Full opinion text
RYAN, District Judge. This shit was instituted with the filing of the complaint of the United States of America on January 6, 1944, against nine defendants — four corporations and five individuals, officers of the corporate defendants. The action proceeded to trial on April 3, 1950; the trial was concluded on June 30, 1950. The issues were finally submitted to the court for determination in November, 1950. I. The Defendants Defendant Imperial Chemical Industries, Ltd. (ICI) is a corporation organized under the laws of the United Kingdom with offices and principal place of business in London. It was formed in 1926 as the successor to Nobel Industries, Ltd., which in turn was known from 1919 to 1921 as Explosives Trades, Ltd., and from 1915 to 1919 as Nobel Explosives, Ltd., and prior to 1915 as Nobel Explosives Company, Ltd. of Glasgow. ICI was formed by the consolidation of British Dyestuffs Corporation, Ltd., a producer of dyestuffs; Nobel Industries, Ltd., a producer of explosives, nitrocellulose products and non-ferrous metals; and Brunner-Mond & Co., Ltd. and United Alkali Co., Ltd., producers of alkali products. We have used the letters ICI herein to- designate the defendant Imperial Chemical Industries, Ltd. as well as Nobel Industries and its predecessors. ICI is one of the largest British manufacturers and sellers of a general line of chemical and related products; it is one of the principal companies of its kind in the world. Defendant Imperial Chemical Industries (New York), Ltd. [ICI(NY)] is a corporation organized and existing under the laws of tire State of New York, with offices and principal place of business in New York City. Defendant E. I. duPont deNemours and Company, Inc. (duPont) is a corporation organized under the laws of the State of Delaware. DuPont was founded in 1802 as a partnership, known as E. I. duPont de Nemours & Co., to manufacture gunpowder and other explosives. In 1903, E. I. duPont deNemours- Powder Company was organized as a corporation under the laws of New Jersey to take over the business conducted by the partnership. In a decree of the United States Circuit Court for the Third Circuit (Delaware), entered on June 21, 1911, United States v. DuPont De-Nemours & Co., 188 F. 127, it was adjudged that E. I. duPont deNemours Powder Company had acquired a monopoly of gunpowder -and it was ordered that two new companies be formed. Pursuant to this direction, Hercules Powder Company and Atlas Powder Company were established and a portion of the duPont business sold to them. Thereafter, on or about September 4, 1915, defendant duPont was incorporated to take over and did take over the remainder of the explosive business. Since 1915, duPont has expanded its business; it now manufactures and sells many chemical products other than explosives. These products are sold and transported in commerce among the several states and between the United States and foreign nations. DuPont is a leading company in its field; it is one of the great chemical and industrial enterprises of the world. Defendant Remington Arms Company, Inc. (Remington) is a corporation organized under the laws of the State of Delaware. It is a manufacturer of sporting arms and ammunition. The Remington trademark and the reputation of its products are favorably and internationally known. Its products are sold and transported in commerce among the several states and -between the United States and foreign nations. Defendants Lammot duPont and Walter S. Carpenter, Jr. are both residents of Wilmington, Delaware and long have been in the employ of and officers of duPont. They have actively participated in the management and direction of duPont and have taken part for many years in the formulation and carrying out of the policies, agreements and undertakings of that company. Defendant Charles Krum Davis is a resident of Fairfield, Connecticut and has been president and general manager of Remington since 1933. Harry Duncan McGowan (now Lord McGowan), herein referred to as Sir Harry McGowan, and Henry Mond (Lord Melchett) are named as defendants but were not served with process. Sir Harry McGowan and Lord Melchett were at the time of the filing of the complaint residents and citizens of Great Britain. The former has been Chairman of the Board of Directors of I Cl, since 1931 and for many years prior thereto had been one of the managing officials of Nobel Industries, Ltd. and of its predecessor companies. Lord Melchett was a director of I Cl from 1928; he took an active part in the management of its affairs. He is now deceased. The following foreign corporations, although not named defendants, are alleged to have been parties to the unlawful agreements set forth in the complaint: Canadian Industries, Ltd. (CIL) ; Explosives Industries, Ltd. (EIL); Compañía Sud-Americana de Explosivos i(CSAE) ; Industrias Químicas Argentinas “Duperial,” S. A. Industrial y Commercial (Duperial-Argentina) ; Industrias Chimicas Brasileiras “Duperial,” S. A. (Duperial-Brazil); Bunge and Born Limitada, S. A. Commercial, Financiera y Industrial (Bunge & Born); Dynamit Aktiengesellschaft (DAG). (DAG is controlled by I. G. Farbenindustries, A. G. as is Koln-Rottweil A. G. (Koln) ; DAG as used herein includes Koln, for whom DAG acted in making the various agreements.) II. The Pleadings The complaint was filed under Section 4 of the Act of Congress of July 2, 1890, c. 647, 26 Stat. 209, as amended 15 U.S.C.A. § 4 — the Sherman Anti-Trust Act — to- restrain and prevent alleged continuing violations of Section 1 of the Act. In essence, the complaint charges a conspiracy among the defendants, having as its purpose a division of world markets and the elimination of competition among themselves and between them and third parties in the trade and commerce of chemical products, sporting arms and ammunition. The complaint alleges the achievement of this purpose by the execution of unlawful contracts, agreements, arrangements and understandings and the