United States v. General Electric Co.

The Pleadings

Pursuant to § 4 1 of the Sherman Act, § 15 2 of the Clayton Act and § 74 3 of the Wilson Tariff Act, the plaintiff, the United States of America, filed a complaint to prevent and restrain alleged continuing violations of §§ 1 4 and 2 5 of the Sherman Act, § 3 6 of the Clayton Act and § 73 7 of the Wilson Tariff Act respectively. It named the following defendants:

1. General Electric Company, described as a New York corporation, having lamp plants in Ohio, New Jersey, Missouri, Massachusetts, New York and California, which together with its subsidiaries is engaged principally in production and distribution of incandescent electric lamps, electrical appliances and other electrical products, and is the largest producer of glass bulbs, lamp bases, and incandescent electrc lamps in the United States and in the world.

2. International General Electric Company, Inc., a New York corporation whose outstanding capital stock is entirely owned by General Electric Company. It is described as a large distributor in and to foreign countries of American produced incandescent electric lamps, electrical appliances and other forms of electrical products.

3. Westinghouse Electric & Manufacturing Company, 8 a Pennsylvania corporation with its principal office in New York City and its lamp plants in New Jersey and Pennsylvania. It is described as the second largest manufacturer and distributor of incandescent electric lamps in the United States. Together with its subsidiaries it manufactures and distributes a full line of electrical appliances and other electrical products, some of which are competitive with similar products produced by defendant General Electric and its subsidiaries.

4. Corning Glass Works, 9 a New York corporation which together with its subsidiaries is described as the largest manufacturer and distributor of specialty glass products in the United States. It is principally engaged in the production and distribution of glass bulbs; tubing and cane, signal and optical ware, heat resisting ware, and other forms of specialty ware.

5. American Blank Company, 10 a corporation of the State of Maine, described as a patent holding company for defendants, General Electric and Corning. It is said to be wholly owned by defendant Corning, or Corning subsidiary, Empire Machine Company.

6. Empire Machine Company, 10 a corporation of the State of Maine, described as a patent holding company for the defendant Corning, 90% of the stock of which is owned by the stockholders of Corning.

7. N. V. Philips’ Gloeilampenfabrieken, a limited company of Plolland. It is described as having been engaged for many years in the business of manufacturing, among other things, glass bulbs, tubing and cane at several of its plants including those *765 in Holland and distributing and selling such products throughout the world, including importations into the United States. (Jurisdiction over Philips was obtained by service on its officers who had taken refuge in this country to escape Nazi domination.)

8. Consolidated Electric Lamp Company, a Massachusetts corporation licensed by defendant General Electric to produce and distribute large type incandescent electric lamps in the United States.

9. Hygrade Sylvania Corporation, a Massachusetts corporation described as being licensed by General Electric to produce and distribute large type incandescent electric lamps in the United States.

10. Ken-Rad Tube and Lamp Corporation, 11 a corporation of Delaware described as licensed by General Electric to produce and distribute large type incandescent electric lamps in the United States.

11. Chicago Miniature Lamp Works, a corporation of Illinois licensed by General Electric to produce and distribute miniature incandescent electric lamps in the United States.

12. Tung-Sol Lamp Works Incorporated, a corporation of Delaware described as being licensed by General Electric to produce and distribute miniature type incandescent electric lamps in the United States.

For brevity the plaintiff will be usually referred to herein as the Government and the defendants’ corporate titles will generally be shortened to the following:

General Electric Company — General Electric o r GE

International General Electric Company, Incorporated — International General Electric or IGE

Westinghouse Electric & Mfg. Co. — Westinghouse

Coming Glass Works — Corning

American Blank Company — American Blank

Empire Machine Company — Empire

N. V. Philips’ Gloeilampenfabrieken — Philips

Consolidated Electric Lamp Company— Consolidated

Hygrade Sylvania Corporation — Sylvania Ken-Rad Tube and Lamp Corporation— Kenrad

Chicago Miniature Lamp Works — Chicago Miniature

Tung-Sol Lamp Works Incorporated— Tungsol

In paragraphs 17 to 83, inclusive, of the complaint, the Government described the history of the incandescent electric light lamp industry and its technical development. It outlined the business organization of the industry during the periods from 1879 to 1896; 1896 to 1911; and 1911 to 1926. In the earliest period General Electric succeeded to the interests of practically all of the companies engaged in the manufacture of incandescent electric light lamps with the exception of Westinghouse. General Electric had acquired the “Edison” patents controlling the carbon filament lamp. These, however, were about to expire in 1896.

During the period from 1896 to 1911 a patent agreement was executed between General Electric and Westinghouse and an association of lamp manufacturers was organized. In 1911 a suit was instituted charging General Electric, Westinghouse and a number of other companies with violating the Sherman Anti-Trust Act and a consent decree was entered in the suit.

The period from 1911 to 1926 was characterized by the acquisition by General Electric of the controlling patents on the tungsten filament incandescent electric light lamps and the licensing of Westinghouse and other lamp manufacturers under these patents. In 1924 the Government filed a petition against General Electric, Westinghouse and Westinghouse Lamp Company charging that the agency system of lamp marketing employed by the companies and the license agreement between General Electric and Westinghouse were il *766 legal and in violation-of the Sherman AntiTrust Act. The case was tried in 1925 in the United States District Court for the Northern District of Ohio, Eastern Division, and the petition was dismissed, 15 F.2d 715. The decision was appealed to the United States Supreme Court which, in 1926, affirmed the District Court, 272 U.S. 476, 47 S.Ct. 192, 71 L.Ed. 362.

In paragraph 84 of the complaint the ■Government charged that since 1927 each -of the defendants unlawfully conspired to ■monopolize, attempted to monopolize, and unlawfully contracted, combined and conspired to restrain trade or commerce among ■the several states, or with foreign nations, in the incandescent electric light lamp industry and more particularly by unlawfully and in violation of § 1 and § 2 of the 'Sherman Anti-Trust Act

“(■a) acquiring and maintaining mono■.polies of (1) patents relating to incandescent electric lamps, (2) patents relating •to glass bulbs, tubing and cane, (3) the ■manufacture and distribution of machinery .for the production of glass bulbs, tubing and cane, (4) the manufacture, distribution and sale of glass bulbs, tubing and cane, (5) the manufacture, distribution, and sale ■of incandescent electric lamp bases, (6) the manufacture, distribution, and sale of incandescent electric lamps;

“(b) agreeing to restrain and by re■straining interstate and foreign trade and ■commerce in incandescent electric lamps -and machinery for the production of in•candescent electric lamps;

“(c) agreeing to restrain and by re-straining interstate and foreign trade and ■commerce in glass bulbs, tubing and cane .and in machinery for the production of :glass bulbs, tubing and cane;

“(c) [sic] agreeing to restrain and by re■straining interstate and foreign trade and ■commerce in incandescent electric lamp bases and in machinery for the production •of incandescent electric lamp bases;

“(e) agreeing to restrain and by re■straining interstate trade and commerce in argon gas; and

“(f) agreeing to maintain and by main-taining uniform prices in the distribution .and sale of incandescent electric lamps in :the United States.”

In paragraph 85 the Government charged that since 1927 General Electric and Westinghouse violated § 3 of the Clayton Act by making sales, contract for sales, or contracts for the distribution of incandescent electric lamps manufactured by them for use, consumption or re-sale within the United States and fixing the prices charged therefor or discounts from, or rebates upon such prices on the condition, agreement or understanding that the purchasers thereof or agents therefor shall not use or deal in other incandescent electric lamps, all with the purpose and effect of substantially lessening competition and tending to create a monopoly in interstate trade or commerce in incandescent electric lamps.

In paragraph 86 the Government charged that since 1927 General Electric, Corning and Philips have violated and are now violating § 73 of the Wilson Tariff Act by unlawfully combining and conspiring with and entering into and maintaining unlawful contracts or agreements relating to the importation from foreign countries into the United States of glass bulbs, tubing and ■cane and machinery for the production of such articles, whereby Philips has been and is prevented from importing such articles into the United States, all with the purpose and effect of restraining lawful trade and competition in the United States.

In paragraphs 87 to 102 the Government set forth in summary and in detail its charges that General Electric since 1927 has dominated and monopolized and continues to dominate and monopolize the incandescent electric lamp industry 'in the United States in which domination and monopoly Westinghouse has shared.

In paragraphs 103 to 117, inclusive, the Government charged that since 1927 General Electric has through its subsidiary, IGE, entered into and maintained unlawful patent licensing agreements, and is unlawfully maintaining other agreements earlier made with potential and actual foreign competitors; that General Electric and Corning have acquired and maintained and are maintaining foreign patents and have entered into licensing agreements with foreign companies in order to keep out of the United States glass parts and glass mak *767 ing machinery and that General Electric and Westinghouse have since 1927 entered and have maintained and are maintaining unlawful patent pooling and licensing agreements and other agreements with potential domestic competitors.

In paragraphs 118 to 129, inclusive, the Government charged that General Electric and Westinghouse recognizing that General Electric’s controlling lamp patents were about to expire entered into negotiations with each other in 1927, with a view toward continuing their control over the manufacture, distribution and sale of lamps in the foreign market. On or about June 15, 1928, General Electric and Westinghouse executed a license agreement, dated as of January 1st, 1927, which superseded the license and agreement executed in 1912 providing as follows:

“(a) Westinghouse is licensed nonexclu-sively by General Electric to manufacture and sell all types of incandescent electric lamps under certain United States patents listed in a schedule annexed to the license and agreement, and under any United States patents and patent applications which General Electric might during the term of the license own or control, or under which General Electric might have the right to grant such licenses, for improvements in electric lamps and improvements in the machines, appliances, or processes for the manufacture of incandescent electric lamps;

“(b) Westinghouse’s quota for domestic production was for the year 1927 to be increased from 17.25% to 22.4421% of the aggregate net sales (expressed in dollars) of electric lamps by General Electric and Westinghouse in and for use in the United States, and thereafter the quota was raised by 1% for each succeeding year after 1927 and until 1930, when it reached a maximum of 25.4421%, at which percentage the quota is to remain constant for the duration of the license;

“(c) Westinghouse has agreed to pay as a royalty or license fee an amount equal to 1% of its net sales of lamps for use in or outside the United States and made under the patents covered by the license, and in the event that such sales by Westinghouse exceed its quota, the royalty rate is to be stepped up from 1% to an amount equal to 30% of such excess sales:

“(d) Westinghouse has agreed to maintain prices, terms, and conditions of sales as fixed and followed by General Electric in making its own lamp sales:

“(e) Westinghouse has agreed not to interfere with General Electric’s ‘consignment’ plan of lamp distribution by (1) offering Westinghouse’s ‘agents’ greater compensation than that allowed by General Electric to its own ‘agents’; (2) offering Westinghouse’s ‘agents’ more favorable terms than those allowed by General Electric to its own ‘agents’, and (3) appointing as Westinghouse’s ‘agents’ persons or companies of whom General Electric affirmatively disapproved;

“(f) Westinghouse is expressly not licensed under the foreign patents owned by General Electric, nor permitted to export lamps nor to sell lamps for export, except to those countries to which General Electric itself has a right to export lamps;

“(g) Westinghouse is expressly not licensed to sell filaments or other parts of lamps, nor to manufacture glass bulbs, tubing, or cane;

“(h) General Electric and Westinghouse have admitted the validity of the patents under which each is licensed, but such admission is to be limited to the life of, and to the fields of use covered by, the licenses;

“(i) The agreement is to continue in force until the date of expiration of the patents and patent applications, as listed in the schedule annexed to the license and agreement, but it has been agreed that Westinghouse can surrender the license by giving two years’ notice after 1935, and General Electric can terminate the-license and agreement on sixty days’ notice after arbitrators, appointed as provided in the license and agreement, have-determined that Westinghouse has willfully breached the agreement; and “(j) If in any year Westinghouse sells an amount 5% or. more in excess of its quota, such sale is to be deemed a breach of the agreement.”

In paragraphs 130 to 139, inclusive, the Government charged that in 1927 about *768 eleven domestic companies, other than Westinghouse, were operating under patent licensing arrangements with General Electric to manufacture and sell lamps in the United States. By 1936 they had been reduced to five companies known as the “B” licensees of General Electric, and consisted of defendants Sylvania, Consolidated, Kenrad, Tungsol and Chicago Miniature. Except for the differences in the amount and type of lamps which-General- Electric permits each licensee to manufacture and sell in the United States the licenses and agreements are substantially identical and provide as follows :

“(a) Each licensee is licensed nonex-clusively by General Electric under its patents then owned or thereafter to be acquired which relate to incandescent electric lamps or to the manufacture thereof;

“(b) Each licensee is limited in its sales in any one year to a certain fixed quota or percentage which is based on General Electric’s total net dollar sales for that year;

“(c) If in any one year a licensee should sell less than its quota, it could, in the next succeeding year, sell an additional amount equal to the amount of the shortage, but not more than 10% of the quota for the year in which the shortage occurred;

“(d) If in any year a licensee should sell an amount 10% or more in excess of its quota, such act would constitute a breach of the agreement;

“(e) Each licensee is required to pay upon its lamp sales a royalty of 3%% with a discount of 10% for prompt payment and proper reporting, and such royalty is computed on the basis of the prices charged' by General .Electric for such types of lamps;

“(f) Each licensee is required to pay an additional royalty of 20% of its net sales in any year in excess of 5% over its quota for that year;

“(g) Each licensee is expressly precluded under General Electric’s patents covered by the license from (1) manufacturing lamp ■bulbs, glass tubing, cane glass or lamp bases, (2) exporting lamps or selling lamps for export, and (3) selling any part of an incandescent lamp or any machine, appliance, or material, or any part thereof;

“(h) Each licensee is licensed to manufacture, solely for its own use as a licensed lamp manufacturer, any lamp-making machinery, appliance or materials covered by any patent or patents listed in the license and agreement, or to purchase the same in each case, solely for such use, but only from such others licensed by General Electric to manufacture them for sale;

“(i) Each licensee has granted to General Electric a non-exclusive license with the right to grant sub-licenses, to make, use and sell incandescent lamps of all kinds and machines, appliances and materials for the manufacture of such lamps, under all patents and patent rights which the licensee or its officers and directors then, or thereafter during the term of the agreement might own or control for the life of the patents respectively;

“(j) Each licensee has agreed to grant to General Electric upon demand, non-exclusive licenses under any foreign patents such licensee might own, to enable General Electric to abide by its contracts with others;

“(k) Each licensee has agreed to keep its books, warehouses, and factories open to the inspection of General Electric;

“(1) Each agreement is to continue in force until December 31, 1944, unless sooner terminated ..by General Electric for breach of conditions thereof by the licensee ;

“(m) Each licensee can cancel the agreement upon six months’ notice in writing to General Electric;

“(n) Each licensee has agreed not to advertise or sell lamps bearing the mark ‘G. E.,’ ‘Mazda,’ ‘Edison,’ ‘National’ or any other mark or brand used by General Electric; and

“(o) General Electric and each licensee have admitted the validity of the patents under which each is licensed, but such admission is to be limited to the life of, and the fields of use covered by, the licenses.”

In paragraphs 140 to 217, inclusive, the Government charged that General Electric and Westinghouse have conspired and combined to control and dominate the manufacture, use and sale of lamp bases and lamp *769 base making machinery in the United States; that General Electric, Corning, Empire and American Blank have conspired and combined to control and dominate the manufacture, use and sale of glass bulbs, tubing and cane, and glass making machinery in the United States; that General Electric has conspired and combined with others to restrain the production, use and distribution of argon gas for use in lamps in the United States and General Electric has conspired and combined with others to restrain the manufacture, use and sale of lamp making machinery in the United States.

In paragraphs 218 to 253, inclusive, the Government charged that in order to carry out the conspiracies, monopolies and combinations in restraint of trade, as alleged in the complaint, and particularly insofar as they relate to the distribution and sale of large lamps, General Electric and Westinghouse have adopted and maintained a system of lamp distribution involving a so-called agency arrangement by which General Electric has acquired a monopoly in the distribution and sale of lamps in the United States, and Westinghouse has acquired a share of such monopoly. By means of this system and by means of the license and agreement between General Electric and Westinghouse, General Electric fixed and controlled re-sale prices of all lamps sold by General Electric and Westinghouse.

In paragraphs 254 to 266, inclusive, the Government alleged that in order to carry out the conspiracies, monopolies and combinations insofar as they related to the manufacture and sale of miniature lamps General Electric and Westinghouse have since 1927 distributed such miniature lamps with the exception of mine type lamps by means of so-called agency contracts and have fixed and maintained re-sale prices of miniature lamps.

In paragraphs 267 to 293, inclusive, the Government charged that the distribution arrangement of General Electric and Westinghouse for all types of lamps whereby contracts of so-called agency have been and are executed by them with their respective distributors has not created and does not create or represent a relationship of true agency between General Electric or Westinghouse and their respective distributors. Plaintiff alleged that General Electric and Westinghouse have employed this device to defeat the provisions of the anti-trust laws.

In paragraphs 294 to 314, inclusive, the Government alleged that in order to maintain and extend General Electric’s control and domination of the domestic lamp industry General Electric and Westinghouse from time to time since 1927 have engaged in other unlawful acts and practices which are thereinafter set forth.

In paragraphs 315 to 322, inclusive, the Government alleged that continuously from the dates of their original agreements, licenses and understandings, as thereinbefore set forth, General Electric and Westinghouse have unlawfully maintained such agreements and understandings with other large and powerful companies which are potential lamp manufacturing competitors whereby such companies have been disabled and have refrained from engaging in competition.

In paragraph 333 the Government concludes that:

“By establishing and maintaining the conspiracies, monopolies, and combinations in restraint of trade, and by the various acts hereinbefore alleged, the defendants herein (a) have obtained and now hold a monopoly of patents relating to glass bulbs, tubing and cane and the manufacture thereof in the United States; (b) have obtained and now hold a monopoly of patents relating to incandescent electric lamps and the manufacture thereof in the United States; (c) have established and now hold a monopoly in the manufacture, distribution, and sale of such lamps in the United States; (d) have unreasonably restricted and now restrict the production of such lamps in the United States; (e) have unreasonably restricted and now restrict the distribution and sale of such lamps in the United States; tff) have fixed and now maintain non-competitive prices on approximately 80% of such lamps manufactured and sold in the United States; (g) have obtained and now maintain monopolies on glass bulbs, tubing and cane on lamp bases; (h) have restrained and now restrain trade in other essential parts and materials for incandescent lamps; (i) have eliminated the importation into the *770 United States of glass bulbs, tubing and cane, machinery relating to the manufacture of such glass parts; lamps, lamp parts and lamp-making machinery; (j) have discouraged and impeded the progress of science and the useful arts, and have used the patent laws of the United States for purposes inconsistent with the constitutional basis of these laws; and (k) have monopolized interstate and foreign trade and commerce and have unreasonably restrained such trade and commerce in violation of the laws of the United States.”

Finally, among the sixteen prayers of the Government are the following:

“(1) That the aforesaid monopolies, attempts to- monopolize, combinations and conspiracies to monopolize, and contracts, combinations, and conspiracies to restrain trade and commerce among the several States and with foreign nations be adjudged and decreed to be unlawful, and that the agreements, understandings, acquisitions, purchases, and practices alleged in this complaint be adjudged and decreed to be in violation of the Sherman Anti-Trust Act, the Clayton Act and the Wilson Tariff Act.

“(2) That the Court adjudge and decree that the defendants have monopolized, attempted to monopolize, combined and conspired to monopolize, and contracted, combined, and conspired to restrain trade in violation of Sections 1 and 2 of the Sherman Antitrust Act, Section 3 of the Clayton Act, and Section 73 of the Wilson Tariff Act.

“(3) That the Court adjudge and decree that the defendants, General Electric, International, Corning, Philips, American Blank, and Empire have monopolized, attempted to monopolize, combined and conspired to monopolize, and contracted, combined, and conspired to restrain trade in violation of Sections 1 and 2 of the Sherman Antitrust Act with respect to patents relating to the manufacture of machinery for the production of glass bulbs, tubing and cane and with respect to the manufacture and sale of glass bulbs, tubing and cane.

“(4) That the Court adjudge and decree that the defendants, General Electric and Westinghouse have monopolized, attempted to monopolize, combined and conspired to restrain trade in violation of Sections 1 and 2 of the Sherman Antitrust Act with respect to the manufacture and sale of bases for incandescent electric lamps.

“(5) That the Court adjudge -and decree that the defendants, General Electric and Westinghouse have monopolized, attempted to monopolize, combined and conspired to monopolize, and contracted, combined, and conspired to restrain trade in violation of Sections 1 and 2 of the Sherman Antitrust Act with respect to patents relating to. lamps and to the manufacture of lamps.

“(6) That the Court adjudge and decree that the defendants, General Electric and Westinghouse have monopolized, attempted to monopolize, combined and conspired to restrain trade in violation of Sections 1 and 2 of the Sherman Antitrust Act and Section 3 of the Clayton Act with respect to the manufacture and sale of incandescent electric lamps.

“(7) That the Court adjudge and decree that the defendants, General Electric, Corning and Philips have combined and conspired to restrain trade in violation of Section 73 of the Wilson Tariff Act with respect to the importation into the United States of glass bulbs, tubing and cane and machinery for the production thereof.

“(8) That each of 'the agreements, licenses and understandings between defendants General Electric and Westinghouse, between defendants General Electric and Consolidated, between defendants General Electric and Hygrade, between defendants General Electric and Ken-Rad, between defendants General Electric and Chicago Miniature, between defendants General Electric and Tung-Sol, between defendants Corning and Philips, between defendants General Electric and each or all of the following defendants: Philips, Corning, American Blank, and Empire Machine, and between any of such defendants, and any other -agreements, licenses and understandings between and among the corporate defendants, or any of them, be each adjudged to represent an illegal combination and conspiracy to restrain and monopolize interstate and foreign trade -and commerce, and that the observance of each of such agreements, licenses and understandings in any respect, and the execution of similar agree *771 ments, licenses and arrangements be perpetually enjoined.

“(9) That the agreements between defendants General Electric and International, and between defendant International and the various foreign lamp companies described hereinafter, be each adjudged to represent an illegal combination and conspiracy to restrain and monopolize interstate and foreign trade and commerce, and that the observance of each of such agreements in any respect and the execution of similar agreements be perpetually enjoined.

“(10) That defendants General Electric and Westinghouse and their respective subsidiaries be enjoined from making a contract or other arrangements with any dealer engaged in handling lamps which will have the effect of fixing a sales price thereof after sueh lamps shall physically pass out of the hands of defendants General Electric and Westinghouse or their respective subsidiaries.

“(11) That the defendants, and each of them, and their officers, directors, agents, representatives, and all persons and corporations acting and claiming to. act on behalf of them, be perpetually enjoined from monopolizing, attempting to monopolize, combining and conspiring to monopolize or agreeing, combining, or conspiring to restrain trade, and be perpetually enjoined from engaging in or participating in practices, agreements, licenses, contracts, relationships, or understandings, or claiming any rights thereunder, having a tendency to continue dr revive any of the aforesaid violations of the Sherman Anti-Trust Act, the Clayton Act and the Wilson Tariff Act.

“(12) That plaintiff have such other and further relief with respect to the organization, functions and operations of defendants as the Court may deem appropriate and necessary to establish effective competition in lamp parts, lamp machinery and lamps in the United States.

“(13) That the plaintiff have such in-junctive relief as the Court may deem appropriate and necessary to prevent General Electric, Corning and Westinghouse by the abuse of their patent rights from restricting and eliminating competition between each other and between and among the other defendants from depriving others of a fair opportunity to compete freely and unrestrictively with General Electric, Corning and Westinghouse and the other defendants and from engaging in any other activities which are designed to or have the effect of impairing the ability of such competitors to compete with defendants.”

Answers were filed by all defendants, Corning filing for American Blank and Empire. Since these latter two defendants were dissolved by judicial decree of the State of Maine on November 7, 1940 and January 8, 1941, an order was signed dismissing the complaint as against them. For the purpose of totality of determination, however, it has been necessary to give consideration in detail to their activities prior to such dissolution. Sylvania also filed a cross-claim against Corning and General Electric alleging restraints of trade in the glass bulb, tubing and cane industry as it affected Sylvania but these parties later stipulated to its dismissal without prejudice. Jewell Incandescent Lamp Company sought to intervene as a representative of a class of incandescent lamp manufacturers but its motion was denied.

The complaint was filed January 27, 1941 and trial commenced in 1942, but was suspended at the request of the Secretaries of War and Navy and not resumed until March 1946.

Introduction

The incandescent lamp industry has its foundations in the invention of the carbon filament vacuum electric lamp by Thomas A. Edison in 1879. A number of companies were organized to exploit this invention, patented in 1880. In 1891, a consolidation of the Edison General Electric Company, Thomson-Houston Company and the Thomson-Houston International Electric Company resulted in the organization of the General Electric Company. By this consolidation General Electric obtained control of the basic Edison patents and until expiration of the patents had a virtual monopoly of the domestic supply in electric lamps. Upon expiration of the basic patents in 1894, General Electric entered into a cross-licensing patent agreement with Westinghouse and organized the Incandes *772 cent Lamp Manufacturers an unincorporated association consisting of several independents who entered the field upon expiration of the Edison patents. In 1901, General Electric acquired a majority stock interest in the National Electric Lamp Company which in turn obtained control of the Lamp Manufacturers Association. By 1911 National Electric controlled eighteen subsidiaries engaged in the incandescent lamp industry. Although National Electric was an alter ego of General Electric, National Eleotric and its subsidiaries held themselves out to the public as competing establishments.

As a result of the cross-license agreement with Westinghouse and stock interest in National Electric, General Electric controlled approximately 80% of the incandescent lamp business by 1911, although the basic Edison patents had expired. The Government, in 1911, charged General Electric, Westinghouse, National Electric and its affiliates with violations of the Sherman Act. By a consent decree National Electric was ordered dissolved and General Eleotric directed to acquire the assets of its subsidiaries to prevent the public from being misled as to the real nature of General Electric control (Ex. G 1). General Electric continued its 80% control of the industry so that the decree had no effect upon its dominance of it, but lamp manufacturers were enjoined by the decree from engaging in certain price fixing practices.

Meanwhile, General Electric, through General Electric Research Laboratory, conducted experiments in the use of metallized carbon filaments. The incandescent lamp of the period 1900 to 1912 was relatively fragile, short lived and not an efficient source of light. Between 1907 and 1909, General Electric brought out the filament lamps. Two Austrians, Just and Hanaman, had developed practical commercial models of the tungsten filament lamps and had applied in the United States for patents. These patent rights were acquired by General Electric and in 1912, the Just and Hanaman patent was issued.

In 1912 aside from General Electric’s control of approximately 80.% of the incandescent lamp business as a result of the previously mentioned consolidations resulting from the 1911 decree, the remaining 20% was done by a numbér of companies which were infringing the Just and Hana-man patent on the tungsten filament. A new license with Westinghouse was executed so as to permit it to manufacture lamps under this and other patents. The Just and Hanaman patent was sustained in 1916, General Electric Co. v. Laco-Philips Co., 2 Cir., 233 F. 96, and as a result, General Electric, as the owner of this patent was in a position to prevent any other persons from making lamps of the then commercially successful types.

The predecessors of General Eleotric had established several foreign contacts. Upon organization of General Electric, these contacts were extended until General Electric had some form of representation in England, France, Germany, Holland, Italy, Austria and Japan (R. 1422-1455). Eventually wholly owned General Electric foreign subsidiaries were established as follows: Anderson, Meyer and Company, Ltd. (China) ; Australian General Eleotric Company, Ltd.; General Electric, S.A. (Brazil); General Electric Company of Cuba; General Electric, S.A. (Mexico); and South African General Electric Company (Ex. 20-G, R. 1425-1426).

In 1919, International General Electric was organized by General Electric for the purpose of exploiting the foreign markets. It was an autonomous organization and its prime responsibility was to operate successfully in the foreign field. It took over General Electric’s foreign assets, its foreign business, and the functions of its foreign department in all areas of the world except Canada.

While General Electric, through the monopoly granted by the Just and Hanaman patents, as well as other patents to be mentioned hereinafter, continued to maintain dominance over the incandescent lamp ■industry in the United States, her overseas markets were expanded through her foreign subsidiaries. General Electric maintained a close contact with this market and negotiated several agreements with foreign companies other than its subsidiaries (R 1434-1455).

*773 Philips, the Dutch Company, offered the potentiality of being a menacing competitor to General Electric in Europe. Exhibit 2112-G points to the seriousness with which International General Electric felt the Philips* competition. J. W. Woodward, in charge of IGE’s European incandescent lamp business warned A. W. Burchard, President of IGE in 1924 that there was serious danger of competition in the American market from Philips for Anton Philips’ leadership was greatly expanding the scope of Philips’ operations.

Several European lamp manufacturers had organized in 1921 a price regulating cartel. This proved inadequate and it broke down in 1924 (Ex. 2111-G). Mr. Woodward of IGE, representatives of Philips and the German interest (Osram) conducted extensive negotiations (Ex. 2112-G) which eventually led to an agreement for the stabilization of the lamp industry throughout the world (Ex. 2117-G). This agreement was the Phoebus contract 12 (Ex. 2278-G) and Anderson, Meyer & Co., Ltd., Australian General Electric Co., Ltd., General Electric Company of Cuba, General Electric, S.A. (Brazil and Mexico), South African General Electric, and deJ' fendant Philips, were among the signators.

Meanwhile in 1922, General Electric invited the Attorney General of the United States to investigate it for the purpose of ascertaining whether it was acting in violation of the anti-trust laws and such an investigation was initiated. (Ex. GE 3 tp 9). It led to an action by the Government in the Northern District of Ohio in 1924 which charged General Electric and Westinghouse with engaging in a combination and conspiracy in violation of the Sherman Anti-Trust Act. There the suit was dismissed and unanimously affirmed by the Supreme Court in United States v. General Electric Co., 272 U.S. 476, 47 S.Ct. 192, 71 L.Ed. 362. (Hereinafter referred to as the 1926 case or the General Electric Co. case. See Ex. G-l.)

The case in the trial court was submitted upon a stipulated set of facts United States v. General Electric Co. et al., Northern District of Ohio, Eastern Division, Second Government Lamp Suit, Record, Vol. 1, page 85 et seq., Ex. G-l. In 272 U.S. at page 478, 47 S.Ct. at page 192, 71 L.Ed. 362, the basis of the action is detailed:

“This is a bill in equity, brought by the United States in the District Court for the Northern District of Ohio to enjoin the General Electric Company, the Westinghouse Electric & Manufacturing Company, and the Westinghouse Lamp Company from further violation of the AntiTrust Act of July 2, 1890, 26 Stat. 209, c. 647. The bill made two charges, one that the General Electric Company, in its business of making and selling incandescent electric lights, had devised and was carrying out a plan for their distribution throughout the United States by a number of so-called agents, exceeding 21,000, to restrain interstate trade in such .lamps and to exercise a monopoly of the sale thereof; and, second, that it was achieving the same illegal purpose through a contract of license with the defendants, the Westinghouse Electric & Manufacturing .Company and the Westinghouse Lamp Company.”

The court first considered the agency relation in detail and observed that the delivery of stock to the agent was no more than a consignment and that the agency contracts were genuine.

On the second issue presented, the court made the following remarks concerning the patent position of General Electric:

“The General Electric Company is the owner of three patents — one of 1912 to Just & Hanaman, the basic patent for the use of tungsten filaments in the manufacture of electric lamps; the Coolidge patent of 1913, covering a process of manufacturing tungsten filaments by which their tensile strength and endurance is greatly increased; and, third, the Langmuir patent of 1916, which is for the use of gas in the bulb, by which the intensity of the light is substantially heightened. These three patents cover completely the making *774 of the modern electric lights with the tungsten filaments, and secure to the General Electric Company the monopoly of their making, using and vending.” 272 U.S. at pages 480, 481, 47 S.Ct. at page 193, 71 L. Ed. 362.

The court then directed the following inquiry to itself:

“Had the Electric Company as the owner of the patents, entirely controlling the manufacture, use and sale of the tungsten incandescent lamps, in its license to the Westinghouse Company, the right to impose the condition that its sales should be at prices fixed by the licensor and subject to change according to its discretion ?. * * * ” 272 U.S. at- page 488, 47 S.Ct. at page 196, 71 L.Ed. 362.

The Court relying upon Bement & Sons v. National Harrow Co., 186 U.S. 70, 22 S.Ct. 747, 46 L.Ed. 1058, concluded that the restrictions in the license to Westinghouse were not illegal.

' This decision in the General Electric case has engendered considerable analysis in the courts, and on several occasions the Government has asked that it be expressly overruled. The history of its recurrences in litigation is comprehensively set forth and reconsidered in two recent cases, United States v. Line Material Co., 333 U.S. 287, 68 S.Ct. 550, and United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525.

At the opening of its case, General Electric attacked the complaint of the Government with the assertion that the matters offered in proof in this action would be shown to be in all substantial -respects the same as those of which the complaint was made or could have been made in the former action against it in 1926. At the end of its case, ilGeneral Electric argued that this was established and that the doctrine of re-s adjudicata applied to the principal issues in this case. General Electric pointed out that its operations under its agency system of distribution and under its license agreements with Westinghou-se and its “B” licensees were substantially indentical in all material respects to its operations prior to 1926; that its position in legal effect remained the same and that its position in the lamp industry, if it has changed, has become less prominent than it was prior to the 1926 suit. It cited the case of Straus v. American Publishers’ Ass’n, 2 Cir., 201 F. 306, as authority for the proposition that successive -suits may not be maintained when they are based upon a continuing conspiracy where the defendants’ course of -conduct remained substantially similar although the basic agreements had been modified in some respects. The fact that additional parties were added and that different statutes were invoked in the second suit, it is pointed out, were held to -be immaterial. I't cited a number of other cases to support this view -and claims that the present suit violates the rule against splitting a cause of action. It contended that even if 'the two causes of action are somewhat different that those matters -actually litigated in 1926 are res adjudicata here.

