellophane producers, have increased their capacity, but have been unable to satisfy the demand except for a period during 1949 and a period commencing January 1,1952. 829 Demand for cellophane has exceeded supply not only in the United States, but also in Europe and South America. 830

350. Waxed paper, glassine and flexible packaging materials were, like cellophane, in short supply during World War II, and in postwar years. Occurrence of periods of relatively free supply of cellophane in 1949 and 1952 coincided with similar periods of relatively free supply of other flexible packaging materials. 831

351. In 1952. all flexible packaging materials except polyethylene were in free supply, and waxed paper, glassine and cellophane were considerably undersold. 832 At that time, duPont was operating its cellophane productive facilities at approximately 72% of capacity. 833

352. During periods when demand for cellophane was greater than ability of producers to supply, duPont has lost business and has been hampered in its competition with other flexible packaging materials. 834 When cellophane has *126 been in free supply as it was during 1949 and is now, 835 duPont has been unable to regain some of the business it lost during the shortage periods. 836

353. During the postwar period the demand for cellophane was greater than at any previous time, owing to the increase in packaging for self-service supermarkets, then in their greatest period of growth. 837 During this period cellophane prices have more closely approached those of waxed paper and glassine than at any previous time. 838

B. Potential competitors were not excluded.

(Findings 354-388)

354. No proof was presented any person failed to manufacture cellophane as the result of any act done by duPont.

355. There is no proof there has been any potential competitor who desired to manufacture cellophane and did not do so.

356. There is no proof duPont possesses power to exclude potential competitors who may desire to manufacture cellophane.

357. DuPont employed lawful business methods in attempting to keep apprised of competitive developments 839 and did not attempt to stifle competitors. 840

358. No evidence was offered any potential competitor was excluded from manufacture of cellophane as a result of duPont’s size or prestige in the chemical industry. Sylvania is the largest producer of viscose rayon in the United States with assets of at least $165,000,-000. 841 Olin Industries, another cellophane manufacturer, has assets of approximately $180,000,000. 842 Other concerns with substantial assets have been engaged in the manufacture of competing flexible packaging materials, such as Pliofilm, foil and papers. 843

359. DuPont did not suppress potential competition by Rayonier in the manufacture of cellophane. 844

360. Rayonier is a wood pulp manufacturer and supplies wood pulp to duPont, among others. 845 The wood pulp it manufactured before 1930 was unsatisfactory for the manufacture of cellophane or rayon 846 An agreement was entered into between duPont and Rayonier on September 27, 1930 under which Rayonier for a fee received substantial secret information and technical assistance from duPont, which enabled Rayonier to produce a satisfactory dissolving pulp for rayon and cellophane manufacture. 847 The fee was modest in comparison to the essential assistance given under this agreement. 848 Improvements in Rayonier’s pulp resulting from the technical assistance by duPont were made available to many other rayon or cellophane manufacturers, including Sylvania. 849

361. DuPont has bought wood pulp for cellophane manufacture in substantial quantities from many suppliers other than Rayonier, 850 and there is wood pulp *127 available for all cellophane manufacturers. 851

362. Rayonier did not desire to enter into the business of manufacturing cellophane. 852

363. The 1930 contract between duPont and Rayonier expired in September 1945. 853 There is no proof either party has any intention to extend it, or there were any understandings extended beyond the expiration of the contract.

364. The 1930 contract between duPont and Rayonier did not exclude Rayonier from the manufacture of cellophane. 854

365. DuPont did not suppress competition by Visking Corporation in the manufacture of cellophane. DuPont has never had a contract, arrangement or understanding with Visking which would have prevented Visking from manufacturing and selling cellophane, 855 provided duPont patents were not infringed.

366. Visking never desired to enter cellophane business. It was interested in the manufacture of cellulose sausage casings. 856

367. DuPont acquired certain Cohoe patents in 1923 which covered the use of glycerine as a softening agent in the manufacture of cellulose sausage casings, and were of interest to duPont because of their possible relevance to the use of glycerine in the manufacture of cellophane. 857

368. In connection with experimental work on cellulose sausage casings one Freund discovered he could not manufacture these casings without infringing the Cohoe patents acquired by duPont. He asked duPont for a license under these patents. DuPont agreed in 1925 to license the patents and its technical information pertinent to cellulose casing manufacture to a company to be formed by Freund. As payment it received 40% of the common stock in the company, Visking Corporation. 858

369. Under the agreements of October 20 and December 31, 1925 between duPont and Visking, duPont licensed to Visking patents and technical information for the manufacture of cellulose sausage casings and in return became entitled to Visking’s technical information and patents as to cellophane sheeting. 859 No limitations prevented Visking from making cellophane if it used its own patents and information, but it was barred from using duPont patents and information for that purpose. 860 There were no understandings between the parties outside the contract 861

370. By rendering financial, managerial and technical assistance to Visking, duPont helped to organize that Company and to develop it into a growing and profitable business. 862 Visking regarded duPont’s technical and managerial assistance as very valuable. 863

371. The agreements of October 20 and December 31, 1925 between Visking and duPont were cancelled as of January 25, 1945. There is no proof this cancellation was anything other than bona fide or there were any understandings which extended beyond termination of the contracts. 864

*128 372. DuPont sold all its stock in Visking prior to the filing of the complaint in this action. 865

373. Representatives of Visking Corporation in June 1948 conferred with duPont with respect to its offer to license its cellophane patents and technology, and arrangements were made for the Visking people to visit a duPont plant to obtain a visual concept of cellophane manufacture. 866 Visking made no proposal to accept duPont’s offer. 867

374. DuPont never entered into any agreement that had the intent of suppressing potential competition from American Viscose, which is now duPont’s principal cellophane competitor in the United States. 868

375. DuPont entered into a contract with British Cellophane, Ltd. in 1935 regarding the exchange of secret technical information. 869 In this agreement it took normal precautions against disclosure of such information to parties not authorized to receive it under the agreement, including shareholders of BCL. 870 One effect of this provision against disclosure of secret data to unauthorized parties was such information could not be passed on to American Viscose by British Cellophane, Ltd. through their common shareholder, Courtaulds, Ltd. 871

376. The 1935 agreement regarding the exchange of secret technical information between duPont and British Cellophane, Ltd. did not exclude American Viscose from entering the cellophane business in the United States. 872

377. DuPont and Union Carbide & Carbon Co. never had an agreement they would not compete with each other as to cellophane, glycol cellulose film, or any other kind of flexible packaging material. Likewise, Carbide was not influenced by duPont not to compete with duPont in the manufacture and sale of cellophane. On the contrary, anyone in the Carbide organization suggesting such an understanding would have been discharged. 873

378. Union Carbide & Carbon Company today manufactures flexible packaging materials which compete with cellophane, including vinylite sheeting and polyethylene. 874

379. Union Carbide & Carbon Co. never considered engaging in the manufacture and sale of cellophane. 875

380. A process for manufacturing glycol cellulose film was acquired by Union Carbide & Carbon Co. from another company which had developed it. Carbide engaged in research and experimental work using glycol cellulose film as a packaging material, but never manufactured it on a commercial scale. 876

381. Because of its desire to sell raw materials important to the manufacture of glycol cellulose film, Union Carbide & Carbon Company sought to interest duPont, Sylvania, Goodyear Tire & Rubber Co., Marathon Corp., Olin Industries and Industrial Rayon Co. in the manufacture of glycol cellulose film. 877 Both duPont and Sylvania conducted experiments in cooperation with Carbide with respect to manufacture of glycol cellulose film. 878 DuPont concluded it was not interested in manufacture of that product and so informed Carbide. 879 *129 Other concerns approached by Carbide took the same position, and none ever made the film. 880

382. When unable to interest other companies in manufacturing glycol cellulose film, Carbide decided not to make that film for reasons, including the high manufacturing cost, and the Dreyfus patent, which was controlled by one of the Celanese companies and did not expire until 1941. Controlling factor was Carbide then was the only manufacturer of ethylene oxide in the world and the market for it was expanding. It decided to continue to concentrate on the profitable manufacture of this chemical rather than .to invest millions in a field involving mechanical operations with which Carbide was not familiar. The only raw material manufactured by Carbide used in making glycol cellulose was ethylene oxide, which comprised only about 6% to 8% of the raw material required for glycol cellulose film manufacture. Carbide is not interested in operating manufacturing processes unless it makes 75% to 90% of the raw materials required for manufacture of the final product. 881

383. DuPont made no attempt to prevent Union Carbide & Carbon Company from manufacturing either cellophane or glycol cellulose film, 882 and no action of duPont had the effect of excluding Union Carbide & Carbon Company from such manufacture. 883

384. DuPont had no patents that would have prevented Union Carbide & Carbon Company from manufacturing glycol cellulose film. 884 DuPont had opportunity to buy certain Lilienfeld patents relating to glycol cellulose, but declined to do so despite a belief Carbide was interested in the patents for their relation to glycol cellulose film. 885

385. Goodyear Tire & Rubber Company did not consider the manufacture of cellophane before late 1948. At duPont’s invitation, it investigated the advisability of entering cellophane manufacture, obtained information from duPont and decided not to engage in cellophane manufacture, but to use its funds available for expansion in fields with which it was familiar. 886

386. There is no proof any of the following companies ever attempted or desired to engage in the manufacture in the United States of plain cellophane or of moistureproof cellophane.

Rayonier, Inc.

Skenandoa Rayon Co.

Industrial Rayon Co.

Union Carbide & Carbon Corp.

Marathon Corp.

Goodyear Tire & Rubber Co.

Eastman Kodak Company

Monsanto Chemical Company

Transparent Package Company

387. DuPont is a corporation engaged in the chemical industry, 887 and manufactures a variety of products. There is no proof the size of duPont or its manufacture of numerous products has had any influence whatever in the decision of third parties not to engage in cellophane manufacture.