establishment and maintenance of jointly-owned foreign companies ; and the continued existence and accomplishment of this conspiracy and its purposes despite various temporary arrangements necessitated by the war. By reason of this, it is alleged that judicial remedy is necessary to restore competition among the defendants and between them and third parties. The complaint prays that the combination and conspiracy and the practices alleged be decreed unlawful and that defendants be perpetually enjoined from continuing, reviving or renewing any of the said violations. Generally, the several answers of the defendants consist of a denial that any of them violated the anti-trust laws. Specifically, the answer of the duPont defendants after admitting many of the transactions alleged, avers: that these activities had not for their purpose nor have they effected an unreasonable restraint of trade; that duPont never controlled or dominated the chemical business nor did it ever have the power to do so; that to meet the ever increasing rivalry among manufacturers in this rapidly advancing field it has had to steadily expand its research activities; that the agreements with defendant ICI had for their purpose the ex-, pansion of duPont’s manufacture and commerce in the chemical industry and the facilitation of technological progress by the acquisition and exchange of patents, inventions and licenses not otherwise available to it. The answer further alleges that the licenses which it granted under these agreements represented lawful exercise of its rights and that these agreements did not have a restrictive effect on trade, but, on the contrary, opened to each party new manufacturing and commercial opportunities. It is also alleged that the agreements were bona fide and not a device to cloak and conceal a division of markets, that their terms stated the full intent and purpose of the parties to them, that the parties, at all times, operated pursuant to such explicit terms in order to carry out their manifest purpose, and that any exchange or grant of information was subject to adequate and justifiable compensation. DuPont further alleges that it has consistently sought to expand its foreign commerce, that because of numerous economic, political and business factors, it had to join with other interests; but that, at no time, did it cease to act with a view to the fullest possible development of its trade. DuPont alleges that the creation of the jointly-owned foreign companies was made necessary by economic conditions, and did not represent an effort to restrict or divide trade; that there was no collusion with de>fendant ICI in the establishment of the prices at which duPont and ICI products were sold to these companies, -but that, on the contrary, prices were fixed independently and separately by each with regard to market conditions and the best interests of their customers. The effect of this, it is alleged, could not >be injurious to trade, since the alternative would have forced duPont, because of factors beyond its control, to yield markets it had previously serviced. As to duPont’s relation with Remington in the conspiracy charged, duPont points out that it acquired a majority interest in that company, and therefore necessarily exercised some control over its policies and management. However, duPont denies that it ever agreed with ICI to limit Remington’s trade, and asserts that any agreement entered into had for its sole purpose the expansion of that company’s trade. The answer of the ICI defendants raises substantially the same defenses; their repetition will serve no purpose. In addition, ICI urges that this court lacks jurisdiction •over it, in that it is a foreign corporation, not doing business in the United States, and therefore not amenable to the process of this court. It does admit that defendant ICI (NY) is found here, and that it is beneficially owned - and controlled by ICI, but denies that ICI (NY) is its agent for the transaction of business. The answer of the Remington defendants; besides denying participation in any conspiracy, also denies that any unlawful understanding existed since 1932 (at which time it became affiliated with duPont) between the other defendants, or that Remington knew of any such combination between the other defendants prior to that time. Answering the Government’s claim that acquisition by duPont of stock in Remington had for its purpose or effected the elimination of competition between Remington and ICI in the sale of sporting arms and ammunition and the bringing of this industry within the existing over-all conspiracy, Remington alleges: that at no time has duPont controlled its management, policies or activities, other than as a right incidental to stock ownership, but that Remington has continued to act independently; that its affiliation with duPont was necessary if Remington was to preserve and improve its competitive position in this field— a policy from which it has never deviated. It is further alleged that as a result of ecpr nomic conditions, acquisition by duPont of a majority interest in Remington was a logical solution to a serious economic problem confronting both companies, and that Remington has greatly benefited thereby. With reference to its agreements with ICI, Remington alleges as their effect, not a curtailment, but an increase in its exports to and in its manufacture in the British Empire, as well as the improvement of its products, the addition and substitution of new ones and the saving of expense and time in research. Remington denies making any agreement whereby ICI was to or did curtail its exports to the United States, alleging that because of the extremely high tariffs in effect here, ICI could not, under any circumstances, have developed an extensive trade to this country. The organization of the jointly-owned foreign companies by Remington with ICI, Remington alleges, was necessitated by political and economic factors (tariffs and national trade