The Government, on the other hand, insisted that the causes of action are not the same. First, it claimed that a new conspiracy arose in or about 1927 in anticipation of the approaching expiration of the alleged patent monopoly of General Electric, that a design was created whereby Westinghouse and General Electric’s “B” licensees would guarantee its dominance in production and sale of lamps although there was no longer completely covering article patents upon which to base controls; that the resale price device was expanded to include a monopolization of market outlets; that action was taken to secure complete control over lamp machinery and -that control over each part of the lamp was utilized to -replace in part the power given by patents that were expiring or that had expired; that patents themselves were made conspiratorial devices 'to function by weight of number and that General Electric’s dominating position was further sustained by its efforts to suppress research by others. The Government further contended that the charge of monopoly was of necessity a charge of a new cause of action and that the prevailing facts and circumstances surrounding such a charge are determinative and that the most cogent ones in the instant case among others were the expiration of *775 patents, the use of adjuvant monopolies, expansion of distributive controls and the exercise of opportunity to abuse powers.

Secondly, the Government charged that even without a new conspiracy, when the General Electric’s patent monopoly allegedly expired in 1933 it thereupon became illegal for it to continue to pursue its previous course of conduct.

Thirdly, the course of conduct followed •by General Electric after 1927 was significantly different from that followed prior to that date. The Government insisted that the documents submitted by General Electric in 1922 to the Attorney General could not give knowledge of what would be the continuation of that “course of conduct” over the years from 1924 to 1941 and that other activities had been shown by the Government to be in some instances independently illegal or essential to the complete picture of the alleged growing monopoly and were not barred from consideration by the decision of the 1926 case.

Fourthly, the Government contended that during the period 1927 to 1941 the transactions if assumed to be similar were not the same as those occurring before the 1926 action and for the purpose of res adjudicata they must be identical not merely similar; that the alleged conspiracy required constant adherence to its purposes and was a constantly self renewing offense.

Fifthly, that the present action is brought under different statutes — the 1926 case charged only violations of the Sherman Act; the present suit charges violations of the Sherman, Clayton and Wilso-n Tariff Acts; that different parties, subject matter and relationships are involved; in the former case only General Electric and Westinghouse and one of its subsidiaries are named as defendants, while here Corning, Philips, the “B” licensees, two patent holding companies, and Westinghouse are named in addition to General Electric and one of its subsidiaries. The former case dealt only with the 1912 General Electric-Westinghouse license and a comparatively small number of General Electric agency agreements, whereas the present one deals with domestic agreements, international agreements, the operation of a vast “agency” system largely comprised of a new form of “agency” and numerous activities in restraint of trade and in furtherance of monopolistic objectives. It further claimed that the relief sought in this case is different from that sought in 1924. The former case was brought to cancel the Westinghouse-General Electric Agreement of 1912 and the “agency” agreements of Westinghouse and General Electric. The present case sought a complete reorganization of the structure of the industry, including the cancellation of, and injunctive relief against, foreign and domestic contracts between General Electric and various alleged co-conspirators, compulsory licensing of patents and dissolution of the monopoly achieved and maintained by General Electric.

The Government contended that it could distinguish the case of Straus v. American Publishers’ Ass’n, supra, and the others cited by General Electric. In connection with the Straus case it argued that the “agreements and conduct” complained of in both actions were “exactly the same” except that instead of covering both copyrighted and uncopyrighted books the later agreements applied to copyrighted books. The earlier case also involved copyrighted books and therefore the issue in the second suit had already been litigated. Both suits covered the same period of time except that the second action asked for damages for a ■longer period. Additional parties were privy to the judgment in the first suit. It asserted that there is no comparison between the two cases because both actions involved in the Straus litigation concerned the same statutes, parties, subject matter and identical issues.

It is true that the complaint in the 1926 case and the present one were filed for violation of the anti-trust laws. It is equally true that new matters are brought forward in the present controversy which make it different. Also a different period of time is involved. That very passage of time has evolved new activities upon the part of the defendants and is essentially a factor bearing upon the continuing validity of patents and their efficacy as a basis for contractual relationships. It is sufficient to say that there are such differences in the time element, the parties, and their activi *776 ties and relationships and the prayers for relief that the doctrine of res judicata cannot be applied as a complete bar to this entire action.

Though the doctrine does not operate as a complete bar to the present litigation, some of the issues there determined may well bar a reconsideration of those same issues here. In the case of Sutton v. Wentworth, 1 Cir., 247 F. 493, 501, the court stated:

“There is a difference, sometimes overlooked, between the effect of a judgment as a bar to the prosecution of a second action for the same cause and its effect as an estoppel in another suit between the same parties upon a different cause of action. In the former case a judgment on the merits must be pleaded, and is an absolute bar to a subsequent action; it concludes the parties, not only as to every matter which ■was offered and received to sustain or defeat the suit, but also as to any other matter which might have been offered for that purpose. In the latter case, the judgment in the prior action may be offered in evidence, and operates as an estoppel only as to those matters which were there directly in issue and either admitted by the pleadings or actually tried.”

This principle was recently approved by the Court in Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591, 597, 598, 68 S.Ct. 715, 719, where the rule was stated as follows:

“But where the second action between the same parties is upon a different cause or demand, the principle of res judicata is applied much more narrowly. In this situation, the judgment in the prior action operates as an estoppel, not as to matters which might have been litigated and determined, but ‘only, as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered.’ ”

Where the former decision has been dis-positive of any issue in this case it will be pointed out as the various issues raised herein are taken up.

The result of the 1926 case was to grant General Electric a legal monopoly in the manufacture and sale of the incandescent lamps. General Electric operated under a system of licenses permitting use of its patents, 527 in number at the commencement of this action, under specified conditions. The license system involved two types, “A” and “B” with considerable differences in their requirements.

At the time the instant suit was filed, the following licenses were in existence:

Westinghouse

Sylvan! a

Consolidated

Kenrad

Tungsol

Chicago Miniature 13

“A” License dated August 1, 1927 (Ex. 25-G)

“B” Licenses (Exs. 27-G, GE-65, GE-66)

dated August 1, 1933

dated July 1, 1933

dated July 1, 1933

dated October 1, 1933

dated January 1, 1934

These licenses were continuations or renewals of substantially similar licenses granted prior to 1922 as follows: Westinghouse, March 1, 1912; Sylvania, January 2, 1917; Consolidated, April 1, 1918; Kenrad, December 1, 1916; Tungsol, January 1, 1921; and Chicago Miniature, January 2, 1919.

The Westinghouse license, Exhibit 25-G, established price and quota restrictions, and provided for a non-exclusive license to General Electric of Westinghouse patents and an exchange of manufacturing information. Provisions were made for an increasing percentage in 1927 at 22.442% and by 1930 and thereafter 25.442% in dollars of the net aggregate sales of General Electric. In addition, no license was granted under General Electric’s foreign patents and “no license is granted to export electric lamps, or sell such lamps for export, except to countries to which the Licensee [GE] would itself have a right to export them”.

The “B” licenses (Exs. 28-G, 29-G, 30-G, 30b-G, 31-G, 32-G) contained no price restrictions but limited production to a per *777 centage in dollars of the net aggregate sales ^of General Electric and contained an export restriction similar to that of Westinghouse. 14

The Alleged Adjuvant Monopolies

The Government primarily contended-that General Electric monopolized the incandescent lamp industry. In order to support and maintain this monopoly, it asserted that General Electric maintained separate illegal monopolies which it termed “Adju-vant Monopolies” claiming that separate ■ anti-trust actions could have been maintained on each and listed them as follows:

(1) “All modern high-speed automatic lamp-making machinery manufactured and distributed in the United States is made and directly controlled by General Electric.

(2) “All machinery for producing all types of glass bulbs, tubing, and cane manufactured in the United States for electrical purposes is made or directly controlled by General Electric and Coming.”

(3) “All lamp base-making machinery manufactured in the United States is made or controlled by General Electric.”

(4) “General Electric is the only manufacturer in' the United States that sells a complete line of lamp bases.”

(5) “General Electric and Corning produce practically all of the large glass bulbs, tubing, and cane used in the manufacture of incandescent lamps in the United States.”

(6) “General Electric manufactures or controls approximately 90% of the tungsten filament wire, lead-in wire, and support wire used in incandescent lamps in the United States.”

(7) “General Electric expanded its distribution outlets from 39,777 to 83,391 in the period in question, and by this means, together with the 30,000 odd Westinghouse agents, who are tied to the General Electric marketing scheme, dominates lamp marketing in the United States.”

(8) “General Electric has a monopoly of lamp patents. This was secured by means of its license agreements with Westinghouse, the B Licensees and foreign companies, agreements with large domestic industrial concerns, namely, American Telephone & Telegraph Co. and Radio Corporation of America, and by its deliberate effort to obtain from the Patent Office Patents covering every aspect of the lamp and its manufacture no matter how trivial and without regard to validity.”

(1) Lamp Making Machinery

Under the first of the so-called “adjuvant monopolies” the Government charged that General Electric controls the manufacture and distribution of all modern high-speed automatic lamp making machinery in the United States. Two manufacturing concerns were alleged to have been eliminated for all essential purposes from competition with General Electric. One was Alfred Hofmann & Company, and the other was the Eisler Engineering 'Company, both located in Newark, New Jersey. It appears from a series of letters of General Electric officials in late 1923 and early 1924 that the matter of licensing Hofmann and Eisler to make and sell lamp making machinery was given consideration. In speaking of the proposed license from GE to Hofmann, Mr. Morrison wrote to Mr. Appleton of GE on January 21, 1924 (Ex. 338-G).

“Our purpose, of course, in granting this license is to get the manufacture of our lamp making machinery under control with a view to protecting our foreign as well as our domestic interests.”

And, again in another letter of the same day to Mr. Burchard (Ex. 339-G) :

“Our purpose in entering into the proposed arrangement with Hofmann is to limit his right to supply machinery to the Licensees of the General Electric Company in the United States and its affiliated companies in Europe.”

In April of 1924 a license was executed which provided, among other things, that Hofmann would receive the business of selling lamp machinery to the “B” licensees in return for agreeing not to sell lamp making machinery to others in the United States (Ex. 327-G). Subsequently General *778 Electric itself sold lamp making machinery to the “B” licensees. The agreement was cancelled in 1930. General Electric claims the relationship was entirely valid and legal in that the contract concerned only such machinery upon which General Electric had patents and that the $65,000 paid Hofmann upon the cancellation of the agreement by General Electric was not in consideration for its cancellation but to settle a claim for damages asserted by Hofmann against General Electric.

The other competitor in lamp making, Eisler, was made defendant in four suits filed by General Electric in this district on twelve patents. Two of the cases were finally decided against General Electric by the Third Circuit Court of Appeals. General Electric Co. v. Eisler et al., 3 Cir., 1927, 20 F.2d 33 and General Electric Co. v. Eisler et al., 3 Cir., 1928, 26 F.2d 12. Still a third decision went against General Electric in General Electric Co. v. Eisler et al., 3 Cir., 1930, 43 F.2d 319. The fourth of the suits was dismissed because the patents had expired before the suit came to trial. General Electric denies that its suits against Eisler were instituted because it desired to eliminate a competitor in, the lamp making machinery field but that they were instituted because it had patents which it believed were valid as issued by the Patent Office and that it was wholly within its rights to prosecute its suits against Eisler which it believed was infringing its patents.

General Electric produced catalogues of both Hofmann and Eisler to show that both firms still offer lamp making machinery for sale although it was admitted by its Chief Engineer of Equipment Works that the machinery built by them was less efficient than that built by General Electric itself (R.1894) and Mr. Poor, President of Sylvania, testified that he believed that the machinery exhibited by Hofmann and Eisler in their catalogues could not be effectively utilized in the profitable manufacture of electric lamps (R. 3292, 3294). It was brought out that General Electric sold lamp making machinery to its “B” licensees only on condition that in the event of a termination of the license agreement General Electric was to have the option to repurchase such lamp machinery except that which had been owned by th^ “B” licensees for ten years or more. Neither Westinghouse nor the “B” licensees were licensed to make lamp making machinery for sale to others. General Electric denied that it had any intent to limit others so that it could exert a monopoly over the manufacture and distribution of lamp making machinery. It contended that others still make it, among them, Standard Tool and Manufacturing Company (R.3408), York Electric (R.3654) and Kahle Machine Company (R.3409). Sylvania installed a machine shop in which some machinery was manufactured in 1923 and 1924 and at the time of trial herein had nearly completed a new and large plant for this purpose (R.3329).

Bearing in mind that the narrow issue presented by the Government under this heading is its contention that General Electric accomplished a separate and complete monopoly of the manufacture and distribution of all modern high speed lamp making machinery in the United States, examination shows that the Government’s proofs fall short of showing monopoly of machinery. ThS Hofmann license on its face permitted the licensee to manufacture machinery under General Electric patents and in so far as that machinery is concerned restricted its distribution. General Electric’s contention that statements made by its officials always referred only to machinery under the patents of General Electric and that Hofmann was otherwise free to sell lamp making machinery not so patented is not convincing but on the contrary exhibits an attempt to restrain trade. But at best, on the Government’s side, this does not connote monopoly but the attempt to restrain Hofmann from trading in lamp making machinery with particular emphasis in the field of supplying potential foreign competitors of General Electric and can involve no more than a violation of Section 1 of the Sherman Anti-Trust Act.'

As far as the Eisler litigation is concerned, comments made in this opinion under the patent heading apply and the Gov-. ernment’s contention is not supported by a showing of other than ordinary disposi *779 tion to litígate patents issued by the Government.

The incorporation of the provision for buying back machinery from the “B” licensees tied to a termination of the patent license before the licensee owned the machinery for ten years is likewise susceptible to successful attack as to its validity because it is an effort to extend the patent monopoly prohibited in such cases as Ethyl Gasoline Corporation v. United States, 309 U.S. 436, 60 S.Ct. 618, 84 L.Ed. 852 and Mercoid Corporation v. Mid-Continent Inv. Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376. But even though there is spelled out from this provision a restraint of trade under § 1 of the Sherman AntiTrust Act, the burden is upon the Government to show, aside - from whatever other implications there may be in General Electric’s conduct toward the manufacture of lamp making machinery, that' there is a specific and separate and complete monopoly in this particular field. The undisputed contention of General Electric that the Hofmann concern, Eisler and other companies continued to manufacture Tamp making machinery stands in the way of a conclusion that the Government has proved that General Electric monopolizes this field.

(2, 5) Glass Machinery and Products

The next of the so-called “adjuvant monopolies” mentioned by the Government deals with the charge that machinery for producing all types of glass bulbs, tubing and cane manufactured in the United States for electrical purposes is made or directly controlled by General Electric and Corning. The fifth alleged “adjuvant monopoly” deals with glass bulbs, tubing and cane produced by the machinery to which reference is made in (2).

The Government submitted that its proofs laid the foundation for its argument that General Electric, through its own activities and through the activities of Corning, had secured a monopoly of the glass bulb, tubing and cane used in incandescent electric lamps in the United States; that General Electric and Corning had mutually agreed with each other not -to invade their respective fields of making incandescent electric lamps and making glass bulbs, tubing and cane for such lamps; and that the monopoly was constructed by General Electric and Corning and controlled and guided by General Electric.

It alleged that the extent of the monopoly was practically complete in that General Electric and Corning manufactured approximately all of the glass bulbs used-in the manufacture of incandescent electric lamps in the United States; that General Electric and Corning manufactured all the glass tubing used in radio tubes and for incandescent electric lamps; that only a small percentage of bulbs was imported into the United- States; and that the majority of miniature bulbs used in the United States was manufactured by General Electric and Corning but Westinghouse and Tungsol manufactured miniature bulbs for their own use out of tubing made by Corning and some negligible quantity of miniature bulbs was also made by independents out of tubing made by Corning.

It further alleged that General Electric produced practically all but 6% of its requirements of bulbs, tubing and cane, the balance of which it was under contract to purchase from Corning; that it did not compete with Corning and made few and limited sales only of bulbs, tubing and cane, and that Corning was thus the only source of supply for glass parts available to lamp manufacturers except General Electric. It also alleged that General Electric, through agreements entered into by Corning, had the power to and did fix the price at which Corning sold glass parts to lamp manufacturers through their agreements; and that it was through such control of prices at which other manufacturers purchased glass parts that General Electric had been able to tighten and make more secure the monopoly over the manufacture and sale of incandescent electric lamps.

In answer to the Government’s argument, General Electric submitted, among other things, that it had been entirely innocent of any part in the establishment of a general program of monopolization or restraint of trade; that its consistent course had been its interest in developing glass for its lamps and that neither its contracts nor course of business were *780 designed to do anything more than improve the quality and production of glass for its own use. It challenged the presence of proof in the case justifying aggregation of Corning and General Electric for the purpose of establishing claims of monopolization. It further contended that each of the agreements complained of by the Government was a legitimate and legal transaction consistent with General Electric’s purpo-se of improving the quality of glass parts and reducing the cost of glass and incandescent electric lamps. General Electric insisted that its interest was primarily in the business of making and selling lamps and that its production of parts necessary to the assembly of the finished lamp was only incidental to its primary objective. In the case of some of the parts, such as bases, filaments and welds, General Electric claimed it found it practicable- to produce in excess of its own requirements and to sell such excess to others. However, it stated that it had been its general policy with respect to glass to produce -only for its own use and that this had not been the result of any agreement or understanding with Corning.

Under the provisions of a contract dated April 6, 1910 (Ex. 565-G) between General Electric, National Electric Lamp Company, Corning Glass Works and The Libbey Glass Company, it was provided, among other, things, that General Electric and Corning should become entitled' to certain rights in new improvements or inventions of machinery covered by United States patents for use in the manufacture of glass bulbs or tubing devised or acquired by either of the parties. That contract also provided that prices paid by General Electric for glass purchased from Corning and Libbey should be based upon sellers’ manufacturing costs, and that such prices “shall in no case be based upon a cost exceeding 7-%% of the lowest cost * * * realized at the plant of any of the parties * * * .” Empire Machine Company 15 had been organized in 1909 by some of the owners of Corning for the purpose of developing glass blowing machinery and had succeeded in developing a semi-automatic bulb blowing machine called “Empire E”, which appeared to have possibilities of success. General Electric was anxious'to have the right to use the “Empire E” and negotiations resulted in the contract dated Jan. 9, 1914 (Ex. 568-G) which was entered into by General Electric, Corning, Empire and American Blank 15 , a corporation organized by Empire to hold title to its patents. Provision was made in the contract for Empire to transfer 25% of its stock in American Blank to General Electric and to deposit 37^% of its stock in trust for the joint benefit of General Electric and itself. The basis of the contract was specified therein as follows:

“Whereas, the Empire Company owns or controls many Letters Patent and Applications for Letters Patent of the United States for inventions relating to glass-blowing by machinery, the use of which inventions the General Electric Company and the Corning Company are desirous of securing for the field covered by this agreement, and whereas, the parties hereto desire to co-operate to secure the introduction of improved machinery and methods which will decrease the cost of manufacturing incandescent electric lamp bulbs," * ’’i

It was also provided:

“All inventions, including machines, processes and apparatus relating to glassblowing by machinery which are now or may hereafter become the property of or under the control of the General Company or the Corning Company, or the Empire Company, shall, subject to the rights of other parties under contracts now in force, inure within the United States to the exclusive benefit of the American Company for the production of incandescent electric lamp bulbs, intended and adapted to be manufactured into electric lamps (but not the electric lamp itself or any step in the manufacture thereof, as distinguished from the manufacture of the bulb) as well as mold-blown articles of glass in so far as *781 the same are or may be used for electrical purposes or in connection with electric illumination, and proper license agreements shall be executed by the party holding control of any such inventions to vest in the American Company these rights. Neither the General Company, nor the Corning Company nor -the Empire Company shall acquire any rights within the United States to inventions of the class specified unless the other parties to this agreement shall have, opportunity to acquire equal rights to use the same upon the same terms; * * * >>

American Blank was obligated to grant to General Electric and Corning:

“sub-licenses under any and all the United States patent rights owned or controlled by the American Company. * * :¡: »

The parties to the agreements of April 6, 1910 and January 9, 1914, modified and amended the terms thereof, and on January 22, 1922, a new contract was entered into by General Electric, Corning, Empire and American Blank as of Januarv 1. 1921. referred to as the “Four Party Agreement” (Ex. 555-G). By this agreement the contract of April 6, 1910 was terminated and that of January 9, 1914 was merged therein and terminated.

It appears from the recital of the new contract that in 1916 Empire acquired for the sole use of American Blank exclusive rights to the so-called Paddle Feeder of the Hartford Fairmont Company,' Cf. United States v. Hartford-Empire Co., D. C., 46 F.Supp. 541, 548, for the production of bulbs in the United States and that pursuant to agreement between General Electric, Corning and Empire, General Electric acquired for the sole benefit of American Blank the exclusive right to use the inventions of the so-called Westlake bulb blowing machine and the so-called Danner tube drawing machine •in the United States for certain fields. Exclusive rights to the inventions of the so-called Fagan cane machine for a certain field in the United States were also to be transferred to American Blank from General Electric. By this contract all United States rights under inventions relating to glass working by machinery, which on January 1, 1922 became the property of, or under the control of General Electric, Corning or Empire, were made to inure to the exclusive benefit of American Blank, for the production of bulbs, intended and adapted to be manufactured into incandescent electric lamps and other electrical devices comprising sealed enclosures (but not the electric lamp itself or any step in its manufacture as distinguished from the manufacture of the bulb) as were inventions relating to the production by machinery of glass tubing and cane. No rights were granted with reference to any patent relating to incandescent electric lamps or to the manufacture thereof as a part of which the bulbs, tubing and cane were used. American Blank agreed to issue non divisible and non-transferable licenses to General Electric and Corning under all the United States patent rights owned or controlled by it. It was further provided in the agreement that all United States rights under invention relating to glass working by machinery developed, owned or controlled by General Electric or Corning between January 1, 1922 and January 1, 1931 should also inure to the exclusive benefit of American Blank, which should grant sub-licenses under inventions to be thereafter acquired by it to Corning and General Electric without royalty. No rights should inure for the manufacture of the lamp or other device itself, or any part thereof as distinguished from the manufacture of bulbs, tubing and cane as such. Provision was made for payment to General Electric for the price of the rights to the so-called Westlake, Danner and Fagan machines in the sum of $1,315,000. in the following manner. Stock held in trust by Empire to the extent of 37%% of all of the stock of American Blank of a par value of $232,500. was to be transferred to General Electric and the balance of $1,082,500. was to be paid to General Electric out of royalties received by American Blank in accordance with a detailed scheme set out in the contract. The contract also provided that General Electric would be entitled to a license under all British patents controlled by Empire prior to January 1, 1922, and that Empire would be entitled to a license under all United States patents relating *782 to machines, apparatus or processes for making mold-blown articles of glass issued or to be issued to General Electric on inventions made prior to January 1, 1922. Finally, the contract provided that American Blank would be entitled to a license under all patents (excepting British) issued or to be issued on inventions owned or controlled by the Empire Company or to which the Empire Company was entitled and made prior to January 1, 1922.

The 1921 agreement was amended as of June 30, 1928 (Ex. 519-G) by the following provisions:

1. General Electric Company shall pay no license fee to the American Company.

2. United States rights under inventions relating to machines, apparatus, or processes for glass working by machinery developed by Corning or General Electric between January 1, 1922 and July 30, 1928 shall inure without charge or royalty to the exclusive benefit of the American Company for the production of bulbs, tubing and cane and other glass parts. 16

3. All United States rights for improvements (as differentiated from inventions themselves) on any 'and all existing inventions now or thereafter patented, developed by Corning or General Electric between July 1, 1928 and December 31, 1940 17 which by reason of contracts in force on January 1, 1922 have become or shall become the property of or under the control of either of them prior to January 1, 1941 18 shall inure without charge to the exclusive benefit of American for the production of bulbs, tubing and cane and other glass parts 16 for use in making electric lamps and other electrical devices comprising sealed containers.

4. The word “improvements” was particularly defined as not including basically new machines, the intention of the parties being to limit the same to inventions which are improvements on existing machinas, apparatus, and processes now or hereafter patented.

5. Non-exclusive rights for the United States shall inure without charge to American for the production of bulbs, tubing and cane and other glass parts 16 for use in making electric lamps and other electrical devices under inventions now owned or hereafter and prior to January 1, 1941 19 developed by Corning or General Electric or which by reasons of contracts in force January 1, 1922 have or shall become the property of or under the control of either of them prior to January 1, 1941 19 relating to :

a. Machines for glass working, etc.

b. Glass melting furnaces, molds, etc.

c. Machines for making up glass batch, etc.

d. Methods of glass furnace operation, etc.

■ e. Machines for packing bulbs, etc.

6. No rights relating to refractories shall inure to American under inventions controlled by Corning prior to April 1, 1932 or between December 31, 1940 and January 1, 1951. 20

7. No rights shall inure to American for the manufacture of the lamp or other devices or to American under any patents relating to frosting, and no license is granted American under any foreign patents 21

8. Non exclusive rights shall inure to General Electric without royalty under United States patents controlled by American on June 30, 1928 and prior to January 1,. 1941 22 provided no rights shall inure to General for the production of bulbs, tubing and cane or other glass parts 20 for sale as such but only for the production of bulbs, tubing or cane, or other glass partsto be manufactured by General within the United States, Canada, or Mexico 20 into electric lamps or other electrical devices.

9. Corning and General are at liberty to acquire from third parties rights under inventions of the kind or class inuring to American. In negotiating for such rights prior to January 1, 1941 19 each'will en *783 deavor to provide an opportunity for the other to participate in the acquisition thereof 23

10. Corning grants General non-exclusive licenses to make and use within the United States all inventions now and prior to April 1, 1932 developed by Corning relating to refractories for the production by General Electric of bulbs, tubing and cane, and other glass parts 20 in the United States, Canada and Mexico. 20

11. Payments to General Electric shall be reduced in the amount of 25% of the annual expenses of American but shall not exceed $1500 annually. Empire agrees to pay General (1) % net profits of American derived from foreign rights, and (2) an amount equal to 62%% of net profits of American from patent rights transferred to American by Empire and General.

In addition to the amendments footnoted the following provisions were incorporated in 1935:

1. Rights of American within the field described to inventions developed by Corning or General between January 1, 1941 and January 1, 1951 or which shall become the property or under the control of either of them between January 1, 1941 and January 1, 1951 by reason of contracts in force on January 1, 1922 shall be non exclusive.

2. Corning grants General a non exclusive license to make and use within the United States all inventions developed by Coming between December 31, 1940 and January 1, 1951 relating to refractories for the production of bulbs, tubing and cane.

In 1928 General Electric and Corning entered into a further agreement (Ex. 539-G) which superseded an agreement of 1922, and in which, as amended, each agreed to grant the other non-exclusive licenses under patents acquired prior to January 1, 1951, “relating to glass composition, or to batch, or recipe, or formula for glass”. The license granted was limited to bulbs, tubing, cane and other glass parts to be used in the manufacture of lamps. No license was granted to General Electric to sell bulbs, tubing, cane and other glass parts, except to RCA Radiotron. The agreement provided for a complete exchange of information on production of products covered by the agreement.

The automatic bulb blowing machine field was again revolutionized with the development by Corning in 1930 of the high speed ribbon machine which strikingly increased the production of bulbs. 24

In accordance with the terms of the Four Party Agreement, Corning, by an agreement dated September 23, 1933 (Ex. 525-G) granted an exclusive license to American Blank under its patents relating to the Ribbon Machine. American Blank on September 25, 1933 granted a non-exclusive license under such patents to General Electric with the same restrictions on General Electric sales as those contained in the Four Party Agreement (Ex. 526-G). On the same date Corning granted General Electric a non-exclusive license under these same patents (Ex. 527-G). This license *784 agreement restricted General Electric to the manufacture of bulbs and machinery, and prevented its selling bulbs (except to RCA Radiotron) and machinery.

The Government claimed that Corning and General Electric control 100% of the trade in glass bulbs, tubing and cane; since the contract of 1914 each was already assured of license under whatever patents issued permitting operation by both under such patents; therefore, it was unlawful afterwards to cross license, there being no controversy between the parties. It claimed that the parties’ recognition of this was demonstrated by the fact that the 1928 amendment provided that non-exclusive licenses should be granted to Corning. It contended General Electric and Corning continued to grant American non-exclusive licenses but treated them as exclusive, and that each followed a general policy of not licensing other companies to manufacture or sell bulbs, tubing, or cane for use in the electric field.

In disputing the Government’s charge that it monopolized the manufacture or sale of glass parts for incandescent lamps and that its production cannot be aggregated with that of Corning, General Electric represented that in 1941 it made and sold approximately 56.6% of the large incandescent lamps sold in the United States; that it produced about 94% of its own requirements and that its sales to others were inconsequential. Thus, it made in that year about 53.2% of all the large lamp bulbs used in the country, and it argued that 46.8% were made by others in this country or were imported, from which it concluded that its percentage could not possibly amount to a monopoly of manufacture. General Electric also contended that its cross licensing or pooling agreements were entirely legal because they had no purpose or effect of restraining trade in glass or in lamps. Indeed, it argued, it would have been prejudiced by restraint of trade in glass from outside sources aggregating some $2,000,000 in the years 1935-1940 and would have suffered actual pecuniary detriment from any restraint on competition.

The evidence disclosed that in 1924 a firm called the Electric Glass Company sought to order through the Tungsten Materials Division of the General Electric Company one S — 11 Bulb Blowing Machine. Mr. W. Ennes of the GE Tungsten Materials Division, to whom this order was directed, advised American Blank Company of the receipt of this order and that since the National Division at Cleveland had all the necessary parts for the assembling of this machine and were in position to make delivery he believed it would be good policy for it to give that Department an order from it as soon as it received the order from the Electric Glass Company (Ex. 839-G). Electric Glass Company promptly ordered from American Blank such a machine pursuant to instructions given it by Mr. Ennes (Ex. 840-G). This order found its way into the hands of Mr. A. D. Falck, then president of the Corning Company who stated that S — 11 bulbs had always been a glass factory product and that “millions are produced by Corning Glass Works annually”. He gave it as the opinion of the Corning Glass Company that the American Blank Company should advise Electric Glass Company that it was not at liberty to grant the license asked for or to authorize the use of a machine, as the rights for this purpose were vested exclusively in the existing licensees of American Blank Company (Ex. 842-G). Mr. Appleton, counsel for General Electric Company, concurred that no licenses should be-issued by American Blank Company but upon a different ground. He believed that the Electric Glass Company should be advised by American Blank Company that it was not its policy to lease machines to. manufacture bulbs of this size (Ex. 843-G). The American Blank Company indicated to Mr. Appleton its concurrence in his opinion and promptly advised Electric "Glass Company to that effect (Ex. 844-G, 845-G). Again in 1929 an inquiry was directed to the Corning Glass Works by a banking firm concerning the possibility of procuring automatic machines for the manufacture of bulbs for incandescent lamps, radio tubes and other similar devices and met with the answer that they were held under license and were not open for sale or license to other companies for radio tube- *785 manufacture at that time (Exs. 848-G, 849-G).

In 1938 Western Electric Company advised Hartford-Empire Company of its desire to obtain a machine for making lamp bulbs. The inquiry was forwarded to the Corning Glass Works by the Hartford-Empire Company with the information to the inquirer that it did not market a machine for fabricating bulbs (Exs. 855-G, 856-G). On April 27, 1938 American Blank Company acknowledged the inquiry propounded by Western Electric Company, which had been forwarded by Hartford-Empire Company to the Corning Glass Works which in turn, referred it to the American Blank Company and advised Western Electric Company concerning the output of the machine and asked to be further informed if Western Electric would be interested in the lease or license of one or more of these machines (Ex. 857-G). On May 18, 1838 a further communication was sent Western Electric Company by the American Blank Company stating that if Western Electric Company were interested it might be possible to work out an arrangement whereby one of these machines could be purchased (Ex. 858-G). On July 28, 1938 the American Blank Company advised Western Electric Company that “a careful consideration of the patent and license situation concerning the machine controlled by this company for the manufacture of small bulbs from tubing renders it impractical to offer you a license for its use.” (Ex. 859-G).

General Electric offered objection to the admission into evidence of the writings and statements of others to which reference has been made as being not binding upon it. No question is raised but that General Electric and Corning associated themselves as parties to the written agreements under consideration. The statements to which objection is taken were made by parties to those agreements, or in the case of inquiries from third parties, were induced or answered by parties to the agreements (Corning and American Blank). The statements, were essentially in furtherance of the mutual objectives of Corning and General Electric. Therefore, they were admissible and reasonable and valid inferences could be drawn from them. In the case of Hitchman Coal & Coke Co. v. Mitchell, 245 U.S. 229, at page 249, 38 S.Ct. 65, at page 72, 62 L.Ed. 260, L.R.A.1918C, 497, Ann. Cas.l918B, 461, the court said:

"In order that the declarations and conduct of third parties may be admissible in such a case, it is necessary to¡ show by independent evidence that there was a combination between them and defendants, but it is not necessary to show by independent evidence that the combination was criminal or otherwise unlawful. The element of illegality may be shown by the declarations themselves. The rule of evidence is commonly applied in criminal cases, but is of general operation; indeed, it originated in the law of partnership.- It depends upon the principle that when any number of persons associate themselves together in the prosecution of a common plan or enterprise, lawful or unlawful, from the very act of association there arises a kind of partnership, each member being constituted the agent of añ, so that the act or declaration of one, in furtherance of the common object, is the act of all, and is admissible as primary and original evidence against them.” (Italics supplied.)

The statements are significant, for in spite of the wording of the machine contracts between Coming and General Electric -they point to a consistent, continued and uniform consideration by both Corning and General Electric as to decisions to be made by American Blank in the disposition of licenses, machines or permission for the use thereof. It is not enough for the General Electric Company to point to the fact that the machine contracts expressly gave American Blank the power to grant sub-licenses under any and all of the patents and that indeed American Blank had granted such licenses as evidence in Exhibits 765-G, 768-G and 782-G. They were licenses to Tungsol and to Westinghouse, licensees of General Electric. It is ■clear that a course of conduct was followed by Corning and General Electric which controlled implicitly the action of American Blank in granting licenses precisely as if Corning and General Electric had the exclusive licenses in their own hands.

*786 The Government complained that the agreements and cross licenses between General Electric and Corning were contrived to establish in them the control of the manufacture and sale of glass for electrical purposes, which they divided into two fields. Coming’s part was for the sale of the glass parts and General Electric's for the manufacture and sale of incandescent electric lamps. It observed that the agreements provided that:

(1) no license was granted to General Electric to sell glass, and

(2) no license was granted to Corning to manufacture or sell lamps.

It contended that the agreements themselves not only plainly disclosed the intention of the parties but that further evidence of the principles governing their activities is gleaned from a reference to interdepartmental communications between officials of each of the respective parties.