388. There is no proof of the extent of duPont’s diversification of chemical products, no proof such diversification as exists has had any effect upon the volume of duPont’s sales of cellophane or upon the entry of any concern into the manufacture of cellophane, and no proof such diversification as exists has developed domestic or international affiliations that were not obtainable by other corporations. 888

*130 C. Distribution outlets were not controlled.

(Findings 389-455)

389. There is no proof as to the number of companies in the United States that engage in the conversion of cellophane.

390. There is no proof of the number of marketing outlets to which cellophane is sold.

391. Sylvania 889 and later Olin 890 had no difficulty in obtaining adequate numbers of converters. Some of Sylvania’s converters sold only Sylvania cellophane and others sold both duPont and Sylvania. 891 Sylvania preferred to sell to direct users rather than to converters because of the functional discounts always given converters. 892 Sylvania refused to sell to numerous converters who sought to purchase cellophane from it. 893

392. Sylvania’s dollar sales to converters increased about five-fold from 1935 to 1948. In 1935 there were only ten or twelve recognized cellophane converters. By the end of 1939, Sylvania was selling to 26 converters and by 1948 it was selling to 93 converters. Converters were the second largest sales outlet of Sylvania in the 1935-39 period, constituting less than 20% of Sylvania’s sales. This figure rose to 28.8% in 1941 and 32.5% in 1948. Dollar sales to converters increased from $1,150,000 in 1935 to $2,200,000 in 1939, $3,800,000 in 1941, and $6,800,000 in 1948. 894

393. DuPont has never engaged in the conversion of cellophane. 895 It promoted conversion by independent companies by furnishing encouragement, sales assistance and technical assistance. 896

394. DuPont prior to World War II had a program of selecting converters to which it would sell. Policy was adopted to enable cellophane, which was a high priced patented product, to fight paper for the business of flexible packaging purchasers. 897

395. Sylvania, as well as duPont, had a selective converter policy. 898

396. DuPont’s selective program in selling converters was to get the special type of selling that was needed to foster cellophane sales. 899 The number of converters was increased as requirements changed. 900 Each application to purchase duPont cellophane for conversion was considered on its merits 901 and duPont’s converter distribution was expanded with the growth of the markets to which cellophane could be sold. 902

397. When duPont commenced the manufacture of cellophane in the United States no one in the United States was engaged in the conversion of cellophane. 903 The first domestic bag manufacture began as a hand operation in a single size in 1925 904 and printing of cellophane began in 1927. 905

398. Conversion of cellophane is a highly specialized operation. The successful converters of cellophane are those *131 who over a long period of growth developed improvements, efficiency and technical competence. There are ample converting facilities to meet requirements for converted cellophane. 906

899. Companies which have grown to be important converters of cellophane, such as Shellmar Products Corp., Dobeckmun Company and Milprint, Inc., were small organizations when duPont persuaded them to undertake conversion of cellophane. Shellmar and Dobeckmun were not even in business when duPont began seeking converters, and Milprint was a small glassine converter. 907 There were many large and strong companies engaged in the conversion of waxed paper and glassine. 908 Most successful converters of cellophane achieved their position by hard work and creative selling, growing from quite insignificant companies to important factors in all types of flexible packaging. 909

400. The number of converters purchasing from duPont has increased. From 1940 through 1944 the number of converters purchasing from duPont increased from 35 to 80. 910 Similarly, the number of concerns engaging in the conversion of' duPont cellophane has increased since 1945. 911

401. Due to shortage of cellophane duPont did not sell to new customers for conversion immediately following World War II. It had a broad policy of aiding veterans and set up allotments of cellophane for them if they desired to enter converting. Since duPont believed the excess of demand for converted cellophane oyer supply was due to shortage of cellophane production rather than any inadequacy of installed converting equipment, it also advised veterans of these facts and some other business would probably give better chance of success 912

402. Converters of cellophane seek business on the basis of quality, price and service. 913 Between cellophane converters there has been no uniformity of price as to cellophane wraps or as to other wraps. Ordinarily a customer can buy any particular bag or wrap from more than one converter, and often purchases both cellophane and other wrapping materials from the same converter. 914

403. DuPont has not attempted to control the territory in which a converter sells products made of duPont cellophane, 915 the prices at which the converters sells such products, 916 or the converted products it will make. 917

404. During the period December 1938 — January 1, 1947 duPont classified converters purchasing from it as “promotional” and “regular”. 918 DuPont’s prices were identical to both classes and both sales and technical service were rendered by duPont to both classes. 919 Promotional converter contract in effect during this period provided for exclusive purchases from duPont of the converter’s requirements of cellophane, while the *132 contract with a regular converter contained no such provision. 920

405. DuPont’s exclusive contracts with certain so-called “promotional converters” which were in effect during the period 1938-1947 were subject to termination on 30 days’ notice by either party. 921

406. Despite existence of requirements contracts between “promotional converters” and duPont, during the period 1938-1947, converters considered themselves free to purchase cellophane from Sylvania. Milprint purchased from Sylvania in 1944 and at other times. 922 Shellmar purchased from Sylvania at various times prior to 1945, and in 1945 commenced purchasing a considerable percentage of its requirements from Sylvania. 923

407. DuPont’s salesmen called upon end users of converted cellophane. DuPont’s purpose in developing converters was to promote usage of cellophane. DuPont encouraged converters to specialized promotion of cellophane and sought to develop business for converters. The intent of these efforts was not to control outlets for cellophane, but to get better distribution of the product. 924

408. DuPont’s policy was a user of cellophane would receive support regardless of whether it purchased direct from duPont or purchased converted film from converters. 925 DuPont salesmen carried samples of converted cellophane and used them in their sales efforts. 926 When a customer preferred printed cellophane or bags, he was referred to converters who could fulfill his desires 927 DuPont preferred the cellophane used to manufacture the converted items to fill such referred orders be duPont cellophane. 928

409. Milprint, earliest and now one of the important converters of cellophane, has been treated no better than duPont’s other customers. It was treated fairly in its allocation during shortage periods but was not favored, and has not been favored in price, or in quality or volume of service rendered. 929

410. DuPont has not protected its original converters or more important converter customers from competition by other converters. New converters of duPont cellophane have constantly come into being 930

411. DuPont promoted use of package machinery and bag making machines by cellophane customers. DuPont did not centralize all business for bags or other processed cellophane in the hands of converters. 931

412. Converters such as Shellmar and Milprint broadened the sales of cellophane by promotional selling. Such selling involves persuading a customer to adopt a new type of package that will increase sales and give his product the protection it requires. 932

413. DuPont continued to encourage small organizations that began converting operations. Technical and sales assistance furnished by duPont to these converters was essential to their growth. DuPont’s assistance to them included reference of customers, joint calls of duPont salesmen with converter salesmen, *133 market surveys, training salesmen and solution of technical problems. 933

414. DuPont furnished assistance to regular converters, as well as to promotional converters. Examples of such service to regular converters are advice as to packaging machinery, 934 chemical tests on materials, 935 results of market research, 936 sales literature, 937 manuals as to packaging, and consumer advertising. 938

415. The one year contracts in effect between duPont and fabricators who purchased some cellophane from it were not requirements contracts. 939 There is no proof any fabricator who was a party to such a contract in fact bought cellophane only from duPont. 940

416. As of January 1, 1947 duPont terminated all purchase contracts with converters and fabricators, and the only contractual relations since that time have consisted of routine individual orders. 941

417. Plaintiff conceded duPont did not fix or control prices charged by converters, 942 and duPont did not attempt to fix such prices. 943

418. Competition for the business of cellophane users has been active between converters of duPont film and converters of Sylvania film. 944 Shifts of business were frequent. 945 Daniels Manufacturing Co., an important Sylvania converter, dominated sale of converted cellophane to the meat industry for years, 946 although converters of duPont cellophane were also selling that industry 947 Recently, converters of duPont cellophane have been able to capture from Daniels amounts of the meat industry business for converted cellophane. 948

419. Prior to January 1, 1947, duPont had cumulative annual quantity discounts for different classes of customers. 949 There is no proof these discounts tended to lessen competition at either buyer’s level or seller’s level.

420. Plaintiff conceded it could offer no evidence any duPont quantity discounts caused any restriction on Sylvania’s production or sales. 950

421. There is no proof duPont’s quantity discount was ever the factor in an order by a purchaser or the decision to purchase from duPont was not determined by duPont’s quality of cellophane.

422. Sylvania had no understanding with duPont as to quantity discount schedules. 951

423. Prior to 1936, duPont had quantity discounts to converters. 952 When the Robinson-Patman Act, 15 U.S.C.A. § 13 et seq., was passed these discounts were reviewed by duPont’s Legal Department. 953 Quantity discounts to converters were continued until 1938, when they were terminated on the advice of the *134 Legal Department. 954 In that year, duPont classified processors of cellophane for resale as converters and fabricators. 955 A 3% functional discount was established for fabricators 956 and continued until January 1, 1947, when discount to fabricators was terminated. 957 Converters were classified in 1938 as ‘■‘promotional” or “regular”, with the same functional discounts applicable to purchases by both. 958 In 1938 functional discount to converters was established at 7y2% off list, plus an allowance of one-half the cost of approved advertising up to 2y2% Qf purchases. 959 In November 1941, functional discount to all converters was changed to 10% off list, and the advertising allowance eliminated. It continued until January 1, 1947 when it was lowered to 7%% 960 DuPont’s converter discount was lowered to 5% on August 1, 1948, and raised to 7 % on October 1, 1950, where it remained. 961

424. Plaintiff does not contend quantity discounts paid by duPont to converters, which were terminated in 1938, violated the Robinson-Patman Act. 962

425. DuPont classifies as a converter one who processes cellophane for resale. Converting activities include printing, bag making, laminating, etc. DuPont .classifies as a fabricator one who processes cellophane for resale to produce a product not used as primary packaging material, such as drinking straws, ornaments, pressure sensitive cellulose tape, ribbon, bonbon cups, etc. 963

426. DuPont’s classification of processors of cellophane for resale as converters and fabricators was made with advice of counsel, and different functional discounts to the two classes were approved on the basis of absence of competition between the two classes. 964

427. There is no proof duPont’s classification of its customers as direct and indirect, or its sub-classification of indirect customers as converters, fabricators, industrial users, jobbers and agents was made with any intent to obtain control over its customers.