barriers) which were effectively closing markets to Remington. Establishment of foreign plants to manufacture and distribute locally and to act as Remington’s exclusive selling agents, it avers, was the only means by which it could continue to sell in these markets. Remington further alleges that all these agreements and arrangements with ICI were independently arrived at, motivated not by any conspiracy, but prompted solely by independent assessment of commercial factors. The action was tried by the Court upon the issues thus framed. III. Jurisdiction over ICI By way of a separate and distinct defense in its answer, ICI has questioned the court’s jurisdiction over it, asserting that it has not been properly served with process in this action. Service of process upon ICI was made, or attempted to be made, by service upon ICI(NY), a New York corporation wholly owned by ICI and having an office in the City of New York. The issue here presented is whether the relationship between ICI and ICT(NY), and, the activities of the latter company in this district, are such that service upon ICI (NY) is effective to confer jurisdiction upon this court over the parent company. This very question was raised by ICI in a prior litigation in which it was involved in this district. United States v. United States Alkali Export Ass’n, Inc. et al., S.D.N.Y.1946. The parties have stipulated herein that the jurisdictional issue should be determined on the basis of the record made in that case (hereinafter known as the Alkasso case), together with the evidence adduced herein. Moreover, ICI has rested its legal position on the arguments it advanced in its briefs in the prior litigation, which briefs it has resubmitted to the court. We have carefully examined the factual evidence bearing on the jurisdictional issue submitted in the Alkasso case submitted herein, the briefs which have been submitted to the courts, and Judge Leibell’s exhaustive opinion in the prior litigation. We are in complete agreement with Judge Lei-bell’s determination that service of process upon ICI (NY) suffices to confer jurisdiction upon this court over ICI. We find that the offices and staff maintained in this district by ICI (NY) were used solely for the purpose of carrying out the business of defendant ICI. The conclusion is inescapable that defendant I'CI was doing business within this district through TCI (NY); and that the two were so inextricably associated that every move of the latter was directed by ICI. Consequently, we hold that service on ICI (NY) gave ICT notice of the institution of this suit. There is every “reasonable assurance that the notice will be actual.” International Shoe Co. v. State of Washington, 326 U.S. 310, 320, 66 S.Ct. 154, 160, 90 L.Ed. 95. It cannot be successfully contended that requiring ICI to defend here will work such an inconvenience as to result in a denial of due process. It is hard to conceive of a forum more convenient to plaintiff and to a defendant who has had such numerous, permanent contacts in this district — contacts so essential to the continued conduct of its affairs. ICI has taken advantage of the opportunities offered here for its corporate activities; it has received the benefit of the laws of the United States; it must expect to be required to answer for their breach. International Shoe Co. v. State of Washington, supra, 326 U.S. at page 317, 66 S.Ct. 154; Latimer v. S/A Industrias Reunidas F. Matarazzo, 2 Cir., 175 F.2d 184, 185. IV. Admissibility in Evidence of Certain Documents Defendants duPont, Lammot duPont, and Walter S. Carpenter Jr. moved to strike certain of the plaintiff’s exhibits on the ground that they are hearsay and not admissible under any exception to the hearsay rule. The moving defendants urge that even if it be assumed that a conspiracy has been shown, prima facie, by evidence aliunde, which they do not concede,, the challenged documents are not in furtherance of the conspiracy, but are (!)■ mere narrative statements of past events, or (2) internal I'CI statements recording gossip, speculation, or opinion, or (3) ex parte interpretations of draft or final agreements, or (4) anonymous and other miscellaneous hearsay statements. There is no disagreement as to the applicable law. If a conspiracy has been shown prima facie by evidence aliunde, declarations of co-conspirators in furtherance of the conspiracy are admissible against all. Since we have found that a conspiracy has been so proven, the sole issue is whether the challenged documents are declarations in furtherance of the conspiracy. Because of the nature of the conspiracy, and of its participants, we conclude that they are. Whether a declaration is in furtherance of a conspiracy must perforce turn upon scope and extent of the conspiracy. When the alleged conspirators are large, corporations, doing a world-wide business, with seats of authority geographically distant one from another, numerous internal communications within each corporation are necessary in order to apprise large numbers of corporate officers and employees of the nature of the negotiations, the attitudes of the representatives of other co-conspirators, the decisions reached, their import and the understanding of the agents of the corporation of the decisions reached. Otherwise, such a conspiracy would be inoperative. Moreover, in a conspiracy 'which continues over many years, which has been adapted to changed conditions, which has altered techniques and tactics from time to time, and where the individuals operating the affairs of corporate members of the conspiracy have changed with the passing of years, the keeping of records of past agreements .and understandings, the preparation of summaries of past relationships between the parties and the making of reports are in aid of the over-all purpose, persisting throughout, which the parties to the agreement have been intent upon accomplishing. In addition, a broad agreement to divide world-wide markets such as is shown in this