On December 13, 1926, the president of Corning wrote to its counsel, Mr. Dorsey, a lengthy letter in the course of which he referred to the relationship existing between Corning and General Electric in the following language:

“I think that Cross expects to concede the point as to. this particular machine. The incident, however, serves to illustrate the strictness with which General Electric clings to . the principle that it is not giving any rights to Coming for lamp making. The converse of this principle with us is that we are not giving any rights to General Electric for glass making except for use in its own lamp factories.” (Ex. 1087-G.)

Again on June 22, 1928 in an exchange between Mr. Dorsey, Counsel, and Mr. Curtiss, President of Corning, Mr. Dorsey mentions that:

•“You told me some time ago that you were not afraid of their [General Electric] going out of their licensed fields * * (Ex. 549-G.)

Evidence of the understanding of General Electric of its boundaries was suggested by -the Government in a memorandum dated December 23, 1938, forwarded by Mr. J. E. Kewley of that Company to Mr. Gerard Swope, President, wherein it is said:

“As arranged in our. agreements with Corning Glass Works and American Blank Company, no sales of glass parts for lamps are made by us excepting to Corning Glass Works. The only domestic sales of glass we make are to the R. C. A. Radiotron Co. as previously explained.” (Ex. 572-G, p. 2465.) ■

In this memorandum it is also disclosed that:

“G. E. Co. has followed the practice of selling Radio Bulbs and Tubing Glass to R. C. A. at the same price as used by Corning.” (Ex. 572-G, p. 2463.)

In a letter of March 13, 1939, Mr. Hughes of General Electric wrote to Mr. Soil of the Empire Division:

“Our agreements are such that we cannot furnish incandescent lamp bulbs to outside customers, and whenever we receive requests such as you sent to Mr. O. P. Anderson, and which originated with Pierce & Stevens, Buffalo, N. • Y., we refer the person making the request to Corning Glass Works, Corning, N. Y. They are in position -to furnish bulbs to anyone on the outside.” (Ex. 865-G!)

The Government further submitted that orders for glass lamp parts of types of which only General Electric had a supply on hand, would be placed with Corning which would bill and collect the amounts due, but the merchandise would be purchased from and would be shipped by General Electric directly as an indication of General Electric’s complete disinterestedness in competition with Corning. This is further emphasized by the fact that when General Electric with Coming’s consent sold bulbs to Chicago Miniature under an “informal arrangement” ' Corning expected General Electric to make regular reports of such transaction (Ex. 879-G).

General Electric again declined to be bound by the statement of Corning representatives and asserted that the Government misinterprets statements made by its own agents, Messrs. Kewley (Ex. 572-G), Reider (Exs. 876-G-878-G) and Hughes (Exs. 865-G, 1087-G, 549-G). It insisted that the Government was unable to point to any substantial evidence of any agreement by General Electric not to engage in *787 the glass business. It reiterated that it was prompted to adopt the policy of not furnishing glass by business reasons of its own and not any agreement with Coming and argued vehemently that Corning made its independent decision to adopt the policy Qf not entering the lamp business and submitted that there was no evidence to support the contention that there existed between Corning and General Electric an agreement not to compete with each other.

The facts show that General Electric made some sales of bulbs and tubes with the specific consent 'and knowledge of Corning. At least two areas, for this type of business occurred; one was in connection with the shipment of bulbs to Chicago Miniature and the other in the sale of bulbs to R. C. A. Radiotron. In each instance •the prices were upon the same basis as the prices charged by Corning and were with the full knowledge and consent on the part of Corning. Indeed, the R. C. A. transactions were pursuant to an agreement granting the right to General Electric to supply R. C. A. Radiotron and when General Electric made shipments of bulbs to Chicago Miniature it was expected to, and promptly did, report to Coming the details concerning such shipments.

The Government alleged that by virtue of sales agreements with Corning General Electric enabled itself to secure control over Coming’s prices. It specifically complained about an agreement between Corning and General Electric made as of June 30, 1928 (Ex. 570-G) extended by agreement to operate through 1950, by which General Electric agreed to purchase 11% of its requirements of bulbs from Corning. The percentage was to be gradually reduced to 6% for the year 1931 and the following years with an option to General Electric to increase it to 12%. The Government further alleged that Corning was guaranteed by General Electric sales of 33-%% of the total United States bulb consumption. Prices were established for the sale of glass to General Electric by Corning under formulae based in part on General Electric’s cost of manufacture and a complete exchange of cost information was provided for. In 1925 Westinghouse agreed to buy all of its annual requirements of glass from Corning (Ex. 783-G) at a price as low as any other purchaser from Corning with the right to purchase elsewhere from any other manufacturer who would supply 75% of its requirements at a lower price. Corning agreed to supply Sylvania and Consolidated with all their requirements of bulbs, tubing and cane at a price as low as that to any other customer (Exs. 811-G, 826-G) conditioned on the purchase in carload lots. Corning agreed to supply independent lamp manufacturers at prices no more than 10% above the lowest price (Exs. 837-G, 838-G).

Under these contracts the Government complained that General Electric’s cost of production influenced the cost to others, and that General Electric in effect underwrote the position of Corning as exclusive seller of bulbs. The Government argued •that it was the purpose of General Electric to keep independent glass manufacturers from gaming a part of the market large enough to enable them to supply independent lamp manufacturers on a mass production basis and that this purpose was accomplished. General Electric, on the other hand, asserted that the contracts between Corning and Westinghouse and General Electric’s “B” licensees expired before the institution of this suit by their own terms, and that if Corning had discriminated in the past against any other customer that the situation had been completely cured as a result of the filing of the Corning consent decree. However, it argued that there is no evidence that General Electric 'had in any way participated or had knowledge of Coming’s sales contracts with its other customers and that General Electric at most had Coming’s price lists.

The expiration of the contracts was yithin the period of a month of the filing of this suit and 'the consent decree filed on the part of Corning cannot be held to cover the issues raised in this case. The evidence discloses that the relationship between Corning and General Electric generated a condition whereby Coming preferred Westinghouse and General Electric’s “B” licensees’ business and that its other and independent customers were required to pay prices in excess of those with which Westinghouse and General Electric’s licensees were favored.

*788 General Electric contended -that there is no evidence that it made any attempt to influence Coming’s prices to Westinghouse or to any other customers of Coming. It denied that there was any connection between the percentage of General Electric’s purchases and its power to fix Coming’s prices. It-asserted that the exchange of price information with Corning was solely for the purpose of promoting efficiency of production and lower cost of manufacture. It alleged that its contract with Corning was in the usual course of a purchaser including in its contract provisions beneficial to itself. In connection with the Government’s contention that General Electric guaranteed Corning 33%% of the United States market and that it underwrote the position of Corning as exclusive seller of bulbs in the United States with -the purpose of keeping independent glass manufacturers from gaining a part of the market large enough to enable them to supply independent lamp manufacturers on a mass-production basis, General Electric insisted that the Government’s statements are based upon a misinterpretation of Article 5(b) . of the sales contract (Ex. 570-G) which reads as follows:

“The Corning Company shall maintain adequate facilities for supplying (in conjunction with any other substantial sources of supply which may be available but excluding and in addition to the facilities of the General Company)- a substantial part of the bulbs required in the manufacture of electric lamps in the United States. It is agreed that from thirty per cent (30%) to thirty-five per cent (35%) of the total requirements shall be the part thereof for which the Corning Company shall so maintain facilities and in consideration thereof, and for the purpose of inducing it to maintain such facilities, it is agreed that if, in any year after the calendar year 1928 the total sales by the Corning Company of bulbs used in the manufacture of electric lamps within the United States, plus the total of all such bulbs manufactured by any and all other manufacturers of bulbs within the United States (other than bulbs manufactured by or for the General Company by manufacturers other than Corning Company), plus all' importations of bulbs (other than importations by or for the use of the General Company) for sale or. use, shall be less than thirty-three and one-half per cent (33-%%) of the total consumption in said territory of bulbs manufactured therein and imported (including in such total any importation of bulbs made by or for the use of the General Company), then in the following year the General Company shall purchase from the Corning Company such additional quantity of bulbs as shall equal such shortage.

“The ascertainment and computation of the quantities of jmlbs manufactured and/or imported, for the purpose of this Section (b) of Article 5, shall be made to the reasonable satisfaction of General Company and General Company shall not be obligated to purchase any additional quantity of bulbs unless and until it has been determined to the reasonable satisfaction of General Company, that the total sales of the bulbs by the Corning Company, plus the total of bulbs manufactured and imported as aforesaid, have been 1-ess than thirty-three and one-half per cent (33-%%) of the total consumption in said territory of bulbs manufactured therein and imported.”

General Electric insisted that this provision did not constitute a guarantee to Corning of any percentage of the bulb business but that its obligation to make additional purchases from Corning arose only when Coming’s sales plus the total domestic bulb production by others than General Electric and Corning, plus all importation of bulbs fell below 33%% of the total domestic consumption. General Electric further contended that the evidence shows that the purpose of this provision of the sales contract was to provide for an outside source- of supply of glass adequate to protect General Electric against such curtailment in its own production as might result from tank failures, strikes, war-shortages and similar hazards, and that in practice the provision has been ignored by the parties because General Electric has never been called upon to purchase any bulbs under it.

Nevertheless the evidence shows that Corning could remain secure in the knowledge that if its sales fell below the formula *789 as cited by General Electric, it could rely upon it to purchase bulbs in such amount as would fulfill General Electric’s commitment in the contract. It is also significant that Corning produced all of the bulbs for sale in the country except those produced by General Electric and such as may have been imported; the latter two categories being of insignificant consequence. Even in the absence of any showing of direct connection between General Electric, Corning and .General Electric’s licensees the hard fact remains that following in the wake of Coming’s and General Electric’s sales agreements there was an advantageous differentiation in price structures made by Corning to General Electric and its licensees over those who purchased independently from Corning and the base upon which these prices were fixed inevitably was formed out of General Electric’s cost figures. General Electric produced over 55% of the bulbs consumed in the country for its own use, and its agreement to absorb any deficiency in sales by Corning up to 33%% of the total number of bulbs produced in accordance with the specific provisions aggregated nearly the entire production of bulbs. All of these considerations lead to the conclusion that General Electric wielded a very powerful influence over the price structure of the bulbs susceptible of and producing the resulting constriction of the market which the Government charged.

The Government alleged that in order to bring patent rights and licenses of other glass companies within the field created by General Electric and Coming, and in order to prevent competition Corning entered into agreements with the Hartford-Empire Company. It is claimed that by virtue of its agreements with Corning, General Electric secured the benefits 'of the agreements with Hartford. Hartford-Empire Company held patents for the manufacture of glass containers and in 1922 Corning secured for itself exclusive rights in the field of bulbs, tubing and cane for electrical purposes (Ex. 763-G). This charge is supported by reference to certain documents taken from the Corning files. One of these is Exhibit 545-G which consists of a letter written by Coming’s attorney, Mr. Sayles, in December 1927 to Mr. Falck in which he reviews the then existing agreements with Hartford-Empire and gives his opinion as follows:

“I have studied as best I could the Corning-Hartford-Empire agreement, and as I interpret it Hartford-Empire gets no rights in machines that Corning develops in the field of bulbs or mold blown articles usable in connection with electricity, and therefore there is no reason why Corning could not enter into a further agreement with General Electric to pool their future inventions.”

General Electric contended that there is no evidence to show that it participated in or knew of the contractual arrangements between Corning and Hartford-Empire. It insisted that the statements of Coming’s officers relative to the purpose of the Hartford-Empire contract were inadmissible against it and if these statements are considered they show no more than that Corning believed General Electric received some indirect benefits from the Hartford arrangements. General Electric submitted that such benefits without participation in or knowledge of the agreements between Corning and Flartford rendered it no party to them. It further denied that it received any benefit whatever from the Corning-Hartford relationship.

The evidence is convincing that the relationship between Corning and General Electric inspired the negotiations between Coming and Hartford-Empire in order to protect the field in which Corning and General Electric had agreed they would operate and it also appears that Hartford-Empire in its dealings with Corning and other glass producing interests always reserved the rights within Coming’s field. Cf. Hartford-Empire Co. v. United States, 323 U.S. 386, 396, 398, 400, 421, 65 S.Ct. 373, 89 L. Ed. 322, modifying United States v. Hartford-Empire Co., D.C., 46 F.Supp. 541. See 46 F.Supp. 541, at page 554.

This was not the only instance where sources of potential competition and intrusion into the field were eliminated. Two others remained involving (1) Libbey Glasj Company (Libbey) and (2) Kimble GlaaS Company (Kimble). The Government *790 showed that Libbey in 1918 entered into a series of agreements with General Electric under which it leased to General Electric its bulb and tubing producing facilities until July 1st, 1928 (Ex. 757-G). There was also an option agreement between the parties under which Libbey could require General Electric to purchase the property and if its option was not exercised prior to July 1st, 1927 then General Electric would have an option to purchase any time prior to July 1, 1928 (Ex. 750-G). Apparently neither of these options was exercised and in 1932 by a series of agreements with Libbey, Corning purchased the business.including plants, equipment and good will of Libbey in the glass field which included tubing and cane (Ex. 762-G).

General Electric strenuously objected that there was no tie between the Corning-Libbey contract of 1932 and the 1918 contract between Libbey Glass Company and General Electric. It called attention to the fact that the 1918 contracts were submitted to the Attorney General in the course of the investigation which preceded the 1926 suit and claimed that due to shortages before World War I it made many attempts to augment the production of bulbs for its purposes. One of these efforts was to lease one of Libbey’s plants and the lease arrangement called for options upon the part of Libbey to sell within a certain period and thereafter for General Electric to purchase within one year. General Electric contended that its contractual relation with Libbey did not prevent that firm from producing bulbs, tubing and cane for many years.

Even though it be conceded, as argued by General Electric, that there is no showing connecting General Electric with the purchase by Corning of the Libbey plant, it is nevertheless implicit in Coming’s activity in reaching out for the absorption of this source of production yet available in the field that the effort was made to further close off the area in bulbs and lamps which Corning and General Electric had allocated to themselves. In 1926 and Í928 General Electric entered into cross licensing agreements (Exs. 994-G, 995-G) wherein Kimble granted General Electric non-exclusive licenses under its patents for the manufacture, use and sale of tubing and cane for incandescent lamps and other electrical devices “but not for other purposes” and General Electric granted Kimble a nonexclusive license under its patents for'the manufacture, use and sale of vials, and other chemical glass ware “but for no other purpose”. Kimble continued to make sales of bulbs and tubing to independent lamp companies until 1932.

The Government charged that in order to eliminate the competition furnished by Kimble, Corning entered into agreements with Kimble in 1932 in-which each party agreed that for a period of 17 years it would not produce or sell tubing, cane and glass ware falling within the exclusive field of the other (Ex. 996-G). Coming’s exclusive field was delineated as including products made from tubing and cane for use with electrical devices. Kimble’s exclusive field included products to be used in the medical profession such as ampoules, droppers and vials. In 1940 the agreements were superseded by a new agreement which carried on the same division of fields (Ex. 999-G). The Government offered evidence to show that both parties carried out the terms of their agreements strictly, steering business into the respective channels they had contrived. General Electric challenged .the Government’s allegations with regard to the Kimble-Corn-ing agreements with the assertion that there is no evidence whatever to show a relationship between the General Electric and Kimble agreements and the Kimble-Corning arrangements. It sought to explain the fact that licenses by Kimble to General Electric were for the electrical field and those from General Electric to-Kimble were for vials, ampoules, droppers, and chemical glassware with the argument that these were the fields for which General Electric and Kimble had been licensed' by Libbey under the Danner patents.

While there is an appearance of independent action as between General Electric and Corning, the fact is that General Electric’s agreement with Kimble is in conformity with the restrictions established between General Electric and Corning in .the Four Party Agreement of 1921 as. amended and the agreement between Corn-- *791 ing and Kimble likewise follows that pattern. The design of the pattern is brightened when it is considered that through the seeming independent negotiations by Corning with Hartford-Empire, Libbey and Kimble the domination over the manufacture and sale of bulbs, tubing and cane ■for electrical purposes was promoted to a point where the products could be purchased only from Corning with the resulting benefits by way of stabilization of the field to General Electric.

The Government claimed that the acquisition of the Peiler and Pipkin patents showed how General Electric and Corning have conspired to maintain the monopoly. General Electric obtained an exclusive license to the Danner machine, rights to which Cbrning acquired through American Blank from General Electric. This patent issued in 1917 and General Electric and Corning regarded it as controlling the manufacture of tubing and cane. The Peiler Patent, issued to Hartford-Empire in 1926 upon an application dated 1912, preceded the Danner patent and dominated several of its claims. It is argued that General Electric and Corning were moved to purchase the Peiler patent in order in effect to extend the Danner patent from 1934 to 1943 — nine years. The Government argued that in order to obviate the objection to the Peiler patent’s questionable validity, Corning and General Electric licensed Libbey, Kimble and Demuth Glass Works following á successful infringement suit against the latter by Hartford-Empire and Corning. General Electric contended in defense of the charges against it revolving around the Peiler patent that its officers estimated that if their use of the Danner machine were held to constitute an infringement of the Peiler patent General Electric would make itself liable in damages to as much as $3,750,000 and that it was prompted to purchase royalty-free non-exclusive licenses under the Peiler patent as an insurance against the possibility of this liability. General Electric claimed that no letter was introduced in evidence between General Electric and Corning upon this subject. It discounted the letter from Mr. Dorsey, counsel to Corning, addressed to Mr. A. D. Falck, its president (Ex. 1082-G) as inadmissible as against General Electric and of no probative force as to its purpose in obtaining a sub-license 4 years after the letter was written. It asserted that the fact that it was offered a sub-license under the Velio tube drawing machine purchased by Corning and that it declined to acquire such a sub-license demonstrated clearly that it had no interest in acquiring extended patent rights relating to tube drawing. It is critical of the Government’s attack upon it in connection with the Demuth patent suit and charged that the Government unreasonably. attempted to show that it had an interest in this suit and its outcome. It argued that in view of the fact that it merely had a paid-up, non-exclusive, sub-license giving it no control over the Peiler patent and no right to any royalties resulting from sub-licenses, made it obvious that it could have no motive to agree with Corning that it should refuse to sub-license others under the Peiler patent.

General Electric’s association with Corning in the procurement of this patent was altogether too close for it to be permitted to relieve itself of the imputations of mutual interest of Corning and General Electric found in the documents from Coming’s official files written by its responsible lawyers and officers wherein the advantages of the Peiler patent to the production of bulbs and incandescent lamps were reiterated (Exs. 1086-G, 1087-G, 1089-G, 1092-G and 1093-G). To be sure these documents are written by Corning officials, but in some instances they are addressed directly to General Electric executives and contain convincing recitals of what was going on in the minds of the parties. There can be no doubt of the joint estimate of Corning and General Electric of the Peiler patent and of the joint effort to get Kimble and Libbey to take out licenses and acknowledge its validity. Similarly there can be little doubt that General Electric approved the course pursued by Coming’s counsel in the suit against Demuth when it was recalcitrant about taking a license and acknowledge the validity of the patent. It strains the imagination to conceive that General Electric did not know of and acquiesce in the arrangement to give Demuth *792 a royalty free license under this patent after it was unexpectedly declared valid and infringed, thus staving off any higher court decision upon it.

The Government contended that General Electric attempted to enlarge the patent monopoly on the inside frosting of bulbs by the use of the pipkin patent despite the fact that in 1925 an inter-office communication between its officials indicated that “the idea of inside frost is too old to be broadly patentable to anybody” (Ex. 1145-G).

In 1928 General Electric acquired the Pipkin patent, No. 1,687,510, relating to the inside frosting of bulbs. As of June 30, 1928 (Exs. 1107-G, 1108-G) General Electric licensed Corning under the Pipkin patent, and agreed to grant to Corning licenses under any other patents relating to inside frost owned or acquired by General Electric during the term of the agreement, to manufacture inside frosted bulbs and to sell such bulbs to the lamp licensees of General Electric. Corning agreed to grant licenses to General Electric under any inside frost p'atents which it might acquire during the term of the agreement which, as amended, was to run until January 1, 1951. Thereafter Corning refused to sell inside frosted bulbs to any company not licensed by General Electric unless it approved (Exs. 1116-G-1118-G). In 1937 General Electric entered into an agreement with the Inwald Company of Austria whereby General Electric acquired the United States rights to the Inwald patents relating to the inside frosting of bulbs and Inwald agreed not to sell its frosted bulbs for export to the United States. General Electric agreed to pay $94,500 as consideration (Exs. 1139a-G, 1139b-G).

The Government charged that General Electric obtained the Inwald patent although it had decided that it infringed the Pipkin patent (Ex. 1141-G) and that General Electric made no commercial use of the Inwald patent. The Government also pointed to a letter signed by one of the executives of 'General Electric in which it is stated:

“ * * * the importance of securing some kind of product protection -on the In-wald frosted bulb, either by showing that the Pipkin patent covers the Inwald product or by including product claims in the InT wald application, is emphasized because if our United States Pipkin patent is sustained and if the Inwald foreign rights will not be in the hands of our Associated Companies abroad, it is probable that foreign made In-wald frosted bulbs will, in one way or another, reach the unlicensed American lamp manufacturers. Our agreement with the Inwald Company does everything possible to control this through the Inwald Company itself, but it will be a difficult job at best.” (Ex. 1140-G.)

General Electric, for its' part, called attention to the fact that in Exhibit 1145-G no reference is made to the Pipkin invention and argued that this concerned a totally unrelated subject. It conceded that the idea of inside frosting per se was old but argued that the Pipkin patent was not for the mere idea; it was for an inside frosted bulb of specified characteristics, which resulted in the first inside frosted bulb of practical value. It referred to the fact that the Pip-kin patent had been held valid and infringed by two Circuit Courts of Appeal (Ex. 225-G, at pp. 1279 and 1313), although finally the patent was held invalid by the Supreme Court, General Electric Co. v. Jewel Incandescent Lamp Co., 1945, 326 U.S. 242, 66 S.Ct. 81, 90 L.Ed. 43, but this was after its expiration. General Electric argued strongly that it cannot be said that it realized all along that the patent was invalid. It concluded that the Pipkin invention related to incandescent lamps and that the lamp licensees were entitled to it and decided to offer Corning a license to make inside frosted bulbs for its lamp licensees so that they could “get them more cheaply by having Corning do the frosting” (Ex. 550-G); and General Electric submitted that its license to Corning was therefore not in furtherance of any conspiracy between it and Corning to restrain trade but merely as a convenient way to permit General Electric lamp licensees to obtain the patented articles. It insisted that this license agreement with Corning under the Pipkin patent was in no way repugnant to the anti-trust laws. It further asserted that in 1928 General Electric licensed Coming to practice the Pipkin patent without any restriction as to those to whom Corning de *793 sired to sell. As to the Inwald patent General Electric asserted that its officers thought this method might have certain advantages over the process under the Pip-kin patent. After considerable experiment it was found that the Inwald process did not meet expectations and General Electric admitted that no substantial commercial use of this patent had resulted. It claimed that it was not its purpose in entering into the Inwald agreement to avoid competition from foreign made bulbs. It asserted that actually Exhibit 1140-G strongly supports the opposite view, for in it is disclosed that the writer had little confidence that the agreement with the Inwald Company would be adequate to protect the rights for which General Electric had paid a large sum and emphasized the importance of securing protection under the United States patent laws. General Electric asserted that it did not follow any program of acquiring patent rights for the purpose of keeping inside frosted bulbs out of the hands of independent manufacturers and that this is evidenced by the fact that when it was offered an opportunity to acquire rights under a certain Wetherbee patent on a method of inside frosting it decided to decline (Exs. 1123-G, 1-124-G). Again in the letters comprising Exhibit GE-233 a similar instance, it insisted, is shown.

The Government claimed that General Electric ignores the fact that the' license operated contemporaneously with the Westinghouse license and that General Electric’s patent monopoly based on the Pipkin patent was exhausted when Corning sold the frosted bulbs yet General Electric effectively controlled the disposition of these bulbs by Westinghouse which it purchased from Coming both as to price and export.

It is to be conceded that the intrinsic facts in connection with the licensing by General Electric of the Pipkin patent to Corning under the circumstances as was done in themselves would hardly constitute a violation of the anti-trust laws. However, when consideration is given to the entire picture and the involvement of Westinghouse and its price fixing licenses, the activity engaged in by General Electric with Coming illuminatfs the general scheme and thus becomes added indicia of the intent and purpose to accomplish the objective of monopoly in the glass industry as it affects incandescent electric lamps, Cf. United States v. Griffith, 334 U.S. 100, 108, 68 S.Ct. 941; United States v. Patten, 226 U.S. 525, 543, 544, 33 S.Ct. 141, 57 L.Ed. 333, 44 L.R.A.,N.S., 325. While it is clear that the Inwald patent rights were never put to practical use the evidence discloses that a substantial sum of money was paid for them and contractual obligations obtained to protect the American market.. The same reasoning adopted here as to the Pip-kin patent leads to the inescapable conclusion that the transaction in Inwald is likewise a clear index to the intent of the parties to maintain a monopoly. United States v. Griffith, supra; United States v. Patten, supra.

In connection with the charge of the participation by Westinghouse in the agreements between General Electric and Corning the Government pointed out that Westinghouse purchased its glass from Coming under more favorable terms than those granted to any other lamp manufacturer except General Electric; together with General Electric’s “B” licensees it was granted the right to purchase frosted bulbs from Corning; and had licenses from Corning and General Electric and American Blank to manufacture miniature bulbs in conformity with its agreements. These were benefits which accrued to Westinghouse and in turn, the Government charged, Westinghouse helped to support the maintenance of the General Electric-Corning monopoly. As evidence of this attitude upon the part of Westinghouse the Government introduced certain documents concerning transactions in' spray gun manufacture by the De Vilbiss Company. It appears that in 1927 Westinghouse and De Vilbiss cooperated in the development of a spray gun for coloring inside bulbs. The work was done at the Westinghouse plant by employees of De Vilbiss and Westinghouse reimbursed De Vilbiss for its expenses (Ex. GE-96). On December 12, 1928 Westinghouse wrote a letter to De Vilbiss in which it discussed the policy to be followed in the distribution of the spray guns so developed. It appears that Nilco Lamp Works and Hygrade Lamp Company

0 *794 (Sylvánia) had asked to be supplied with such spray guns and De Vilbiss was advised by Westinghouse “since these Companies are 'B’ licensees of the General Electric Company it is agreeable to us for you to supply these Companies with such guns.” (Ex. 1164-G.) When the Save Sales Company applied in 1933 to De Vilbiss to purchase such a spray gun it was advised by De Vilbiss that “According to our agreement with the General Electric Corporation it is impossible for us to sell you one of the C-526 spray guns as used by them for coating the interior of lamp bulbs.” (Ex. 1162-G.) This was drawn to the attention of an official of General Electric in 1934. General Electric contended that it had no knowledge of the Westinghouse-De Vilbiss transaction and made inquiry of both Westinghouse and De Vilbiss concerning the alleged agreement with General Electric. From the De Vilbiss letter to General Electric under date of January 24, 1934 it appears that De Vilbiss considered that there was a “working arrangements between our Company and the General Electric Company and Westinghouse Electric and Manufacturing company as it pertains to the special extension spray gun nozzle used for coating the interior of lamp bulbs.” This letter describes the arrangement between De Vilbiss and Westinghouse whereby the appliance in question was developed with De Vilbiss supplying the engineering service paid for by Westinghouse on account of which De Vilbiss says:

“ * , * * we agreed orally that this particular nozzle would not be exploited generally to the trade.

“Our files contain no written agreement but this arrangement was made orally and has since been adhered to as being a fair and equitable obligation to the company paying for the development of this nozzle.” (Ex. 1163-G.)

General Electric claimed that the Government apparently abandoned its charge that General- Electric made any arrangement concerning the manufacture of the spray gun in question. It denied that the complaint in the case charges that General Electric asserted any responsibility for the Westinghouse-De Vilbiss arrangement or any evidence that General Electric had anything whatever to do with such agreement. In this contention General Electric is correct but this evidence is relevant and material in so far as it bears upon the participation of Westinghouse in the relationship between General Electric, Corning and itself. There is a clear indication here that Westinghouse .in contemplation of what it considered its normal course of duty extended itself to see that only the licensees of General Electric should be served where this particular appliance was concerned. The Government sought to implicate Tung-sol as a supporter of the alleged General Electric-Corning monopoly by exposing the relationship of Tungsol to American Blank as a lessor and eventual owner of American Blank machines for blowing " miniature bulbs. Such a machine was first developed by General Electric in 1923. It was under agreement to transfer the rights under the patent relating to this machine exclusively to American Blank. General Electric sold such machines to, or permitted them to be manufactured by Westinghouse and the Miniature Incandescent Lamp Corporation, which was the predecessor of Tungsol. The question was raised by American Blank or Coming as to why General Electric had not transferred exclusive rights under these machines to American Blank, since Tungsol had two such machines and others were being built for it. Corning agreed that General Electric should grant exclusive rights under the patents relating to this machine to American Blank, and American Blank would license Tungsol and Westinghouse. Such a license was made to Tung-sol by American Blank, first for seven and later for a greater number of miniature bulb blowing machines (Exs. 780-G, 766-G). Under this license title to the machines remained the property of American Blank and on the termination of the licenses it had the right to repurchase the machines. For t-his lease Tungsol paid over $10,000 and agreed to pay royalties based on the number of bulbs produced (Exs. 767-G, 768-G). Finally in 1935 Tungsol requested that it be given title to the machines and Corning approved such action (Exs. 778-G, 779-G). However, in the agreement transferring ownership to Tungsol it was obligated to continue paying royalty and to ob *795 serve the same restriction on the use the machines as was provided in the previous lease agreement (Ex. 765-G). During the negotiations Tungsol’s attorney advised ■it that in his view the original transactions were in effect a sale and not a lease and that therefore American Blank had no right to charge royalties for the use of the machines. He stated: of

“If, however, you feel that your relationship with the American Blank Company can he taken up independently of your relationship with the Corning Glass Works and the General Electric Company, we feel very strongly that by appropriate negotiation future royalty can either be avoided or very much reduced, and, perhaps back royalties recovered.

“If the question were simply one between you and the American Blank, and involved no other business relationships, we should have no hesitation in going into it further with a definite idea of avoiding future payments of royalties and possibly recovering royalties heretofore paid, although that possibility is a very dim one.

“Before even discussing this, however, the question of general policy must be determined.” (Ex. 777- G.)

The Government asserted that Tungsol continued to pay a large amount of royalty to .American Blank through 1939 (R. 3648 and Ex. 2307b-G). The Government concluded that Tungsol considered that its other business relationships with Corning and General Electric would be affected if it discontinued payments of royalty to American Blank as suggested in its lawyer’s letter. From 1935 to 1939 Tungsol paid American Blank varying sums for royalties. These are bulked in the statement in evidence (Ex. 2307b-G). The only other evidence adduced by the Government in this isolated area is that Tungsol’s lawyer advised it that there was a possibility of escaping from the payment of royalties but that its position with Corning and General Electric might be affected if it sought to discontinue such payments to American Blank. There is no explanation by Tungsol as to why it chose the course of continuing to pay American Blank royalties in the face of its counsel’s advice and if this incident were to be analyzed by itself there would be lacking definite proof of Tungsol’s support of the general scheme. Only when it is considered in connection with Tungsol’s relationship as a “B” licensee does this incident raise a color of participation by Tungsol in the monopoly scheme. When Tungsol’s entire position and status is considered the arrangement is an index to its participation in the general conspiracy charged.

It was further claimed by the Government that the monopoly was also maintained by the elimination of domestic competition. Under this heading the Government showed that in 1935 three unlicensed companies, Premier Miniature Bulb Copipany, Dura Electric Company and Henry Lange, Inc., were producing miniature bulbs on machines considered by American Blank Company to infringe patents of General Electric. The Government submitted that Corning had the primary interest in the matter of preventing the use of tubing made by others than Corning in the manufacture of miniature lamps. Coming’s counsel ^advised the companies that they were infringing patents held by American Blank (Exs. 949-G — 951-G). The objective sought by Coming’s counsel was to draw the companies into accepting licenses wherein means would be used that would insure the licensees purchasing all tubing from Corning. Since a requirement could not be legally utilized in the licenses that would compel the licensees to purchase all ■of their tubing from Corning, it was recommended that the desired result could be accomplished by limiting the licenses to one year and then refusing to renew if the licensee bought tubing elsewhere than from Corning (Exs. 955-G — 958-G). At the time this situation arose title was still in General Electric and it granted American Blank licenses under these patents on November 1, 1935 (Exs. 963-G, 963a-G). Licenses prepared by American Blank and submitted to the three companies contained provisions for a term 'of one year and 'provided for royalties (Exs. 964-G-967-G). The licenses were not accepted and eventually suit was instituted against the companies (Exs. 975-G, 978-G, 986-G). Lange and Dura entered into a stipulation that they would be bound by the results of the suit against Premier

of *796 (Ex. 989-G). The case was tried against Premier and a decision was rendered that the claims involved were invalid (Ex. 781-G). General Electric argued that the suit in no event could have resulted in the elimination of domestic competitors since it is a fact that it went against the plaintiff. It sought to excuse itself from any responsibility in connection with the activity of Coming’s patent counsel in the litigation. The exhibits offered by the Government in connection with this transaction run from 942-G to 990-G and none is more revealing than a letter dated January 8, 1936 written by Mr. Lange to counsel for Corning (Ex. 969-G) in which he sets forth the impact of the pressures by American Blank upon his company. General Electric may have been entirely free from many of the mechanics of this action but was an indirect party to the suit and it made the necessary license arrangements with American Blank preparatory thereto and cannot escape the implications that are patent as evidence of the entire arrangement with Corning to effectively armor their monopoly position.