428. There is no proof any converter, fabricator, industrial user or distributor of cellophane ever purchased cellophane from duPont rather than from Sylvania as the result of any functional discount allowed by duPont to any class of purchaser.

429. Purchasers from duPont who bought cellophane for converter purposes and for fabricator purposes were allowed the discount granted other converters only on that portion of film purchased for conversion, and the discount allowed other fabricators on the portion purchased for fabrication. 965

430. There is no proof products manufactured by converters compete with products manufactured by fabricators, which are not used as primary parts of a package and as to which during the period 1938-1946 duPont allowed a functional discount at a different rate, and thereafter no such discount.

431. Prior to January 1, 1947, duPont classified one group of customers as industrial users. There is no proof customers purchasing cellophane from duPont as industrial users competed with customers purchasing from duPont as converters or fabricators.

*135 432. As early as 1928, duPont paid annual cumulative quantity discounts to customers purchasing cellophane for their own use, 966 it being then the U. S. manufacturer of cellophane. 967 Rates of these discounts and quantity of purchases necessary to earn specific rates were reviewed and revised from time to time. 968 A discount schedule ranging from 2%% on annual purchases over $10,000 to 10% on annual purchases of over $1,500,000 was adopted in November, 1935, 969 and remained until all quantity discounts on cellophane were terminated on January 1, 1947. 970

433. When the Robinson-Patman Act was passed in 1936, duPont reviewed its quantity discounts to direct users of cellophane, 971 which had been in effect since at least 1928. 972 Under duPont’s quantity discounts the maximum price difference to purchasers had been approximately 3$S a pound. One pound of moistureproof cellophane contains about 21,-000 square inches, and will wrap a large number of articles such as cigarette packages. On this basis duPont Legal Department in 1936 advised discounts on cellophane did not have any effect on competition that was forbidden by the Robinson-Patman Act. 973 According to the Legal Department, quantity discounts to direct users were lawful, since they did not injure buyer or create a monopoly, so discounts were continued. 974 This advice was repeated in 1938 with respect to quantity discounts to direct users for discount was an infinitesimal part of customer’s cost and could have no effect on competition. 975 In 1943 during the period of maximum price control by plaintiff, duPont’s Legal Department advised that the Federal Trade Commission had indicated disapproval of cumulative quantity discounts such as allowed by duPont to direct users. The Legal Department did not urge immediate abolition of all quantity discounts and advised this would not be necessary 'unless later Federal Trade Commission rulings were more decisive. DuPont, however, undertook studies of its quantity discount arrangements with direct users, 976 and on its next price change eliminated the quantity discount, effective January 1, 1947. 977

434. Sylvania gave quantity discounts equal to those granted by duPont. 978 On occasion Sylvania allowed such discounts on annual sales of less than $10,000 to a customer, 979 which was the minimum quantity on which duPont allowed discount, 980 and in cases allowed direct users to include their purchases from converters in computing the rate at which Sylvania would allow a quantity discount. 981

435. Sylvania allowed quantity discounts to cooperative organizations acting as purchasing agents for numerous bakers, determining rate on basis of the total orders routed to Sylvania through the organization. DuPont did not allow a discount to such agents, but only to the individual baker ordering from duPont. 982

*136 436. When a direct user was purchasing quantities of cellophane from duPont to entitle it to a discount, Sylvania sold the same customer on its own regular quantity discount schedule. There is no proof of the number of occasions on which Sylvania decided to pay more discount than the customer’s purchases directly from it would have earned, and no proof of the annual or total amount expended by Sylvania in such extra discounts. 983

437. Availability of a quantity discount from duPont until 1938 and a functional discount thereafter did not influence Shellmar, one of the most important cellophane converters, to purchase from duPont rather than Sylvania. Sylvania offered as large a discount as duPont, and Shellmar would have preferred two sources of supply. However, it could not use Sylvania cellophane because the quality was not adequate. Quality rather than discount was the reason its purchases were from duPont. 984

438. DuPont’s quantity discounts, which were eliminated January 1, 1947, 985 were paid to small customers as well as large ones. Of 306 quantity discounts paid in 1941, 253 went to customers who purchased less than $50,000 of cellophane in that year. 986

439. There is no proof of extent, if any, to which duPont’s former agents for the sale of unconverted cellophane (H. D. Catty Co., Brooks Paper Co., Zellerbach Paper Co.) competed with jobbers who also handled such cellophane. Principal business of these agents consisted of resale of unconverted cellophane in quantities of 500 lbs. and over. 987 Principal sales by jobbers were of quantities less than 500 lbs. 988 In any event, Catty withdrew from the sale of unconverted cellophane in 1945, Brooks in 1947 and Zellerbach in 1948. 989

440. Prior to 1948, duPont did not have jobbers in the West Coast area served by its agent Zellerbach. 990 However, duPont had a representative in that area 991 and converters sold into that area. 992 After discontinuance of Zellerbach’s agency in 1948, 993 duPont commenced selling direct to jobbers on the West Coast. 994

441. DuPont did not control resale prices of any of its three agents, or the contractual relations between them and their customers. 995 It did advise an agent as to the desirability of certain clauses in customer contracts. 996

442. During the period December 1938-November 1941, part of duPont’s functional discount to converters consisted of allowing 50% of the converter’s approved advertising expense on cellophane, provided the allowance did not exceed 2 /z% of total purchases. DuPont’s advertising allowance was available to regular converters as well as to promotional converters, and allowance was paid to a regular converter. 997

443. DuPont’s advertising allowance to converters did not tend to channel *137 business to duPont, but was a source of friction with important customers. 998

444. Sylvania made deals with direct customers who were not converters under which it paid part of their advertising costs. This caused purchases from Sylvania by important accounts. 999 DuPont did not grant any advertising allowance except to converters, and. to them only in the period 1938 — 1941. 1000

445. DuPont did not attempt to fix prices charged by jobbers of duPont cellophane. 1001

446. There is no proof duPont fixed the resale prices for cellophane charged by its agent, Brooks Paper Company.

447. DuPont sold cellophane to the West Coast area, also served by Zellerbach Paper Company, its agent. Cellophane customers in the area were aware of duPont’s own prices as well as Zellerbach's 1002 While prices were comparable, there is no proof duPont fixed, by agreement, prices charged by Zellerbach for duPont cellophane.

448. DuPont’s price lists carry prices for both cellophane in rolls and cellophane in sheets. On area basis, duPont’s sheet prices were higher than roll prices 1003 DuPont’s agent, H. D. Catty Co., at times purchased roll cellophane from duPont, cut it into sheets and sold the sheets. In 1945, H. D. Catty Co. inquired of duPont what spread duPont intended to have in duPont’s prices for rolls and sheets. 1004 DuPont refused to interfere on a complaint by its agent, Zellerbach, Catty was reselling cellophane at a price lower than charged by Zellerbach. 1005

449. In 1939 a duPont salesman had a discussion with Houston Paper Company, a jobber which had been reselling both duPont and Sylvania cellophane. The salesman sought to persuade Houston to buy duPont cellophane and, being unsuccessful, informed his superior Houston should be removed from a list of preferred jobbers. This was done. 1006 Thereafter, Houston’s name erroneously appeared on a preferred jobber list. 1007 In calling attention to this, another duPont employee stated Houston should not be included, since it was handling competitive Sylvania cellophane, was a price cutter and was aggressively pushing Sylvania cellophane. 1008 There is no other evidence duPont attempted to control resale prices of any jobber of duPont cellophane.

450. DuPont employed a red and blue standard label bearing the legend “DuPont Cellophane” 1009 During the period 1938-1947 when converters were classified as “promotional” or “regular”, both classes were permitted to use the standard label with the sale of their converted products, provided such use was in accordance with regulations established by duPont protecting its right to the standard label by insuring it would not be used on products made of cellophane not made by duPont. 1010

451. There is no proof fabricators were not permitted to use the duPont standard label. Fabricator contracts when duPont’s registered trademark “Cellophane” was in wide use granted to fabricators the right to use duPont’s *138 trademark to identify fabricated products made from duPont cellophane. 1011

452. DuPont issued a form of agreement covering use by customers of duPont’s standard label in 1947. 1012 This agreement was offered to all customers, including those purchasing both Sylvania and duPont cellophane. 1013 As before, the label was to be used on products made of duPont cellophane. 1014

453. Value of the duPont standard label was small. A converter was interested in promoting its own name rather than that of the producer of one of the flexible packaging materials it converted. 1015

454. To broaden use of cellophane, duPont furnished sales and technical help to its customers. This help included work in the field, advice as to problems encountered in conversion and in use of converted products, chemical tests, merchandising literature, market surveys, reprints of consumer advertising, etc. DuPont provided such service both to customers buying exclusively from it and to customers purchasing from Sylvania as well as duPont. There is no proof the services furnished by duPont of this character to two-source converters differed in quality or amount from that furnished to converters purchasing only from duPont. 1016

455. As of April 1, 1949, duPont’s distribution practices are summarized:

1. Prices were based on a minimum of 500 pounds of rolls or a case of sheets. Smaller orders were referred to jobbers or converters.

2. Discount from list price on domestic sales was a functional discount to any customer that purchased materials for processing (printing, bag making, etc.) and subsequent resale for packaging uses.

3. No sales agreements between duPont and any customer existed for domestic sales.

4. Remaining wholesale distributors were two companies acting as exclusive distributors of roll cellophane to the dairy industry for use as hoods for milk bottles. Material ordered by these companies was prepared at a special price, without discount. Other resellers of non-processed duPont cellophane were jobbers who purchased at net prices and had neither exclusive territories nor any territorial limitations. Jobbers set their own resale price schedules and there was no suggested resale price schedule by duPont.

5. Use of the standard label, a red, white and blue insignia with the words, “DuPont Cellophane”, was available to all customers.