case, existing from as early as 1897, cannot be a- static one, else it would find itself ineffective due to rapidly changing world conditions, and the new and frequent developments in technical fields. Revisions, alterations, adjustments, and expansion to new and attractive areas were necessarily part of the conspiracy here proven, and, indeed, at the very heart of its successful survival of altered external factors. Accordingly, the steps taken by each co-conspirator in suggesting alterations, preparing for conferences, reporting discussions among the representatives of the co-conspirators concerning proposed alterations, planning new means of effectuating the joint purpose, all are in furtherance of the conspiracy. An agreement and conspiracy of the nature proven in this case is a vital, growing, adjustable enterprise, and this growth, vitality and adjustability further the purposes of the conspiracy, for without them, the conspiracy would become ineffectual and fail of its purposes. All of the challenged documents are therefore held to be in furtherance of the conspiracy. The objections of the moving defendants go to the weight to be given particular parts of particular documents, and where a document contains conjecture or speculation as to the state of mind of individuals employed by a co-conspirator, or similar matter of slight probative value, little if any weight has been given to it. The conclusion we have reached is in accord with the weight of authority. See United States v. U.S. Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746; Schine Chain Theatres v. United States, 334 U.S. 110, 68 S.Ct. 947, 92 L.Ed. 1245; Hitchman Coal & Coke Co. v. Mitchell, 245 U.S. 229, 38 S.Ct. 65, 62 L.Ed. 260; United States v. Hartford Empire Co., D.C.N.D.Ohio, 46 F.Supp. 541, affirmed 323 U.S. 386, 65 S.Ct. 373, 89 L.Ed. 322; United States v. General Electric Co., D.C.N.J., 82 F.Supp. 753, 902-905. In light of the conclusion here reached it is apparent that six exhibits offered into evidence by the plaintiff during the trial and excluded as to the defendant Remington (with the reservation that in light of later developments, the ruling might be changed), should be admitted generally. Each appears to be in furtherance of the conspiracy. Exhibits 1278, 1279, 1280, and 1281 are therefore admitted. Exhibits 1269 and 1309 likewise appear in furtherance of the conspiracy provided only their authenticity as declaration by agents of ICI is established. Neither is signed and there is no proof as to their authorship. Nevertheless, since there is sufficient circumstantial proof to establish that they are authentic records and declarations of an’agent of ICI, they are received in evidence. Both are from the files of ICI (cf. VII Wigmore on Evidence 2160 (1940 ed.)); the subject matter of both is corroborated by other evidence, and both, the first document especially, give every indication of having been prepared by a responsible agent of ICI. Indeed, the only logical explanation of their appearance in the ICI files if they are not authentic, is that the documents are forgeries, or spurious. Such an explanation is rejected as entirely improbable. However, the weight to be given the documents, particularly to the second, is necessarily decreased. While they bear every indication that they were prepared by persons in a position to know of the matters set down, their anonymity must go to the weight to be given them. With this caveat, the two documents will be received. We come now to examine the stenographic record of the trial consisting of over 5200 pages, the 1436 exhibits introduced by the Government and printed in 13 volumes, and the 2264 exhibits introduced by the defendants and printed in 17 volumes. We are grateful to counsel for their cooperation in expediting the presentation and introduction of the evidence, but we have approached the examination and evaluation of the multitudinous exhibits with the reflection that of them there were too many and too much. Perhaps, with knowledge born of this experience, a similar trial in the future will see the introduction of fewer exhibits. However, we have here considered all exhibits and from them and the testimony we make the following findings. V. The Patents and Processes Agreements A. The “Explosives Agreements” The several types of agreement into which the defendants entered present important problems peculiar to each type. Therefore, although the complaint alleges that all the agreements entered into between the defendants reflect a continuing overall conspiracy, the distinct types will be separately examined. We will separately consider the various patents and processes agreements; the agreements affecting the jointly owned companies; and what might be characterized as miscellaneous selling arrangements. Throughout it must be borne in mind that the Government alleges the interconnection of all these agreements. While reaching the fullest efflorescence in the 1929 and 1939 agreements embracing large categories of products, the patents and processes agreements were first developed with respect to explosives. In ascertaining the intent underlying the patents and processes agreements, a separate study of the explosive arrangements may prove useful. Evaluation of the intent of the parties in making these agreements will be facilitated by first setting forth summarily the content of the major earlier agreements. 