The Government claimed that a serious threat to the alleged monopoly position of General Electric and Corning in the United States was the Dutch firm of N. V. Philips’ Gloeilampenfabrieken, a limited company of Holland. Philips owned patents relating to glass machinery which it threatened to exploit either by manufacturing in the United States or by licensing other American Companies to manufacture (Exs. 431-G, 447-G, 448-G). The Government submitted that Philips threatened not only the position of Corning as the only company in the United States selling bulbs, tubing and cane for electrical purposes, but also was a threat to General Electric’s alleged controlled sources of supply for bulbs, tubing and cane. When the matter of the sale of Philips’ patent rights to Corning was breached in 1933 it indicated that it felt under obligation first to discuss the matter with General Electric which expressed an interest in purchasing the patents (Exs. 438-G, 439-G). Negotiations were conducted with Mr. Minor of International General Electric in 1935 (Ex. 448-G). Reports of these negotiations were made by Mr. Minor to Coming (Exs. 449-G, 450-G) and arrangements were made for Corning officials to meet with officials of International General Electric in Europe to discuss the European bulb and lamp situation in which they might be interested (Ex. 451-G). After protracted negotiations a draft of the proposed agreement was transmitted by Philips to Coming (Exs. 459-G, 460-G) which provided for payments to Philips of $20,000 a year and gave exclusive licenses to Corning under Philips’ United States glass machine patents; provided that Corning would supply glass to a Philips’ United States subsidiary; and provided further that Philips would not be interested, directly or indirectly, in the manufacture or sale of glass or machinery in North America. Since such an agreement might be held to violate the antitrust laws (Exs. 463-G, 464-G), Philips made an agreement with another Dutch company to grant licenses and this agreement contained the non-import provisions. A Dutch company named Nieuwe Nederlansche Maatschappij Tot Vervaardigen Van Spiegelglas N.V. (Spie-gelglas) was arbitrarily selected to be the immediate licensee of Philips. It was then to grant licenses to Corning under the Philips patents (Exs. 463-G-469-G) with provisions for payment to be made in Holland except if funds should be frozeñ by the United States Government (Ex. 476-G). All of these agreements were finally executed in 1937, effective as of January 1, 1936. Specifically they were:

(1) All exclusive license executed July 9, 1937 effective January 1, 1936 from Philips to Spiegelglas, a corporation of Holland, under Philips’ United States glass patents (Exs. 420-G, 425-G).

(2) An agreement dated as above between Philips and Spiegelglas wherein Philips undertook not to be interested in the manufacture or sale of glass in North America (Ex. 421-G, 426-G).

(3) Sublicense and assignment executed July 19, 1937 as of Aug. 1, 1936 from Spie-gelglas to Corning of all rights under Philips’ patents (Exs. 422-G, 427-G).

(4) Agreement between Corning and Philips executed July 19, 1937 as of July 1, 1936 by which Corning agreed to supply bulbs to Philips’ American licensees (Éxs. 423-G, 428-G).

*797 (5) Sublicense from Corning to General Electric dated March 1938 as of August 2, 1936 under Philips patent for the electrical field (424-G).

The Government claimed that the real purpose of these agreements was to keep Philips out of the United States glass market and that General Electric actively participated with Corning in accomplishing this purpose. General Electric entered into an agreement with Corning (Ex. 424-G) by which it obtained a license under the Philips’ patents, agreeing to pay half of the sums due to Philips. In this way it was alleged that General Electric secured the benefits of the agreements with Philips and Spiegelglas, which contained the provisions restricting Philips from competing in the United States. General Electric argued that it merely took a sublicense from Corning without the knowledge of any possible illegality of the arrangement between Corning and Philips and so it could not be found to have joined in the conspiracy to prevent the importation of bulbs, tubing and cane into the United States. The Government’s references to the transactions revolving around the so called Spiegelglas agreements were put forward in order to fortify its position that General Electric and Corning collaborated in order to construct monopolistic positions for each other. Notwithstanding the denials of the General Electric officials who testified that they knew nothing of the Spiegelglas agreement it is inconceivable that General Electric was unaware of the import of the series of agreements to which it ultimately subscribed when it undertook its sublicensefrom Corning. The deal with Philips was an effective effort at the protection of the Corning-General Electric mutual position and a view of the entire transaction from its inception to the ultimate sublicense to General Electric leaves no room for doubt that General Electric was aware of all of the implications for which it bound itself by sharing to the extent of one half the annual stipend to be paid to Philips. 25

The Government also argued that General Electric entered into the transaction with respect to the European rights of the Westlake bulb and Danner tubing machines which similarly reflected its endeavor to maintain the alleged Corning-General Electric monopoly. Mention is also made of the Corning Ribbon Machine, the European rights for which General Electric admittedly never negotiated. It is unnecessary to discuss the issue raised by the acquisition of the Westlake and Danner European rights at this point in our consideration of the case as the matter is dealt with in the broader aspects of the Government’s allegations concerning foreign transactions.

The Government adverted to the Corning negotiations with the Russian government to furnish it with ribbon machines (Exs. 404-G, 406-G). It brought to light a letter signed by Mr. E. A. Baldwin of International General Electric in 1934 in which he stated that he felt disturbed that the Russians might not respect territorial restrictions and that he considered that the ribbon machine situation in Europe resolved itself into one capital issue,

“namely: the protection of the American bulb market and all that goes with it, and the protection of the American investment in the European bulb market and all that goes with that * * (Ex. 406-G.)

The Government also showed that after International General Electric had conceded that it had no interest in the foreign rights to the Corning ribbon machine and Corning appeared to be closing with the Russians, officials of International General Electric Company and of International General Electric Company of New York, Ltd. sought to have Corning restrict the U. S. S. R. from exploiting any rights it. might receive from Corning in North and South America and other countries where General Electric and the foreign countries in which it had an interest were operating (Exs. 411-G, 413-G). Another instance associated with Russia was brought forward, by the Government when it showed that in 1935 RCA Radiotron sought .to obtain from Corning a miniature bulb blowing machine for the use of one of its licensees in Russia (Ex. 407-G). In a letter from Mr.. *798 Hewlett Scudder of General Electric to Mr. W. C. Duncan of International General Electric, wherein this transaction was discussed, the following language appears

“I understand that you and I agree that the General Electric Company own the machine or let the Corning Company have it in such a way that General Electric Company controls its sale and probable use.” (Ex. 408-G.)

From Exhibit 409-G it appears that General Electric came to a decision that it would decline to supply the machine and the Government assumed that this decision was based upon its fear that the Russians might use the machine in such a way as to be a .threat to European licensees (Ex. 408-G). The illumination thrown by the Government’s evidence with respect to the “Russian situation” casts only a feeble ray upon the relationships of Corning and General Electric in these instances and are but cumulative in demonstrating a cooperation between Corning and General Electric in the endeavor in this direction to protect their mutual monopoly.

General Electric submitted that the evidence wholly failed to support the charges of the Government with respect to its contracts and practices relating to glass and glass machinery, that they were legal in all respect-s and were the result of consistent effort to achieve “a productivity high in quality and quantity, and low in cost”. It denied that it had been a party to a conspiracy with Corning or any one else to monopolize the manufacture and sale of glass, to refrain from competing in the sale of glass or to exclude the products of glass manufacturers. It asserted that it has not imposed unreasonable restrictions upon licenses in granting others the use of its glass and glass machinery patents and has consistently opposed unreasonable restrictions on its use thereof. It denied any 'responsibility for difficulties which competitors may have had with, or their decision . to look to, Corning as their source of supply and generally contended that no grounds for relief have been shown by the Government with respect to this phase of the case.

The court -cannot find itself in agreement with the position taken by General Electric. The various contracts to ■which reference has been made in which Corning and General Electric participated were designed to effect an exchange of patents relating to machinery for the production of glass and glass as it pertained to the incandescent electric lamp so that the field was divided between General Electric and Corning. The design matured so that ■they produced practically all the machinery for the manufacture of glass in the incandescent electric lamp industry and Corning produced all of the glass bulbs, tubing and cane not produced by General Electric in the United States. Corning confined itself to the production and sale of the glass bulbs, tubing and cane for electrical purposes; General Electric, for all practical ■purposes, to the production and sale of incandescent electric lamps. Always great ■care was taken by each of the parties not to overstep the boundaries they had established for themselves. Corning was granted security and stability for its output under General Electric’s obligation to make additional purchases from Corning after the year 1928 when Coming’s sales plus the total domestic bulb production by others than General Electric and Corning plus all importation of bulbs fell below 33%% of total domestic consumption.

General Electric found the relationship •appealing to its interest too because it could calculate the cost of its purchased bulbs from Corning for its own use (which amounted to 6% of its requirements) at a price based partially on its own costs and its licensees received similar treatment from Corning with slight variations, while independents paid more. Corning negotiated with Hartford-Empire and Libbey and with Kimble to divide their glass production in such a manner that the electrical glass field would be strictly the domain of Corning and through it to General Electric. Any suggestion of competition in electrical glass by these companies was thereby effectively thwarted. This rendered a comfortable situation for Corning and at the •same time redounded to the benefit of General Electric .to the extent that it prevented encroachment on such influence as it had established on the single source of supply of electrical glass and its price from Corning. The incident of the contract for the *799 American rights to the Philips patents and the concomitant commitment that this -country would not be exposed to competition with foreign glass demonstrated a vital cooperation between . Corning and General Electric.

At the time that General Electric acquired the exclusive license to the Westlake machines from Libbey in 1918 its patents were in interference with the Empire machine to which both General Electric and Corning held non-exclusive licenses. General Electric therefore considered that it became possessed of rights in the controversy between the two machine patents. Notwithstanding the previous commitments between Corning and General Electric which accorded each to the other rights in their respective patents and licenses General Electric insisted that the 1921 Four Party Agreement was entered into to -settle the controversy arising out of the interference proceedings between the Westlake and Empire machines. It appears that Corning resisted General Electric’s claim that it should be reimbursed for Coming’s share in the consideration given by General Electric for the acquisition of the Westlake license. This was considered by General Electric to constitute the kind of controversy to which the United States Supreme Court made reference when it used -the following language in the -case of Standard Oil Co. v. United States, 283 U.S. 163, 171, 51 S.Ct. 421, 424, 75 L.Ed. 926:

“Where there are legitimately conflicting claims or threatened interferences, a settlement by agreement, rather than litigation, is not precluded by the Act. * * * An interchange of patent rights and a division of royalties according to the value attributed by the parties to their respective patent claims is frequently nece-ssary if technical advancement is not to be blocked by threatened litigation. If the available advantages are open on reasonable terms to all manufacturers desiring to participate, such interchange may promote rather than restrain competition. * * * ”

Nevertheless the court agrees with the Government that there was no patent controversy or threat of controversy between Corning and General Electric in connection with the interference proceedings, for each was assured of licenses under whatever patents issued which would permit operation by both under such patents. There was simply an adjustment to General Electric for its outlay in acquiring the Westlake license and the 1921 Four Party Agreement was a natural evolution of the relationship between Corning and General Electric memorialized in written form. Cf. United States v. Line Material Co., 333 U.S. 287, 68 S.Ct. 550.

These and other considerations heretofore discussed looked toward the -perpetuation of the domination that General Electric and Corning secured over the entire industry in the manufacture and distribution of glass bulbs, tubing and c-ane. The end result could be none other than monopoly in -their hands to the practical exclusion of all competition. United States v. Patten, 226 U.S. 525, 543, 33 S.Ct. 141, 57 L.Ed. 333, 44 L.R.A.,N.A., 325. The machinery phase, however, did not rise to the level of a -separate monopoly but was a restraint of trade and competition which functioned to give the ultimate monopoly in glass products as they pertained to the incandescent electric lamp industry. United States v. Griffith, 334 U.S. 100, 105-107, 68 S.Ct. 941. General Electric and Corning have accordingly violated § 1 of the Sherman AntiTrust Act in restraining trade and competition in the manufacture and distribution of machinery for the manufacture of glass bulbs, tubing and cane and § 2 of the Sherman Anti-Trust Act in monopolizing the manufacture and distribution of glass bulbs, tubing and cane. Likewise, American Blank, Empire and International General Electric 26 were necessary parties to the restraints exercised and'thereby violated § 1 and § 2 of the Sherman Anti-Trust Act.

(3, 4) Lamp Base Machinery -and Bases

Items 3 and 4 in the foregoing list of “adjuvant monopolies”, as alleged by the Government, dealt respectively with the charge that all lamp base making machinery manufactured' in the United States is made or controlled by General Electric and that *800 General Electric is the only manufacturer in the United States that sells a complete line of lamp bases. The Government claimed that in addition to being separate monopolies they were used as supports for the entire alleged monopoly structure.

It appears undisputed that in 1912 the General Electric Company centered its lamp base making and base machinery making in the Providence Works as specifically authorized by the 1911 decree and that the acquisition was brought to the attention of the Attorney General in .1922. The lamp bases used on standard lamps comprising the large bulk of base production are un-patented and have been unpatented since 1922. This is also true of the basic machines upon which the standard bases are manufactured. Only one patent relating to the refinement of the threading machine, the use of which is not at all necessary to the successful manufacture of bases existed at the time of the commencement of this suit and that expired in 1947.

The Government specifically charged that Westinghouse willingly participated in a conspiratorial plan that it should not sell lamp bases to companies other than its own subsidiaries (Exs. 256-G, 257-G). It appears that on April 15, 1920, General Electric and Westinghouse agreed (Ex. 252-G) that General Electric was to provide Westinghouse with information for the manufacture of bases or machines for the consideration of the sum of $25,000 to be paid to it by Westinghouse. The 1927 license did not include the right to sell lamp bases and as a matter of fact it is shown that Westinghouse did not sell bases to lamp manufacturers except in small quantities.

General Electric contended that since Westinghouse was licensed to sell lamps and paid for “know how” although there was no specific agreement or restriction upon Westinghouse not to sell bases or machines it would have been entirely proper to have such an agreement. Westinghouse could sell bases not made with General Electric patents or “know how” and as a matter of fact at the time o.f the trial is said to have been selling such bases.

The Government urged that General Electric’s intent to restrict the sale of bases or base making machinery is evidenced by its relationship with Waterbury Farrel Foundry and Machinery Company. In 1924 General Electric had developed a double-cut eyelet machine to be manufactured by the Waterbury Farrel Company and secured an agreement from that company not to sell this machine to any other customer for a period of five years unless General Electric was reimbursed for the expense of development (Ex. GE-175). In 1930 General Electric had Waterbury Far-rel develop another eyelet machine at the expense of General Electric and under the same conditions restricting sale to other purchasers for a period of five years. On February 10, 1941, after this suit was brought, General Electric notified Waterbury Farrel Company that :

“Without determining the existence of such an agreement or its terms, you are hereby notified that such agreement, if it exists, is hereby cancelled and terminated and that you are under no obligation by the terms of such supposed agreement or otherwise, to obtain -this Company’s approval of those to whom you wish to sell such machines.” (Ex. GE-177.)

Waterbury Farrel replied to the effect that the machine had been marked “private” in its records during all the years and that there was no written agreement, and that it felt that the understanding was a very satisfactory way of handling this very special machinery (Ex. 178-G).

General Electric contended that it paid for the development of all of these machines and that it had a right to agree with the Waterbury Farrel Company that these machines would not be sold to other customers for a period of five years unless the development costs were paid to it. It wrote Waterbury Farrel Company after the suit was started in connection with the pinning machine because it first had notice of this situation upon the filing of the complaint and felt obligated to inform Waterbury Farrel Company of its position as soon as it learned of the situation. General Electric stated that so far as the eyelet machine was concerned it bought only one of the machines and no one else ever bought one because it was impractical.

*801 The Government next drew attention to the relationship of General Electric with the U. S. Tool Company in 1938. (Exs. 315-G, 316-G), when General Electric aided that company in the development of a lap-seam machine. General Electric endeavored to obtain an exclusive license to this machine and in Exhibit 317-G, Mr. Atkins of the Providence Base Works of General Electric wrote to Mr. Kenyon of General Electric Parts Department and concluded:

“The writer should attempt to negotiate an agreement with U. S. Tool Co. to be sure that G. E. is protected from other companies, domestic or foreign, getting into base business.”

It was concluded that an exclusive license was hazardous and since General Electric and Westinghouse controlled 85% of all the bases in use in the country and through th'e “B” licensees controlled an additional 10%, the field in which the independent manufacturer of bases would sell his product would be rather limited (Ex. 318-G). Thereafter an agreement was finally negotiated with the U. S. Tool Company whereby General Electric was granted a non-exclusive license on all the inventions in question (Ex. 314-G).

Again General Electric pointed out that it had incurred large development costs in connection with this machine until it was brought to completion by the U. S. Tool Company. It denied any wrong implications in Mr. Atkin’s letter of September 27, 1938 wherein he said :

“If for any reason we do not purchase the machine, I do not think they will dare to approch anyone except Westinghouse for fear of incurring General Electric’s ill will.” (Ex. 316-G.)

General Electric contended that a fair interpretation of this language meant that since it was heavily involved in the development costs of this machine that the U. S. Tool Company would hesitate to sell it to others without permission of General Electric until costs had been recouped for fear of incurring General Electric’s ill will. Again this machine was unsuccessful and has never been used for actual production.

The Government alleged that price cuts were made on bases from time to time and that these were designed to discourage the rise of any competitor in the field (Exs. 272-G, 307-G, and 308-G). It also refers to Exhibits 278-G, 279-G, 289-G, 290-G and 291-G as instances of refusal upon the part of the Providence Base Works to supply lamp bases or parts. General Electric denied any motive upon its part to suppress competition by lowering prices and in the three instances when it was requested to furnish bases or parts, it claimed those parts were the subject of patented products that it had the right to decline to sell.

The proofs, however, show that in 1938 General Electric required all independent, unlicensed lamp manufacturers to sign letters in which they waived any right to a defense against an infringement suit which might be based on their use of purchased lamp parts or materials (Ex. 278-G) and unless this waiver was signed Orders would not be filled (Ex. 279-G, R. 2123).

Still another effect of General Electric’s alleged monopolistic position in the base field was suggested by the Government as disclosed when General Electric and Westinghouse determined not to encourage the development of the low-wattage 3-light lamp using a medium screw base. In correspondence by General Electric and Westinghouse officials the sales policy was expressed to be based on the theory that this lamp was inefficient and costly to the consumer (Exs. GE-183, 258-G and 261-G). The Government insisted that the major reasons for General Electric’s opposition to the lamp was stated in a letter of Mr. Harrison of General Electric, dated March 29, 1937, in which he commented that the demand for these lamps seems definitely on the wane.

“ * * * a fact which should not he unwelcome to the public utility companies since the tendency of these small sizes is to cut down rather than to build up the use of kilowatt-hours.” (Ex. 268-G.)

The Government charged that General Electric refused to supply the Northern Incandescent Lamp Corporation, an in *802 dependent, unlicensed manufacturer, with medium screw bases for a three-light lamp. Meanwhile the Eagle Manufacturing Company began to manufacture these bases. Thereupon the Government alleged that General Electric decided to do likewise so as to eliminate Eagle as a source of competition. Despite its aversion to the manufacture of these lamps General Electric went into the field. It is also alleged that General Electric was prompted by the motive of desiring to keep itself informed of quantitative information such as it could get by knowing who was producing how many bases. The Government pointed to Mr. Harrison’s letter in which he said:

“As a matter of fact, Providence is making the bases because we have felt that the value of having accurate quantitative information on all such things exceeded the disadvantage of making them.” (Ex. 266-G.)

The Government cited several instances where such information concerning independent manufacturers was sought and obtained by officers of General Electric from Mr. Atkins of the Providence Base Works. The Government charged that in its position as the supplier of bases to the industry General Electric was enabled in fact to maintain observers in the factories of its potential competitors and pointed to the memorandum report of Mr. Kenyon of General Electric (Ex. 305-G) as revealing “the penetrating power of a monopolist”.

General Electric claimed with regard to the medium base for three-light lamps that it made such bases because in spite of its judgment of the poor economy of the lamp for the consumer there was a demand for it which moved General Electric to produce the bases and the lamps. It pointed to the very fact that Eagle Electric Manufacturing Company was manufacturing these bases as proof that General Electric had no monopoly on their manufacture and challenges the Government’s statement that it refused to supply Northern Incandescent Lamp Corporation *s having no foundation in the proofs. It insisted that any information it gathered concerning competitors was in the ordinary line of the usual business methods and that the sale of lamp bases was not used as a scheme of spying out the quantitative information as charged by the Government.

The lamp base works constitutes a highly desirable arm of General Electric whereby it supplies itself, Westinghouse, the “B” licensees and others with lamp bases. It is practically unchallenged in the manufacture and production of lamp bases and is the only manufacturer of a full line of lamp bases in the United States. Although it supplied lamp bases to all desiring them, it was able to annex conditions to purchase rights as evidenced by the waiver of defense requirement. This conditioning sales upon waivers of defenses, even though upon an unpatented device, was ah invalid. restriction by analogy to the doctrine expressed in Sola Electric Co. v. Jefferson Electric Co., 317 U.S. 173, 63 S.Ct. 172, 87 L.Ed. 165; Edward Katzinger Co. v. Chicago Metallic Mfg. Co., 329 U.S. 394, 67 S.Ct. 416, 424, 91 L.Ed. 374; and MacGregor v. Westinghouse Electric & Mfg. Co., 329 U.S. 402, 67 S.Ct. 421, 424, 91 L.Ed. 380, that a licensee is not estopped to challenge the validity of a patent. In the instant case, were a manufacturer to refuse signing the waiver, General Electric would and did refuse sale of lamp bases. The resulting effect was to compel compliance since the full supply of lamp bases was limited to General Electric. Only when General Electric was caught in a draft of competition to satisfy the demand of the market created by an independent manufactur'er of the three way lamp base did it activate itself to produce a similar type base of which its policy had heretofore discouraged the manufacture. It appears, therefore that General Electric had the power to and did exert that power to restrict trade by virtue of its unlimited control over the manufacture of lamp bases. What competition it met in the lamp base field was negligible and only existed where its policy had not successfully foreclosed market demand. The proof, however, fails to sustain the charge that General Electric deliberately engaged *803 in price cutting of lamp bases for the purpose of driving competitors from the market.

The immediate case is analogous to that cited in United States v. Griffith, 334 U.S. 100, 68 S.Ct. 941, wherein it was stated that:

“Anyone who owns and operates the single theatre in a town, or who acquires the exclusive right to exhibit a film, has a monopoly in the popular sense. But he usually does not violate § 2 of the Sherman Act unless he has acquired or maintained his strategic position, or sought to expand his monopoly, or expanded it by means of those restraints of trade which are cognizable under § 1. For those things which are condemned by § 2 are in large measure merely the end products of conduct which violates § 1. * * * So it is that monopoly power, whether lawfully or unlawfully acquired, may itself constitute an evil and stand condemned under § 2 even though it remains un-exercised. For § 2 of the Act is aimed, inter alia, at the acquisition or retention of effective market control. * * * Hence the existence of power 'to exclude competition when it is desired to do so’ is itself a violation of § 2, provided it is coupled with the purpose or intent to exercise that power. • * * * It follows a fortiori that the use of monopoly power, however lawfully acquired, to forclose competition, to gain a competitive advantage, or to destroy a competitor, is unlawful." 334 U.S. at. pages 106, 107, 68 S.Ct. at page 945.

General Electric’s relationship to the lamp base industry plus its practices have been such that it violated § 2 of the Sherman Anti-Trust Act by monopolizing the manufacture and distribution of lamp bases. As was stated in the Griffith case it

“is chargeable in legal contemplation with that purpose since the end result is the necessary and direct consequence of what (it) did.” 334 U.S. at page 108, 68 S.Ct. at page 946.

Its conduct and position in connection with the production of lamp base manufacturing machinery failed j;o attain the level of a separate monopoly but supported the monopoly of lamp bases. These activities, however, were in violation of § 1 of the Sherman Anti-Trust Act since they unlawfully restrained trade by seeking to foreclose sources of lamp base machinery.

Westinghouse was a favored beneficiary by virtue of its relationships with General Electric (Ex. 25-G). This is discussed in greater detail under later sections. But the clear cut proof that it conspired with General Electric in restraining trade and competition in the lamp base area is lacking. All that is present is an inference to be obtained from Exhibit 316-G, previously quoted, and the Government’s charge must fall. 27

(6) Filament and Leading-in Wire

The Government named the alleged monopoly of General Electric in filament and leading-in wire as another “adjuvant monopoly” which it secured in order to support its lamp monopoly. In 1916, when it granted lamp licenses to the “B” licensees, it was provided that the licensees could not manufacture drawn tungsten or leading-in wire and that all drawn tungsten should be purchased from the licensor. Previous to this agreement Sylvaniá was making its own wire but upon the execution of its agreement with General Electric it sold its wire plant to General Electric. Under the 1933-1934 licenses, the “B” licensees were permitted to manufacture materials used in the manufacture of lamps, but they were not permitted to sell any parts of the lamp. The Government charged that since each licensee was restricted to a quota it would have been uneconomical for a licensee to put up and maintain a high quality wire producing plant. Westinghouse has been permitted for many years to manufacture its own filament wire and other lamp parts but its license provides, “No *804 license is granted to sell filaments or other parts of lamps.” (Ex. 25-G.)

Also in qpnnection with leading-in wire contentions the Government charged that in 1915 General Electric was manufacturing this wire under the Fink patent when it purchased the patent rights of Eldred relating to the ¡manufacture of the so called Dumet wire. The Commercial Research Company controlled the Eldred patent. The Government contended that in the agreement with Commercial Research Company (Ex. GE-155) to secure that patent General Electric caused Commercial Research Company to limit its own facilities for the manufacture and sale of this material and thereby deprived all other lamp manufacturers of the only other source beside General Electric for leading-in wire.

The Government further claimed that the policy of General Electric with respect to essential lamp parts is disclosed by Mr. Reed in a letter to Mr. Sloan (both of General Electric), dated May 15, 1936, as follows:

“It is my understanding that we have for many years adhered closely to the policy of declining to sell incandescent lamp 'parts or materials (with the single exception of bases) to domestic manufacturers who are not licensed under the incandescent lamp patents of the General Electric Company. This has been true of unpatented as well as patented parts and materials.” (Ex. 239-G.)

Further, that although General Electric was able to produce the best and cheapest wire parts for lamps, it refused to sell filament wire to independent lamp manufacturers. When Westinghouse supplied independents with some of this material General Electric drew its attention to the fact that it was violative of its license to supply this material (Exs. 246-G, 247-G).

The Government admits that independent wire manufacturers have appeared in the industry from time to time but it contended that General Electric inhibited their growth and capacity. It asserted that no “B” licensee could buy any substantial part of its wire requirements from a wire manufacturer other than General Electric without the fact being known to General Electric through its surveillance of the number of lamp bases the licensee bought and that no “B” licensee would risk his machinery subject to buy back options 'held by General Electric by giving enough business to a wire manufacturer to make it worth while to invest the capital necessary for the manufacture of a high quality product and so competition is frustrated despite the' expiration of any patents which might have controlled the manufacture of the material. General Electric denies any monopoly in the manufacture and sale of filament and leading-in wire. It insisted that other manufacturers make this product, and specifically names the Callite Company as the supplier of filament wire.

Leading-in wire, 28 also called “welds”, was made in large quantities by Sylvania, Westinghouse, Callite and several smaller companies. It appears that Tungsol purchased approximately 40% of its wire from Callite. No evidence is brought forward by the Government to support the contention that the sanctions it suspected General Electric would level against licensees who purchased wire elsewhere were actually enforced.

The agreement with Commercial Research was made in 1915 and the Eldred patent with which it was concerned expired in 1932. Other phases raised by the purchase of the Eldred patent are discussed in connection with the Fink patent under the general heading “Patents” herein. But for present purposes, the contention made that General Electric’s arrangement with Commercial Research violated the antitrust laws is unsupported.’

The evidence concerning the contact made with Westinghouse in 1939 (Exs. 246-G, 247-G) supports -the charge that General Electric and Westinghouse violated § 1 of the Sherman Anti-Trust Act in suppressing trade in this field, but there is no evidence inducing the conclusion that General Electric monopolized the filament and leading-in wire field. Here again its *805 activities were such as to be auxiliary to its monopolization of the entire incandescent electric lamp industry.

(7) Expansion of Distribution Outlets

The next “adjuvant monopoly” was claimed by the Government to reside in' General Electric’s expansion of distribution outlets, together with those of Westinghouse, said to be connected in one scheme to dominate lamp marketing in the United States. The charges are discussed in this opinion under the general headings of “Agency” and “Suppression of Trade by Domestic Licensees”. The general conclusions reached under those discussions are that the agency system employed by General Electric and Westinghouse individually is valid under the 1926 case, and that distribution outlets involved in the individual systems are not monopolized but that General Electric and Westinghouse engaged in practices in this area which eliminated competition between themselves.

(8) Patents

Finally the Government charged that General Electric created an illegal monopoly of patents by means of its license agreements with Westinghouse, the “B” licensees, foreign companies and by other practices.

In the present action, the Government charged that General Electric conducted monopolistic and price fixing practices not passed upon by the Supreme Court in 1926 and that General Electric lacked patents to justify any of these practices. Since the Just and Hanaman patent expired in 1929, the Coolidge patent in 1930, and the Langmuir patent in 1933, it claimed that General Electric has owned no patent “which covers completely the making of modern electric lights with the tungsten filaments” and that General Electric had no lawful basis for monopolizing the making, using and vending of incandescent electric lamps. It further asserted that General Electric, upon winning the favorable verdict in 1926 realized that when the Just and Hanaman, Coolidge, and Langmuir patents expired it would be without patents giving it basic and fundamental control of incandesent electric lamps; that General Electric therefore pursued a course of conduct designed to accumulate patents covering improvements in machines, processes, and minor details or related to highly specialized adaptations of lamps in limited use which, coupled with threats of litigation, backed by the financial power it controlled, deterred competition in the manufacture of lamps; that General Electric since the expiration of the Langmuir patent in 1933 has not owned a single incandescent electric lamp patent which has been held valid and infringed by a court of last resort in a contested case; and that General Electric’s litigious past together with an alleged false and misleading patent marking system aided in maintaining the monopoly on lamp manufacturing by bar ring real and potential competition through an inherent threat of costly patent litigation. The Government argued that of the number of patents own,ed by General Electric from 1927 to the date of the complaint more than half were not employed in the manufacture of incandescent lamps and insisted that when consideration is narrowed to the so-called “bread and butter” lamps, i. e., 25, 40, 50, 60, 75, 100, and 150 watt lamps, General Electric lacked patents for the completed lamp to justify the monopoly and restraints allegedly practiced by it.

General Electric asserted that each of the many lamps manufactured by it or its licensees was covered by some article patent owned by it when the complaint was filed. It contended that the Government did not charge in the complaint the invalidity of any General Electric patent and that the Government was estopped to deny the validity of any patent which it granted. It asserted that so long as the licensed patents cover a substantial and important portion of the article in question so that the price control of the article can be said to be normally and reasonably adapted to secure pecuniary reward for the patentee’s monopoly, and so long as the license is a bona fide license based upon a real desire upon the part of the licensee to use the licensed patents, the licensor insisting upon limitations in the license to protect his own business, price control of the entire article is proper. It insisted that it is proper to grant limited licenses under *806 machine and process patents whereby it could fix prices and limit the manufacture of the entire article. It claimed that the situation is somewhat analogous to the price and territorial controls attached to the sale of medical preparations made under a secret process and insisted that since a license under a secret process providing for price control is valid, a fortiori, a similar license under a process or machine patent is valid.

General Electric denied having a monopoly of patents, conducting vexatious litigation, or employing an improper patent marking system. It asserted that it did no more with its patents than it had the right to do. Patents had 'been issued to it 'by the score and it argued that if the patents meant anything, they were when issued by the United States Patent Office, presumptively valid, and that it therefore had the right to take into court those who appeared to infringe a patent and to generally assert its rights under the patent. It insisted that its patent marking system was not false but “strictly and literally accurate” It claimed that the Government’s charges that it successfully monopolized all patents relating in any way to the incandescent electric lamp or its manufacture are without support and argued that the Government’s statements ignore the fact that under all of the domestic licenses to which the Government referred, it secured a mere non-exclusive license under the lamp patents of its licensees.

No merit is found in General Electric’s contention that the Government may not attack the validity of patents in an antitrust suit in view of the pronouncement of the Supreme Court in United States v. United States Gypsum Co., 333 U.S. 364, 367, 68 S.Ct. 525, that when defendants rely upon patents to justify restraint of trade, the Government is entitled to an opportunity to prove that the patents are invalid. Actually the Government’s attack is not centered against the validity of any patents. It has attempted to show that with the expiration of the Langmuir patent in 1933, General Electric had no product patent that covers the incandescent electric lamp which would permit it to fix the price on the completed lamp or to limit its manufacture and distribution and that machine and process patents would not permit restraints upon disposition of the completed lamp.

