United States v. Imperial Chemical Industries, Ltd.

254 F. Supp. 685, 149 U.S.P.Q. (BNA) 750, 1966 U.S. Dist. LEXIS 10436, 1966 Trade Cas. (CCH) 71,769
CourtDistrict Court, S.D. New York
DecidedMay 10, 1966
DocketCiv. A. 24-13
StatusPublished

This text of 254 F. Supp. 685 (United States v. Imperial Chemical Industries, Ltd.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Imperial Chemical Industries, Ltd., 254 F. Supp. 685, 149 U.S.P.Q. (BNA) 750, 1966 U.S. Dist. LEXIS 10436, 1966 Trade Cas. (CCH) 71,769 (S.D.N.Y. 1966).

Opinion

RYAN, Chief Judge.

In 1953, defendant ICI entered into a series of patent and knowhow agreements. Now, almost thirteen years later, and two years before these agreements are about to expire, the Government moves this Court for a declaration that certain provisions of these agreements are in violation of the Final Judgment *687 entered July 30, 1952, in United States v. ICI et al., 100 F.Supp. 504; 105 F.Supp. 215, and prays that defendant be enjoined from enforcing these provisions.

The specific declarations sought are: one, that the period during which ICI might lawfully restrict disclosure of its secret process by its licensees under the terms of the Judgment expired on June 30, 1965; and, two, that irrespective of this termination date, the restrictions against disclosure and use imposed by ICI in these agreements on technology “developed by the licensee” and in the “public domain” is unlawful and should be enjoined. As to the first part of the relief sought, we note that the agreements clearly fix varying dates in 1968 for the termination of the confidentiality restrictions. No construction of the agreements is required; we need only refer to the Final Judgment to see if these dates violate it. The second part of the relief sought requires a reading of the agreements to determine if the language employed provides what the Government contends it does and is therefore a violation of the Final Judgment.

In support of its position the Government relies on the terms of the agreements, and on the legal position taken by ICI in contemporaneous civil litigation in this Court with one of its licensees as demonstrating the interpretation which ICI gives to the challenged provisions. ICI disputes the Government’s interpretation of the agreements and rests on the agreements themselves and on the affidavit of Forsyth, the employee who, on behalf of defendant ICI, negotiated the agreements with the licensees following the entry of the Final Judgment. None of the recitals in this Forsyth affidavit are contradicted by the Government.

The licensee with whom ICI is presently in litigation is National Distillers (formerly National Petro-Chemical Corp.,) against whom ICI had sought an injunction to prevent it from disclosing ICI’s secret process in violation of the agreement between them. (Imperial Chemical Industries Limited v. National Distillers, 342 F.2d 737; and 354 F.2d 459 (CA2-1965).

During the litigation National Distillers, resisting the injunction on the ground, among others, that the agreements violated the Final Judgment, sought the participation of the Department of Justice, Anti Trust Division, and when this proceeding was commenced by the latter National Distillers applied for permission to intervene. This application was opposed by ICI because National Distillers was an adversary engaged in adversary proceedings; the Government opposed the intervention but not National Distillers’ appearance as “amicus.” We granted it permission to file a brief amicus curiae. National Distillers by brief now has joined with the Government in asking this Court to take judicial notice of the suit pending between it and ICI. We have taken notice of this suit pending here and later will consider and discuss its relevance to this proceeding.

We turn first to the question of whether the language of the agreements went beyond the bounds of the Final Judgment. This Court in an Opinion on Remedies, filed in May 1952, prior to the entry of the Final Judgment, directed ICI to license not only its patents but its trade secrets, “because the supplying of such knowhow and technology is necessary to the efficient use of the licensed patents and to the production by the licensee of products comparable in quality and cost of production to that of the licensor.”

Accordingly, Article IX (9) of the Judgment directs ICI to furnish to all licensees of its patents “a written manual or other descriptive material describing the methods and processes used by ICI in practicing commercially as of June 30, 1950, in the manufacture of such products, the inventions claimed in the patent so licensed. The furnishing of such manuals shall be unconditional except that: (b) ICI may require as a condition of the furnishing of such a manual that the licensee (1) for 15 years shall not *688 disclose any of the contents of the manual to any third person, and (2) shall use the technical information contained therein only in its manufacturing operations in the United States.”

Article IX (11) upon similar conditions provides for the furnishing to any licensee upon request of “a written manual describing the methods and processes found prior to June 30, 1950 by ICI in a commercial plant, pilot plant or semi-works, to be usable in practicing commercially the inventions claimed in the licensed patents, but which were not on that date being applied by ICI.”

Pursuant to these provisions ICI entered into a set of agreements: a License Agreement, a Manual Agreement and a Technical Assistance Agreement with four separate companies on the following dates: with Spencer Chemical Co. Manual and Technical Assistance agreements on March 3 and 4, 1953, respectively; with Dow Chemical Co. on March 12, 1953; with Eastman Kodak Co. on May 13, 1953; and with National Petrochemical Co. (later National Distillers) on March 16, 1953.

Raised by this motion are three types of objections to the provisions of these agreements. The first grouping concerns the confidentiality provisions restricting disclosure by the licensees; the second grouping deals with restrictions on the use of technology outside the United States; and the third grouping of objections is directed to the expiration date of all restrictive provisions. The language of the confidentiality restrictions differs in the agreements, and for convenience in our consideration we have classified them into two groups. We note here that certain portions of these agreements are common to all.

Each Manual Agreement is described therein as having been entered into pursuant to the Final Judgment and each contains a recital that under the provisions of the Judgment ICI is obligated to furnish to any applicant who has been granted a license pursuant to the Judgment and who intends to manufacture thereunder common chemical products as defined in the Judgment a written manual describing the methods and processes used by ICI as of the 30th day of June, 1950 in practicing commercially in the manufacture of such products the inventions claimed in the U.S. Letters Patent so licensed, and that the licensee intends to manufacture polythene under the license but is desirous of obtaining and has therefore requested ICI to provide more valuable and up-to-date technical information relating to the methods and processes of manufacturing polythene granules than ICI is obligated to supply under the Judgment and that ICI has agreed to provide such more valuable and up-to-date information on the terms and conditions therein contained.

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254 F. Supp. 685, 149 U.S.P.Q. (BNA) 750, 1966 U.S. Dist. LEXIS 10436, 1966 Trade Cas. (CCH) 71,769, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-imperial-chemical-industries-ltd-nysd-1966.