6. Business outside of the continental United States and Canada was handled by the Export Section, covering every country in the world where import licenses and exchange conditions permitted sales. Export business was normally handled through distributors who were given exclusive resale franchises in designated territories, cancellable on 60 days’ notice. Foreign distributors were given discounts and commissions of 5% on rolls and 10% on sheets.

7. DuPont’s policy was export business on rolls should return a net profit equal to domestic sales and export roll prices were higher than United States roll prices. On sheets export was regarded as an outlet for production in excess of domestic requirements and export prices for sheets were the same as the United States prices. 1017

*139 D. Patents were not abused.

(Findings 456-532)

456. Plaintiff conceded for purposes of this case claims of all patents involved are valid. It conceded validity of duPont’s trademarks. 1018 No evidence was offered as to abuse of trademarks. 1019

457. DuPont never applied for a cellophane patent not based on research done by it. 1020 Only half of proposals by research personnel for patent applications were submitted as applications, the remainder were rejected by duPont’s patent personnel because the discovery was not patentable. 1021

458. DuPont’s reason for filing applications on its inventions was to prevent others from filing an application, securing a patent, and preventing duPont from enjoying the benefits of its own research either in production or as basis for further research. DuPont desired to obtain patents on results of its research so to feel secure in employing its own discoveries. 1022

459. Criteria by which duPont decided whether to file a patent application were technical merit of discovery and its possible utility in the operations of duPont. 1023

460. When a duPont research worker made discovery pertinent to cellophane, he forwarded a patent proposal to the Patent Service Section of the Rayon Department. Patent Service made a preliminary, study. The Patent Steering Committee then considered advisability of applying for a patent. This decision turned upon' the technical merit of discovery and its possible utility in company operations. If decision of the Patent Steering Committee was favorable, Patent Service would search prior art, develop the facts, to serve as basis for patent application. Upon filing of the application, the Patent Board of the Company was advised. This Patent Board consisted of representatives from each operating department, the Legal Department, Chemical Department, Engineering Department and Foreign Relations Department. 1024

461. DuPont’s Executive Committee exercised control over patent license agreements. It issued policy statements for the guidance of Company management and personnel as to the Company’s policies with respect to patents and procedures to be followed. 1025

462. DuPont’s patent policy was to apply for U. S. patents to protect its expenditures for research and development. Policy was to seek patents on inventions which might have commercial value:

(1) Inventions duPont intended to practice in its manufacture.

(2) Auxiliary inventions covering modifications which may be found practical to introduce in duPont’s manufacture.

(3) Inventions covering uses of duPont’s products.

(4) Inventions which may be a source of income. 1026

DuPont preferred to utilize its inventions in its own manufacture, rather than to exploit them by licenses. It was prepared to consider licensing of inventions it might not be able to use itself or where demand for products embodying invention could not be met by duPont alone. 1027

463. Since 1938 duPont had a specific policy no license of a duPont patent should be conditioned upon use of duPont. products. 1028

*140 464. DuPont never acquired any patent for purpose of suppressing the patent and not using it. 1029

465. DuPont never applied for a patent to cellophane for the purpose of blocking third parties from developing their inventions or for fencing off others from patenting inventions relating to an area in which duPont held patents. 1030 DuPont did not undertake research work for purpose of getting patents. Patents were considered only a by-product of that work. 1031

466. When duPont did not apply for a patent on results of its research, it found itself blocked from using results when others later obtained patents on the same development 1032

467. DuPont acquired rights under patents relating to cellophane owned by others. In each case, the patent was studied and decision made as to whether rights would be acquired. DuPont did not acquire any patent right it did not believe had possible utility in its manufacture or sales. 1033

468. DuPont on some occasions obtained patent rights on customer use inventions, for the purpose of being free to promote use of duPont cellophane by customers without exposing them to possible infringement proceedings. 1034

469. DuPont acquired patents relating to use of cellophane. Examples of this are:

(a) Wertheimer patent relating to ribbons. 1035

(b) Patents relating to the closure of cellophane bags. 1036

(c) Patents relating to adhesives. 1037

(d) Patents relating to sealing. 1038

470. There are 7000 United States patents relating to the cellophane art. 1039 During the period 1924-1947, duPont had rights under 368 patents relating to cellophane and 49 relating to caps and bands. 1040 Plaintiff conceded for purposes of this action validity of all claims of all patents. 1041 Of the 368 relating to cellophane, as of January 1, 1952, 102 had expired and 266 were in force. 1042

471. DuPont had neither intent nor power to subvert the use of trademarks, trade secrets or know-how relating to cellophane.

472. Of the 368 patents relating to cellophane which were issued to duPont, 68 were customer use patents which duPont as a manufacturer would not use. Of the remaining 300, duPont had used 93 in its commercial operations, or 31% 1043

473. Patents under which duPont had rights were not put into use by duPont due to difficulties not foreseen when it filed the patent application. Such included :

*141 (a) Critical material required for the practice of the invention was not available in commercial quantities. 1044

(b) Critical material required for the practice of the invention, although available in commercial quantities, had such a high cost the process was less desirable than other processes. 1045

(c) During the period between filing the patent application and issue of the patent, new technology developed that gave better results than the patented discovery. 1046

(d) Invention that operated under laboratory conditions could not be applied to commercial operation under plant conditions. 1047

474. A patent application is filed soon after invention so as to have an early filing date. At time of making application the question of whether the invention will have commercial utility is a matter of judgment rather than certainty. 1048

475. There is no proof the chemical industry puts to commercial use as much as 30% of patent rights available.

476. Average percentage of commercial use of patents in the duPont Company is from 30% to 32% of patent 2-ights available, as compared to 31% of its rights under cellophane patents 1049

477. As of January 1, 1952; duPont •owned or had rights under 266 existing patents relating to cellophane. 1050 Of these 113 related to moistureproof cellophane, and the balance of 153 to plain •cellophane or to customer use. 1051 Of those relating to moistureproof cellophane, 30 had been licensed to duPont non-exclusively by the American Solvent Recovery Company, and 11 more had been licensed to duPont non-exclusively by Marbo Patents, Inc. 1052

478. During period 1929-1952, duPont had rights under 158 U. S. patents relating to the manufacture of moistureproof cellophane. 1053 Of these, 104 had been issued to duPont. Of these, 47 related to moistureproofing compositions, 5 related to slip agents, 1 related to mold inhibitors, 19 related to heat sealing, 22 related to anchorage of coatings, 8 related to process and apparatus, and 2 related to solvent recovery. 1054 Of the 54 patents relating to moisture-proof cellophane that had been licensed to duPont, 30 related to solvent recovery and 11 related to rubber derivative coatings and materials. 1055 Of these 54, 41 were licensed to duPont on a non-exclusive basis.

479. Of the total 158 patents relating to moistureproof cellophane, under which duPont had rights sometime during the period 1924-1952, 1056 duPont’s rights under 54 had been acquired from others. 1057 None of these 54 could have been employed to prevent the manufacture of moistureproof cellophane and none would have enabled a manufacture of moistureproof cellophane absent a license from duPont under the basic product patent during the period it was in force. 1058

480. During the period 1929-1946 it was not possible to manufacture moistureproof cellophane in the United States without infringing duPont’s basic product patent, No. 1,737,187. 1059 During the period 1931-1948 a moisture-proof cellophane could have been physically manufactured without infringing duPont’s four basic process patents, but there is no proof such a non-infringing *142 method of manufacture would have been practical on a commercial basis. 1060

481. There is no proof existence of any U. S. patent relating to cellophane licensed to duPont from third parties contributed in any degree to volume of duPont’s sales of cellophane.

482. There is no proof existence of any U. S. patent relating to cellophane licensed to duPont from third parties broadened duPont’s right under its own patented inventions to exclude others from manufacture and sale of moisture-proof cellophane.

483. Satisfactory plain and moisture-proof cellophane can be manufactured in the U. S. today without infringing any existing patents issued, licensed or assigned to duPont. 1061

484. DuPont did not use any patent relating to cellophane to threaten others. On three occasions it brought actions for infringement. One such suit was brought against Sylvania and was based on the five original patents relating to moistureproof cellophane. This suit was settled by stipulation. 1062 The second action was against two manufacturers of ribbons of cellophane and was based on certain patents covering specific types of ribbons. This was settled by consent decree. 1063 The third action was on a customer use patent, which related to the sealing of cellophane. DuPont by contract was obligated to sue infringers and did so. 1064 A number of claims were held invalid by the trial court, and duPont did not appeal. 1065

485. DuPont in 1939 granted Marathon Paper Mills Company a non-exclusive, non-assignable license under its moistureproof product patent 1,737,187 to coat plain cellophane with a defined rubber wax moistureproofing composition and to sell the coated film for the packaging of cheese. 1066 The royalty payable was 2‡ per pound of the coated film. 1067 Marathon acknowledged validity of the patent licensed, 1068 and the agreement was limited to the period of that patent. 1069 Marathon did not desire a license to manufacture moistureproof cellophane itself. 1070 The product it made under the duPont license was used to package cheese. 1071

486. Sylvania, which was duPont’s exclusive licensee under the 1933 Agreement as amended in 1938, consented to duPont’s license to Marathon in 1939 under the product patent and the 1933 Agreement was modified to the extent duPont was free to license Marathon 1072 Royalties from Marathon under its license of the moistureproof product patent were divided % to Sylvania and % to duPont. 1073 Upon termination of the 1933 Agreement and grant of a nonexclusive license to Sylvania under the moistureproof product patent on January 1, 1945, 1074 all Marathon royalties were payable to duPont alone until expiration of the product patent in 1946. 1075

*143 487. During the term of its license, Marathon could purchase non-moisture-proof film from either duPont or Sylvania for coating. 1076

488. The license to Marathon by duPont expired on November 26, 1946, with the expiration of duPont’s product patent 1,737,187 1077