A comparison of Exhibits 2245-G and 21-G supports the Government’s contention that more than half the lamp income of General Electric in 1940 was derived from “bread and butter” lamps. The Government disclaimed interest in the specialized lamps such as the bipost lamp, sealed beam lamp, large lamp with mechanical base, and other lamps of patented specialized construction discussed by General Electric’s patent experts Dr. Jeffries (R. 507-578) and Mr. Hughes (R. 1897-1899). Exhibit 226-G contains a list of patents owned by General Electric relating to incandescent electric lamps, lamp parts, processes and machines for the manufacture thereof with issue dates beginning January 23, 1923 and ending December 26, 1939. All of these patents have expiration dates after commencement of the suit. It shows that of all the patents therein itemized, 281 are not used. Exhibit GE-147 consists of four volumes containing 527 letters patent owned by General Electric, the first of which was issued April 19, 1910 and the last on December 31, 1940. The patents actually employed in the manufacture of the “bread and butter” lamps are listed in the following: Exhibit 2247-G, General Electric; Exhibit 2249-G, Westinghouse; Exhibits^ 2251-'G, 2252-G and GE-150, Sylvania; Exhibit 2253-G, Kenrad; and Exhibit 2254-G, Consolidated. No “bread and butter” lamps are manufactured by Tungsol and Chicago Miniature. A comparison of Exhibit GE-147 and the lists of General Electric patents last above mentioned discloses 79 General Electric patents employed in manufacturing “bread and butter” lamps as follows:

Number Inventor Type

*• 1,188,196 Needham Product

3] 1,205,002 Marshal Process 1,206,704 Helfgott Process

4. 1,210,237 Walker et al. Machine

jj-1,210,238 Walker et al. Machine 1,213,852 Fagan and

Quackenbush Machine

l- 1,247,068 Benbow Product

jj' 1,268,647 Van Keuren Product 1,280,704 Fuller Process

io. 1,284,648 Gill Process

*807 Number Inventor Type

11. 1,306,643 Swan Machine

12. 1,320,874 Langmuir Machine

13. 1,393,550 Langmuir Process

14. 1,410,499 Pacz Product

15. 1,423,956 Mitcbell & Process, Produ

White & Machine

16. 1,453,594 Mitchell et al. Machine

17. 1,453,595 Mitcbell et al. Process

18. 1,475,192 Marshall Machine

19. 1,498,908 Fink Product

20. 1,512,240 Ryan Machine

21. 1,536,833 Fagan Machine

22. 1,546,352 Rippl Machine

23. 1,546 353 Rippl Machine

24. 1,580,809 Brown Machine

25. 1,597,439 Fagan Machine

26. 1,631,378 Martin Machine

27. 1,646,258 Raus Machine

28. 1,655,140 Fagan Machine

29. 1,655,141 Fagan Machine

30. 1,655,466 Inman Process & Machine

31. 1,659,613 Phelps Machine

32. 1,661,866 Zabel Machine

33. 1,662,045 Patterson Machine

34. 1,687,510 Pipkin Product

35. 1,694,265 Inman Process & chine Ma-

36. 1,698,321 Staudenmeir Machine

37. 1,708,756 Fagan Machine

38. 1,718,487 Pipkin Machine

39. 1,722,161 Strickland Machine

40. 1,722.195 Bumstead Process

41. 1,733,882 tllingworth Process & chine Ma-

42. 1,736,766 Burrows Machine

43. 1,736,767 Burrows Machine

44. 1,742,966 Muller Machine

45. 1,747,040 Akeroyd Machine

46. 1,745,143 Brown Machine

47. 1,771,927 Illingworth Machine

48. 1,788,957 Phelps Process & chine Ma-

49. 1,795,181 Phelps Product

50. 1,801,119 Soepnel Machine

51. 1,812,776 Donovan Machine

52. 1,834,781 Inman Process

53. 1,867,418 Muller Machine

54. 1,907,532 Flaws Machine

55. 1,907,533 Flaws Process & chine Ma-

56. 1,960,066 Rippl Process & chine Ma-

57. 1,960,067 Rippl Process & chine Ma-

58.' ‘ 1,962,902 Kunath Process & chine Ma-

59. 1,920.375 Hahn Machine

60. 1,998,958 Flaws Product

61. 2,006,231 Malloy Machine

62. 2,027,157 Flaws Machine

63. 2,031,560 Bumstead Machine

64. 2,042,520 Flaws Machine

65. 2,053,137 Donovan Machine

66. 2,053,946 Donovan Machine

67. 2,054,675 Illingworth Machine

68. 2,069,079 Rudd Product

69. 2,069,086 Donovan Machine

70. 2,085,578 Flaws Machine

71. 2,089,055 Flaws Machine

72. 2,104,656 Krejci Machine

73. 2,104,663 Metzger Machine

74. 2,314,171 Benbow Machine

Number Inventor Type

75. 2,120,853 Brown Machine

76. 2,142,865 Zabel Process

77. 2,152,793 Donovan Machine

78. 2,179,296 Iden Machine

79. 2,227,303 Flaws . Machine

Examination of the list hereinabove itemized supports the Government’s contention that there are but 10 product patents owned by General Electric and employed in the manufacture of the “bread and butter” lamps following the expiration of the Langmuir patents in 1933. They are as follows:

1. Needham, 1,188,196

2. Benbow 1,247,068

3. Van Keuren 1,268,647

4. Pacz 1,410,499

5. Mitchell and White 1,423,956

6. Fink 1,498,908

7. Pipkin 1,687,510

8. Phelps 1,795,181

9. Flaws 1,998,958

10. Rudd 2,069,079

General Electric did not controvert the analysis which produces the above listed product patents but stood upon its insistence that* it “has at all times owned important article patents covering not only all of the ‘bread and butter’ lamps, but substantially all other lamps manufactured by itself and its licensees”.

The relevant factors of each of the 10 product patents are summarized as follows.

1. Needham Patent, No. 1,188,196

This patent, expiring June 20, 1933 related to a gas filled bulb and claim 5 provided :

“ail incandescent lamp containing a double fluorid of sodium and aluminum”.

The claims primarily related to the employment of a fluorid within the bulb to prevent blackening. In its use it was not emplo3>-ed for the higher wattages by General Electric and Westinghouse, although an appreciable use is shown by Sylvania and Kenrad.

2. Benbow Patent, No. 1,247,068

This patent, expiring November 24, 1934, related to the coiled-coil filament. At the time the coiled-coil filament came into wide *808 spread commercial use, the patent had expired (R. 696, 2584-2585).

3. Van Keuren Patent, No. 1,268,647

This patent, expiring June 4, 1935, provided for a leading-in'wire having a moisture free borate coating. Its principal use seems to be in connection with the Dumet leading-in wire covered 'by the Fink patent hereinafter discussed and had wide use in the “bread and butter” lamps.

4. Pacz Patent, No. 1,140,499

This patent, expiring March 21, 1939, covered the so-called “sagless” tungsten filament. Certain claims to it were held valid in Anraku v. General Electric Co., 9 Cir., 80 F.2d 958, and other claims were eventually held invalid in General Electric Co. v. Wabash Appliance Corporation, 304 U.S. 364, 58 S.Ct. 899, 82 L.Ed. 1402, rendered shortly before the patent expired. This patent had wide application in the “bread and butter” lamps.

5. Mitchell and White Patent, No. 1,-423,956

This patent, expiring July 25, 1939, covered the commercial form of the so-called “tipless” bulb. General Electric claimed this to be a lamp but an examination of the patent claims show that it refers to the construction of the bulb, General Electric Co. v. Eisler, 3 Cir., 20 F.2d 33.

6. Fink Patent, No. 1,498,908

This patent, expiring June 24, 1941, covered the Dumet leading-in wire. Dumet wire is composed of special metals having a heat expansion characteristic of glass which General Electric takes credit for developing. The Government charged General Electric with bad faith in the procurement of this patent, particularly in the institution of a suit under 35 U.S.C.A. § 63. However, the proof shows its contentions that General Electric failed to notify the Commissioner of Patents of General Electric’s interest are without merit since the Commissioner was notified by the reference to the bill of complaint (Ex. 229-G at p. 1515 and Ex. GE-158). Further, the Commissioner expressly acknowledged receipt of the bill of complaint in which was found reference to General Electric’s conflicting interests (Ex. GE-159).

7. Pipkin Patent, No. 1,687,510

This patent, expiring October 16, 1945, related to the inside frosted bulb. It was held valid in General Electric Co. v. Save Sales Co., 6 Cir., 82 F.2d 100, and General Electric Co. v. Wabash Appliance Corporation, 2 Cir., 93 F.2d 671, but invalid in General Electric Co. v. Jewel Incandescent Lamp Co., 3 Cir., 146 F.2d 414, affirmed, 326 U.S. 242, 66 S.Ct. 81, 90 L.Ed. 43, a decision rendered after the present suit was instituted. Although the major portion of “bread and butter” lamps is frosted (R. 561), General Electric in 1940 made 14,000,000 lamps with clear bulbs of the “bread and butter” wattage (Ex. 2245-G). 8. Phelps Patent, No. 1,795,181

This patent, expiring March 4, 1948, related to the so-called “molded seal” bulb, its purpose being to properly seat the bulb in the base.

9. Flaws Patent, No." 1,998,958

This patent, expiring April 23, 1954, relates to a particular form of connection between the leading-in wires and the filament resulting in a better contact without crushing the wires. Although used prior to 1940 by General Electric, its use apparently has been discontinued (Exs. 226-G, 2247-G).

10. Rudd Patent, No. 2,069,079

This patent, expiring January 26, 1954, relates to an improved stem for electric lamps. This patent is not used by Sylvania (Ex. GE-150).

In summary the above product patents cover the following parts of an incandescent lamp:

Filament ........ Benbow, Pacz, Flaws

Leading-in wire... Van Keuren, Fink, Flaws

Bulb ............ Needham, Mitchell and White, Pipkin, Phelps

Stem............Rudd

The elements constituting a completed incandescent electric lamp are described in Exhibit GE 12 as follows:

“The lamp comprises essentially a doubly coiled fine filament of tungsten supported within a glass envelope. It is so supported partly by means of a pair of leading-in. *809 wires which pass through the walls of the glass envelope and partly by means of a molybdenum wire surrounding its central portion, and held on a glass support fastened to the glass envelope. A metallic base attached to one end of the glass envelope or bulb, as it is commonly referred to, serves the dual function of supporting the lamp in a threaded supporting socket and of affording electrical connection to conductor terminals in the supporting socket.”

The Needham, Benbow and Van Keuren patents all expired before the end of 1935. The Pacz and Mitchell and White patents expired prior to filing of the complaint in the instant cause. Although used prior to 1940, the Flaws patent is no longer used by General Electric in the manufacture of lamps although it had 14 remaining years of life as a patent. The Pipkin patent was subsequently found by the Supreme Court to be invalid. The Fink patent, never exposed to litigation, expired shortly after this suit was commenced. The Phelps patent likewise was never litigated and Westinghouse’s patent attorney wrote that satisfactory lamps may 'be manufactured without it (Ex. 213G). The Rudd patent is not of sufficient significance to be used by Sylvania (Ex. GE 150, Ex. 2251G).

It is recalled that in the “Introduction” the history of the domestic licenses was gone into in some detail. There were two types of licenses, “A” and “B”. Westinghouse was granted the only “A” license issued by General Electric. All other licenses granted by General Electric were “B” licenses either for small or large lamps. The “A” license granted the right to manufacture both large and miniature type lamps.

The Westinghouse license (Ex. 25G) executed June 15, 1928 as of January 1, 1927, stated that:

“This license and agreement relates to, and to machines and processes for the manufacture of, electric lamps as hereinafter defined.

******

“An electric lamp is for the purpose of this agreement defined as any device the primary purpose of which is to convert electric energy into light within the visible spectrum * * * ”.

A non-exclusive license under specified patents was granted “for improvements in electric lamps and improvements in machines, appliances or processes for the manufacture of such lamps, to make use and sell said electric lamps”. Royalties were based upon an amount equal to 1% of the net sales by Westinghouse of “lamps of the kind covered by this license”. The license was limited “to the sale of Class A. electric lamps in and for use in tbe United States in each calendar year to an amount expressed in dollars which shall not exceed the amount represented by “specified percentages of the aggregate net sales during the year of the licensor. The license was granted on condition that prices, terms and conditions of sale of the “electric lamps” made under the license were in accordance with those of the licensor and prohibited export of “lamps” except under qualified exceptions. A patent list was annexed to the license and consisted of practically all the General Electric patents involving incandescent electric lamps then in existence. The “B” licenses followed a similar pattern with a differentiation made between miniature lamps and large lamps and without a price fixing clause. The licenses provided for an accounting system to be employed by General Electric in which no distinction was made whether a product patent on an element of a lamp was employed in a particular lamp or whether process, or machine patents, or a combination of product, process and machine patents were employed. As long as any General Electric patent concerning incandescent electric lamps was employed in the manufacture of a particular lamp, that lamp was subject to the price, quota and export limitations of the license. Therefore, as an illustration, when Sylvania lamps were exported to Venezuela (Ex. 114 G, 115 G), and to Newfoundland (Ex. 116 G), General Electric held that the license export limitations barred such sales. Sylvania appreciated the understanding and found it not unwelcome.

General Electric officials recognized as early as 1926 that their patent basis required strengthening. George T. Morrison, then Vice President of General Electric expressed this opinion to Gerard Swope, *810 President of General Electric, in a letter dated April 28, 1926 (Ex. 64-G). 29

“The important patents on which our Lamp Agreement with the Westinghouse Electric & Manufacturing Company is ‘based are as follows:

“The Just and Hanaman Patent, covering broadly all kinds of tungsten filament lamps; expiring February 27; 1929.

“The Coolidge Patent, covering an incandescent lamp having a filament or drawn tungsten wire, either vacuum or gas-filled; expiring December 30, 1930.

“The Langmuir Patent, covering all commercial forms of gas-filled or Type ‘C Lamps; expiring April 18, 1933.

“The vacuum Lamp, which represents 54% of our lamp business in dollars and 70% in numbers, is covered by the Just and Hanaman and Coolidge Patents which expire, as stated above, on February 27, 1929 and December 30, 1930, respectively. I believe there are no other patents owned by the General Electric Company which would prevent others making this type of lamp when the Coolidge patent expires.

“It is unnecessary to enumerate here the many advantages that have accrued to the General Electric Company, the Westinghouse Company and the lamp industry as a whole, both in this country and in foreign lands, in the way of standardization, simplification and stabilization of the lamp industry as a result of our Lamp License Agreements. In view of the short time that will elapse before the expiration of these important patents it behooves us to at this time give very serious and careful thought fo the working out of a plan that insure the continuance of the very satisfactory license agreements and co-operative arrangements which have contributed so much in the past to the development of the electrical industry as a whole, and made possible such satisfactory profits to those engaged in the business.

“I think we have the necessary material, in the way of important process patents, to form the basis of an agreement that would extend for many years beyond the expiration of the present agreements.

“The first step in this direction would be to take up negotiations with the Westinghouse Company for an extension of their present agreement, and this would involve giving the Westinghouse Company a larger participation in the business than they enjoy under the present arrangement. Just how far we would have to go in this direction would be a matter of negotiation.

“On various occasions during the past three years I have discussed this matter with Mr. Cary and taken the position that we would not expect in any new arrangement to give the Westinghouse Company a participation in excess'of 20%. This of course was not satisfactory to him and he has mentioned a figure of 30%. We no doubt could compromise on 25%. Perhaps we could satisfy them with a smaller percentage, but I doubt it. I believe that we could be justified in going this far if we could make an arrangement that would permit them to reach this increased figure over, a period of years, they getting a larger percentage of the growth in the business than we during the period agreed upon— say a growth of 1 % per year during 5 years. Under our present agreement they pay us 1% royalty on their net sales up to their allotment, and for sales in excess of this they pay us 1% plus 10%. In a new arrangement permitting them a larger allotment I would insist that upon sales in excess of this allotment they pay a higher royalty than the 10% they now pay on their excess. In fact, I would make the excess royalty so high that there would be no incentive for them to go beyond their allotment say a 25% royalty.

“Whether or not we would be successful in getting the Westinghouse Company to pay us an increased royalty on the increased business allotted to them, over their present allotment of 17.25% is problematic. We might try on something like this. — They *811 are running now at about 20%. We might continue to let them continue to do 20% on the present royalty 'bases of 1% and increase the royalty by one-half of 1% for each percent they increase over 20% and up to the new percentage agreed upon, say, 25%. Personally I would not be so keen about increasing their present royalty on the increased allotment above their present allotment- as I would be about fixing a high royalty for any excess done beyond the percentage agreed upon.

“The Westinghouse Company, of course, is the key to any lamp license arrangement in this country, and we must get them in line before making any arrangements with the other Licensees. In fact, it is necessary to get the Westinghouse Company in line if we are to be successful in working out arrangements with the foreign lamp manufacturers. You are familiar with the work that has been done and the plans that we have been developing in foreign countries during the past twenty-four years, all for the purpose of protecting our domestic lamp business against foreign encroachments when our important patents expire. That time is rapidly approaching. No better stimulus to the necessity of continuing these activities could be given than frequent reviews of what is going to happen to our lamp business when these important patents expire. The fact that we have had in this country such a satisfactory plan of cooperation between the various manufacturers has been helpful in getting the co-operation of the foreign manufacturers. It is of the utmost importance, therefore, that we have our house in order here, and as I have stated in the foregoing, the first step in this direction is to get the Westinghouse Company lined up in a new agreement.”

A letter dated June 19, 1928 written by H. A. Couse, G. E. Lamp Department Counsel and obtained from the files of the New York Law Department addressed to Mr. Swope (Ex. 207-G) reveals that some consideration had been given to the possibility that “the trend of prices is downward, and that .with some of the fundamental patents expiring within the next few years, there is likely to be increased competition.”

The memorandum from Zay Jeffries (then Consultant to General Electric and later Technical Director at Nela Park) to T. W. Fresch (then Vice President of General Electric in charge of the Lamp Department) and obtained from the files of J. E. Kewley (Vice President of General Electric in charge of Lamp Department from 1934 to 1945) dated December 21, 1928, detailed the policy of the incandescent Lamp Department in connection with patent litigation as follows (Ex. 208-G) :

“With reference to our discussion of this matter on December 20, 1928, I am noting below some of the p'oints which were considered.

“I have taken a more or less active part in the lamp patent litigation since about 1916 * * * Whereas in the past we have found it possible to r.ely on three main patents, namely, Just and Hanaman, Langmuir, and Coolidge, it seems probable that it would be much preferable in the future to strive to adjudicate more patents and perhaps secure adjudication in more districts. The following is a copy of a letter from Mr. J. H. Anderson [Patent Attorney for the Lamp Department] to Mr. R. W. Davis [Sales Dept, of National Lamp Works at Nela Park] of October 3, 1928:

“ ‘The following is a list of our incandescent lamp patents which relate to the lamp itself. These are all article patents as distinct from process and machine patents although some of these article patents have also process claims. These article patents have the advantage that they could be used against imported as well as domestic lamps. I have not listed the process and machine patents of which we have a great number, and of course these, would be effective against domestic manufacture.’

******

“The above list might be increased somewhat by the addition of the Westinghouse patents, and will be increased by the issuance of some new patents in the future on which applications have now been filed.

“I believe we should establish the policy of filing suits on such of these patents as *812 have not been adjudicated as soon as we encounter definite infringement.

******

“I should like to urge the general policy of active and aggressive litigation on some of these patents, the litigation of which has not been necessary because of the commanding position of' Just and Hana-man, Langmuir, and Coolidge.

“I think it would also be proper to advise the Westinghouse Company of our policy and suggest that they follow the same policy with reference to their own patents in this field.”

Mr. Fresch wrote to A. G. Davis- [probably W. G. Davis, Manager Parts Manufacturing] on February 13, 1933 (Ex. 209-G) and stated that his letter was in reply to an earlier one from Mr. Davis and expressed the view that

“I believe that our chances for holding our proportion of the lamp business are better now than they have been for many years. My belief is not based entirely upon patents or prospective patents but upon a combination of our operating efficiency, our ability to invent the new precision machinery, which future developments will certainly require, and upon our ability to' successfully complete a number of product inventions which are now in‘process. *

“The success of our plan will depend in hb small measuré upon the cooperatiqn of the Patent Department. * * * I say'this because most of the product patents which we contemplate will cover rath-ér small details, no one of which may be of any considerable importánce, but taken collectively I believe they will be of sufficient importance to be of considerable value to iis.

* * * * -

“In the work which we are doing it is probable that we shall ask the Patent Department' to put in a number of applications which seem trivial, but I believe these applications should nevertheless be put through, hot only because some of {hem may become important but also because some of them will be required to protect us from the applications of others.”

In October of 1933 Mr. Jeffries wrote Mr. Fresch (Ex. 211-G) of suggestions in connection with Japanese baseless lamps then being imported into the United States. He stated that:

“This threatened practice makes the prosecution of our patents a much more urgent matter than would otherwise obtain. With the so-called basic patents all expired and with our decision not to take the Fink leading-in wire patent to court, there are three patents on which we now mainly rely. These are the ones mentioned above, viz., the Mitchell & White tipless lamp patent; the Pipkin inside-frosted bulb patent; and the Pacz non-sag filament patent. The Mitchell & White patent has been favorably adjudicated, but in a later case against Eisler it was limited to what might be called straight-through tubing as opposed to tubing which is bent near its junction with the lamp itself. A number of the Japanese lamps infringe the Mitchell & White patent, even with the limitation just mentioned. It seems probable that we may obtain a broader interpretation of the Mitchell & White claims which will give us stronger offensive powers against Japanese lamps, but even if the claims are restricted to so-called straight tubing the Mitchell & White patent is still a formidable weapon against a considerable proportion of the Japanese lamps now on the American market.” ' ■

General Electric warned that the expressions contained in these and similar letters were merely opinions of officials and employees of the company not essentially burdened with the duty of formulating policy. It pointed to the testimony of high officers of the company like Mr. Swope who was asked whether he was in agreement with the critical expressions of the Morrison letter (Ex. 64-G) and he answered in the negative. Specifically, Mr. Swope did not agree that “there were no other patents owned by General Electric Company which would prevent others making this type of lamp when the Coolidge patent expires”. (R. 1459). General Electric contended that Mr. Swope’s opinion in this regard was more accurate and closer to the policy of General Electric *813 than that of Mr. Morrison and other officers and employees who were thinking along the same line. It is no detraction from the integrity of Mr. Swope’s opinion when it is found upon an analysis of his testimony, the expressions cited above, and all of the circumstances surrounding this phase of the case, that the conclusion is reached that these contemporary statements graphically portrayed the climate of opinion and policy as it was conceived and born just prior to the expiration of General Electric’s basic and controlling patents in 1933. These contemporary expressions confirm beyond doubt that General Electric was pinning its faith on some of the product patents herein discussed to perpetuate a similar basic patent control as was awarded to General Electric by the 1926 case. It is not even controverted that General Electric carried into effect the policy expressed in the above writings of patenting numerous machine, process, and article patents and prosecuted extensive litigation for patent infringements (Ex. 225-G, GE 78). Wherever it found evidence of any patent infringed by an independent manufacturer or distributor it brought action with many of these actions settled by consent decrees (Ex. 225-G) but contested cases in a large measure ultimately went against General Electric (Ex. 225-G, GE 78).

In the 1926 case, the Supreme Court found that General Electric owned three United States patents (Just and Hanaman, No. 1,018,502; Coolidge, No. 1,082,933; and Langmuir, No. 1,180,159) which the court held to “cover completely the making of the modern electric lights with the tungsten filaments, and secure to the General Electric Company the monopoly of their making, using, and vending.” 272 U.S. at page 481, 47 S.Ct. at page 193, 71 L.Ed. 362. In United States v. Line Material Co., 333 U.S. 287, at page 311, 68 S.Ct. 550, at page 562, it was stated that:

“The General Electric case holds that a patentee may, under certain conditions, lawfully control the price the licensee of his several patents may charge for the patented device”.

General Electric contended that the licenses it granted were in reliance on the 1926 case; that it has article patents covering every incandescent electric lamp manufactured by its licensees which authorizes price, quantity and export restrictions; and that it is immaterial if the patent does not entirely cover the product so long as a substantial and important portion of the product is covered rendering the conditions exacted a normal and reasonable adaptation necessary to protect the patentee’s monopoly. Examination of its patent structure in existence after 1933 demonstrates that it had no basic and controlling patents on the manufacture of incandescent electric lamps but only improvement patents on elements constituting the completed lamp, process and machine patents, many of which are not used (Ex. 225-G). Its patent expert admitted failure to employ many of the .patents and acknowledged that patents claimed to cover an incandescent lamp actually were patents upon some part of the completed lamp (R. 1904 — 1939). Letters of General Electric officials emphasized their concern with the approaching end of the monopoly granted by the three basic patents of the 1926 case and the need for perfecting a future patent control.

GE cited the cases of General Electric Co. v. Willey’s Carbide Tool Co., D.C., 33 F.Supp. 969 and American Lead Pencil Co. v. Musgrave Pencil Co., 1936, 170 Tenn. 60, 91 S.W.2d 573, to support its contention that price control is justified so long as a substantial and important portion of the article in question is covered by licensed patents. These cases are in conflict with the 1926 case for the Supreme Court was emphatic in its holding that the three patents therein were entirely controlling in the manufacture, use and sale of the tungsten filament lamp. In fact, in its brief submitted to the trial court in the 1926 case, General Electric admitted that the patents were “fundamentally controlling”. Brief for General Electric in U. S. v. General Electric et ah, Equity No. 1051, N.D. of Ohio, Eastern Division, January 27, 1925. page 7; Ex.G 1.

*814 There is no dispute with the proposition that every patent owner is given by statute a legal monopoly of the manufacture, use and sale of the things set forth in his patent claims. In the Line Material case the court stated that

“During its term, the valid patent excludes all except its owner from the use of the protected process or product. * * * This monopoly may be enjoyed exclusively by the patentee or he may assign the patent ‘or any interest therein’ to others. * * * As we have pointed out, a patentee may license others to make and vend his invention and collect a royalty therefor”. 333 U.S. at page 308, 68 S.Ct. at page 561.

But the court therein held that:

“the precise terms of the grant define the limits of a patentee’s monopoly and the area in which the patentee is freed from competition of price, -service, quality or otherwise.” 333 U.S. at page 300, 68 S. Ct. at page 557.

Therefore patent grants are to be strictly construed for a monopoly is a “protean threat” to fair prices. United States v. Line Material Co., supra, 333 U.S. 287, 308, 310, 311, 68 S.Ct. 550. Cf. Mercoid Corporation v. Mid-Continent Inv. Co., 320 U.S. 661, 665, 64 S.Ct. 268, 88 L.Ed. 376; United States v. Masonite Corporation, 316 U.S. 265, 277, 278, 62 S.Ct. 1070, 86 L.Ed. 1461.

General Electric contended that it is proper to grant limited licenses under machine and process patents. It argued that price fixing under a machine or process patent was held proper in Straight Side Basket Corp. v. Webster Basket Co., 2 Cir., 82 F.2d 245 and Ceramic Process Co. v. Cincinnati Advertising Products Co., D.C., 28 F.Supp. 794, appeal dismissed, Cincinnati Advertising Products Co. v. Ceramic Process Co., 6 Cir., 116 F.2d 497 and argued that “the point is not essential to the decision here”. 'It asserted that in any event, “it is clearly proper to grant licenses under machine or process patents with, quantity restrictions as distinguished from price restrictions on the product, since quantity restrictions are a direct restriction of the extent of use of the licensed machine or process”. These contentions are without merit in the light of Barber-Colman Co. v. National Tool Co., 6 Cir., 136 F.2d 339 and Cummer-Graham Co. v. Straight Side Basket Corp., 5 Cir., 142 F.2d 646 wherein the Webster case was rejected. See United States v. Line Material Co., 333 U.S. 287, 301, 68 S.Ct. 550 (footnote 14).

It was stated in Re Amtorg Trading Corp., 75 F.2d 826, at page 832, 22 C.C.P.A., Customs, 558, certiorari denied, International Agricultural Corp. v. Amtorg Trading Corp., 296 U.S. 576, 56 S.Ct. 102, 80 L.Ed. 407 that:

“The distinction -between product and process patents is clear and is quite generally understood. The product patent is upon an invented or discovered article; the process patent is upon a method of making an article. It not infrequently happens that in the same letters patent invention is recognized in both the article and the method of making it, but it is the well-settled rule of law that a product patent protects only -the product, and that a process patent protects only the process.

* * * * * *

“Thus a process patent is not infringed by the sale of a product made by the process, the product itself not being patented, and a product patent is not infringed by one who uses the process by which it is made, the process itself not being patented.”

This is reemphasized in Metro-Goldwyn-Mayer Corp. v. Fear, 9 Cir., 104 F.2d 892, at page 899, the court therein citing Keplinger v. De Young, 10 Wheat. 358, 6 L.Ed. 341; Merrill v. Yeomans, 94 U.S. 568, 24 L.Ed. 235; Salvage Process Co. v. James Shewan & Sons, Inc., D.C., 26 F.2d 258; Goodyear v. Central R. Co., of New Jersey, 10 Fed.Cas. No. 5,563, page 664; Welsbach Light Co. v. Union Incandescent Light Co., 2 Cir., 101 F. 131; Barton v. Nevada Consol. Copper Co., D.C., 36 F.2d 85; In re Amtorg Trading Co., supra.

General Electric’s argument that the situation is analogous to. price and territory controls attached to the sale of medical preparations made under secret *815 process as in the cases of Fowle v. Park, 131 U.S. 88, 9 S.Ct. 658, 33 L.Ed. 67; and Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 402, 31 S.Ct. 376, 55 L.Ed. 502 is unténable. Under the patent law, a public disclosure is made, protected by a statutory grant of monopoly for a given period but confined to narrow channels guarding against the extension of that monopoly. General Electric is not in the position of the owner of secret processes as in the cited cases. During the pen-dency of its patents it was protected by them and no one could make use of them without license until their expiration. In the case of a secret process one who without fraud uncovers the secret is not controlled by the original owner and may put it to use. However even in the secret process cases the anti-trust laws may not be violated for it is held that the public interest is still the first consideration and the restraints accorded the owner of the secret are limited to what is reasonably necessary. Cf. United States v. Line Material Co., 333 U.S. 287, 307, 68 S.Ct. 550.

General Electric’s position since 1933 has been such as to leave it bereft of patent control over the lamp as such. Yet its domestic licenses are contrived so as to provide it with control over the manufacture and distribution of the completed lamp as well as its parts.

General Electric claimed that the restraints were imposed in its licenses in good faith in reliance upon the 1926 case. Granted that .-;uch may have been a motive for the Westinghouse license in 1927, it cannot, however, excuse a continued exercise of the restrictive provisions after 1933 upon Westinghouse or those in the renewed “B” licenses of 1933 and 1934. After 1933, the purpose of General Electric was to perpetuate the same domination over the incandescent electric lamp industry as it exerted theretofore. Lacking the basic and controlling patents approved in the 1926 case, it marshalled an offensive of patents of lesser degree to maintain its paramount position of control in the industry. As has been seen, this was not coincidental but planned with well calculated premeditation. General Electric’s position and the relationship of its licensees in many respects is analogous to the situation interdicted in United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525.

All “B” licenses granted by General Electric contained a provision that in consideration for the license granted by it, the licensee would grant General Electric a non-exclusive license with the right to grant sublicenses to make, use and sell incandescent electric lamps of all kinds, types and sizes within and throughout the United States, its territories and possessions, under any and all patents or patent rights presently owned or controlled or which may thereafter be owned or controlled by -the licensee developed during the term of the license granted by General Electric for the life of such patents respectively. The “B” licenses further required the license of patents or patent rights held by officers and directors of the licensees. In addition to obtaining the beneficial use of the patents of its domestic licensees, General Electric secured the patent rights of its foreign licensees through its subsidiary, International General Electric, as discussed in “Foreign Agreements”. Since the main buttress of its position in the incandescent electric lamp industry was patents, it followed the conscious policy of funneling into its control all patents held by its licensees and touching any phase of the industry. General Electric, however, minimized its privileges in this respect contending that it had a mere non-exclusive license. The license included the right to sublicense for the duration of the life of the patent. It was thus placed in the position of rendering impotent any possible advantages to which one of its licensees would normally be entitled as the owner of a patent (Exs. 29-G, 30-G).

In Transparent-Wrap Machine Corporation v. Stokes & Smith Co., 329 U.S. 637, 67 S.Ct. 610, 91 L.Ed. 563, it was stated that:

“We are quite aware of the possibilities of abuse in the practice of licensing a patent on condition that the licensee assign all improvement .patents to the licensor. Conceivably the device could be employed with the purpose or effect of violating the anti-trust laws. He who acquires twr *816 patents acquires a double monopoly. As patents áre added to patents a whole industry may be regimented. The owner of a basic patent might thus perpetuate his control over an industry long after the basic patent expired. Competitors might be eliminated and an industrial monopoly perfected and maintained. Through the use of patent pools or multiple licensing agreements the fruits of invention of an entire industry might be systematically funneled into the hands of the original patentee.

ijí Jfc * * * *

“Congress, however, has made no specific prohibition against conditioning a patent license on the assignment by the licensee of improvement patents. But that does not mean that the practice we have here has immunity under the anti-trust laws. Indeed, the recent case of Hartford-Empire Co. v. United States, 323 U.S. 386, 65 S.Ct. 373, 89 L.Ed. 322, Id., 324 U.S. 570, 65 S.Ct. 815, 89 L.Ed. 1198, dramatically illustrates how the use of a condition or covenant in a patent license that a licensee will assign improvement patents may give rise to. violations of the anti-trust laws.” 329 U.S. at pages 646-648, 67 S.Ct. at page 616, 91 L.Ed. 563.

The Court stated in the' Line Material case that:

“By • aggregating patents in one control, the holder of the patents cannot escape the prohibitions of the Sherman Act. See Standard Sanitary Mfg. Co. v. United States, 226 U.S. 20, 33 S.Ct. 9, 57 L.Ed. 107; United States v. United States Gypsum Co. [post, 333 U.S. 364, 68 S.Ct. 525].” 333 U.S. at page 308, 68 S.Ct. at page 561.

In this present case, General Electric regimented an industry by, among other things, its acquisition of patents to perpetuate a control over the incandescent electric lamp long after its basic patents expired to maintain a dominant position 30 rendering it possible for it to eliminate competition and maintain an industrial monopoly of the type recognized by the Transparent-Wrap case to be an eventuality violative of the anti-trust laws. 31 Its aggregation of patents into its control permitted General Electric to monopolize patents and by so doing it violated § 2 of the Sherman Anti-Trust Act.

There remains for consideration two contentions of the Government in this area of patents: (1) the charge of vexatious litigation; and (2) the charge of false and misleading patent marking.

In its argument that General Electric prosecuted vexatious and oppressive patent litigation in order to maintain its monopoly position, the Government refers to a number of patent suits which it alleges were brought without probable cause. It goes into detail concerning four suits brought against a machinery manufacturer, Eisler, involving twelve patents. The suits were in this district, three of the cases, being finally decided against General Electric by the Third Circuit Court of Appeals, 20 F.2d 33, 26 F.2d 12, and 43 F.2d 319. The fourth of these suits was dismissed by General Electric because the patents had expired before the suit came- to trial (Ex. 225-G, p. 1214). The Government commented on other patent litigation of General Electric and analyzed Exhibits GE-78 to show that in the ten years from 1927 to 1937, General Electric instituted 51 suits involving patents -on lamps other than the three 1926 case patents. It stressed the uniform lack of success by General Electric in all of this litigation as in itself sustaining the charge that the suits were brought without probable cause.

General Electric, on the other hand, denied that it used its patents as a means of wearing out its competitors by vexatious litigation. It offered the testimony of Mr. Reed that it was the policy as far as domestic infringements were concerned to sue a strong manufacturer who gave evidence of intention to contest the action rather than a distributor or a dealer and to bring no other action against domestic infringers until the court had passed upon the first action. Once the patent was held *817 valid, it was its practice to proceed against others. It stressed the fact that the Pacz patent and the Pipkin, patent were held valid and infringed in Courts of Appeal Anraku v. General Electric Co., 9 Cir., 80 F.2d 958, certiorari denied 298 U.S. 678, 56 S.Ct. 942, 80 L.Ed. 1399; General Electric Co. v. Save Sales Co., 6 Cir., 82 F.2d 100; General Electric Co. v. Wabash Appliance Corporation, 2 Cir., 93 F.2d 671, certiorari denied Wabash Appliance Corp. v. General Electric Co., 303 U.S. 641, 58 S.Ct. 610, 82 L.Ed. 1101, rehearing denied Id., 303 U.S. 667, 58 S.Ct. 749, 82 L.Ed. 1124. It contended that it acted only within its rights in bringing. patent infringement suits to protect its inventions.