1. Content of These Agreements In 1897, duPont and various other American companies entered into an explosives agreement with Vereinigte Koln-Rottweiler Pulverfabriken, of Cologne, and Nobel-Dynamite trust of London (predecessor of ICI), the latter companies being designated “the European factories.” The spirit of the agreement was set forth in the preface: “Whereas, the parties hereto own or control a large number of companies and works engaged in the manufacture and trade of explosives, and whereas, it has been deemed advisable to make arrangements, so as to avoid anything toeing done which would affect injuriously the common interest” (Ex. 1410, pp. 11148 E, F). The agreement provided substantially as follows: with respect to Black Powder and Smokeless Sporting Powder, “the American Factories undertake not to erect factories in Europe, and the European factories undertake not to erect factories in the United States of America. Both parties, however, were to be free to import into the other party’s territory” (Ex. 1410, p. 11148 G, H). With respect to detonators it was provided that “the European Factories shall abstain from erecting detonator works in the United States of North America,” and would discontinue works then in the process of construction (Ex. 1410, p. 11148G). In consideration of this undertaking the American Factories agreed to order at fixed prices a certain number of detonators per year. “With regard to Smokeless Military Powder it is hereby agreed that the European Factories undertake not to erect any factories in the United States of America, and that the American Factories undertake not to' erect any factories in Europe. Whenever the American Factories receive an enquiry for any Government other than their own, either directly or indirectly, they are to communicate with the European Factories through the Chairmen appointed, as hereinafter set forth, and by that means to ascertain the price at which the European Factories are quoting or have fixed, and they shall be bound not to quote or sell at any lower figure than the price at which the European Factories are quoting or have fixed. Should the European Factories receive an enquiry from the Government of the United States of North America, or decide to quote for delivery for that Government, either directly or indirectly, they shall first in the like manner ascertain the price quoted or fixed by the American Factories and shall be bound not to quote or sell below that figure” (Ex. 1410, p. 11148 H). The provisions of the 1897 agreement most pertinent to this suit are those involving high explosives, defined as “all explosives fired iby means of detonators,” as to which it was “agreed that the United States of North America, with their present or future territories, Possessions, Colonies, or Dependencies, the Republics of Mexico, Guatemala, Honduras, Nicaragua, and Costa Rica, as well as the Republics of the United States of Colombia and Venezuela, are to be deemed the exclusive territory of the American Factories, and are hereafter referred to as ‘American Territory’. All the countries in South America not above mentioned, as well as British Honduras and the Islands in the Caribbean Sea, which are not Spanish possessions, are to be deemed common territory, hereinafter referred to as ‘Syndicated Territory’; the rest of the world is to be the exclusive territory of the European Factories, hereinafter referred to as ‘European Territory’. The Dominion of Canada and the Islands appertaining thereto, as well as the Spanish possessions in the Caribbean Sea, are to be a free market unaffected by this Agreement. “The American Factories are to abstain from manufacturing, selling, or quoting, directly or indirectly, in or for consumption in any of the countries of the European Territory, and the Europeans are to abstain in like manner — in any of the couirtries in the American Territories. With regard to the Syndicated Territory neither party are to erect works there, except by a mutual understanding, and the trade there is to be carried on for joint account in the manner hereinafter defined” (Ex. 1410, pp. 11148-H-I). It was further provided that the American and the European Factories were each to designate a Chairman, who were to agree upon and fix a basis price for each market in the Syndicated Territory, to include cost of manufacture, and all charges, as well as a stipulated “contribution towards the Common Fund.” The Chairmen were empowered likewise to fix a selling price for each market, below which no sales were to be effected; the difference between the basis price and the selling price was to be deemed the “Syndicate” profit, and to be divided in equal shares by the American Factories and the European Factories (Ex. 1410 p. 11148 1 et seq.). This 1897 Agreement was cancelled by the parties in 1906, one year before the filing ^)f a government monopoly suit against duPont which resulted, inter alia, in its judicial condemnation. United States v. E. I. DuPont DeNemours & Co., C.C., 188 F. 127. In 1907, DuPont entered into the first of the patents and processes agreements (Ex. D. 1271). The other parties to the contract were Koln-Rottweiler and Nobel Dynamite Trust, Ltd. (the European factories). Many of the provisions of this first of the patents and processes agreements were adhered to in the later agreements. In it the words “invention” or “inventions” were understood to include American inventions and European inventions. “Explosives” were defined “as including Black Powder and Nitrate mixtures in all their varieties; smokeless propellants, whether for military or sporting purposes; disruptive explosives of any kind, whether for industrial or warlike purposes; * * * and generally all devices for initial detonation or ignition, as also ammunition of every kind, as well as the ingredients and component parts of all the above insofar as they are applicable to explosives.” To the “Americans” were allocated the United States of America and their present and future territories, possessions, colonies, or dependencies, Mexico, Guatemala, Honduras, Nicaragua, Costa Rica, Panama, Colombia and Venezuela. To- the “Europeans” were assigned all countries not allocated to the “Americans,” except the balance of South America, British Honduras, Islands of the Caribbean, the Dominion of Canada and Newfoundland. The agreement provided for the exchange of patented and secret processes; each granted to the other exclusive rights for the grantee’s territory and non-exclusive rights in all other territories (Ex. D-1271, pp. 8213, 8214). Each