489. When Marathon decided to make cheese wraps by applying its rubber-wax coating to non-moistureproof cellophane, it obtained from duPont a license under duPont’s product patent 1,737,187 which enabled Marathon to make the wrap it was interested in producing. Despite its right under the license to apply its coating to plain cellophane, Marathon did not operate under the license long. It determined use of moistureproof cellophane as a base for its coating made a better wrap, and used moistureproof film. Application of Marathon’s coating to this film did not require a license or payment of royalties. 1078 Marathon’s royalties to duPont were $1.77 in 1944 and zero in 1945. 1079 Despite expiration of the product patent in 1946, Marathon was continued to make its cheese wrap from moistureproof cellophane 1080

490. Late in 1940, Marathon inquired whether duPont would be willing to broaden Marathon’s license under duPont’s moistureproof patent to include the coating of plain cellophane with Marathon’s rubber wax composition for use as wrappers for ground and processed meats. 1081 DuPont declined and suggested Marathon coat moistureproof film. DuPont offered technical assistance for problems encountered in such coating. 1082 Marathon was not deeply interested in coating plain cellophane for

meat wrappérs and did' not press for extension of its license to enable that use. 1083

■ 491. Marathon has not been interested in manufacture of cellophane, evén when duPont offered to license its patents and technology. Cellophane manufacture would have been a departure from Marathon’s business. Marathon preferred to invest its financial resources in other directions. 1084

492. In 1930, duPont and Dobeckmun Company entered into agreement where Dobeckmun could receive within the United States technical information from Kalle with respect to lamination of moistureproof cellophane, and was granted non-exclusive license with respect to patents duPont might obtain for the process and apparatus used in such lamination. The agreement provided Dobeckmun would use only cellulose sheets made by duPont. At the time of agreement, duPont was the only manufacturer of moistureproof cellophane in the United States and it had the right to make moistureproof cellophane in the United States, its moistureproof cellophane product patent having then issued and having not been licensed in any way. 1085 In 1938, duPont waived the provision in the Dobeckmun agreement by which Dobeckmun agreed to use only duPont cellophane in operations under the agreement. 1086

493. In 1931, duPont was the only manufacturer of moistureproof cellophane. Dobeckmun Company obtained a patent on the heat sealing of moisture-proof cellophane, and Humitube Company obtained a patent on the sealing of moistureproof cellophane. 1087 These *144 companies were interested in using the patents in the manufacture and resale of moistureproof cellophane tubes for cigars. DuPont purchased these patents. It agreed to grant Dobeckmun and Humitube, and no one else, licenses to manufacture and resell cigar tubes as described in the patents. 1088 DuPont at that time had no “Promotional Converters” as such, and there is no proof either Dobeckmun or Humitube was bound by contract to purchase all moistureproof cellophane from duPont. On advice of counsel, duPont licensed the sealing patents generally, except for manufacture of a specified size of cigar tubes for resale, by a label attached to shipments of duPont moistureproof cellophane. 1089

494. DuPont acquired patents covering sealing of moistureproof cellophane to remove a source of annoyance to its customers and to avoid the possibility the patents might be used to retard expansion of the use of cellophane. The patents covered the principles of sealing used in automatic wrapping machín0j»y. 1090

495. In connection with acquisition of sealing patents from Dobeckmun and Humitube, duPont agreed to sue infringers manufacturing and selling cigar tubes of the dimensions defined in the Dobeckmun patents. 1091 Because of this obligation, duPont brought an infringement suit against Vis-O-Tube. 1092 Sylvania, in 1935, suggested settlement of the suit, Vis-O-Tube being its customer, by a license from duPont to Sylvania under the sealing patents. DuPont felt it was obligated to prosecute the suit and refused to settle. 1093 The sealing patents were adjudged invalid in 1936, and duPont did not appeal. 1094

496. In 1933, Saniwrap Company sought to purchase moistureproof cellophane from duPont to manufacture cigar tubes which would infringe the Dobeckmun patents. On advice of counsel, duPont refused to sell. Representatives of the Federal Trade Commission then called on Humitube, Dobeckmun, and duPont and reviewed the contracts pursuant to which the patents had been acquired by duPont and licensed to the other companies. 1095 After discussion of these with duPont management and legal counsel, the FTC representatives informed duPont there were no grounds for valid complaint against duPont in connection with the sealing patents. 1096

497. In licensing its ribbon patents to customers in 1931 — 1933 duPont reserved right to cancel the license at will on 30 days’ notice. 1097 There is no proof duPont ever communicated to a customer any thought the licenses might be can-celled if other cellophane were used to make the patented ribbons, and there is no proof duPont ever exercised its 30-day cancellation clause in the ribbon licenses for any reason. Since 1938, duPont had a specific policy no license of a patent shall be conditioned upon the use of duPont’s products. 1098

498. DuPont granted royalty-free licenses to certain customers under patents covering specific types of cellophane ribbons. The patents were Brandenberger 1,406,148, Wertheimer, 1,543,634, Cohn, 1,958,033, and Lees, 1,849,747. 1099 *145 DuPont acquired patent rights under these patents in order to secure freedom for customers in the use of cellophane. 1100 Patent rights were acquired in 1923, 1932, 1933 and 1936 1101

499. DuPont brought infringement suits on two ribbon patents against the Hy-Sil Co. 1102 Sylvania, which sold cellophane to Hy-Sil, suggested settlement on a royalty basis with an understanding royalties would be accumulated to finance prosecution of infringers. 1103 DuPont rejected this arrangement as a patent pool. 1104 After negotiations, duPont licensed Sylvania under all four ribbon patents, by two agreements of April 1, 1937. These licenses were non-exclusive, with the right to sub-license to a stated number of manufacturers of ribbons. A royalty was payable by Sylvania to duPont on the net selling price of ribbons manufactured under the licenses. Sylvania was free to pay the royalty or to pass it on to its sub-licensees. DuPont agreed not to grant more than a stated number of additional licenses. 1105

500. April 1, 1937 agreements between duPont and Sylvania were terminated in March, 1940. 1106

501. No proof was offered the number of licenses and sub-licenses permitted to duPont and Sylvania under the ribbon license agreements of April 1, 1937, did not exceed the number of actual customers the companies had, for ribbon manufacturing. Sylvania had three customers classed as fabricators, which would include ribbon manufacturers, in 1935, 1940, and 1945. 1107 There is no proof any company unsuccessfully sought a license under the ribbon patents to manufacture ribbons. Sylvania granted one sub-license under the ribbon patents, although under its agreement with duPont it was entitled to more than one. 1108

502. Cellophane used for ribbons was non-moistureproof cellophane for a specialty use. DuPont sales of cellophane for that purpose amounted to less than 1% of the total sales in 1938. 1109

503. DuPont, on May 20, 1942, granted a non-exclusive license to Sylvania under Snyder U. S. Patent 2,087,008. 1110 Glycerine and glycerol were in short supply. 1111 This patent covered use of ethylene glycol as a softener for moistureproof cellophane, in place of glycerol. Due to its volatile character, ethylene glycol could not be used in non-moistureproof film, but only in film that was to be coated. Sylvania was practicing the invention and wanted a license. Since the patent was related to manufacture of moistureproof film, the royalty of 2% of selling price was waived on products on which Sylvania paid a royalty under the 1933 Agreement. 1112

504. Use of the invention in the Snyder patent was not limited to moisture-proof film, which was why duPont granted a separate license for that patent. The ingredient was not a component of the moistureproof coating, but of the base film. 1113

505. On April 9, 1943, duPont and Sylvania entered into an agreement by which duPont licensed two Cupery patents, 2,142,115 and 2,142,116 to Sylvania, *146 and Sylvania licensed its Cornwell Patent 442,202 and Morgan Patent 2,288, 413 to duPont. 1114 The term of the licenses was six months after the cessation of the war or three years from date of contract, whichever was shorter. 1115 The licenses were non-exclusive, royalty-free, and were limited to regenerated cellulose film, but not limited to moistureproof cellophane. 1116 The license agreement was negotiated at arm’s length as a separate transaction. 1117

506. DuPont needed a license under Sylvania’s Morgan Patent to permit it to use ethylamine hydrochloride as a softener because of wartime shortage of glycerine. The ingredient was useful for flame-proofing, which was necessary in cellophane duPont was manufacturing for war use. Sylvania needed a license under duPont’s two Cupery patents to cover its use of ethanolamine sulfonate as a softening and flame-proofing agent in its types of cellophane for war uses. 1118

507. DuPont and Sylvania entered into agreement on October 22, 1937, which provided for a non-exclusive, non-assignable, royalty-free license to Sylvania under duPont’s Hunter patent 2,062,179, and a similar license to duPont of Sylvania’s Morgan patent 2,043,860. 1119 Both patents were concerned with cellophane which gave protection against ultra violet light and were so related neither duPont nor Sylvania could develop light protective wrappers without infringing the patent of the other. 1120

508. DuPont performed research which formed the basis for its Hunter ultra violet patent. 1121 This patent dominated Sylvania’s Morgan patent on ultra violet light protective cellophane, but it was theoretically possible to practice the Morgan patent without infringing the Hunter patent. 1122

509. DuPont’s negotiation of the cross-license of the Hunter and Morgan patents was an arm’s length transaction. 1123 There was no understanding between the parties other than the formal agreement. 1124

510. In negotiating the ultra violet light protective film licensing agreement, duPont proposed non-exclusive licenses royalty-free. 1125 Sylvania proposed price fixing provisions and provisions requiring consent of the other party to further licensing. DuPont rejected these proposals. 1126 After negotiation, duPont consented to a provision in the contract that would require each party to give 30 days’ notice to the other before granting further licenses. This provision was for notice and did not limit right of either party to grant further licenses under its patents. 1127

511. DuPont’s reason for entering ultra violet light protective film cross-licenses was it was charged by Sylvania with infringement, and desired freedom *147 to develop sales of ultra violet protective cellophane. 1128

512. There is no proof any person other than duPont and Sylvania wanted to manufacture ultra violet protective cellophane, or ever asked duPont or Sylvania for a license under a patent relating to such film.