There appears to be little merit to the Government’s charge of vexatious litigation for the very nature of a patent grants to the owner the right to protect it against infringers.- Normally the patent owner is under no requirement to license -the use of patents or even to use it himself. It seems apropos on the arguments of both the Government and General Electric at this phase of the case to raise the question of efficacy of t'he present patent system which permits the issuance of patents in the number disclosed in this case which, when subjected to the test of litigation, results in invalidating the work of the patent authorities. Cf. citations in footnote 4, Transparent-Wrap Machine Corporation v. Stokes & Smith Co., 329 U.S. 637, 647, 67 S.Ct. 610, 91 L.Ed. 563; Potts et al. v. Coe, Commissioner of Patents, 78 U.S. App.D.C. 297, 140 F.2d 470, rehearing 79 U.S.App.D.C. 223, 145 F.2d 27.

In regard to the patent marking claim, the Government charged General Electric with designedly frightening off competition by marking lamp cartons with a number of patents which General Electric claimed covered the lamp therein when but one of the patents covered the item contained. This charge appears to be on nebulous grounds. It has not pointed to a single instance of a competitor being prohibited from entering the incandescent lamp field for the reasons it here asserted. The printed notice on the lamp cartons read:

“The Mazda Lamp contained herein is manufactured by General Electric Company under one or more of the following patents * * *(Italics supplied.) and was followed by a list of patent numbers, at least one of which was employed in the manufacture of the lamp contained therein. Testimony developed the fact that this was -a practice often resorted to w-hen multiple patents expiring at different times covered several objects and cannot be said to have deceived the public.

The Government undertook to show that each of the foregoing alleged “adjuvant monopolies” was in itself illegal as a separate, choate monopoly in addition to its claim that in each instance the structure described was in support of the monopoly over the incandescent electric lamp industry. Separated into water tight compartments that the Government places each of these activities of General Electric and viewed therein, the Government proved that General Electric in combination with Corning monopolizes the glass bulb, tubing and cane industry; that it individually monop^ olizes the lamp base industry; and that it individually monopolizes patents employed in the incandescent electric lamp industry. As for the remaining alleged “adjuvant monopolies”, the Government’s proof failed but it did prove individual restraints of trade and competition. Permitting all these activities, however, to intermingle in the general stream of evidence, -they support the theory that General Electric has acquired the power to and in fact does monopolize the entire incandescent lamp industry in the United States. United States v. Griffith, 334 U.S. 100, 105-109, 68 S. Ct. 941; United States v. United States Gypsum Co., 333 U.S. 364, 401, 68 S.Ct. 525; Standard Oil Co. v. United States, 283 U.S. 163, 51 S.Ct. 421, 75 L.Ed. 926; United States v. Reading Co., 226 U.S. 324, 357, 33 S.Ct. 90, 57 L.Ed. 243; Standard Sanitary Mfg. Co. v. United States, 226 U.S. 20, 41, 48, 33 S.Ct. 9, 57 L.Ed. 107; United States v. Pullman Co., D.C., 50 F. Supp. 123, 135.

“Agency”

In the early stages of the development of the incandescent lamp the Edison Com *818 pany sold integrated systems including the power sources, transmission equipment and lamps. It also sold lamps to central stations which distributed them to their customers, sometimes absorbing all or a part of' the cost of the lamps in the overall service charge. At .that time there was a rather considerable variation in bases, sockets, voltages, etc., and in view of the large number of different types of lamps needed for the wide variety of uses it was necessary to maintain direct relations with the consumers'in order to see that the proper type of lamp was used for particular purposes in particular localities. ,

In 1912 General Electric adopted its agency plan for distribution of lamps. According to General Electric, this is accomplished in three ways:

1. Sales to large consumers, such as industrial and commercial establishments, railroads and electric lighting companies under contracts usually negotiated by employees of the sales department.

2. Sales to such large consumers under contracts negotiated by. agents, shipments being made from stock in their hands on consignment, or from General Electric warehouses, and

3. Sales to the consuming public through agents who deliver lamps from stock in their custody, which they have received on consignment from other agents whose functions are to recommend the appointment,

serve and supervise the operations of such served agents. 32

Two selling groups carried out the objectives of this system: General Electric’s sales department and selling agents. The latter consisted of two kinds: those who perform serving or wholesale functions known as B agents and those who perform retail functions known as A agents. The sales department is divided into an Eastern and Western Division. Each division has several sales districts, each with a manager and salesmen. They negotiate contracts with large consumers for the sale of lamps and promote the sales of lamps generally in their respective territories. The' B agent is a large wholesale house engaged in distributing electrical, hardware or mill supply goods. General Electric stated that the eligibility requirements for this type of agency are designed to select substantial concerns capable of rendering adequate service to the agents served by them. After appointment the B agent receives a consignment of stock, which he is authorized to distribute to designated General Electric agents, to any consumer within domestic territory to the extent of the consumer’s requirements at specified prices and to any purchaser under contract with General Electric when authorized by it at specified prices. In order to maintain his status he was required to dispose of at least $5,000 in lamps during the given year; he *819 was required to furnish General Electric with a complete monthly inventory of unsold lamps; to report the number of lamps sold by other dealers served by him and to pay General Electric each month a sum equal to the value of all lamps sold by him and by the dealers served by him. The agent was also required to pay for all lamps damaged or missing from his stock and from that of the dealers served by him.

WA agents were similar to B agents except that they were not required to carry as great an inventory, need only to have disposed of $1,000 worth of lamps during the given year and were not permitted to serve other dealers, generally functioning in the retail field. The A or retail agents (later supplemented with the S agents) were given designations in accordance with the type and volume of business done, required sales, working stock required to be maintained and the manner of reporting. Some of these were the A agents consisting of electrical dealers or general retailers who were required to dispose of a minimum of $500 of lamps annually; SA, similar to A but required to dispose of only $25 worth of lamps annually; AR consisting of department store, chain store or mail order concerns having retail stores and required to handle $500 annually; SAR, the same as in the $25 category; W R, chain stores selling at retail or wholesale to associated stores and doing a business of $2500 annually.

General Electric’s testimony showed that the S agency came into effect on December 1, 1934. Studies had shown that many new types of dealers had taken on the sale of lamps in relatively small quantities. The B agents were not interested in promoting this business because it was expensive to handle. In order to provide a more satisfactory and attractive proposition for the small retailer and for the wholesaler which would cause them to promote and develop this type of business, the S agency was adopted. It applied to agents disposing of less than $500 worth of lamps annually and later this was reduced to a $200 annual requirement. Two new features characterized it that distinguished it from the plan under which the retail agencies operated prior to its inauguration in 1934. One was a change in the method of reporting sales and the other was in the renewal by notice, in both of which departments the mechanics were simplified.

The served agents of which the S agent is typical are recommended by the B agents or the General Electric salesmen and are appointed by General Electric generally to sell lamps to consumers over the counter. They are usually small retail stores such as grocery, hardware, electrical goods, drug, and general merchandise stores. After-appointment the agent receives a consignment of stock from which he sells lamps to' the public. At stated intervals sales proceeds are remitted, less compensation to-the B agency by whom he is served. The-B agent remits the proceeds to General Electric along with the proceeds received from other agents together with the proceeds of sales he has himself made to consumers, less his compensation and the compensaton received for serving the S agents.

Utility operating agents were appointed’, under designations conforming to the functions performed by the utility. CA agents-were central stations disposing of lamps to customers who received current from the central station and they were required to dispose of $500 worth of lamps annually. ■ SCA agents were similar to CA except that their required annual disposition of lamps amounted to less than $500. CB agents were similar to the CA classification except that they must have dealt in at least $5,000 in lamps annually and may serve dealers having A, SA, AR and SAR agencies.

Miniature lamps are sold directly by General Electric salesmen and by agents to large consumers such as automobile, radio and flash light manufacturers. They are also distributed to the trade by agents who are dealers handling automotive supplies and electrical merchandise. The same general rules govern the disposition of miniature lamps as those appertaining to large lamps. Such agents were likewise classified under various designations. They were, however, in the nature of wholesalers who sell outright to retailers and General Electric controlled only the sale price of such agent. General Electric ap-- *820 points as selling agent of its Christmas tree lamps, manufacturers of Christmas tree lamp strings who sell the strings with the lamps installed in them and who also sell replacement lamps to wholesale or retail outlets. Photo lamps are sold partly direct and partly through agents.

The number of large lamp appointments grew from 25,571 as of June 1, 1924 (Ex. 1166-G) to a total of 92,336 as of September 30, 1940 (Ex. 2238-G) as shown in the table below.

(Exhibit 2238-G)

NUMBER OF AGENCY APPOINTMENTS

Large Lamps As of Sept. 30, 1940

Rules and regulations established and published by General Electric to govern' all large lamp agents provided that the dealer may handle lamps of only one “Mazda” manufacturer, either General Electric or Westinghouse; he may dispose of lamps only as authorized by General Electric which agrees to maintain a certain working stock in his custody; that the lamps may be sold only for use in the United States and its territories at prices fixed by General Electric. Retail agents may sell only to consumers and wholesale agents may deal only with other agents and consumers. The Office of Supervisor was established and maintained by General Electric. The function of .the Supervisor was to pass upon each contract submitted by General Electric and Westinghouse to determine whether the proposed agent had the qualifications required' by the sales rules, as well as to serve notice of change of sales rules on Westinghouse and to furnish sales rules and price lists to “B” licensees when price changes were made by General Electric. The cost of operating the office of Supervisor was borne by General Electric.

General Electric contended that the stock is consigned to the hands of all agents and remains its property subject to its control and on the termination of an agency all unsold lamps are to be returned to General Electric. ■ General Electric determined the prices at which the agents shall sell to the consumers with whom they have been authorized to deal. The written appointments provide that agents are forbidden to attempt to control the prices at which any purchaser may re-sell a lamp (Ex. 1171-G § 3, Ex. 1176-G § 3).

The Government argued that even if the contracts established a bona fide agency relationship the operation of the system has been such that no true agency relationship exists. Along this line it contended ■ that the legality of the present price fixing scheme depends upon the precision with which General Electric “adheres both in form and in practice to every detail of the approved activity” as held valid in the 1926 case on the basis of a true agency rather than that of sale. It insisted that it was common practice over the period of *821 1927 to 1941 for General Electric and Westinghouse agents to pay for lamps which they had not sold and as a result General Electric and Westinghouse were fixing resale prices on such lamps. It submitted that General Electric and Westinghouse wholesale dealers often permitted retail dealers, particularly those in the S classification to purchase lamps outright. In many instances the retail dealers did not have sufficient sales to warrant the wholesalers bothering with the accounting and checking even under the simplified procedure required under the S plan. Wholesale dealers required payment in some instances because they had assumed the obligation to pay General Electric for all lamps sold by retailers served by the wholesalers and were unwilling to assume credit risks. The Government stated that a large number of S agents paid for lamps on a C.O.D. basis or at the end of the month as for any other merchandise or operated with a fictitious working stock. It offered fifteen documents taken from the files of General Electric and Westinghouse as evidence that these conditions existed (Exhibits 1388-G-1404-G, not including Exs. 1390-G and 1401-G). Three Westinghouse documents: 1405-G, 1401-G and 1409-G, are offered to show respectively that dealers handling miniature lamps under DA appointments. also maintained inadequate working stock (Ex. 1405-G) and that dealers operating under A and WA appointments sometimes pay for all lamps as shipped.

The Government conceded that General Electric and Westinghouse made some effort to police the agents, but charged that they never used a police force sufficiently large to insure strict obedience, and that they knew after a few years that violations would continue to a substantial degree.

General Electric denied the inefficacy of its policing system and contended that the Government brought forward “exceptions to the rule”. The series of fifteen exhibits offered by the Government beginning with. Exhibit 1388-G were inter-office communications usually from a higher manager to a lower one, complaining of violations of rules with regard to permitting agents to. pay for lamps upon receiving stock, failure to carry adequate stock, etc. Only three of the communications originated in the General Electric organization, Exhibit 1389-G in 1937, and Exhibits 1391-G and 1394-G in 1938. The others originated with Westinghouse as follows:

Exhibit Date

1388-G ................. December 1936

1392- G .................April 1938

1393- G ................. May 1938

1395- G ................. July 1938

1396- G ................. August 1938

1397- G ................. February 1939

1398- G ................. February 1939

1399- G ................. March 1939

1400- G ................. March 1939

1402- G ................. November 1939

1403- G ................. January 1940

1404- G ................. March 1940

Passing by the question of whether General Electric should be bound by the disciplinary communications of Westinghouse’s agency system in this phase of the case, the Government’s offer is not impressive. A number of years are here involved. Chiefly S agencies are accused. There were many thousands of them and at best but. relatively few accusations are made. On the other hand the documents indicate almost a zeal upon the part of the responsible office heads to reduce the number of irregularities to a minimum.

In July of 1938 General Electric circularized its division managers concerning an arrangement for taking cash deposits by serving agents to gain “maximum credit protection consistent with the agency” (Ex. 1394-G). Westinghouse in the same month adopted a similar course (Ex. 1395-G). The Government, alleged that this was a mere device to Cover up payment for large lamps. Two plans were suggested in Exhibit 1394-G. One referred to a cash deposit for the personal protection of the serving agent to be taken from SA and SAR agents to be handled as security only. The other referred to a special order designed to provide a plan for serving on an agency basis certain electrical contractors, acting as SA agents, who normally pick up lamps as well as equipment and supplies *822 at the serving Agent’s place of business. Electrical contractors were not required ■to have a working stock. The Government contended that this in effect permits continuance of sales on a cash basis to electrical contractors even where they are designated as SA agents, and. pointed - to the form contained in Exhibit GE-20 as in latest use.

The Government conceded that the Supreme Court held in United States v. General Electric Co. et al., 272 U.S. 476, 47 S.Ct. 192, 71 L.Ed. 362, that in 1926 General Electric was then distributing its lamps through a bona fide agency system, but charges that in the period from 1927 to 1940 the formal nature of -the agency system approved in 1926 by the Supreme Court became lost in the large increase in volume of distributing units. It particularly contended that the agency system was altered in a manner not contemplated in the 1926 case when the simplified or S agency plan was introduced in 1934. Under that plan an agent no longer took monthly inventories to determine lamps sold each month and transmitted payments accordingly. Instead the Government charged that the fiction of working stock was maintained on the books of the agent for eleven months of the year. An equally fictitious assumption was made that an agent ordering lamps was doing so in order to maintain his working stock at a fixed level, so that all orders placed with the serving agent represented lamps sold by the agent. At the end of eleven months a physical inventory was supposedly taken and bookkeeping adjustments were made to reconcile the fictitious working stock with the actual stock. It contended that an inventory was essential for the agent to determine whether he was keeping his working stock at a fixed level and if the assumption that placed orders to maintain his stock at a fixed level were in accord with the facts then it would be unnecessary to transfer credits at the end of the year because the physical inventory filed at that time would agree with the working stock figure. The Government charged that the simplified agency plan was deliberately intended to permit agents to pay for lamps as ordered and before they were sold during the entire course of a year in the hope that this fact would be obscured by bookkeeping transactions at the close of the year. It further charged that the S agents constituted so large a proportion of the total number of agents and the plan so pervaded the entire system as to make it unlawful; that it was a fundamental change in the agency system and that the existing agency contracts do not establish a bona fide agency relationship.

General Electric answered that it adopted the S form of agency (Exs. 1179-G and GE-30) in 1934 in order to offer to small-retailers an attractive business proposition and at the same -time encourage serving agents to obtain new business. The system was approved only after its legal department had considered it in the light of the 1926 case and had concluded that it was valid under that decision. The original appointment of an S agent is for one year and before the expiration of that contract a; notice providing for its renewal for another year is sent to the agent who, by-reason of past performance, is entitled to renewal. If the agent does not wish to renew he rejects it by signing a notice of rejection and returning it, otherwise the contract automatically is renewed for another year. Another change designed to simplify the operations of small dealers was to eliminate a monthly inventory report and substitute another method of determining and reporting sales, as follows: The agent begins with a stock of pre-de-termined size recorded in a consignment memo. As he sells lamps from the stock, he orders new lamps to replace them which are charged to his consignment account-At the end of a month the value of the lamps shipped to him as replacements is-added to his opening working stock and the-value of those on hand (value of working stock less value of sales, plus value of replacements) is deducted from the total in order to record the value of the lamps sold.. General Electric or a serving agent sends a. statement to the agent each month showing the value of the sales made during the-preceding month. This amount less his. commissions the agent remits to his serving agent who, in turn, remits to General Electric. - If the S agent accepts the figures. *823 of sales and unsold stock on the statement he so indicates -by signing it. Before the end of the year a physical inventory is taken to check the accuracy of the ac-countings and to correct discrepancies, if any.

General Electric argued that the S agent may take an inventory if he desires but it is not necessary for him to report it monthly; that the stock of S agents generally is so small that the inventory can be taken by a casual inspection of the stock; that the simplified method conforms with good accounting practice; that General Electric carried the investment in the stock; and that the S agent has no reason to order more lamps than are necessary to replenish his working stock because he may have it increased and can get them on consignment rather than investing his own money to buy the lamps. General Electric denied the Government’s allegation that the S agency plan “pervades” the entire agency system because it asserts that of all the General Electric retail sales following the installation of the S agency plan from 1935 to 1945 less than one third of the sales were made through S agents. Approximately 75% of all General Electric lamps sold through agents are sold by agents other than S agents, and it argues that the B (Ex. 1171-G), A (1176-G), and S (Exs. 1179-G and GE 30) contracts completely conform with the contracts considered by the Supreme Court in the 1926 case.

General Electric set up a trust fund agreement whereby it stipulated that lamp string manufacturers to whom it distributed Christmas tree lamps under the XA agency plan should require dealers to deposit in the trust fund account the value of all lamps shipped by General Electric less the dealer’s commissions. Then, as the dealer reported lamps sold, General Electric withdrew from the fund an amount equal to the selling price of the lamps (Exs. GE-196, 1815-G, 1816-G, 1817-G). The Government asserted that this requirement was tantamount to compelling the dealers to advance the same amount of money as if the lamps had been bought outright C.O.D. and was not an agency whereDy General Electric would carry the investment and relieve, as has been testified, the lamp string manufacturer from his obligation. General Electric admitted that it sought to cover poor credit risks with provisions for security for payment without destroying the agency form of transaction. Indemnity bonds, guarantors and deposits of cash or collateral to guarantee performance were among the methods used to secure performance by agents (Ex. GE-197). The cash deposit plan mentioned in Exhibit 1394-G was the subject of a bulletin of even date with it (Ex. GE 32) and was designed for ordinary agents with poor credit. The electrical contractors’ form was likewise designed to cover the poor credit risk as indicated in Exhibit 1394-G. In connection with the Government’s charge that it required security with the consignment of miniature lamps (as demonstrated in Exhibit 1421-G), General Electric explained that this is a letter concerning a particular agent whose credit was then considered unsound and that it merely suggested that trust fund or some other form of protection be used. t General Electric insisted that the trust fund procedure used in connection with the Christmas tree lamp distribution was “simply a normal operation of security practice”. This business was seasonal and brought serious credit risks not only from the fact that the XA agents made their sales late in the year but they also extended credit to their customers. Various methods of meeting these risks were followed, including the trust fund agreement of which the Government complained. General Electric explained that it determined in each case to what extent each agent’s credit was sufficient and required the execution of the agreement for all lamps shipped in excess of that amount. As the agent received shipments he deposited in the trust fund an amount equal to the value of the lamps less his compensation. As he sold the lamps and reported the sales an amount equal to the sales value less his compensation was withdrawn by General Electric from the trust account. It asserted that it never withdrew money from the account until the lamps had been sold.

After reviewing all of the several means of security protection sought by General Electric for itself and its serving *824 agents as shown by the Government the evidence fails to sustain the Government’s charge that these were devices to cover what were in fact sales. Invariably they were utilized to cover specific risks, not given general application, and on only in-, frequent occasions, in certain categories. In themselves or together with other factors they fail to divest the transactions to which they are directed of their agency form.

The Government alleged that neither General Electric nor Westinghouse followed the rules they had promulgated and that there was a convenient reciprocity between them in the matter of waiving the rules where each would realize an advantage thereby. It also accused General Electric and Westinghouse of permitting agents to continue in violation of the agency rules where such agencies made substantial sales or where if they were discontinued they would make good non-Mazda outlets. It charged that Westinghouse permitted Goodrich Company to pay each, month for lamps shipped the previous month, and other lapses from the agency contract (Exs. 1411-G, 1412-G, 1413-G and 1415-G). It inferred from the language used in these exhibits that Westinghouse was likewise permitting abuses of the agency contract by Goodrich Company. It further charged General Electric and Westinghouse with permitting agents to operate without executing contracts, sometimes for six' and seven months and even longer (Exs. 1425-G, 1436-G-1439-G). The government alleged that it was common practice to permit dealers to over report in order to qualify for higher rates of discount and to grant discounts to dealers from prompt reporting who did not qualify (Exs. 1444-G, 1455-G). It summed up its charges in this area as having reduced the agency rules “to a pretense and a sham”.

The Government’s evidence involved General Electric and Westinghouse indiscriminately and the objections of General Electric that it should not be held responsible for alleged derelictions by Westinghouse in which it had no part are passed over for on the merits of the charges, after giving cognizance to the Government’s argument that isolated instances should be sufficient to characterize an entire system of dealing in matters of this kind, substantial weight cannot be accorded these charges. In the main the very reason for the existence of the documents to which the Government refers is that complaint was being voiced ’ at a deviation from agency practi.ce and frequently fear is expressed as to the consequences of such deviation. At most the Government has shown that on the lower echelons of the organization the rules were sometimes regarded as onerous and susceptible of causing loss of business, but the Government’s documents are replete with evidence that in the higher ■and supervisory brackets all reasonable care was taken that the’agency form should ■be strictly adhered' to. The evidence is convincing that effort was extended and mechanics devised to enforce the provisions of the agency plan, that irregularities in it were not countenanced and where they occurred they were corrected. Considering the scope of the operation few instances were brought to light. In reference to Exhibit 1444-G, where it appears that an adjustment of a discount was allowed a firm - that had attempted a small over reporting to bring itself within the $50,000 basis, the very adjustment was allowed with the warning that it should be made clear that such conduct was contrary to the terms of the B agency contract and was not to be condoned or tolerated. This appears to have been an exceptional circumstance and was not indicative of an indulgent policy toward the rules. Operating without a contract, or after one had expired, other irregularities undoubtedly occurred, but were infrequent, and were dealt with when shown to be in a manner inconsistent with the agency policy. The charge of convenient issuance of waivers of requirements by General Electric and Westinghouse is not substantiated. Policy in this regard is discussed in the memorandum Exhibit 1698-G. An analysis of all waivers granted between 1936 and 1939 showed a small number of B agencies handling less than one half of one per cent of the total lamps of all such agents and of the A agencies, an even smaller percentage. These figures support the enunciated policy. In this phase *825 ■of the Government’s attack ■ the agency plan is not successfully undermined.

The Government sought to show that General Electric was not entitled to claim that it supported the assertion of ownership and title in itself to the lamps in the hands of S dealers under the agency plan Iby making itself responsible for the personal property taxes on them. The Supreme Court gave consideration to this as a relevant element to confirm the view “that the so-called relation of agent to the company is the real one.” 272 U.S. 476, 483, 47 S.Ct. 192, 194, 71 L.Ed. 362. The Government undertook to show what taxes had been paid by General Electric in Newark, N. J.; Trenton, N. J.; Detroit, Michigan; Washington, D. C.; and the County of Cook (Chicago), Illinois, for the years 1937, 1938 and 1939 on lamps in the hands of dealers. The facts were adduced in the form of a stipulation (R. 3911-3930). In Newark, General Electric paid taxes on the lamps in the hands of its dealers. In Trenton, it filed no return and paid no personal property tax. In the other three jurisdictions General Electric filed returns, paid personal property taxes, but paid no taxes on the lamps in the hands of its dealers. In all there were 33 dealers, 6 were in Newark. Of the 27 remaining in the other 4 cities, 14 paid no personal propérty taxes on lamps, 13 paid taxes, of whom 2 demanded and received reimbursement. The Government charged that in the case of over half the dealers neither they nor General Electric paid taxes and the lamps escaped taxation. It also showed that a provision relating to taxes appeared in the form of contract in force in 1940 as follows:

“The agent shall pay all taxes, excises and charges, which are now, or may hereafter be, levied, imposed or charged (whether by federal, state, municipal or other public authority), with respect to lamps distributed, sold and/or used by the agent hereunder.” Exhibit 1171-G.

It argues that this provision referred to “all” taxes that were to be paid not only on the sale of lamps, but also upon their distribution and use. Apart from this it charged that General Electric took no active steps to inform agents that General Electric would reimburse them for taxes they paid, or to inform the taxing authorities that General Electric was the owner of the lamps found within -their jurisdiction and that the taxes should be levied against General Electric. It further argued that the stipulated facts showed a fair sample of a condition representative of the state of these taxes as they were related to the large number of agents since 1927. General Electric answering the Government’s charge concerning the tax clause, Exhibit 1171-G, stated that the evidence makes it clear that it was adopted for insertion in agency contracts in the early 1930’s to meet the then recent imposition of sales taxes imposed by a number of states. It calls attention to the additional sentence not quoted by the Government as follows:

“The agent shall make all reports required by the public authorities with respect to such sales and distribitiion of lamps. When authorized by the law imposing such tax, excise or charge, and when consistent with the contract of the purchaser, the agent, -may, at its option, increase the price of lamps to the purchaser by an amount equal to such tax excise or charge.” (Gen eral Electric’s emphasis.)

General Electric contended that the wording of this provision was directed to taxes imposed for sale, distribution or use rather than. for. ownership. It asserted that the stipulation records conditions under which returns were required in the cities named, and that in Newark, General Electric maintained sales office, a service office and a factory. It included lamps on consignment in Newark in its personal property tax returns for the years 1937-8 and 1939, so indicating them in the return. It had no place of business and filed no return in Trenton because, its witnesses would testify, it did not believe it was required by law to file a return covering consigned lamps. In Chicago it maintained a sales office, service office and warehouse, filed personal property returns but did not include the value of lamps on consignment under the belief that the law did not require such action, and a similar situation applied to Detroit and Washington. Further, the stipulation itself indicates that a large number of the firms did *826 not include the value of the lamps in their returns of personal property because they understood that they held them under consignment. General Electric insisted that it continued the practice of making itself responsible’ for the payment of personal property taxes without variarice and presented a summary of the payment of such taxes from 1926 to 1945 (Exs. GE-53, GE-165, GE-166, 2308-&-2313-G) and that its policy in this respect was made known to agents through national advertising material and was used by salesmen to induce the ■taking on of agencies (Exs. GE-267-GE-272). Unquestionably, as the Government points out, it is apparent that some of the lamps escape taxation, but General Electric argued that it should not be held responsible for laxity upon the part of the taxing authorities in requiring appropriate returns. It stands ready to reimburse any dealer for such taxes or to pay such a tax bill when directed to it.

The Government has not proved any substantial variance in the position of General Electric with regard to its accepted liability for the payment of personal property taxes on lamps which it regarded as on consignment in the hands of its agents than existed prior to 1926 for the facts support General Electric’s contentions.

The Government made the charge that General Electric fixed resale prices in connection with the distribution of its sealed beam lamps used in automobiles. It referred to Exhibits 1832-G, 1840-G, 1845-G and 1853-G as evidence of a practice upon the part of General Electric salesmen to attempt to control the prices at which those headlight lamps were resold by dealers. While the documents in question evince a concern upon the part of the salesmen that lamps are being sold below list prices they also show an awareness upon their part that they could not legally fix a resale price. The instances in question do not affect the established agency pattern and cannot be said to go beyond the stage of mere suggestion of a resale price.

The Government has placed-in evidence before the court the sales rules, forms of application for and appointment to various types of agencies in Exhibits 1169-G to and including 1197-G. The current agency forms, sales rules, etc., effective as of July 1, 1945, were offered in evidence by General Electric and are contained in Exhibits GE-29 and 30. The form of B and A contracts existing at the time of the 1926 case are to be found in Exhibit 1-G, at pages 229 and 375 respectively. Except for the S form of contract (Exs. 1171-G and GE-30), the general pattern and structure of the agency contracts are the same in all important and relevant respects. The -types of agencies differ only in the authority that is extended to the agent to serve or not to serve other agents, limitations on the amount of lamps to be handled and other such particulars and the agency contracts vary so as to cover each form of agency. Only in the S agency is there a noteworthy departure from the conventional forms, which has been heretofore discussed. This was obviously to accommodate ^mailer distributors and cannot be said to be an innovation that made the agency system different from that' considered by the Supreme Court in the 1926 case.

An analysis of the considerations of the Supreme Court accorded to the agency system in the 1926 case applied to the B, A and S contracts which are the subject of cojnplaint in this case in the light of the Government’s charges and the evidence (both documentary and oral) lead to the conclusion that there is no substantial change in the agency system from 1926. .The rule laid down then still governs this phase of the case and to decide otherwise would be to overrule the decision of the Supreme Court.

It appears that at the time of this suit as in 1926 General Electric assumed all risk of loss of lamps in the hands of agents by fire or flood. General Electric carried its own insurance reserves on lamps in the custody of agents. It assumed the risk of obsolescence in lamps and the risk of price decline. Its policy of responsibility for taxes is the same as has been discussed. Where laws of states require merchants who sell goods not their own to indicate such fact or where the recording of agency appointments is required General Electric has supplied signs and directed recording as *827 required by such laws. In general as between General Electric and its agents no evidence has been brought forward showing that between each other the relationship was regarded as anything but that of principal and agent.

The evidence indicates a persistent industry upon the part of General Electric to maintain the agency scheme. There is much to show that it knew that it was essential to live within the judicial admonishment of the Supreme Court decision to preserve the agency system. General Electric has done this - substantially with lapses so few in number as to be well within the margin for human error and without disturbing the general pattern which had been set for it. Accordingly, it follows that the disposition of the agency issue in this case is controlled by the 1926 case where it was held to be valid.

; Two of the same adverse parties to this litigation — the Government and General Electric — litigated substantially the same agency contract issue in the Supreme Court case in 1926. All of the circumstances we have considered are almost identical with those which appeared in the 1926 case. The question of the validity of the agency agreements was put in issue by the Government at that time and the ruling of the Court was adverse to the Government. It now appears that the exposure of the same issue a second time is barred by reason of the rule of res adjudicata. Whether the decision is induced by that doctrine or estoppel upon the part of the Government to raise -the question again or by the precedent created by the 1926 case is immaterial. The ultimate conclusion must be that the Supreme Court has passed judgment favorably upon the form of agency agreements in question in this case which in their present aspects are no different from what they were when under consideration in 1926. Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591, 597, 598, 68 S.Ct. 715.

However, there is a phase of relationship to the agency system which was not litigated in the 1926 case and which raises an issue of conflict with the anti-trust laws. General Electric and Westinghouse operate their agency systems under the joint supervision of a Supervisor appointed by General Electric. This supervisory mechanism was superimposed by General Electric as a governor to completely synchronize and co-ordinate the perfect enmeshment of the agency systems of itself and Westinghouse. In holding that the agency system of General Electric in itself has not been shown to be violative of -the standards set by the 1926 case, reservations are maintained as to the effect of the operations of the supervisor as they are referred to later in this opinion. 33

Foreign Agreements

The Government charged that in order to assist in maintaining its dominance of the incandescent lamp industry upon expiration of its patent support in 1933 General Electric sought to accomplish three objectives: (1) to prevent the sale in the United States of lamps made by foreign companies; (2) to prevent domestic lamp manufacturers from obtaining lamp parts and lamp making machinery from foreign concerns; and (3) to acquire for itself inventions and patents developed by foreign companies, principally to increase its pool of patents and prevent other domestic lamp manufacturers from obtaining rights under such patents.

The Government alleged in its complaint with respect to foreign licenses that they:

“provide almost uniformly for (a) an exchange of patent rights relating to the manufacture of lamps; (b) an exchange of information relating to the manufacture of lamps; (c) an allocation of territory by which (1) the manufacture, sale, and sale for use in -the United States of lamps, lamp parts, and lamp-making machinery are exclusively reserved to International General Electric, (2) the home market of the other party is exclusively reserved to i-t, and (3) certain other territory is made non-exclusive and in which both parties may manufacture and sell.”

*828 It is argued that an agreement known as the Phoebus Agreement of 1924 with a 1941 renewal was evidence of a world wide cartel in th,e lamp industry and part of an alleged conspiracy between the defendant Philips among others and General Electric to restrain trade and competition in the United States and to further the alleged lamp monopoly of General Electric. These agreements were introduced in the Government’s rebuttal case and are not specifically referred to in the complaint but the Government claimed they are included in the phrase “among others” in paragraphs 106 34 and 107 35 of the complaint.

In regard to the Phoebus agreements, the Government contended that General Electric and IGE are parties for the reasons that IGE controls several if not all of the Overseas group 'mentioned therein and that International General Electric Company of New York, Ltd. is wholly owne.d by IGE, and in fact both are regarded by General Electric as the same. It claimed that the Phoebus cartel and the domestic licenses are directly related to the purpose of maintaining the General Electric lamp monopoly. It argued that ■the foreign contracts of IGE, its participation in the Phoebus Cartel, all with General Electric as the prime mover behind these activities and the intended beneficiary of International General Electric’s works, are the component parts of a single plan to maintain complete control of the domestic lamp market and eliminate competition at any place in the world where it might set in motion forces which could disturb General Electric’s domination of the United States market. It contended that the Philips license granted by IGE (Ex. 40-G) is part of the alleged general conspiracy to restrain trade and competition in violation of the Wilson Tariff Act in assisting in the maintenance of General Electric’s domestic monopoly.