party further agreed that if it acquired during the term of the Contract any rights under any patents or secret processes relating to the manufacture of explosives in any territory in which it has not granted its “inventions” to the other, “such party shall co-operate and use its best endeavours to obtain such similar rights, licences, etc., for the other party as will enable the other party to use the same in territory in which rights have been granted to it hereunder, but neither party is under obligation to purchase or pay for any such rights for the benefit of the other” (Ex. D-1271, p. 8215). It was also provided that “For the purpose of making effective the grant's hereby made, each party shall disclose to the other immediately, or in any event within twelve months from the date of this Contract, full particulars in regard to all ‘inventions’ employed by such party, and shall furnish the other with copies of all patents owned or controlled by such party, and wherever necessary shall execute such assignments and licences under such patents as may be necessary to carry out the intent of this Agreement, and each party shall appoint one or more competent and trustworthy persons experienced in the business for the purpose of receiving information from the other party as to all secret processes now used by either party to this Contract, and shall notify the other of such appointment, and immediately after receipt of such notification, or in any event within twelve months thereafter, each party shall disclose to the appointees of the other party all such information concerning any secret process used, owned or controlled by such party as may be necessary to carry out the intent of this Agreement. Each party agrees from time to time during the continuance of this Agreement to transfer any ‘invention’ hereafter owned or controlled by it, and to disclose all such information in regard to any such ‘invention’ whenever the same may reasonably be required under the terms of this Agreement- Each party agrees to use its best endeavours to keep secret any disclosures made by the other party to it, but shall not be liable in damages for failure so to do, Each party will further supply such experienced chemists, engineers, foremen, and other experts as the other party may require to assist such other party in availing itself of any such ‘invention’ and practically applying it, all of which assistance, however, shall be at the expense of the party availing itself thereof, and such assistance shall be afforded by each party to the other from time to time as required” (Ex. D-1271, p. 8215). Finally, of special significance in this 1907 Agreement was the provision for payment for the licenses granted, which read: “It being impossible to compute the detailed value to each of the parties of the ‘inventions’ hereby granted, the patents hereby conveyed not having been applied in the business of the grantees, and the secret processes being at present unknown to each grantee hereunder, a proper and fair compensation by each party to the other can most accurately be reached by basing the payment to be made by the parties to each other on the increase in 'their profits as compared with the profits earned in 1906, providing for the normal increase independent of the adoption of the ‘inventions’ hereby granted by allowing 6 per cent on all and any increase in the earnings capital, on the assumption that any increase in the normal profits must call for a corresponding increase in capital” (Ex- D-1271, pp- 8216, 8217). We find that the purpose and effect of this agreement of 1907 was to eliminate competition in the various explosive markets of the world. Early in the summer of 1913, duPont counsel “urged upon the Executive Committee the danger of the continuance of this agreement in view of the injunctive provisions of the decree in the government suit.” Conferences were held and the 1907 agreement was cancelled (Ex. 39, p. 213). A new agreement was drawn, which was not executed due to the outbreak of World War I (Ex. 1); however, duPont and the British Nobel Company continued to cooperate during the war and accepted the unsigned draft as if in effect between them during the war. The 1914 draft followed the familiar pattern; if was in the form of an agreement-to exchange present and future patents, processes and inventions relating to military and commercial explosives; the allotment of exclusive territories was identical to that made in the 1907 agreement (Ex. D-1271, p- 8213; Ex- 1)- The 1913 document was drawn in the light of the recognition “that previous agreements had been based on sound business considerations” and. of duPont’s position that “it is not good business to attempt an expansion in certain directions if such an act is bound to result as a boomerang of retaliation” (Ex- 37, p. 198). It was drafted to replace the 1907 agreement with a document which gave outward service to the law of the United States. The negotiations left Judge Laffey, duPont general counsel, who had participated in the conference which brought it forth, with the impression that, “ * * * we were getting our house in order legally, abolishing all contract relations that might be construed in restraint of trade, but that, as a matter of-voluntary policy, nothing would be done by either party that under the 1907 agreement would constitute a violation of the coív tract” (Ex. 39, p. 213). It was also noted by Judge Laffey that, “It was well understood by both parties that there was no legal obligation under the Sherman Law to compete and that even natural competitors in the same territory might as a voluntary policy refrain from competition” (Ex. 39, p. 213)- The evil, however, lay in that here the competitors were by collateral understanding effectuating a purpose to refrain from competing with each other (Ex- 37, pp- 197-99; Ex. 39, p. 213; Ex. D-1275 to 1280-C). In 1920, duPont entered into an agreement with Explosives Trades Ltd., successor to Nobel, which