513. In 1939 when the ultra violet license agreement between duPont and Sylvania was made, ultra violet protective film was an insignificant product sold at a premium over the price of other cellophane. 1129 It remained a high priced specialty 1130 and accounted for less than y2 of 1% of duPont sales in 1947. 1131

514. Settlements of interferences declared by the United States Patent Office are a recognized way of resolving disputes between rival applicants. An interference proceeding is a proceeding which if carried through the stage of testimony can be quite expensive in both time and money. 1132

515. DuPont settled by agreement interferences declared by the United States Patent Office between duPont patent applications relating to cellophane and patent applications of others. 1133 DuPont’s policy was it was always willing to make a reasonable settlement that did not impair its rights under its basic cellophane patents. 1134

516. Each settlement of the 15 interferences as to which evidence was received in this action was a separate transaction, except in instances where several interferences were settled by a single agreement. There was no over-all agreement between duPont and any party to an interference. 1135

517. There is no proof any parties to the interferences other than duPont and Sylvania ever had any intention or desire to engage in the manufacture of cellophane. 1136

518. Eight of the 15 interferences involved moistureproofing compositions relating to resin wax. 1137 No one could have practiced the inventions to coat plain cellophane with such wax and produce moistureproof cellophane without infringement of duPont’s basic product patent, 1,737,187. 1138

519. There is no proof duPont did not settle the patent interferences in good faith and no proof all rights duPont obtained in the interference settlements extended duPont’s cellophane manufacture or sales to any measurable degree.

520. There is no proof upon which validity of patent claims involved in interferences settled by duPont can be determined, 1139 and plaintiff conceded all claims issued to duPont were valid. 1140

521. Interference 63558 concerned use of cellulose tubes for covering a golf club grip. Priority on all counts was awarded to duPont. The invention was never commercially successful. Under settlement agreement, Spalding obtained an exclusive license to sell if it maintained a stated volume of business. It did not maintain volume, and the license became non-exclusive. 1141

522. Interference 74629 involved aluminum rolls for drying cellophane in the process of manufacture. Priority as to invention was divided as to various claims. DuPont received an exclusive *148 license with the right to sublicense limited to regenerated cellulose. 1142

523. Interference 74837 with the American Can Company concerned a greaseproof container, in which cellophane could be a component. The product was never a commercial success. DuPont thought it was the senior party by a considerable period, but in fact American Can Company won priority. 1143

524. Interferences 69624 and 73959 involved claims by duPont, Union Carbide & Carbon Company, Eastman Kodak Company, Hazel Atlas Glass Company, and Sylvania, as to resin wax moistureproofing compositions. DuPont considered technology involved was important, but thereafter the invention lost technical significance and made a negligible contribution to cellophane technology. The interferences were settled by bargaining between the parties. DuPont was willing to settle only if there was no effect on duPont’s basic moistureproof position, for the resin wax coating, if applied to plain cellophane, would produce a product within claims of duPont’s basic patent. DuPont obtained in the settlement exclusive rights to the invention so far as they concerned moistureproof cellophane. 1144 Carbide also got from settlement what it wanted. 1145 DuPont’s inventor was prior on all counts. The resin wax patents involved in these interferences are on the Register of the United States Patent Office available for licensing and no company involved in the interference has sought a license from duPont. 1146

525. Interferences 71448 and 71449 involved claims by duPont, Eastman Kodak, and Swann Company (Monsanto) with respect to estergum wax. DuPont would settle if it got exclusive rights to use such wax compositions on regenerated cellulose film, and obtained such rights in the settlement agreement. Its basic product patent would have been infringed by moistureproof cellophane produced by coating plain cellophane with estergum wax compositions. 1147 DuPont considered its chances of winning the interference good. 1148 The subject of the interference was cellulose acetate film, as to which the settlement granted exclusive rights to Eastman. 1149

526. Interference 70341 involved claims of duPont and Monsanto for a specific type of resin wax of possible utility for moistureproofing cellophane. 1150 DuPont was willing to settle to save expense of litigating the interference, but only if it could obtain exclusive rights to the wax for coating moistureproof cellophane, since the resin wax if applied to plain cellophane would produce a product within the claims of duPont’s basic product patent. 1151 Settlement gave duPont an exclusive license with unlimited right to sublicense, to make, use and sell the wax for manufacturing moistureproof cellophane and cellophane coated with wax 1152 DuPont’s application was filed two years before Monsanto, and it expected to win priority, but priority was eventually awarded to Monsanto. 1153 DuPont’s rights to use for manufacturing moistureproof cellophane the wax covered by the patent involved in the interference are available for licensing and Monsanto has not sought a license. 1154

*149 527. Interferences 68801 and 68197 concerned claims by Eastman Kodak and duPont as to plasticizers for films. These were settled by the exchange of royalty-free non-exclusive licenses. 1155

528. Interference 72191 involved claims of duPont and Eastman Kodak for a specific plasticizer useful in a coating composition. Settlement was reached by negotiation between the companies. 1156 DuPont obtained an exclusive license to the claims, so far as they affected regenerated cellulose film, with the right to sublicense. 1157

529. Interference 73673 involved claims of duPont, Goodyear Tire & Rubber Co. and Marsene, with respect to a specific resin in a resin wax moisture-proofing composition. Originally Marsene was eliminated by the Patent Office, and duPont and Goodyear then negotiated a settlement agreement. Marsene appealed and was reinstated. This vitiated the agreement with Goodyear. Interference was litigated; Marsene won priority; and duPont’s patent issued with one narrow claim. 1158

530. Interference 71566 involved claims of duPont and Marbo Company with respect to rubber hydrochloride. Its relation to cellophane was the possibility of using this as a component of a moistureproof coating composition 1159 DuPont was unwilling to settle unless it could obtain rights that would cover the use of the composition for producing moistureproof cellophane that would fall within the claims of its basic product patent. 1160 Under the settlement it obtained an exclusive license under the patent for the use of synthetic rubber in the coating of moistureproof cellophane. 1161

531. Interference 68654 concerned claims of Hercules Powder Company and duPont to a specific resin that might be useful in moistureproof coatings. 1162 After negotiations, the interference was settled by an exclusive license to duPont, royalty-free, for use of the composition on cellophane and a royalty-free license to Hercules for use of the composition on certain other materials. 1163 DuPont’s inventors were prior as to use of the composition on cellophane. The Hercules inventor was prior on specific counts as to use of the material with paper. 1164

532. After duPont’s basic product patent on moistureproof cellophane, 1,-737,187, had issued in 1929, the United States Patent Office in 1931 declared Interference 63420 between this patent and an Eaton application owned by Rosenberg. 1165 DuPont believed Rosenberg had no case, but offered to purchase the Eaton application for $10,000 to avoid a possible interference suit and for its nuisance value. Rosenberg rejected this and asked at least $150,000. 1166 DuPont then presented its evidence. After hearing it, Rosenberg’s patent counsel conceded he had no case and suggested settlement, 1167 which was effected by duPont paying $5,000 for the Eaton application. This was what it would have cost duPont to complete prosecution of the interference proceeding. 1168

XII. DuPont Did Not .Conspire to Monopolize.

A. With Sylvania.

(Findings 533-591)

1. Patent License Agreement.

(Findings 533-583)

533. Sylvania began manufacture of moistureproof cellophane after issuance *150 to duPont of its basic product patent 1,-737,187 on November 26, 1929. 1169 Sylvania’s manufacture and sale of moistureproof cellophane infringed the claims of this patent, 1170 as Sylvania was aware. 1171

534. Sylvania conducted manufacture of moistureproof cellophane without obtaining a license from duPont after the issuance to duPont on October 6, 1931 of U. S. Patents 1,826,696-1,826,699, which covered coating compositions useful in the manufacture of moistureproof cellophane and apparatus and processes for its manufacture 1172 Sylvania developed a process and moistureproofing composition which avoided the claims of these four patents. It used a three ingredient coating composition rather than the four ingredient composition patented by duPont. 1173 Sylvania’s non-infringing composition and process were more expensive to operate than those patented by duPont and produced moistureproof cellophane inferior in quality to that made under the duPont process and composition patents. 1174

535. Sylvania in February, 1931, advised duPont it planned to manufacture moistureproof cellophane and duPont informed Sylvania the product patent would be enforced. 1175 In July, 1931, Sylvania approached duPont with the suggestion Sylvania would allow duPont to use a newly developed ingredient for moistureproof cellophane, if duPont would agree not to take action on Sylvania’s infringement of duPont’s prod-’ uct patent. DuPont rejected this suggestion and informed Sylvania it proposed to defend the product patent, but offered to license Sylvania non-exclusively under all present and future moisture-proof patents at a royalty of 3% of the selling price and with Sylvania sales to be limited to 10% of total sales of mois-tureproof. Sylvania declined. 1176

536. On November 19, 1931, duPont notified Sylvania of infringement of the moistureproof patents stating unless assurances were given infringement had ceased duPont would take steps to protect its rights under its patents. 1177 An action against Sylvania for infringement of moistureproof patents was filed in the United States District Court for the District of Delaware on January 28, 1932, 1178 and refiled in Virginia in January, 1933. 1179 The suit charged infringement of duPont’s five basic moistureproof patents. 1180

537. DuPont was confident of validity of its five moistureproof patents. 1181 After filing suit, it engaged in preparation for trial. 1182

• 538. After duPont’s infringement action against Sylvania was commenced counsel for Sylvania suggested the case should be settled. 1183 Negotiations between the parties led to a license agreement, dated April 26, 1933, pursuant to *151 which the infringement suit was withdrawn 1184

539. Neither party dictated the terms of the license agreement by which the suit was settled! 1185

540. DuPont did not settle its patent suit against Sylvania by a licensing agreement because of lack of faith in its patents or it feared other methods of moistureproofing might soon be found, or because it desired to minimize' competition by restricting the number of manufacturers! 1186

541. DuPont settled its infringement •suit against Sylvania and licensed Sylvania under its moistureproof patents. DuPont’s reasons were there was always a possibility duPont would not win the suit, and even if duPont did win, it would have licensed Sylvania anyway! 1187