*829 General Electric claimed that the IGE agreements are the lineal descendants of license agreements made around 1900 by General Electric and its predecessor, the Thomson-Houstpn International Electric Company, that they were fully investigated by the Attorney General prior to the 1926 case and the failure to challenge them in the 1926 case shows that they were considered proper. It claimed that it was confronted with local protectionism abroad and was forced to undertake local manufacture and investments in local concerns. It declared that it had a 96% interest in a British company’s factory at Rugby as early as 1918, and investments at about the same time in a French and German company, a 60% interest in a Japanese company in 1918, complete control of a company in China in 1916 and a company in Brazil in 1922. It states that since IGE took over its foreign business in all areas of the world except Canada, the income of the company in dividends on all of its investments in foreign selling and manufacturing companies has been more than $50,000,000. IGE claimed that it had financial investments in many foreign companies and representation upon many foreign boards, but it claimed that the amounts and numbers were insufficient to control company policy. General Electric claimed that prior to the formation of IGE there was a demand for General Electric patents by foreign countries, but the exchanges could only be made with territorial restrictions. With the formation of IGE and the enhanced value of General Electric research and manufacturing experience, General Electric insisted that the renegotiated licenses exacted royalty and service charges amounting to total receipts of $4,500,000 to $5,000,000 between 1919 and 1939. Exhibits GE-115, GE-116 and GE-119 contain standardizing notices, equipment notices and construction data which General Electric contended are typical illustrations of “know-how” transmitted and received by IGE. A photograph showed many volumes of material not actually introduced. In defense of these IGE licenses General Electric referred to the contrast between conditions abroad and domestic conditions and claimed this refuted alleged culpability and substantiates the fact that the true purpose was to provide for the sale and exchange of valuable property in the form of inventions and manufacturing information and that the ancillary restraints were but normal precautions to protect the legitimate interests of the parties to them. General Electric pointed oiit that lamps made in foreign countries differ in sockets, bases, shapes and other respects and conform to the requirements of various voltage circuits; that uniformity exists in this country which makes possible high mass production methods not attained elsewhere; and that lamp prices abroad are considerably higher than in this country. Accordingly, General Electric contended that the market in this country for foreign made lamps as well as the market abroad for American made lamps has reflected these conditions and it claimed that there is no competition between the domestic licensees and the foreign companies. In addition, General Electric insisted that trade barriers have restrained the flow of lr/mps between this country and abroad with the exception of Japanese lamps which was attributed to the unique freedom of Japan from economic obstacles facing lamp manufacturers of other nations in that she was favored by a sharply devalued exchange, cheap materials and cheap labor. It contended that the territorial restraints in the foreign licenses and domestic licenses limiting exports are reasonable and therefore valid as ancillary to an exchange of manufacturing information. It claimed ■that it is recognized that there are individual restraints of trade that the Sherman Act was not intended to cover and stated that while agreements which have as their main purpose the division of territories have been held to be unlawful, territorial restraints have been upheld within the doctrine of lawful ancillary restraints of trade. It is argued that the exchange of patents and know-how is sufficient to support the foreign licenses and since the licenses go beyond the patents involved, emphasis is made upon the effect to be given an exchange of know-how.

Philips defended the 1931 license (Ex. 40-G) on the ground that its production problems in Holland differ from those in this country because the United States *830 is keyed to mass and standard production, whereas in Holland a much greater volume of hand work is employed on innumerable varietm0 and styles of lamps. Export from Holland to this country or vice versa it contended would be entirely implaticable and worse than the proverbial attempt to carry coals to Newcastle. It claimed that restraint of trade in the United States was precluded by American patents controlled by General Electric and sought to justify the license on the ground that it needed ■General Electric patent's and technical assistance. It argued that the Sherman Act is inapplicable since Philips is a foreign corporation conducting its business abroad and it could not be held to have violated the anti-trust' laws unless the Government shows that:

(1) it wilfully intended to restrain United States trade;

(2) the consequences of the acts of Philips were directly and substantially to restrain such trade; and

(3) such restriction was one of the principal purposes of the acts done.

Admissibility of the Phoebus agreement of 1924 and the 1941 agreement was contested by General Electric on the grounds that: •

(1) they do not deal with the commerce of the United States but expressly exclude it; and

(2) neither General Electric nor IGE are parties to the agreement.

In addition to the above objections, Philips claimed irrelevancy of the Phoebus agreement and the 1941 agreement on the grounds that:

(1) They are agreements made abroad solely between foreign lamp companies and dealers all of whom were engaged in business solely abroad.

(2) They have no consequences in the United States, much less direct and substantial consequences.

(3) That the question of the Phoebus agreements and the 1941 modifications are moot anyway; as far as Phoebus is concerned since the outbreak of war in 1939, and the 1941 modifications since 1945.

(4) That as regards the so-called Kre-menezky and Pintsch codicils to the Phoe-bus agreement no relief as against Philips could be effectual anyway.

(5) That the Phoebus and 1941 modifications were not entered into or continued in order to further any, alleged domestic lamp monopoly in the United States of General Electric or to restrict in any manner United States trade or as a part of any conspiracy for either of those purposes.

(6) That the Phoebus and 1941 modifications are not within the pleadings and Philips objection to their introduction in evidence should be sustained.

In 1919 General Electric established International General Electric as its wholly owned . subsidiary to exploit its foreign rights and investments (Exs. 20-G, 59-G, R.1409-1495). By an agreement dated April 1, 1919, supplemented by agreements of May 1, 1924 and March 22, 1938 (Ex. 38-G) IGE was established as the foreign adjunct of General Electric. In the agreement (Ex. . 38-G) Article .I provided for territorial divisions whereby General Electric would confine itself to the United States, its possessions, colonies, territories and dependencies, exclusive of the Philippines, Puerto Rico and the Virgin Islands and IGE would cover the rest of the world. Article II provided that General Electric grant International General Electric access to its factories at all times and arranged for the interchange of detailed technical information and assistance in a variety of situations when required. Article III provided for an .interchange of patents, patent rights and trademarks in the United States and foreign countries. Article IV provided that General Electric constitute IGE as its sole agent abroad with a power of attorney “to deal with, cancel, modify, carry out” all business arrangements in foreign countries provided General Electric would not make “.quotations or sales to any other person or company in foreign countries, or to anyone for export”.

In the actual operation of the agreement between IGE and General Electric, key officials transferred from one to the other. The relationship of necessity was very close from the very nature of «the business 'being conducted and the ownership. (Exs. 381-G, 437-G, 447-G, 2220-G). Identification of certain officials of the two com *831 panies as listed in Exhibit 22Z0-G is illuminating at this point. Mr. J. M. Woodward was the European representative of IGE until 1925 when he resigned to become general counsel to the Phoebus Group (Ex. 2120-G). Mr. Gerard Swope was the first president of IGE until he became president of General Electric in 1922. Mr. Owen D. Young was the chairman of the Board of Directors of General Electric from 1922 to 1940. Mr. A. W. Burchard was the vice chairman of the Board of Directors of General Electric and chairman of the Board of Directors of IGE from 1922 to 1925, when he retired as president of IGE, continuing his other duties until his death in 1927. Mr. C. H. Minor was president of IGE from 1925 to 1945. Mr. G. F. Morrison was Vice President of General Electric from 1916 to 1928 but retired from active participation in the management in 1925 due to illness, although he did not die until 1945. Mr. Charles W. Appleton was General Counsel of the Incandescent Lamp Committee of General Electric from 1921 to 1927 when he became Vice President of General Electric in charge of public relations with public utilities.

In Ex. 447-G, a letter to Mr. Swope in 1935 Mr. Minor underlined the close relations of General Electric and IGE, when he commented upon the advisability that he should be made a vice president of General Electric as follows:

“There is one difficulty in the situation, in that I have no direct responsibility for the domestic policy that becomes involved when situations develop where these companies with whom we have contractual relations take a definite decision to penetrate the American market. It has occurred to me • that it might be wise to again consider my election as a Vice-President of the General Electric Company. I have always thought, heretofore, that it was desirable to keep the two companies quite distinct, and I think you agreed with such a program. However, in my opinion this situation with Philips is likely to be repeated in our relations with other companies, in the course of the next few years, as our existing contracts gradually come 'to termination.”

Commencing in 1919, representatives of IGE conducted extensive negotiations with foreign lamp manufacturers, continuations of contacts earlier established by General Electric. As mentioned in the “Introduction”, there had been established a price stabilizing group in Europe which had maintained some form of order among European manufacturers (Ex. 2111-G). Mr. Woodward, in line with his primary duties, remained in close touch with all the leading incandescent lamp manufacturers in Europe sending to General Electric and IGE detailed reports of the European situation (Exs. 2111-G, 2112-G to 2117-G, 2124-G, 2127-G to 2130-G). He wrote Mr. Burchard and Mr. Morrison in January of 1924 (Ex. 2111-G) as follows:

“The matter of the Westinghouse agreement with the Osram Company is not grave, but it is important enough to get the most out of it possible under the circumstances, in the event that we have an opportunity to have the matter reennsi'^'-r-’.

“As a primary consideration I would like the factories in which we are intereste, i through the Vereinigte Company in Austria, Hungary, Czecho-Slovakia and Poland, to have any rights (non-exclusive) which the Westinghouse Company may be in a position to grant, and I should like any lamp manufactured under these rights to have full freedom of sale throughout Germany, the Scandinavian countries, and the Baltic States including Finland. As long as these factories exist and the loyalty of Aschner continues, this affiliation of ours carries a maximum of menace for a minimum of investment, and insures a corresponding respect from Philips and Meinhardt.

“As a second consideration I should like the Westinghouse Company never to agree to respect the Osram patents in the territories even for which it may grant its own rights to the Osram Company. The Osram patents in some of these countries have a quality and value at least as vague as the future contributions of the Westinghouse Company. Therefore it seems to me to be the better tactics for the Westinghouse to exchange good wishes and experience with the Osram Company, but to retain freedom of action in any territory outside of Germany. This would leave the Westinghouse free to enter such territories as Lithuania and the Baltic States without *832 any particular -danger to itself and create sufficient disturbance to -make it quite to the interest of the Osram Syndicate to bring pressure to bear, in the best way it can, upon such concerns as Pintsch and Berg-mann, as well as Radio, so that these latter companies shall not export into the territory in -which the Westinghouse is interested. Up to the moment we have been able to exercise only what might be -called moral control over these concerns — control which is -apt to become weaker in time and needs a little bolstering up, even now.

“I did agree in principle -to the arrangement between the Westinghouse Company and the Osram Company, but no details were discussed and in my own mind I did not contemplate anything except an exchange of rights and experience applying simply to the territories of Germany and America.”

In April of 1924 he wrote Mr. Burchard again, a copy of which he -sent tó Mr. Swope (Ex. 2112-G) -as follows:

“I probably will not be here on your arrival, and in view of the possibility that you may actually -see Meinhardt, Philips and Aschner and be immediately drawn into serious discussion before I return for the Technical Conference, I wish to leave the following memorandum.

“I -have agreed orally with 'Meinhardt and Philips, on a basis which will include Aschner, to a syndication of -the -commercial profits in the entire lamp business outside of the United States, Canada, England and the British Colonies. Thi.s involves a commitment on our part to bring into the syndicate France, Spain, Portugal, Belgium and Italy. You will note from the terms that they include even the domestic business in the exclusive territories of Philips and Meinhardt.

“This is not in accordance with the plan to claim percentages by territories which I understand from Mr. Henderson you and Mr. Morrison wished me to support, but on the other hand I do not believe it at all inconsistent with the ultimate object which you sought by that arrangement. While Mr. Henderson has been familiarizing himself with conditions here, I have given -a great deal of thought to his proposition to claim 75% in those territories (China and Brazil) where our factories are located, and 33% in the. remaining non-exclusive territory. Having -nothing to trade on with which to support this -claim I have not as yet advanced it, and I will not advance it unless you disapprove of the direction which the negotiations have taken. I feel that merely to advance a claim to a percentage in excess of that which we are holding or can hold, would not advance our ■cause very much. It would meet at first with a refusal and a demand for supporting argument and facts other than a strong desire. Negotiations would certainly be protracted indefinitely. Further, our politics for two and a half years has been to force propositions to come from the other side, employing every -resource -and sustaining all the losses necessary for that -result.

“Circumstances and luck having brought about almost the precise situation which we have from the beginning desired, and the proposition having -been made, I have given my adherence-to it in the belief that you would approve it.

“In order to explain the development of this present situation I will go a little further into detail.

“In view of the conditions in which the entire Continental group have found themselves, and to which I have referred in my letters to Messrs. Lusk, Levis and Henderson, — copies of which I have forwarded to you for your personal advice, — the European Cartel, based purely on a price schedule, broke down utterly during February, although it was agreed to keep the prices effective up to the end of June. As a result of -this breaking down, Meinhardt became convinced -that our arguments -as to the uselessness of a price schedule by itself are well founded. He therefore proposed to Philips a basis of syndication. The upshot was an agreement for the division of their commercial profits, making adjustments out of the increase of the present business, .in the usual manner, to bring the relations to a 2 to 1 basis. Aschner was then brought into the argeement, and, as you may imagine, Meinhardt had the -greatest difficulty in getting Philips and Aschner to any sort of basis whatever; but he knew •their situation well, -because he meets each in- every field where he operates (except France) and he knew their necessities. It *833 was not at that time Meinhardt’s hope to bring the American affiliations in. On the contrary I have reason to think it was his hope to use the strength of this syndicate in order to force the hands of the American group in the matter of issuing a price schedule. When he approached me and found that we are not at all hostile to the syndicate and approve of exactly the sort of association proposed, it was a matter of a few minutes to come to an arrangement on the principles. He brought Philips into the discussion at once.

“As a sine qua non I stipulated that the arrangement must extend for at least twelve years and preferably fifteen. Mein-hardt was in entire accord with this and in fact had previously fought the question out with Philips, who wished only a short time affair, say from three to five years. I asked that the broad principles of the syndicate be laid down in a simple agreement, without any attempt to work out the inevitable adjustments necessary to make a fair deal, and that this broad agreement be initialed and accepted in good faith and all subsequent provisions be made to fall within its lines. Only in this manner is it ever possible to arrive at a finish of the negotiations with Philips. To be perfectly frank I think we should come to an agreement at the earliest date possible, since from this time on our position will become less fa-vourable in most quarters.

“It was contemplated that a zone system should be used for supplying the lamps necessary to the different sales organizations, so far as that can be justified on economic grounds, and that a fixed output price can be established for the factories. The intention is to leave the business of any important country in the hands of the organization of that country if it is in position to hold a substantial portion of it. This will be essential in order to get our French associates into the arrangement, and will be a matter of considerable importance to us if we undertake to bring the English group in. It is obvious what this may mean-to us if we are skilful in expanding the idea in ■the years to come. On these general principles Meinhardt’s interests coincide more nearly with our own, and I think we can utilize that fact to develop a satisfactory set of principles of operation.

“All of the business of the International Company will be involved. Meinha-rdt insisted on this, and it was an easy point for me to concede. I am satisfied that there is nothing improper in it, since. it relates wholly to the business done outside the United States, which business I am satisfied, further, will be based upon lamps manufactured outside of the United States.

“The agreement contemplates bringing in all manufacturers within Osram territory on some proper basis. I rather object to including them in the syndicate, as I would prefer some other method of taking care of them along lines leading to their going out of the manufacturing business and remaining simply as factors. I avoided getting into the discussion of details, for the reason outlined above, and I strongly recommend that subsequent discussions as between principals do not be allowed to become much involved. The experts can take up these problems later and should be requested to work out arrangements within the terms of the broad agreement.

“Philips immediately requested me to issue schedules raising the prices throughout overseas territories. I refused; but said that we were willing to issue price schedules promptly after the initialing of the agreement.

“I think you know my estimate of the elements here. But I may again say by way of emphasis that I desire to effect an arrangement which will be to the absorbing interest of the Philips Company throughout as much of the remaining ‘useful life’ of Anton Philips as possible. He, and practically he alone, constitutes a danger to our American profits. Should our patent protection at any time become weak in all or part of America he will be our greatest menace, the least vulnerable and most resourceful of our competitors. He is insanely anxious to get into England, and for my part, if I could arrange it on a sound basis and without losing all my personal friends locally, I would get him there in short order. England is the greatest bait, carefully handled, which can be held out to him, and if we exercise the ordinary principles involved in poker, I am satisfied *834 that we can make arrangements which will be profitable and satisfactory for a long time to come.

“I have had no opportunity of discussing this with Mr. Henderson, as he has been on tour since the situation took its present form. However, I gave him a full explanation, in strict confidence, of my ambitions and hopes in this matter, before he started, m order that he might be guarded in his expressions to the people with whom he came in contact, and so avoid giving an impression of over-eagerness on our part. I did, however, draw Mr. Minor into the discussions immediately, for his information and to obtain his advice. I wish in the future to have Mr. Grauding included in our conferences if either group call in its staff. He has an exceptional acuteness for sensing the motives and states of mind of the people with whom we are dealing, as well as having a wide commercial knowledge and experience of his own.

“On the other hand I have requested Meinhardt and Philips to leave as many as possible of their staff out of the general discussion and to impose silence on those who are admitted. I explained that it would be practically impossible for us to exercise proper guiding influence over our friends the French and the Belgians, if it became publicly known in advance what direction the negotiations were taking. (One sentence omitted.) The continued discussion of this matter will take place next week. Both Meinhardt and Philips regard it as of primary importance, as the proceedings of the Technical Committee are relatively without interest to them; and they therefore propose to give their entire time while here to this matter.

“I have endeavoured to impress upon both of these gentlemen that absolutely nothing can be gained by attempting to trade on these negotiations at this time, and that we must all be prepared, in fact, to make some sacrifice at first. The gain will come through stabilization and the opportunity offered for further development after stabilization has been effected.

“I am returning to England immediately in order to follow up the request I have made that they proceed with the matter of syndicating their export business to the British Colonies. I found Mr. Lusk not particularly well recently, and I expect that the matter will lag. While Mr. Minor knows what I propose and supports it, he probably is not in a position to push it. In anticipation of the present turn of events I have avoided coming to a conclusion of the license agreements with any of the English manufacturers except Hirst. It always has been my intention to use the license for the purpose of inducing cooperation between themselves first and the Continental manufacturers later, should the occasion arise, as it now has. Neither their license royalties nor their importance in the export field were sufficient to make the licensing of them an otherwise urgent affair for us. If I find Mr. Lusk still not well I am inclined to the idea of allowing either Nash or Hirst to take the initiative, if they should so desire.”

Mr. Morrison in July, 1924 wrote Mr. Swope concerning an agreement being drawn up between Westinghouse and General Electric (Ex. 2113-G) in which he expressed concern in keeping Westinghouse in line with the proposed foreign incandescent lamp holding company on which the “General Company” was working. Mr. Burchard wrote to Messrs. Swope, Morrison, Appleton and Minor in August, 1924 that in response to an inquiry relating to the negotiations with foreign lamp manufacturers, the following reply had been received from Mr. Woodward:

“Lamp negotiations moving constantly forward without any apparently insurmountable obstructions but with violent altercations between other parties and usual amount of delay on account of vacations important people extending beyond middle of September. We are utilizing our full resources to steer matters in direction desired and I expect to be in position on August 30th to write you definitely of the specific items of assistance we wish from you. The important items will be serious financial assistance to Kremenezky and pressure to be brought on Levy for settlement Belgian problem. Have had private interviews with Hirst and believe that we have found programme which will work out English situation notwithstanding previous unfavorable incidents. Am having second conference with Austro Hungarians Sunday at Zurich to be followed by Gen *835 eral Conference Zurich Wednesday. The following week will meet Italian manufacturers with Grauding. Would appreciate you causing all legal criticism of contract be mailed me at earliest possible date. I propose rewrite this contract in form of partnership to share profits above a stipulated base. This will not change substancé but I think will improve legal effect.” (Exhibit 2114-G.)

In September, 1924 Mr. Woodward wrote Mr. Young (Ex. 2115-G) in reply to a request for the “essential items of our program”. He stated that all parties engaged in business outside the United States and Canada undertook to cooperate by a general lamp agreement in the future development of the lamp business and that this was advantageous to IGE interests. He mentioned that all manufacturers were committed to “our program of standardization, as well as the adoption of our formulae for arriving at the economic life of lamps”. He pointed out the necessary territorial divisions of the contracting companies and details as to patents, prices and other arrangements, and included a copy of the terms of the agreement for Mr. Young’s consideration. In the same month Mr. Woodward inclosed a copy of the final printed draft of the negotiations in a letter to Mr. Burchard (Ex. 2116-G). He pointed out that he was summarizing the principal points of the agreement in a letter to Mr. Young. Exhibit 2115-G is dated the same as Exhibit 2116-G and apparently is the letter to Mr. Young to which he referred. «

The negotiations resulted in the signing of an agreement at Zurich, Switzerland dated December 20, 1924 (Ex. 2278-G) under which the signators became known as the Phoebus S. A. Compagnie Industrielle pour le Development de L’Eclairage (Ex. 2120-G) referred to hereinafter as the Phoebus Group and the agreement as the Phoebus agreement. Mr. Woodward initially signed the agreement subject to the approval of IGE (Ex. 2117-G). However, IGE did not see fit to ratify the signature of its European representative.

Among those who did sign this agreement and who are of immediate concern are the following;

British Group —

British Thomson-Houston Co., Ltd.

Cryselco, Ltd.

Edison Swan Electric Co., Ltd.

General Electric Co., Ltd.

Metropolitan-Vickers Co., Ltd.

Siemens and English Electric Lamp Co., Ltd.

Campagnie des Lampes

N. V. Philips Gloeilampenfabrieken

Osram G. m.b. H. Commanditgellschaft

Vereinigte Gluhlampen & Elektrizitats, A.G.

Societa Edison per la Fabbricazione delle Lampade

Tokyo Electric Co., Ltd.

Overseas Group —

Anderson, Meyers & Co., Ltd.

Australian General Electric Co., Ltd.

General Electric Company of Cuba

General Electric, S.A. (Mexico)

Societa Italiano per le Lampade Elettriche

South African General Electric Co., Ltd.

By the terms of the Phoebus agreement the territory outside the United States and Canada was divided into “Home Countries” (Where -only one local manufacturer could sell) and “Common Territory” (where all parties could sell). As to the territory divided it sought to maintain the relative position of the parties. Each party was given an allotment for the different countries, and the ratio between allotmeiits was designated a party’s “Local Participating Percentage”. In determining allotments business based on sales made in or to the United States and Canada was excluded. The agreement provided for exchange of technical information and stated that:

“no party hereto will aid directly or indirectly in any manner whatever any lamp manufacturer not sharing the burdens and obligations of this agreement except in so far as existing contracts may necessitate it.”

Penalties were provided for sales over quota and a mechanism was set up whereby conflicts between the parties might be referred to a Phoebus tribunal for settlement. Special provision by codicil was made to permit two firms Kremenezky and Pintsch, to continue shipping annually a specified number of carbon lamps to the United States and Canada on the assurance of each of the firms that the patent owner for the United States and Canada had agreed to grant the necessary licenses. (This feature was discussed in the “Glass Machinery and Products”.)

*836 The Phoebus agreement was amended to an immaterial extent by an agreement made in Paris, dated April 24, 1931 (Ex. 2278-G, p. 96) in which the British Thomson-Houston Co., Ltd., signed for the Overseas Group (Ex. 2136-G). The 1924 agreement became obsolete with the outbreak of war in 1939 and a new agreement was executed January 15, 1941 (Ex. 2278-G, p. 32) which embodied most of the features of the 1924 agreement. It eliminated the Kremenezky and. Pintsch codicils and terminated in 1945. It similarly excluded the 'United States and Canada and oh its -face dealt only with the competition of foreign manufacturers abroad and not with competition between foreign and American manufacturers. Its signators are as follows:

British Thomson-Houston Company, Ltd.

A. C. Cossor, Ltd.

• Crompton Parkinson Limited

Cryselco Ltd.

Edison Swan Electric Co., Ltd.

General Electric Co., Ltd.

Metropolitan-Vickers, Electrical Co., Ltd.

Philips Siemens Electric Lamps & Supplies, Ltd.

Overseas Group (by I.G.E. Co., Ltd.) [See Ex. 2136-G]

In conducting the negotiations leading to the Phoebus agreement Mr. Woodward was aware of the implications of the antitrust laws and he wrote that he was “satisfied that there [was] nothing improper in it, since it relates wholly to the business done outside the United States, which business”, would be “based upon lamps manufactured outside the United States”. (Ex. 2112-G, and see Exs. 2115-G, 2117-G.) After the execution of the Phoebus agreement (Ex. 2278-G) Mr. Woodward accepted the office of General Counsel of the Phoebus group, resigned as the European representative of IGE and was appointed European Counsel of IGE, in 1925. 36

Following the Phoebus agreement of 1924 IGE effected license contracts with foreign manufacturers, some of the signators of the Phoebus agreement as follows:

1. General Electric Ltd. of London, April 1922 modified May 1923 and June 1931 (Ex. 48-G).

2. G. E. Sociedad Anonyma of Brazil, .June 23, 1926 (Ex. 44-G).

3. Societa Edison Clerici, Fabbrica Lampade of Italy, July 1, 1926 (Ex. 39a-G).

4. Campagnie de Lampes of France, July 1, 1927 in Paris, August 10, 1928 in New York (Ex. 42-G).

5. Osram of Germany, July 1, 1929 (Ex. 39-G).

6. Compania Mexican- de Lampanas Eléctricas, S. A. of Mexico, April 1, 1930 (Ex. 46-G).

7. Philips of Holland, March 14, 1931 (Ex. 40-G).

8. Vereinigte of Hungary, August 12, 1938 (Ex. 41-G).

9. I. G. E. Co., Ltd. of England, April 14, 1939 (Ex. 49-G).

10. A. E. I. of England; The British-Thomson-Houston Co., Ltd.; Metropolitan Vickers Electrical Co., Ltd.; The Edison Swan Electric Co., Ltd.; and Ferguson Failin, Ltd., August 24, 1939 (Ex. 43-G).

Some of these subsequent agreements •were renewals or continuations of contracts made by General Electric or its predecessor, The Thomson-Houston Company. The Expiration dates of certain IGE license agreements as of 1929 are found in an appendix to the license agreement with Osram (Appendix A of Exhibit 39-G). Appendix A to Exhibit 40-G, page 23, the agreement with Philips, lists a summary of parties to 'and terms of the license agreements effected by IGE as of 1931 as follows:

“1. The General Company has heretofore granted to the Allgemeine Elektrici-tate Gesellschaft, of Berlin, Germany, exclusive manufacturing rights and information and non-exclusive selling rights, for Holland and non-exclusive ' selling rights for the Dutch -Colonies in respect of that portion of the scope of this agreement not Included in the following definition:

*837 “All electric lamps for illuminating, heating or medical purposes operating by any or all of the following methods: Incandescence of a refractory- filament or -by luminescence of gas or by cathode incandescence (except so-called arc' or enclosed arc lamps not operating in a sealed container) ; all parts thereof and all machines and processes for their manufacture, all of the lamps thus defined being specifically excluded from the grant to Allgemeine Elektricitats Gesellschaft.

“2. The General Company further has heretofore granted to the British Thomso-n-Houston Company, Ltd.; and The Associated Electrical Industries, Ltd., both of London, England, for the Dutch Colonies, non-exclusive selling rights for electric lamps as included in the -scope of this agreement.

“3. The General Company further has heretofore granted to the Tokyo Electric Company, Ltd., of Tokyo, Japan, for the Dutch East Indies non-exclusive selling rights for electric lamps as defined in the clause above quoted as being excluded from the grant to Allgemeine Elektricitats Ges-ellschaft.

“4. The General Company further has heretofore granted to the General Electric, S. A. of Brazil, and to the Compañía Mex-icana de Lamparas Eléctricas, S. A. of Mexico, and to the China General Edison Company, Inc., of Shanghai, ■ China exclusive manufacturing and selling rights for the respective territories of Brazil, Mexico and 'China, for electric lamps as defined in the clause above quoted as being excluded from the grant of Allgemeine Elektricitats Gesellschaft.

“5. The General Company further has heretofore granted to Osram G. m. b. H. Kommanditgesellschaft of Berlin, Germany, exclusive manufacturing rights for Denmark, Finland, Norway, Sweden and Switzerland for electric lamps as defined in the clause above quoted as being excluded from the grant to Allgemeine Elektricitats Ge-sellschaft.

“6. The General Company further has heretofore granted to the British Thomson-Houston Company, Ltd., and The Associated Electrical Industries, Ltd., exclusive manufacturing and selling rights for electric lamps as included in the scope of thi-s agreement for Northern and Southern Rhodesia and the British possessions, protectorates and mandatories in Africa, North of Rhodesia, including Soudan, and including Nigeria and -the West African colonies.

“7. The General Company further has heretofore granted, or agreed to grant, ■to the Electric Lamp Manufacturers (Australia) Limited, exclusive manufacturing and selling rights for electric lamps as defined in the clause above quoted as being excluded from the grant to Allgemeine Elektricitats Gesellschaft.”

The foreign license agreements of IGE follow an identical pattern. In general, these were territorial restrictions with the United States and Canada -recognized as being excluded. The patent and technical exchanges between the parties made available to the foreign licensees all the known American developments in the incandescent lamp ¡industry, whether owned by General Electric or secured through, its domestic licensees by virtue of the contract with IGE. In addition to the principal party agreeing with IGE to restrict its activities to the assigned territories it was required that the parties hold their controlled companies and licenees to these restrictions. Certain of the agreements permitted IGE to fix the condition of sales and minimum prices in Mexico and South America (Exs. 39-G, 40-G, 41-G). Certain of the agreements had termination dates in 1955 (Ex. 40-G, 41-G, 43-G). Osram’s license had a termination date in 1970 (Ex. 39-G) and Compagnie des lampes in 1983 (Ex. 42-G).

General Electric ownership direct or in direct in members of the Phoebus agreement or foreign licensees is as follows (Ex. 59a-G):

Percentage

Name of Company Dec. 31, 1940

Osram, G. m.b.H. 21.45

Philips 11.85

Philips Holding Co. 2.47

Cié. des Lampes — Ordinary 37.03

Cié. des. Lampes — Founders 33.47

Vereinigte 10.64

A.E.I. — Ordinary 40.66

—Preferred . 20.72

Tokyo Shibaura Electric Co. 28.14

*838 There was a small IGE representation on the boards of A.E.I., Compagnie des Lampes, Osram, Philips, and Vereinigte (Ex. GE-128) as follows:

“This is one of their greatest concerns in dealing with Westinghouse. They realize fully the desirability of getting some set-up preventing Westinghouse sending

1925 *

1930

1935

1939

No. of Board

I.G.E. Rept.

No. of Board

I.G.E. Rept.

No. of Board

I.G.E. Rept.

No. of Board

I.G.E. Rept.

Associated Electrical Industries *

12 6 13 1 11 1 14 1

Compagnie des Lampes

12 . 4 13 3 9 3 11 3

Osram

15 — 15 3 15 3 15 3

Philips Mfg. Co.

7 1 7 — 6 1 6 1

United Incandescent (Vereinigte)

10 1 10 — 11 1 11 1

Exhibit 20-G lists General Electric’s subsidiaries and percentage of voting power in each held by General Electric or by its immediate controlling subsidiary. Extracted therefrom are the subsidiaries of IGE of immediate concern and its percentage of voting power in each.

Name of Company

Percentage of Voting Power

Anderson, Meyer and Co., Ltd. Australian General Electric Co., 84.1 Ltd. 100.0

China General Edison Co., Inc. Cia. Mexicana de Lampara 100.0

Elec., S. A., (Mexico) 66.7

General Electric Co. of Cuba 100.0

General Electric Co. (P.I.) Inc. 100.0

General Electric Co., S.A. (Argentina) 100.0

General Electric, S.A. (Brazil) 100.0

General Electric, S.A. (Mexico) 100.0

I G E Co. (India) Ltd. 100.0

IGE Co. of New York, Ltd. 100.0

South African General Electric Co., Ltd. 100.0

In March 1927 Mr. Woodward wrote Mr. Minor (Ex. 2129-G) that members of Phoebus were fearful of the competition from the American made lamp. lamps to the European market. In my opinion it would be a great error for the General Company to assist in weakening this potential threat. For reasons which you may think more of than I do, the Germans especially fear Westinghouse activities in Russia in the future.

In April 1927, Mr. Swope wrote Mr. Appleton (Ex. 2130-G) that Mr. Woodward had written him and quoted from Mr. Woodward’s letter “for your consideration as follows”:

'“1st. That I wanted an agreement made now which would determine where W. would stand relatively to us at some future date or in some future situation which relationship would come in effective opera-ation under conditions controllable by us.

“2nd. I wanted W. meanwhile to be free to achieve any position relative to others in field which it can achieve by itself.

“3rd. In order for W. to have such freedom we need not and should not change the existing license — which is freedom itself.

“4th. Whenever W. shall have reached the highest measure of progress it can on its own account,- we can subject it to the terms of the agreement referred to under the 1st paragraph.

*839 “5th. You have to follow this program whether you like or not because of the necessity you are (or the Overseas group is) under to compel any new licenses to accept the same burdens and obligations (it has) undertaken with others in the Overseas Territory.

“6th. Westinghouse cannot afford to accept these burdens now and will not if it is truthfully and fully informed as to what they are — and therefore must fight its way to the point when it can force the necessary concessions, which we, tied as we are, can never secure for it.

“7th. This fight by the Westinghouse will probably scare the European competitors into being good toward us — for maybe ten years.”

Mr Woodward’s concern for Westinghouse was, but repetitious of earlier expressed fears of General Electric officials. Mr. Burchard wrote Messrs. Morrison, Terry and Appleton in June of 1925 (Ex. 2124-G) and quoted from Mr. Woodward’s letter dated June 3rd, 1925, as follows:

“A point has been reached where every important lamp manufacturer in Europe has recognized the patents of the General Electric Company in all overseas countries, and has taken, or engaged to take, licenses under those patents upon our usual terms and conditions.

“The only important lamp manufacturer in the world who has not taken a license or recognized these patents is the Westinghouse Lamp Manufacturing Co. or its international subsidiary. I think that, in view of the facts above recited, it is only proper to request the Westinghouse Company to consider the situation with a view to giving like recognition to our rights. Protracted delay in this matter is likely to be quite embarrassing to the International General Electric Co. in its relationships with its licensees.”

A year later Mr. Morrison repeated much the same in a letter to Mr. Swope (Ex. 64-G) quoted in its entirety in the discussion on patents. Before the negotiations of the new patent licensing agreement with Westinghouse Mr. Morrison called attention to the early expiration of the Just & Hanaman, Coolidge and Langmuir patents upon which General Electric’s control of the incandescent electric lamp field rested. He acknowledged the stabilizing influence of the General Electric agreements on domestic and foreign lamp trade and indicated that ah agreement with Westinghouse was essential to the proper maintenance of domestic trade by meeting foreign licensees’ fears of American exportation.