again repeated the pattern of the 1913 Agreement. It was provided that products other than explosives might be added if the parties so elect (Ex. 3, pp. 55-56). It was called by the parties the “General Explosives Agreement of 1920.” The German companies were not made parties; World War I had intervened. This agreement Sir Harry McGowan of ICI referred to on September 19, 1923 as “a camouflage to cover all relationships between the two companies” (Ex. 43, p- 228)- 2- The Intent of the Parties These agreements represent the major Patents and Processes Agreements involving explosives. The claim of the Government with respect to this phase of the case simply stated is: The 1897 Agreement was at least in part an open effort to divide markets. Recognizing its illegality under the Sherman Anti-Trust Law, 15 U.S.C.A. §§ 1-7, 15 note, the parties sought to achieve the same purpose through a patents and processes agreement which it was hoped would give a color of legality to the unlawful operation. Through their lack of experience with this technique of evasion, however, they included provisions which exposed its unlawful purpose- When apprised of this by counsel, they eliminated the ' offending provisions, but did not, however, change the essential purpose of the arrangement or the suitability of the agreement to that purpose. The position of the defendants may be stated as follows: the 1897 Agreement was an illegal one and for that reason was can-celled; the Patents and Processes Agreement of 1907 was not a continuation of that arrangement but a genuine effort to achieve the benefits of exchange of technology; its illegal aspects did not represent an effort to continue the 1897 Agreement, but resulted from inexperience with the legal requirements of such agreements; and in any event, if there had been any illegal purpose originally, it was abandoned in the subsequent Agreements- A basic issue in the conflicting analyses is, of course, the role played by the Patents and Processes Agreement of 1907- A comprehension of this is facilitated by examination of a factor of central significance in the patents and processes phase of the alleged conspiracy; the utility of these Agreements as instruments of territorial division. This can be appreciated by observing the operation of the agreements with respect to patents and secret processes involving techniques or methods in the production or utilization of non-patented products. All may compete in the production or sale of such commodities. Under the agreements the granting or acceptance of a license to such a technique results directly in the elimination of competition. The accepting party is given the exclusive right to utilize the technique in producing a non-patented commodity in its allocated exclusive territory; but it may not utilize the technique in the territory reserved by the grantor. Similarly, the granting party may not utilize the technique in the territory reserved to the other. It is plain that, acting in strict accordance with the terms of the patents and processes agreements, parties so disposed could effectively eliminate competition between themselves. We here assume that the patents and processes agreements are not invalid on their face. The burden thus devolves upon the Government to prove that the defendants entered into these agreements with an illegal purpose, or that they operated to achieve an illegal result. It should be noted again that both agreements were cancelled by the parties on advice of counsel that it was illegal- The correctness of this opinion can scarcely be doubted, nor do we understand the defendants to dispute it now. The immediate question is whether the illegality of the 1907 Agreement reflected only innocent inexperience with the legal requirements or whether it also represented a deliberate effort to continue the purpose of the prior 1897 Agreement- In this connection, several #facts seem reasonably apparent. The 1897 Agreement was a palpable effort to eliminate competition among the contracting parties- In part, this was to be accomplished by a division of territories. It was cancelled because the parties recognized it to be illegal- A reading of the 1897 and 1907 Agreements convinces that the latter Agreement was worded and designed to effectuate the purpose of the former. Some of the incriminating similarities were well pointed out by counsel in urging the cancellation of the 1907 Agreement: “The parties to the Agreement of 1907 are substantially the same parties to the Agreement of 1897; the territorial division is the same in both Agreements; what was European territory under the old Agreement is European territory under the present Agreement; what was American territory under the old Agreement is American under the present Agreement; much of the phraseology of the old Agreement is found in the new Agreement” (Ex. D-1279, p. 8283). . The single most illuminating provision of the 1907 Agreement concerned payments for the mutual exchange of patents and processes. This exchange of patent and process licenses, coupled with territorial limitations, can be considered legal only on the theory that it represents a legitimate exploitation of a legal monopoly. An essential element of such legitimate exploitation is that a bona fide effort be made to exact royalties proportioned to value. Thus, if a patent and process agreement of the kind involved here was to provide for exchanges of licenses with no remuneration at all, absent an exchange equal in value, its efficacy as an instrument to divide markets could scarcely be questioned- What the parties did do in the 1907 Agreement was hardly preferable. In substance, they provided that one-half of the increase of profits subsequent to the exchange of licenses would be attributed to the use of the licensed inventions, and paid to the licensing party- The effect of this provision was to eliminate all possible inducement between the parties to compete. The explanation that, absent experience as to