International Technologies Consultants, Inc. v. Pilkington PLC

137 F.3d 1382, 98 Cal. Daily Op. Serv. 1602, 98 Daily Journal DAR 2255, 1998 U.S. App. LEXIS 3874, 1998 WL 95352
CourtCourt of Appeals for the Ninth Circuit
DecidedMarch 6, 1998
DocketNo. 94-17143
StatusPublished
Cited by4 cases

This text of 137 F.3d 1382 (International Technologies Consultants, Inc. v. Pilkington PLC) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
International Technologies Consultants, Inc. v. Pilkington PLC, 137 F.3d 1382, 98 Cal. Daily Op. Serv. 1602, 98 Daily Journal DAR 2255, 1998 U.S. App. LEXIS 3874, 1998 WL 95352 (9th Cir. 1998).

Opinion

OPINION

KLEINFELD, Circuit Judge:

International Technologies has been engaged for some time in attempts to participate in the plate glass industry, dominated by Pilkington and its licensees, including Guardian. An earlier pair of lawsuits between International Technologies and Guardian resulted in a consent decree. The issue before us is whether the consent decree barred this new lawsuit.

FACTS

The district court granted judgment on the pleadings, so no evidence has been presented and no findings have been made. We do not know whether the facts set out below are true. They are a summary of what the unsuccessful plaintiff pleaded. The appellate task in reviewing dismissal under Federal Rule of Civil Procedure 12(c) is to determine whether, if the facts were as pleaded, they would entitle the plaintiff to a remedy. See Merchants Home Delivery Serv., Inc. v. Hall & Co., 50 F.3d 1486, 1488 (9th Cir.1995).

International Technologies Consultants (“ITC”) has been trying for years to get into the engineering and consulting end of the plate glass business. It has been thwarted by Pilkington and its licensees. ITC claims that the means by which Pilkington and its licensees have thwarted its participation in the industry amount to antitrust violations under the Sherman Act, sections 1 and 2, and also constitute various common law torts.

Glass is made by melting sand, limestone, and other minerals such as dolomite. Until a few decades ago, good plate glass that would allow a clear view without bubbles or ripples was made by drawing glass from a furnace in strips, rolling it to the desired thickness, grinding it flat, and polishing it on both sides. The modem “float” technique is to pour the molten glass on a layer of very pure molten tin, so that the molten glass floats on the tin. The surface of the molten tin is very smooth. When the glass hardens it is about as smooth as the molten tin was and does not need grinding and polishing. This float process makes better plate glass for less money than the old way. Although the float process was first patented in 1905, it did not become commercially widespread until Alistair Pilk-ington developed a practical version, patented in the late 1950’s and early 1960’s.

By the beginning of 1992, Pilkington pic owned all but one of the manufacturing plants around the world employing the float process for making plate glass. Because the older method was commercially obsolete, this gave the Pilkington firm a monopoly. But the firm had two problems maintaining its monopoly, expiring patents and difficulty maintaining secrecy.

The critical patents expired in the late 1970’s and early 1980’s. Expiration of the patents did not by itself destroy Pilkington’s ability to control the industry. While the patents had still been in effect, Pilkington had licensed their use, and required the licensees to keep the details of the float glass process secret. But the nature of plate glass makes it hard to keep a secret about how to make it. It cannot all be made in one plant by one manufacturer. Unlike, say, photographic film, glass is brittle and heavy, so shipping expense and breakage make it im[1385]*1385practical to manufacture all the world’s plate glass in one place. Instead, factories produce glass by the float process all over the world. Yet 95% of the commercial grade plate glass in the world is produced by Pilk-ington and its licensees.

Guardian started out as a challenger to Pilkington’s dominance. It hired experts from the glass manufacturing division of Ford Motor Company, a Pilkington licensee, and went into the business of designing and operating float glass factories. After a flurry of lawsuits, Pilkington and Guardian settled their differences and made a secret agreement to prevent new entrants into the market. Guardian was to take the lead in order to enable Pilkington, a British company, to reduce its exposure to United States antitrust law.

Appellant ITC began effective marketing of float technology in the early 1980’s. ITC does not actually manufacture glass; rather, it sells engineering and consulting services to glass manufacturers, to help them build float process manufacturing plants. Its engineers used the public domain information in Pilk-ington’s expired patents, and their own knowledge, rather than Pilkington’s manufacturing secrets, to design ITC’s technology.

Pilkington successfully destroyed a number of ITC ventures. In 1984, ITC had Norwegian government and private support for a float glass plant there. Pilkington falsely told the Norwegian government that its proprietary rights prevented anyone from operating float glass manufacturing plants without a Pilkington license, told ITC’s sources of financing that ITC had stolen the design, and threatened to sue them if they cooperated with ITC. ITC’s major source of financing pulled out because of Pilkington’s threats of lawsuits.

ITC then obtained government and private financing to build a plant in Donora, Pennsylvania. One of the subcontractors it hired to formulate bid specifications, Stewart Engineering, had done work for Pilkington, but not on the design of the tin bath component of the float technology. Pilkington had Guardian sue Stewart Engineering in state court in Michigan. The lawsuit was based on false allegations with no reasonable basis that Stewart had stolen the Pilkington-Guardian float process technology. This baseless litigation had the practical consequence, as intended, of driving away ITC’s financing so that the project collapsed. Guardian then took no further action in the lawsuit, leaving it pending but unpursued.

In 1990, ITC bid on a huge project to build a ■ plant in Indonesia, again using Stewart Engineering. Guardian told ITC’s financing sources, the government of Indonesia and private sources, that it would she for patent infringement if they proceeded with ITC. Though some suppliers backed out, the project was still proceeding. When it was more than half done, Guardian began filing papers in the Michigan lawsuit against Stewart Engineering. The lawsuit had been lying fallow for 18 months, yet Guardian moved for a temporary restraining order, returnable the same day as the motion. ITC was added as a defendant and slapped with the temporary restraining order, with no practical opportunity for it to defend itself. The Michigan state court' order prevented ITC from budding thé tin bath in Indonesia using the Stewart Engineering design, so at this critical stage of construction, the Indonesia project was stopped. To get around the state court order, ITC brought an antitrust suit in federal court and tried to get a preliminary injunction and removal of the Michigan state court action. This strategy failed, and the federal antitrust suit was dismissed without prejudice.

About a.month after the.Indonesia project was shut down by the Michigan state court order, the. Indonesian joint venturer began the termination process to fire ITC as co-venturer. The Indonesian company told ITC that it had to either defeat the trade secrets claim immediately, or else quickly redesign the tin bath to avoid the trade secrets issue. ITC’s engineer, Robert Greenler, then redesigned the tin bath. His new design avoided the supposed trade secrets. After the Michigan state court judge strongly encouraged Guardian and ITC to settle, they reached an agreement in principle, and the court vacated the temporary restraining order against ITC.

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137 F.3d 1382, 98 Cal. Daily Op. Serv. 1602, 98 Daily Journal DAR 2255, 1998 U.S. App. LEXIS 3874, 1998 WL 95352, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-technologies-consultants-inc-v-pilkington-plc-ca9-1998.