542. Sylvania’s reason for settling the infringement suit by moistureproof license was it had been unable to avoid infringement of duPont’s product patent and there was risk validity of that patent would be sustained, and because the process Sylvania had developed to avoid •duPont’s composition and process patents was more expensive, so it was economical to settle on a reasonable royalty basis rather than to continue to bear high production costs! 1188

543. The 1933 Agreement between ■duPont and Sylvania did not provide for the license of future patents without additional fee! 1189 DuPont never had understanding with Sylvania in connection with the 1933 Agreement the two companies would present a united front to keep other people from manufacturing cellophane! 1190

544. DuPont offered Sylvania a nonexclusive license, but in course of negotiations for settlement of the suit the license to be granted was at Sylvania’s request made exclusive! 1191

545. The 1933 Agreement contained these terms:

(1) The patents licensed were 1,737,-187 and 1,826,696-99, all issued to duPont and consisting of duPont’s basic product patent and its four composition and process patents! 1192

(2) DuPont granted to Sylvania a license to manufacture, import and sell moistureproof cellophane in the United States, its territories and possessions! 1193

(3) DuPont agreed to grant Sylvania, at Sylvania’s election, licenses under future patents granted to or acquired by duPont, provided the inventions claimed related to moistureproof cellophane and fell within the scope of the five recited patents! 1194

(4) Sylvania agreed to grant to duPont, at duPont’s election, a license under any future patent granted to or acquired by Sylvania prior to October 6, 1948 where the inventions claimed were concerned with the manufacture of moistureproof cellophane and fell within the scope of the five recited patents! 1195

(5) Licenses granted under the agreement did not obligate the licensee to operate under the licensed patent, and could not be sub-licensed or assigned, except in connection with the transfer of the entire business of the party! 1196

(6) Licenses granted under the contract extended to October 6, 1948 (the expiration date of duPont’s composition and process patents), provided licenses *152 under future patents should continue as to patents under which éither of the parties had begun commercial manufacture prior to October 6, 1948. 1197

(7) Election of a party to take a license under a future patent was required to be made within three months of notice from the other party to exercise the right to election, and the right to a license under the patent expired otherwise. 1198

(8) Sylvania agreed to pay duPont royalty of 2% of its net selling price of all moistureproof cellophane sold by Sylvania for use within the United States, its territories and possessions, moisture-proof cellophane being defined in the language of U. S. Patent 1,737,187. 1199

(9) Sylvania agreed to pay duPont the 2% royalty on products sold by Sylvania for use within the United States, its territories and possessions, when such products were licensed under future duPont patents, provided the 2% royalty under future patents should be in addition to that payable under the five recited patents only if such future patents covered different processes from those claimed in the five recited patents. The maximum royalty was 2% for the five recited patents and 2% for all future patents, or a total of 4%. 1200

(10) If duPont acquired a license under a future patent of Sylvania, it was obligated to pay a royalty of 2% of the net selling price of the licensed product sold by it for use within the United States, its territories and possessions, provided the future patent covered different processes from those covered by the five recited patents. The maximum royalty payable by duPont under such future patents was 2%. 1201

(11) Each of the parties was required to keep records of its sales and imports under the provisions of the agreement, and make quarterly reports to the other showing quantities of goods sold and royalties due. Such records were subject to inspection by the other party. Royalties were payable quarterly with the submission of the quarterly report. 1202

(12) The royalty payments by Sylvania would be increased to 20‡ per pound or 30% of the net selling price, whichever was greater, on all licensed articles sold by Sylvania for use in the United States, its territories and possessions, constituting quantities in excess of 20% of the combined annual sales of moistureproof cellophane during 1933 of duPont and Sylvania in that area. For each year for nine years subsequent to 1933, 1% was added to the 20% to mark the limit for the corresponding year above which the additional royalty was to be paid. After 1942, percentage of combined sales of moistureproof cellophane which Sylvania might make in the area without imposition of the additional royalty was 29% in each year. Additional royalties were computed on an annual and not a quarterly basis. Each party was required to keep records and permit examination of them by the other to determine additional royalties. 1203

(13) Royalty payments duPont was obligated to make were increased by 20% or by 30% of the net selling price of the licensed articles, whichever was greater, on all such licensed articles sold by duPont for use in the United States, its territories and possessions, and constituting quantities in excess of 80% of the combined annual sales of duPont and Sylvania of moistureproof cellophane as licensed by Sylvania to duPont during 1933 in that area. For each year for nine years subsequent to 1933, 1% was deducted from the 80% to mark the limit for the corresponding year above which duPont was obligated to pay the additional royalty. After 1942, percentage of the aggregate sales of the articles li *153 censed under Sylvania patents, which duPont could make without imposition of the additional royalty, would be 71%. Similar provisions as to annual payment of the royalty and keeping of the records were included as in the case of Sylvania’s additional royalty. 1204

(14) If a third party infringed any patent under which a license had been given under the contract in such a way as to affect sales of licensed material by licensee, licensor was required to sue to stop the infringement, and if it did not do so licensee could discontinue payment of royalty under the infringed claim; if the infringement related to the five recited duPont patents, Sylvania could ter-' mínate the agreement; if the infringement related to patents other than the five recited duPont patents, licensee could file suit against the infringer. 1205

(15) DuPont agreed it would not grant a license to a third party under the five recited patents in respect to the subject matter licensed to Sylvania without Sylvania’s consent. Each party agreed it would not grant to any third party any license under the future patents covered by the agreement during the three months period within which the other party had a right to obtain a license, or at any time while a license so acquired remained in force, unless duPont and Sylvania agreed to the terms of the license to the third party. 1206

(16) Sylvania represented at the date of the execution of the contract it had no U. S. patent relating to the manufacture of moistureproof cellophane, and duPont represented as of the same date it had no U. S. patent relating to the manufacture of moistureproof cellophane except the five recited patents. 1207

(17) . Sylvania acknowledged validity of the five recited patents for the period and for the scope of Sylvania’s licensed operations under them. DuPont and Sylvania agreed they would not assist others in infringing or contesting validity of any patent under which a license was granted pursuant to the agreement. 1208

(18) The right of each party to examine the records of the other as to articles manufactured and sold under the agreement was stated not to include any right to inspect the plants or processes of the other, or to acquire any confidential information concerning plants or processes or other confidential matters 1209

546. The 1933 Agreement contained the understandings between the parties and there was no side agreement of any kind. 1210

547. DuPont was advised by counsel in connection with its negotiation of the 1933 Agreement and the attorneys approved the agreement at the time it was made. 1211

548. No person connected with Sylvania ever stated to any duPont official Sylvania considered the 1933 Agreement to be illegal. 1212

549. There was no understanding between duPont and Sylvania for the exchange of patents or technology. 1213

550. DuPont had no understanding with Sylvania to pool patents and did not exchange patent applications with Sylvania. 1214

551. The 1933 Agreement did not apply to plain cellophane, only to moisture-proof cellophane. It did not provide for exchange of technology. It contained no provisions for. fixing of prices or limitation on Sylvania’s right to export. It *154 required no payment of royalty on export sales and no royalty on any sales of nonmoistureproof cellophane. 1215

552. At the time of the 1933 Agreement, Sylvania owned no rights under any patent relating to moistureproof cellophane ; duPont owned basic patents on its inventions of the product moisture-proof cellophane, of moistureproofing compositions, and of processes of manufacture. Consequently, no rights relating to moistureproof cellophane passed to duPont from Sylvania at the time of the 1933 Agreement. 1216 The 1933 Agreement was co-extensive in scope with the claims of duPont’s product patent 1,737,187 on moistureproof cellophane, and did not apply to plain cellophane. 1217 At the time of the 1933 Agreement, Sylvania was consciously infringing that patent. 1218 No technical information was licensed under the 1933 Agreement, and neither Sylvania nor duPont at any time transmitted such information to the other. 1219 No patent applications were exchanged pursuant to the Agreement. 1220 No competing processes were licensed. 1221 The 1933 Agreement was terminated January, 1945, two years prior to the expiration of duPont’s basic product patent. 1222

553. DuPont administered the 1933 Agreement according to its terms. 1223

554. DuPont considered the merit of. Sylvania patents as they were issued and when it decided the patent did not fall within the terms of the 1933 Agreement, did not assert a right to obtain a license under the Agreement. 1224

555. Since execution of the 1933 Agreement, duPont and Sylvania entered into agreements in settlement of patent interferences, 1225 or granted licenses to each other on patents not within the scope of the 1933 Agreement. 1226 Each of these transactions was made individually after arm’s-length negotiations and not pursuant to any understanding between duPont and Sylvania. 1227

556. In determining whether it would take a license from Sylvania, duPont did not consider as a factor Sylvania would be free to license others. 1228

557. The 1933 Agreement had no obligations or any agreement as to lines of business other than the manufacture and sale of moistureproof cellophane. 1229

558. During life of the 1933 Agreement duPont obtained licenses from Sylvania on nine patents relating to moistureproof cellophane. DuPont reviewed the value of these patents from time to time, but none of them was of any significance and none was used by duPont in its operation. There is no proof any third party ever sought or desired a license under any of these nine Sylvania patents. 1230

559. None of the nine patents licensed by Sylvania to duPont pursuant *155 to the 1933 Agreement enhanced duPont’s position in the manufacture of cellophane. 1231

560. It was not possible to manufacture moistureproof cellophane under one or all of patents licensed by Sylvania to duPont. 1232

561. The patents licensed to Sylvania by duPont under the 1933 Agreement were used by Sylvania in all its production of moistureproof cellophane. In making a non-heat-sealing moistureproof cellophane, Sylvania used seven patents, five of which were licensed to it by duPont. 1233 In making a heat-sealing anchored moistureproof cellophane, Sylvania used thirteen patents, eleven of which were licensed to it by duPont. 1234 In making various other types of moistureproof films, Sylvania used nineteen patents, fifteen of which were licensed to it by duPont. 1235

562. There is no proof any person other than Sylvania desired a license from duPont to engage in the manufacture of moistureproof cellophane during the life of the five basic duPont patents. Marathon Corporation in the late 1930’s, and several other companies during World War II, desired to purchase plain cellophane and apply it to a moisture-proof coating or laminate. 1236 Marathon was licensed to engage in coating plain cellophane for cheese packaging. 1237 Other persons who desired to coat plain cellophane they purchased from cellophane manufacturers were not licensed. 1238

563. DuPont licensed seven companies at times under one or more of its five basic moistureproof patents. ' The identity of the licensees was as follows : 1239

(1) #1,737,187 — Sylvania. Marathon Corporation.