In January 1927 Mr. Burchard wrote Messrs. Appleton and Freeh that in connection with the Westinghouse negotiations he understood that it was proposed to increase Westinghouse’s percentage. He expressed his misgivings and further stated:

“There is one point, however, which I think perfectly olear, and on which any new incandescent lamp license to the Westinghouse Company with a larger minimum royalty percentage must be absolutely conditioned, namely, — that they will become parties to an arrangement which will assure their effective cooperation with us in the foreign field. They are not now cooperating with us effectively in the foreign field and are taking advantage of the present effort to stabilize the foreign 'lamp business to increase their business in the foreign field at a very much higher rate than that corresponding to the general growth of this part of the business. The definite assurance of their effective cooperation in the foreign field should certainly be made a sine qua non to the granting of a new license in the domestic field.” (Ex. 65-G.)

Mr. Woodward’s letter to Mr. Minor in March 1927 (Ex. 66-G) is even more revealing. He wrote that Osram was concerned with Westinghouse sales in territory in which Osram was interested. Mr. Woodward considered it undesirable for Osram’s representative, Dr. Meinhardt, also President of Phoebus, to discuss the situation with Westinghouse. He assigned as reasons the fact that General Electric held in the United States all of Osram’s knowledge, experience and patent rights and could not afford to have Osram’s information transmitted directly to Westinghouse by reason of the fact that General Electric was authorized “in fact bound” by the IGE-Osram contract “to make it *840 a condition that the Westinghouse Company shall observe the same territorial and commercial restrictions” that were provided in the agreement.

“The territory in which Osram is actually interested to control Westinghouse operation lies outside of the United States and outside of Germany, but in practically all of this territory the International General Electric Company and not Osram controls the existing patents * * * ”.

Mr. Woodward felt that there was no particular advantage from the IGE or General Electric standpoint "in any deal which Osram might make with Westinghouse which would keep Westinghouse out of the European countries in which Osram owns the patents.” He closed with the feeling that he considered it of “primary importance that our interests and not Osram should keep control of the initiative in dealing with the problem of Westinghouse Company’s overseas business”.

General Electric’s license agreement with Westinghouse (Ex. 25-G) provided that:

“No license is herein granted under foreign patents; and no license is granted to export electric lamps, or sell such lamps for export, except to countries to which the Licensee would itself have a right to export them.”

The “B” licenses contained even greater restrictions. They provided (Ex. 30-G, 29-G) that:

“No license is granted under foreign patents ; no license is granted to export incandescent lamps or to sell lamps for export.”

The “B” licensees were not without knowledge as to the reason behind this restriction for in 1937 Mr. John Woolridge of Sylvania wrote as follows (Ex. 113-G):

“Confidential

FOREIGN LAMP SALES

November 22, 1937

Mr. W. A. Coogan — New York Office “I want to acknowledge your letter of November 17 on the above, also a copy of your letter of November 16 to Mr. Erskine, which Mr. E. J. Poor has discussed with me.

“When I first spoke to you last month in New York in regard to investigating foreign lamp markets, we had in mind at that time the possibility of inflating our lamp sales before December 31. In line with a recently adopted policy, we have decided against such inflation, due to the fact that we are allowed to carry over into 1938 any shortage in our quota up to 10% of the quota.

“Accordingly, what we want to do now is mainly examine the lamp markets in the various foreign countries, particularly South America, Cuba, Mexico, Australia and Canada. We do not want to make any quotations nor send any samples out at this time.

“The following is the type of information which we should like to collect, with your help, for each of the above countries. There is no particular hurry, if we can obtain it during the next few months:—

“1. The various important brands sold in the country.

“2. Are there any lamp factories in the country ?

“3. The types of lamps generally in use in the country, i. e. the voltages, .watt-ages and finishes, in order to determine whether they are similar to our types.

“4. The list prices and the distributors’ discounts.

“5. The duty.

“6. Transportation costs.

“When we have the above facts, we can then determine whether there are any foreign countries where we could possibly meet competition with American costs, and at that time we can investigate as to whether there would be any way for us to utilize this to our advantage.

“In your letter to Mr. Erskine, you spoke of a possible license from the G.E. to export lamps to certain countries. I don’t know whether I explained the situation to you, but the fact is that in the world at large the more important electrical interests, such as the G.E. Siemens of Germany, Philips of Holland, etc., are closely bound together in a cartel with the. result that they have entered' into binding agreements, apportioning world markets between *841 the respective companies. Accordingly, you can see that if the G.E. broke their agreement and allowed us to export into a foreign country which was assigned under the cartel agreement to a European manufacturer, that European manufacturer would have a claim to enter the American market in competition with us and probably could not be restrained from doing so. This is something which would probably not be to our advantage.

“Right now we are very much interested in checking carefully conditions in foreign countries, with the thought in mind that in certain countries the cartel arrangement might some day break up, in which case we might then obtain a foothold through export. Right now the only foreign country I know of where the cartel agreement does not control is Japan, — but as you know, exports to Japan are simply out of the question because of cheap Japanese labor.”

The Westinghouse link is graphically set forth in Exhibit 2138-G in which in 1932 Mr. H. R. Boswell, then Lamp Division Manager of Westinghouse Electrical International Company’s London Office, wrote to Mr. Harold Smith, General Counsel, in New York. He acknowledged receipt of communications from the New York office and inclosed a memorandum as follows:

“1) American customers holding domestic contracts but who also require lamps for export.

“Regardless of whether the domestic contract is with G.E. or Westinghouse, either I.G.E. or Westinghouse International has the right to offer the customer an export contract under which lamps will be supplied for export at the domestic list prices, less the customer’s domestic contract discount.

“Once an export contract is closed with one company, (I.G.E., for instance) then the other company (Westinghouse International in this case) has not the right during the life of the said contract to quote or accept orders at the contract price. Naturally both companies have the right to negotiate for and offer renewal contracts on equal terms.

“Should a customer holding a domestic contract not execute an export contract but nevertheless wish to purchase lamps for export, then either company may accept the order at domestic list prices less the customer’s domestic contract discount.

“2) American customers who do not hold domestic contracts but who nevertheless require lamp& for export.

“Either I.G.E. or Westinghouse International has the right to offer the customer an export contract under which the lamps will be supplied for export at domestic list prices, less such discount as the customer would have been entitled to had he been executing a domestic contract for the same annual volume of business.

“3) Sales at prices ruling in countries of destination.

“Any American customers whether they have or have not a domestic or export contract may be supplied at any time with export requirements for any individual country at the prices, terms and conditions of sale ruling in that country.”

The effect and interrelationship of these foreign agreements is set forth in a letter from Mr. Couse to Mr. E. J. Poor, Chairman of the Board of Sylvania August 18, 1939 (Ex. 121-G) as follows:

“I have your letter of July 28, regarding the export of Hygrade lamps. During the last year, we have received a number of complaints about the Hygrade lamps being offered for sale in foreign countries.

“As you have long known, the International General Electric, acting for the General Electric Company has disposed of its patent rights and manufacturing and technical information in foreign countries under agreements whereby the purchaser is protected against competition by the seller and the seller is protected against competition by the purchaser. Under these agreements, the General Electric Company is responsible not only for its own acts but for those of its licensees. Where an American licensee uses in the manufacture of lamps machinery, parts and materials purchased from the General Electric Company and then exports such lamps, the foreign companies have a just cause of complaint and they have complained. While your B *842 license from the General Electric Company does not contain a covenant on your part not to export, it does provide in Article III, Section E, that

“ ‘No license is granted under foreign patents; no license is granted to export incandescent lamps or to sell lamps" for export.’

“In my opinion, therefore, the export of lamps covered by article claims of patents of the General Electric Company or made by the use of patented machinery or processes is outside the license and is an infringement of such patents.

“I have no doubt that there might be a commercial advantage to you in exporting lamps but, because of the agreements aforesaid, it is the duty of the General Electric Company to refrain from itself violating said agreements or, by failure to act, permitting its licensees to violate the agreements under existing circumstances.

“That unlicensed lamp manufacturers export some lamps is beside the point. The unlicensed manufacturers have not had the benefits of a B license, and the General Electric Company is not responsible for their acts.”

It is true that Mr. Couse establishes in this letter the defense emphasized by General Electric in its argument, namely that only the export of lamps is prohibited where they are covered by article claims of patents of General Electric or made by the use of patented machinery or processes. But as heretofore indicated the basis for this defense is unmerited.

During the course of the discussion concerning the General Electric-Corning relationships, Philips’ part in the general scheme of foreign relations was therein detailed. As was there pointed out, General Electric’s relations with Philips primarily concerned the glass bulb, tubing and cane phase of the incandescent electric lamp industry. The “Spiegelglas” Agreement which secured Philips’ cooperation was a direct result of negotiations conducted by International General Electric.

A striking indication of the depth of feeling concerning Philips is communicated by Mr. Minor, President of IGE in his letter on May 25th, 1935, to Mr. Swope, President of GE (Ex. 447-G), wherein he reported upon a meeting with Philips Board of Directors. He recited that for 15 years Philips had exported into the United States the so called handblown glass tubing and bulbs with occasional violation of their agreements to export only hand made materials but with the devaluation of the dollar the market was entirely lost to them. Philips felt that they should now be compensated for the loss of this market. He goes on as follows:

“After many weary hours of discussion and listening to the over-exaggerated egotism of a feudal system of exploitation that reminds one of the pirates of old, you can write down the following in bold letters as the present policy of the Philips organization, and I mention it in this way because the results impinge primarily upon General Electric domestic business rather than on the General Electric international business.

"Having regularized the lamp and radio business of the world, as well as having completed working agreements with the principal makers of X-ray equipment in Europe, it is the policy of the Philips Company to exploit by manufacture and/or licenses under its patents — except insofar as they may be limited or abridged by a most technical interpretation of the existing lamp and radio contracts, as well as the option latter — the makers of the United States.” [Emphasis by Mr. Minor.].

On the face of the Phoebus agreements General Electric and IGE are not parties, United States trade is expressly excluded and the Sherman Act has no extra-territorial operation. American Banana Co. v. United Fruit Co., 213 U.S. 347, 29 S.Ct. 511, 53 L.Ed. 826, 16 Ann.Cas. 1047; United States v. Aluminum Co. of America, 2 Cir., 148 F.2d 416. There appears to be present merely an agreement between foreign companies doing business abroad except for the codicil relating to Pintsch and Kremenezky deleted from the 1941 agreement and no longer material. No restraint or conspiracy is present on the face of the agreements but the Government has undertaken to demonstrate this by explorations in the nether surface.

The Government contended that General Electric and IGE are in substance *843 parties to the Phoebus Agreement and the 1941 agreement by virtue of their interlocking relationship since IGE controls several if not all of the Overseas Groups and IGE, Ltd. of London is wholly owned by IGE. The evidence overwhelmingly supports the Government’s contentions for it is a fact that IGE was the manipulator which brought into being the Phoebus Cartel and General Electric activities in the United States were geared to the Phoebus agreement and were controlled by virtue of it. The Phoebus agreement and the 1941 agreement are complements of the domestic monopoly and a part of the general conspiracy charged. The Government interrelated the formation of Phoebus with Westinghouse’s license of 1927 and interrelated the agreements between IGE, Philips and Phoebus to show IGE complicity by its submission of a dispute with Philips to the Phoebus tribunal for arbitration (Exs. 2133-G, 2298-G). It encountered numerous obstacles in its submission of the Phoebus agreement and the 1941 agreement into evidence; it was not presented at the trial until rebuttal; principals are lacking as signators; the Phoebus agreement terminated in 1939; the 1941 agreement terminated in 1945.

At times, the connection seems tenuous but a design is apparent. It is uncontested that General Electric dominated the field of manufacturing incandescent electric lamps in the United States in 1924, but that domination was found to be legal in the 1926 case. General Electric feared entry of foreign competitors into the United States even though there may have been immediate technical difficulties preventing foreign competitors from meeting American standards of production. In order to adequately protect its domestic market it employed its wholly owned foreign subsidiaries as the medium to develop an effective cartel system in Europe that would make home territories inviting to foreign manufacturers. IGE played a prominent part in the negotiations leading up to the Phoebus agreement with comprehensive reports being rendered to General Electric by IGE’S European representative, Mr. Woodward, the chief architect’ of the Phoebus agreement. Once the Phoebus agreement was in effect, IGE negotiated the individual foreign license agreements each containing territorial restraints keyed to the Phoebus agreement and all requiring subsidiaries and licensees of the parties to respect the territorial limitations. It was IGE’s burden to maintain the balance of marketing conditions originally established by the Phoebus agreement by preventing American manufacturers from invading the foreign markets. This would be no problem in so far as General Electric was concerned since it had authorized IGE to conduct its foreign business. Domestic licensees of General Electric were the invaders with whom the Phoebus parties were concerned. The duty of preventing a European invasion fell upon General Electric and this was the consideration governing the Westinghouse negotiations leading to the export prohibitions in the 1927 Westinghouse license. The subsequent “B” licenses contained a similar restriction. Thus Phoebus provided the foreign cartel with IGE serving as the link to General Electric in regimenting the incandescent lamp industry into a gigantic world cartel, the hub of which was General Electric. The motivating factor governing all IGE foreign contracts from its very inception was the intent to maintain the dominant position of General Electric in the United States by protecting it from foreign competitors.

The gloss of separate corporate entities employed to insulate General Electric from the consequences of these maneuvers avails nothing in the face of the plain intent to monopolize the incandescent electric lamp industry in the United States and protect this dominant position from foreign competition.

IGE was designed to continue General Electric activities in the foreign field. Its European representatives conducted a campaign the purposes of which were the stabilization of the European market and the diversion of European manufacturers from the United States. Westinghouse was a dangerous element able to upset these foreign relations and it had to be satisfied on the domestic front that it might not be tempted to the foreign field. Although much of the ground-work was laid *844 prior to 1927, it is plain that the conspiracy came into play that year by the fact that the 1926 decision gave the signal for plans to meet the oncoming eventuality of a loss of the legal monopoly in 1933. Westinghouse, it is true, did not sign the new license agreement until 1928 but the' preliminary negotiations leading to its execution hung upon the IGE and General Electric commitments to fend off American competition in the foreign market and the premise of the Westinghouse license expressly states that it was made January 1, 1927 although not executed until 1928 (Ex. 25-G).

General Electric and IGE sought to minimize the effect of the Woodward, Burchard and Morrison correspondence discussed herein by claiming that they amount to nothing more than the personal views of the particular individuals concerned. They argued that the writers did not control or influence the policies of General Electric in renewing foreign licenses or domestic licenses and that the views expressed were not adopted or followed by those responsible for General Electric policy. A considerable portion of General Electric’s testimony was devoted to this aspect of the case and great pains were taken in attempting to limit the effect of the contemporaneous documents. With regard to Mr. Morrison, General Electric argued at length that while he had the title of Vice President, he had retired from active duty or participation in the management of the Edison Lamp Division because of ill health in 1925. It contended that the oral testimony adequately demonstrated that he was not consulted with respect to the policies of the Lamp Department in 1927, that the actions of the Lamp Department were not influenced by his views and that the Westinghouse agreement was not actually executed until 1928. General Electric further sought to minimize the effect of Mr. Morrison’s letter, Exhibit 64-G, by pointing to the fact that his views in the past had not always been adopted. In connection with Exhibit 65-G, General Electric claimed that Mr. Bur-chard was primarily concerned with the affairs of IGE,. that it was written 10 days before his death and a year and a half before the signing of the Westinghouse license. In contesting the effect of Exhibit 2130-G, General Electric contended that the domestic situation was not Mr. Woodward’s realm of responsibility and that it was dated in 1927 well before the signing of the Westinghouse license. In regard to the Woodward correspondence concerning the Phoebus agreement (Ex. 2278-G), General Electric and IGE argued that it clearly demonstrated that they do not relate to United States commerce and are ; therefore inadmissible pointing to Mr. Woodward’s statement in Exhibit 2117-G that he was concerned that the agreement did not violate the anti-trust laws. The testimony of General Electric has failed to disturb the import of the Woodward-Burchard-Morrison documents, but on the contrary has served to strengthen them. The situation differs in nowise from what was stated in United States v. Corn Products Refining Co., D.C., 234 F. 964, at page 978, appeal dismissed, Corn Products Refining Co. v. United States, 249 U.S. 621, 39 S.Ct. 291, 63 L.Ed. 805:

“The documents were never intended to meet the eyes of any one but the officers themselves, and were, as it were, cinematographic photographs of their purposes at the time when they were written. They have, therefore, the highest validity as evidence of intention, and, although in many instances Bedford attempted to contradict them, his contradiction only served to affect the general credibility of his testimony.”

More recently the Supreme Court commented in United States v. United States Gypsum Co., 333 U.S. 364, at pages 395, 396, 68 S.Ct. 525, 542, as follows:

“The government relied very largely on documentary exhibits, and called as witnesses many of the authors of the documents. Both on direct and cross-examination counsel were permitted to phrase their questions in extremely leading form, so that the import of the witnesses’ testimony was conflicting. On cross-examination most of the witnesses denied that they had acted in concert in securing patent licenses or that they had agreed to ‘do the things which in fact were done. Where such testimony is in conflict with *845 contemporaneous documents we can give it little weight, particularly when the crucial issiies involve mixed, questions of law and fact. * * * ” [Italics supplied.]

Cf. United States v. Hartford-Empire Co., D.C., 46 F.Supp. 541, 553. There is something of an inconsistency in General Electric’s attempt to limit the meaning of Mr. Morrison’s letter, Exhibit 64-G, because in discussing the issue of res judicata it stresses the importance of his depositions submitted to the Attorney General in connection with the 1922 investigation (Ex. GE-6, item 89A, GE Brief pp. 166-167.)

These challenged documents were obtained from the files of General Electric and IGE officers holding key positions. They mirror well the contemporaneous thoughts and the policy considerations of General Electric and IGE officials, and the testimony at the trial failed to limit them. The authors of the documents were no minor figures but men of the stature of “elder statesmen” who governed, controlled and established the policies of General Electric in their time. The conduct of General Electric has been too well geared to the teachings of these documents for their meaning to be discounted. (Cf. Exs. 338-G, 339-G and 390-G). These documents have revealed the intent that governed the policy of General Electric and have lifted the corporate veil of IGE to expose it as a facile tool and active conspirator in a scheme whose primary purpose was the maintenance of General Electric domination over the lamp industry in the United States by preventing foreign competition.

During the course of the trial, the Phoebus Agreement was constantly referred to and formed the basis of the Government’s cross examination of a number of witnesses, particularly Mr. Herman F. van Walsem, President of Phillips; Mr. Hendrick Hesselink, Sub-Managing Director of Phillips; Mr. Hijmans, Vice President and head of the Patent Department of Philips; and Mr. Minor of General Electric. No contest was made of its genuineness but solely of the issues of whether its introduction into evidence and the Government’s reliance upon it is outside the limits of the complaint. From the plain wording of the complaint, paragraphs 104 to 115 inclusive, General Electric was sufficiently informed that it would be material to the issue. The evidence, moreover, demonstrates that the Phoebus agreement resulted from activities of General Electric and IGE officials. Although their corporate signatures are not on Phoebus, their activities were keyed to Phoebus. International General Electric’s, General Electric’s and Philip’s objections to it are therefore without merit.

General Electric argued that territorial restraints in its licenses were reasonable and therefore valid as ancillary to an exchange of manufacturing information. In support of its argument it contended that the exchange of technical and manufacturing information and “know-how” was a primary purpose of the license agreements and was clearly evidenced by its substance and importance. It referred to the mass of accumulated industrial information which it had compiled and argued that the “protection of one’s labor is afforded even though the subject mattei may not be strictly a ‘trade secret’. It may stand ‘like a trade secret’ ”. It claimed that the parties to the license agreements sought technical and manufacturing information and “know-how” and sought access to each other’s research laboratories and that the material involved was of the utmost importance. It insisted that the “ancillary restraints were not to eliminate or even reduce potential or actual competition, but were simply to protect the parties against competition which would only have been of their own creating.” In concluding it insisted that the proofs established that patented inventions and a vast body of “everchanging manufacturing information and ‘know-how’ has been exchanged between International General Electric and its foreign licensees.”

The Government argued that the reliance upon “know-how” demonstrated that General Electric recognized the weakness of its patent situation and that the agreements related to patented as well as un-patented materials. It contended that it was inconsistent for General Electric to *846 argue that there was no competition in the foreign market and at the same time claim that it was protecting against competition. Since patents were predicated upon inventions and issued’ pursuant to a public policy and “know-how” does not depend upon such a statutory grant, the Government claimed that “know-how” could not be given the broad protection accorded the owner of a patent. Its primary contention was that the exchange of patents and “know-how” was ancillary to the purpose of eliminating competition by an allocation of territory and that the agreements and territorial allocations included all products not merely those embodying “know-how” received from the foreign licensees. It challenged General Electric’s failure to produce evidence of current “know-how” that the court might pass upon whether such was in the nature of a trade secret and pointed out that the “B” licensees never received “know-how” yet made lamps meeting the most rigid specifications. “Know-how” is a vague term and it is difficult to be certain to what extent it was utilized by General Electric, International General Electric and the foreign licensees. Certainly General Electric's witnesses could give no clear definition when testifying. Nor could General Electric produce evidence that it was embodied in all products covered by the licenses negotiated by International General Electric. Restraints exercised under a patent grant are circumscribed within narrow limits and measured by the precise terms of the grant but restraints exercised under authority of “know-how” are measured by the use made of it. “Know-how” as employed by General Electric has not been based upon the sale of a business making the territorial restrictions reasonably ancillary thereto. The secret and confidential nature of the material has not been exhibited. General Electric claimed that it received “know-how” from the foreign licensees in return for its “know-how” and enjoyed substantial remuneration for it to boot. International General Electric did not discount the value of its licensees’ “know-how” claiming it to be of immense value since its foreign subsidiaries had production problems similar to those of its licensees.

General Electric claimed that the territorial restraints were reasonable. Reasonableness has been considered a test since early pronouncements of the courts. In the case of Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, at pages 406, 407, 31 S.Ct. 376, 384, 55 L.Ed. 502 the Court stated that:

“ ‘The true view at the present time,’ said Lord Macnaghten in Nordenfelt v. Maxim Nordenfelt Gun & Ammunition Co., [1894], AJC. p. 565, 6 Eng.Rul.Cas. 413, T think, is thist The public have an interest in every person’s carrying on his trade freely: so has the individual. All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy, and therefore void. That is the general rule. But there are exceptions: restraints of trade and interference with individual liberty of action may be justified by the special circumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restrictions is reasonable, — reasonable, that is, in reference to the interests of the parties concerned, and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favor it is imposed, while at the same time it is in no way injurious to the public.’

“The presént case is not analogous to that of a sale of good will, or of an interest in a business, or of the grant of a right to use a process of manufacture. The complainant has not parted with any interest in its business or instrumentalities of production. It has conferred no right by virtue of which purchasers of its products may compete with it. It retains complete control over the business in which it is engaged, manufacturing what it pleases and fixing such prices for its own sales as it may desire. Nor are we dealing with a single transaction, conceivably unrelated to the public interest. The agreements are designed to maintain prices after the complainant has parted with the title to the articles, and to prevent competition among those who trade in them.”

*847 In United States v. National Lead Co., D.C., 63 F.Supp. 513, at page 524, affirmed 332 U.S. 319 (see page 325), 67 S.Ct. 1634, 91 L.Ed. 2077, the court held:

“It is suggested that the 1920 Contract may escape the condemnation of the Sherman Act by recourse to the doctrine which validates covenants in restraint of trade when reasonably ancillary to a lawful principal purpose, such as the sale of a business. United States v. Addyston Pipe & Steel Co., 6 Cir., 1898, 85 F. 271 [46 L. R.A. 122], affirmed [Addyston Pipe & Steel Co. v. United States], 175 U.S. 211, 20 S.Ct. 96, 44 L.Ed. 136. Such a principal purpose is, in the case at bar, supposed to be the sale by TAS of its American business to TP, accompanied by a license under its patents; and conversely, the sale by TP of its foreign business to TAS, accompanied by a license under its patents.

“The shortest answer to this suggestion is that, in fact, TAS had no American business to sell, and that TP had no foreign business to dispose of. At -best, each had an opportunity and a hope. Certainly the world-wide territorial allocation was unreasonable in scope when measured against the business actualities. This is a case where if not the sole, at least one of the principal, objects was ‘to restrain trade in order to avoid the competition which it has always been the policy of the common law to foster.’ United States v. Addyston Pipe & Steel Co., 6 Cir., 1898, 85 F. 271, 282, 283; Greater New York Live Poultry Chamber of Commerce v United States, 2 Cir., 1931, 47 F.2d 156, certiorari denied 283 U.S. 837, 51 S.Ct. 486, 75 L.Ed. 1488.”

Reflecting these expressions upon the circumstances of this case without conceding that the exchange of “know how” could be the basis for territorial restrictions, the parties to the contracts herein are found to have received their quid pro quo in the mutual exchange of valuable information each to the other. The interest of the public in the world wide divisions of territory set up and the far flung effects upon competition and trade encompassed in them is very great. No matter how reasonable the restraints have been considered as between the contracting parties they were entirely unreasonable in so far as the interest of the public is concerned.

It has been all too evident that the primary purpose of the foreign licenses was to restrict competition in the United States by dividing markets in the foreign countries, all geared to the Phoebus agreement and domestic licenses to reduce interest of potential foreign competition in United States trade. There is in the foreign licenses a striking similarity to the situation interdicted in United States v. National Lead Co., supra. General Electric’s objections to the use of the word “cartel” are immaterial for as the criterion is not one of semantics, it is rather as the trial court in the National Lead Co. case observed:

“Whether the form of association they created be called a cartel, an international cartel, a patent pool, or ‘a technical and commercial cooperation,’ is of little significance. It is a combination and conspiracy in restraint of trade; and the restraint is unreasonable.” 63 F.Supp. at page 523.

General Electric has contended that there was no competition between the domestic licensees and the foreign companies. This contention loses force in the fact of the revelations made in the series of exhibits, 88-G to 129-G that show a lively competition might have developed but for the territorial restrictions placed upon the General Electric domestic licenses. It is true that General Electric’s domestic licensees sought to evade these restrictions and were subjected to pressures from it (Exs. 106-G, 107-G, 108-G, 117-G, and 121-G) but , notwithstanding, they deemed it to their best interests to succumb.

Philips is the only foreign licensee before the court and while the restraints were primarily precipitated by General Electric through IGE, Philips participated therein and is equally responsible. IGE is chargeable with unlawful conduct by virtue of its being the direct tool of *848 General Eléctric in the manipulation of the foreign agreements. Westinghouse 37 and the “B” licensees 38 are likewise violators by virtue of their engagements in and practical fulfillment of the clauses in their licenses prohibiting them from engaging in the export trade. A conspiracy and combination to restrain trade and competition in violation of § 1 of the Sherman Anti-Trust Act have been made out and General Electric, International General Electric, Philips, Westinghouse, Sylvania, Consolidated, Kenrad, Tungsol, and Chicago Miniature were co-conspirators. 39

Mazda!

In general, the Government contended that one of the steps in the acquisition and maintenance of the General Electric monopoly structure was to extend the trademark “Mazda” to Westinghouse lamps with the purpose of misleading the public into the belief that there was only one generally accepted and recognized standard incandescent lamp, the Mazda lamp. It claimed that it was unlawful for General Electric to utilize the goodwill of Westinghouse in permitting it to use the Mazda mark; that a trademark cannot serve two masters and since it was employed by General Electric and Westinghouse, its use was an imposition upon the public. It asserted that General Electric employed Mazda as a name of a tungsten filament lamp which could only be manufactured by General Electric (Exs. 2281-G, 2283-G) because of its ownership of the basic and controlling patents (Just and Hanaman, Coolidge, and Langmuir), the mark had become associated with a tungsten filament electric lamp resulting in the Mazda mark becoming public property upon expiration of these patents in 1933.

General Electric contended that the Government’s argument confuses two distinct branches of business in which General Electric was engaged relating to the production of lamps:

“(a) The manufacture and sale of lamps; and

“(b) The collection and selection of technical information useful in lamp manufacture and the sale of specifications embodying General Electric’s selection of the best combination of technical expedients available to General Electric for its use in lamps. These specifications are sold directly to lamp manufacturers selected by General Electric as ‘Mazda’ licensees, and indirectly to the public as actually embodied in lamps by General Electric and its ‘Mazda’ licensees. This second branch of business is known as General Electric’s ‘Mazda’ Service.”

It insisted that “Mazda” has always been correctly advertised as a service (Ex. GE-135) and that its goodwill is symbolized by the symbol “GE” whether or not “Mazda” is used. It argued that the use of “Mazda” was proper citing Menendez v. Holt, 128 U.S. 514, 9 S.Ct. 143, 32 L. Ed. 526; Keebler Weyl Baking Co. v. J. S. Ivins’ Son, D.C., 7 F.Supp. 211, 214 and asserted that the use of a trademark as a symbol of service has been sustained in a line of cases, citing, among others, American Viscose Corp. v. Crown Craft, Inc., D.C., 28 F.Supp. 884; Finch-ley, Inc. v. George Hess Co., D.C., 24 F. Supp. 94; H. Freeman & Son v. F. C. Huyck & Son, D.C., 7 F.Supp. 971. It claimed that in its initial announcements of the adoption of “Mazda” in 1909 demonstrated that it was for a service and therefore could not be restricted to tungsten lamps (Ex. 135-GE) and in fact Mazda service had been extended to certain lamps which do not employ the tungsten filaments (Exs. GE-138 through GE-142, inclusive). Licensing Westinghouse to use the Mazda mark for the duration of the patent license it alleged was consistent with lawful use since it was a *849 “necessary limitation to insure the embodiment of one factor in the standard of excellence required of lamps bearing the ‘Mazda’ mark”.

Exhibit GE-135 is a compilation of typical advertisements employed by General Electric since the Mazda mark was first employed and runs back to 1909. Tab 1 of Exhibit GE-135 states:

“For the purpose of insuring that the incandescent lamps manufactured by them, respectively, shall have the advantage of the latest discoveries and inventions in the art, wherever made, the foremost lamp companies of America have made arrangements, whereby the technical staff of the Research Laboratory of the General Electric Company in collaboration with the technical staff of the National Electric Lamp Association and others, shall regularly follow the work which is being done in the factories and laboratories of the leading foreign and American Lamp companies and shall keep constantly informed as to the progress and development in methods and processes in each, distributing the information thereby secured to the lamp manufacturing companies enjoying the benefit of this arrangement, and selecting from all known materials and processes those best fitted for each different style and type of metal filament incandescent lamp made for or by the respective American companies.

“For the purpose of identifying the lamps made in accordance with the information thus obtained, the Research Laboratory has adopted as a trade-mark the word

MAZDA

and its presence on any metal filament lamp evidences that the expert knowledge and selective skill of its technical staff entered into the production of that lamp and that the best materials and processes known to it as fitted ior that type of lamp have been employed in its manufacture.”

Continually stressed in the advertisements has been the statement that “Mazda” is the mark of a Research Service. The meaning of “Mazda” is set forth in Tab 9 of Exhibit GE-135, as follows:

“Mazda is the trademark of a world-wide service to certain lamp manufacturers. Its purpose is to collect and select scientific and practical information concerning progress and developments in the art of incandescent lamp manufacturing and to distribute this information to the companies entitled to receive this Service. Mazda Service is centered in the Research Laboratories of the General Electric Company at Schenectady.

“The mark Mazda can appear only on lamps which meet the standards of Mazda Service. It is thus an assurance of quality. This trademark is the property of the General Electric Company.”

There can be no doubt that General Electric organized and maintained at the expense of many millions of dollars research laboratories in which scientists, technicians, and the most modern agencies of investigation were employed to promote maximum efficiency in the manufacture of incandescent electric lamps and the machinery for their production. There can be no doubt that the research field was regarded by General Electric as a very fundamental department of its great business. Indeed, this intelligent policy is very probably one of the factors accountable for the phenomenal growth and advances that were made in the business. It took pains to show the public the depth of its scientific and technical investigations in its advertisements devoted to the “Research-Laboratories” of General Electric Company (Ex. GE-135, tabs 9 to 22). There can be no doubt that it applied its mark “Mazda” to the results of its research as that was embodied in the incandescent electric lamp and other of its products. The proof adduced by the Government fails to show, however, that the “Mazda” mark per se was invalid. Its contention that “Mazda” was keyed to tungsten incandescent lamps and passed into the public domain upon expiration of the Langmuir patent also falls because of lack of proof that the word “Mazda” became a general trade name of the tungsten filament lamp. Under ordinary circumstances there would be no vice in General Electric licensing the use of the “Mazda” symbol conditioned upon observance of its technical specifications as the American Viscose and similar cases hold or in denying a license to any one.

*850 But in a consideration of the use made by General Electric of the mark “Mazda” within the area of the anti-trust laws different implications arise. General Electric contended that a department of its business was devoted to the sale of its collected and selected specifications “directly to lamp manufacturers selected by General Electric as ‘Mazda’ licensees, and indirectly to the public as actually embodied in lamps by General Electric and its ‘Mazda’ licensees”,,

Who were the customers in this department in the United States ? The only “Mazda” license granted by General Electric was that to Westinghouse in 1927 (Ex. 26-G) and its duration was conditioned upon Westinghouse remaining a patent licensee of General Electric. Insured of a production quota based upon General Electric’s total lamp production with its prices similarly fixed by General Electric (Ex. 25-G), Westinghouse was in the status of a controlled competitor. The “B” licensees craved the use of the “Mazda” mark but were denied it. Similarly no independent manufacturer was granted this right. It is therefore apparent that the second branch of the business was illusory. It was for the benefit of General Electric and only one customer of its choice — Westinghouse.

When consideration is given to this aspect in conjunction with the conduct of General Electric and its sole “Mazda” licensee, Westinghouse, in their joint use of the mark, as discussed in “Public Business” and “Suppression of Trade by Domestic Licensees” and the General Electric activities discussed in “Electrical Testing Laboratory”, the design in the general pattern of monopoly by General Electric of the incandescent electric lamp industry becomes very vivid. “Mazda” formed a panoply to screen interrelated General Electric-Westinghouse activities.

Public Business

The text continues — open the document to read the rest.