(2) #1,826,696 — Riegel Paper Company. Rhinelander Paper Company. Pyroxylin Company. Eastman Kodak Company. Sylvania.

(3) #1,826,697 — Riegel Paper Company. Rhinelander Paper Company. Hercules Powder Company. Sylvania.

(4) #1,826,698 — Riegel Paper Company. Rhinelander Paper Company. Hercules Powder Company. Sylvania.

(5) #1,826,699 — Riegel Paper Company. Rhinelander Paper Company. Hercules Powder Company. Eastman Kodak Company. Pyroxylin Company. Sylvania.

564. At the time of execution of the 1933 Agreement, the provision for additional royalty was academic, since Syl *156 vania’s production of moistureproof cellophane was below the 20% allowed in the initial year. 1240

565. During the period of April 1933-January 1, 1945, when the 1933 Agreement was in force, Sylvania could have sold in the United States without paying additional royalty of 200 per lb. 53,718,-658 lbs. of moistureproof cellophane manufactured under its licenses from duPont. This would have amounted to a 31.4% increase in its domestic sales of moistureproof cellophane during the period of the Agreement. 1241

566. Sylvania’s domestic sales of moistureproof cellophane under the 1933 Agreement, percentage such sales bore to combined domestic sales and percentage of combined sales Sylvania could have sold without paying additional royalty of 200 per lb. are shown for the years the 1933 Agreement was in force:

Year Sylvania Sales Subject to 1933 Agreement Sylvania Sales as Percentage of Combined Domestic Sales Percentage of Total Sylvania Could Sell Without Payment of 200 Royalty

1933— ■ 2,287,595 12.7-20

1934— 5,404,645 17.4 21

1935— 7,517,440 20.4 22

1936— 9,972,998 21.2 23

1937— 10,948,310 20.6 24

1938— 13,019,458 22.8 25

1939— 14,615,780 21.2 26

1940— 15,893,742 20.7 27

1941— 20,208,342 20.7 28

1942— 23,731,356 24.9 29

1943— 23,933,070 22.7 29

1944— 23,300,455 22.8 29 1242

567. Sylvania was advised at each quarter by duPont of percentage of total domestic sales of moistureproof cellophane Sylvania had achieved in that quarter. 1243 The application of excess royalty for sales in excess of the percentage stated in the Agreement was on an annual rather than a quarterly basis. 1244

568. Sylvania's plans for expansion of production were never affected by the existence of the 1933 Agreement. Sylvania never followed a policy of curtailing its production 1245

569. Royalties paid by Sylvania under the 1933 Agreement did not impair Sylvania’s ability to compete with duPont. 1246

570. Royalties paid by Sylvania under the 1933 Agreement amounted to less than 10 per pound. 1247

571. Sylvania paid duPont approximately $1,500,000 in royalties under the 1933 Agreement during its effectiveness from April 1933 to January 1, 1945. 1248 In addition to obtaining rights under duPont’s basic product patent Sylvania benefited from the Agreement by being able to use duPont’s patented compositions and processes which were more economical than Sylvania’s independent composition and process. 1249 Royalties never *157 prevented Sylvania from expanding its production, and Sylvania never considered the royalties an impediment to its ability to produce and expand. 1250 Its policies as to expansion in no way changed following the termination of the 1933 Agreement in 1945, 1251 although the new 1945 Agreement had no provision for increased royalty rates based on any amount of moistureproof cellophane sold. 1252

572. The royalty provisions in the 1933 Agreement did not M>ply to sales of plain cellophane or exports of moistureproof cellophane. 1253 They did not apply to sales of cellophane made under patents of the selling party, but only to sales which the party made of products licensed under patents of the other party. 1254 Without being required to pay any royalty whatever to duPont, Sylvania was free to sell any amount of plain cellophane, any amount of moistureproof cellophane for export, and any amount of any cellophane utilizing solely Sylvania’s own patents.

573. As there is no evidence of Sylvania’s cost of manufacture, 1255 there is no proof of its domestic sales of moistureproof cellophane had ever exceeded the percentage of total domestic sales of moistureproof cellophane stated in the contract, payment of the extra royalty on the portion in excess would have caused Sylvania to take a loss on that portion of its moistureproof cellophane sales. There is no proof the additional royalty payable on excess sales would have caused Sylvania’s entire sale of moisture-proof cellophane to have been conducted at a loss. 1256

574. Although Sylvania expanded its productive capacity as its financial condition would permit, it never reached a percentage of domestic sales of moisture-proof cellophane that entailed payment of the additional royalty. 1257

575. Sylvania’s domestic sales of moistureproof cellophane approached the percentage in the 1933 agreement only in 1935. 1258 Sylvania continued to enlarge its production facilities, adding two casting machines in 1936 and an additional one in both 1937 and 1938. 1259

576. Sylvania increased the number of its casting machines in operation from twelve in 1934 to fifteen in 1935, seventeen in 1936, eighteen in 1937, and nineteen in 1938. 1260 It increased the number of its machines for applying moistureproof coating from six in 1935 to seven in 1936, and to ten in 1937. 1261 Its production of moistureproof cellophane increased from 8.3 million pounds in 1935 to 11.9 million pounds in 1936, and 13.9 million pounds in 1937. Sylvania’s total cellophane production increased from 13.8 million pounds in 1935 to 20 million pounds in 1936, to 20.7 million pounds in 1937, and to 21.3 million pounds in 1938. 1262

577. Sylvania’s production of moistureproof cellophane and its proportion of national sales of moistureproof cellophane increased in the period of 1933-1936, following a license to Sylvania by duPont of product and process patents on moistureproof cellophane. 1263 The license enabled Sylvania to improve the quálity of its moistureproof film. 1264 *158 The license removed reluctance of some consumers to use the Sylvania moisture-proof film because it infringed duPont patents. 1265

578. Sylvania increased its assets from its organization until 1946, when it was acquired by American Viscose Corporation. 1266 American Viscose’s total assets as of 1950 were approximately 272 million dollars. 1267 Much of its assets are devoted to production of products other than cellophane, notably rayon 1268

579. The 1933 Agreement was amended in 1938. 1269 The amendment eliminated the provision the consent of the other party had to be obtained before licensing a third party under patents licensed under the agreement, 1270 and substituted a provision that licenses granted under the agreement were exclusive rather than non-exclusive. 1271

580. The 1933 Agreement was terminated January 1, 1945. 1272

581. DuPont and Sylvania entered ■into an agreement on January 1, 1945 (called the “1945 Agreement”) which differed from the 1933 Agreement in the following ways:

(1) Licenses granted were non-exclusive rather than exclusive. 1273

(2) Licenses granted applied only to patents specified in the agreement without any provision for the licensing of future patents. 1274

(3) Royalties under the five original moistureproof patents, which were to expire in 1946 and 1948, were 1% % of the net selling price during 1945, reducing 1/4% per year to 1% in 1948. 1275

(4) Royalties on patents licensed to Sylvania under the 1933 Agreement subsequent to its execution, and specified in the 1945 Agreement, were 2% of net selling price. This 2% rate was not cumulative, but on products sold by Sylvania under patents with different rates of royalty, the higher royalty rate was to apply. 1276

(5) DuPont was granted licenses under nine named Slyvania patents, under five of which it was to pay no royalty and under four of which royalty was 1% of net selling price. 1277

(6) Each party agreed if it licensed the same patent to a third party under terms more favorable than those in the 1945 Agreement, it would notify the other party and give it the privilege of substituting the more favorable terms. 1278

As in the 1933 Agreement, royalty payments applied only to sales in the United States, its territories and possessions, and were limited to sales of moistureproof cellophane as defined in duPont’s basic product patent, 1,737,187. 1279

582. During the quarter preceding expiration of duPont’s four basic process patents in 1948, royalties from Sylvania were at a rate of approximately $40,000 per quarter. During the first two quarters of 1949 they dropped to slightly more than $3,000 per quarter. It seems the duPont patents widely used in Sylvania’s production of moistureproof cellophane in addition to the product patent 1,737,187 were the process patents issued in 1931. 1280

*159 583. The 1933 Agreement did not have the effect of channeling to duPont from Sylvania technical information and significant patent rights. No technical information or patent application was transmitted. 1281 None of the 9 patents licensed to duPont had commercial significance. 1282

2. Prices.

(Findings 584-591)

584. There was no express or implied agreement between duPont and Sylvania as to prices either would charge for cellophane of its own manufacture. 1283

585. DuPont established prices for its cellophane independently of Sylvania. There were no agreements as to what prices should be charged, one company would follow the prices of the other, or published prices would be observed. Proof does not support an inference of agreement between duPont and Sylvania as to prices. 1284

586. DuPont changed prices for cellophane and without notice of any kind to Sylvania a change was planned. 1285

587. When duPont made a price reduction on its cellophane during the period 1930-1947, Sylvania would obtain from its customers a copy of the new duPont price list, and thereafter, in order to remain competitive, would issue its own price list back dated to an effective date the same as on the duPont list. Although effective date of the two lists was the same, the lists were not issued to the trade at the same time. 1286

588. Identity of duPont and Sylvania price lists prior to 1947 was due to Sylvania’s desire to obtain as high a price for its cellophane as it could and its inability to sell its product at higher prices in competition with duPont cellophane. 1287 During 1949 Sylvania’s list prices were higher than those of duPont and its sales suffered as a result. 1288

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