the value of the licenses, these provisions represented a bona fide effort to assess value, does not merit consideration. Its destructive effect on competition is too plain to admit of doubt. The inherent utility of the 1907 Patents and Processes Agreement as an instrument of trade division, the nature of the 1897 Agreement, the similarity between the two agreements, the special profit sharing provisions, and the historical recordings and writings lead us to conclude that the 1907 Agreement was designed to effectuate the purposes of the illegal 1897 Agreement- The weight to be accorded duPont’s declarations, which recur throughout the relationships of the parties, that the agreement was to be considered on its face, and no subterraneous intent was to be imported therein will be considered later. It suffices to say that they do not successfully rebut the inference here drawn with respect to the 1907 Agreement. Nor is this conclusion rebutted by evidence purporting to indicate a genuine desire to achieve the advantages and exchange of technology. So long as a major purpose of the agreement was an illegal one, a complementary legitimate purpose does not immunize the parties from Anti-Trust prosecution. See U. S. v. National Lead Co., D.C., 63 F.Supp. 513, 524. Not only are the patents and processes agreements susceptible to being apt instruments of territorial divisions, but the very first such agreement was deliberately entered into with.a view to effectuating that illegal purpose- From the finding above that the 1907 Agreement was intended to achieve an illegal purpose it does not necessarily follow that all the subsequent patents and processes agreements were similarly motivated. It thus becomes necessary for us to determine whether or not the subsequent agreements are expressions of the same basic policy. In this inquiry two factors must be borne in mind: first, as we have noted, the 1913 and 1920 Agreements deleted those provisions which in the 1907 Agreement gave clear internal corroboration of the parties’ unlawful intent; second, the potentiality of the patents and processes agreements for territorial allocation is inherent in the structure of the agreements, and is in no way dependent upon the omitted provisions. If a material consideration in inducing the agreement was to divide markets and restrain United States imports and exports the agreements were unlawful. We turn then to examine the circumstances surrounding these agreements and to inquire into the manner in which they were carried out. DuPont points to vigorous statements by their executives to the effect that they would not agree to any effort to use the agreements as a tool of territorial division and repudiating any construction of these agreements as designed to achieve territorial allocation. Defendants urge these duPont statements as decisive on the question of intent; the Government asserts that they are purely record making statements, and merit no consideration whatsoever. The weight to be accorded these contemporaneous utterances may be most profitably considered in an examination of a dispute between the parties, concerning the proper interpretation of these agreements, which arose latér in connection with its military explosives aspects. However the following" may be noted here. It is established in law that the agreements were unlawful if entered into with an unlawful intent and to accomplish an unlawful purpose. U. S. v. Columbia Steel Co., 334 U.S. 493, 522, 68 S.Ct. 1107, 92 L.Ed. 1533. The evidence is that counsel fully advised defendants that the law so provided (Ex. D-1279, p-. 8284). Under these circumstances it is reasonable to assume that if the parties had the unlawful intent ascribed to them, they would have sought to conceal that fact by statements of the kind here made. This does not mean, of course, that such statements are to be considered evidence of guilt (as the Government appears to urge), but it does mean that they must be weighed carefully in their context and measured against the course of events. In connection with the 1913 and 1920 Agreements, the Government points to, as important evidence of duPont intent and purpose, a memorandum drawn up by Lam-mot duPont in 1919 setting forth a proposed duPont export policy. He embraced within the projected policy four categories of products: (1) explosives, accessories and ingredients; (2) artificial leather; (3) dye stuffs and intermediates; and (4) all other products. With respect to each of these categories three distinct trade areas were proposed, varying slightly with each of the categories of materials, and paralleling the areas set forth in the various patents and processes agreements. The three areas are designated: (1) Active Territory —“Territory where duPont or subsidiaries expect to and will endeavor to, become the leading source of supply”; (2) Representative Territory- — ‘‘Territory where duPont company or subsidiaries expect to do business now or later, but do not expect to become the leading seller”; (3) Inactive Territory — “Territory where duPont company or subsidiaries do not expect to do any business and will not attempt to supply in any way. Inactive Territory includes all above in which we have given to other manufacturers, through Agreements, exclusive rights to our own Patents and Processes” (Ex. 2, p. 36). The Government urges that this document establishes the “camouflage” nature of the patents and processes agreements; that this policy (which Lammot duPont asserted to be already in effect) represented fulfillment of the agreements. The position of duPont, apart from denial of the secret understanding underlying the patents and processes agreements and the claim that Lammot duPont misstated past policy, and that his recommendations were not accepted, is that the document, at worst, indicated a unilateral policy dictated by business considerations; which, if the fact, would admittedly not be within the purview of the Sherman Act. In support of this, duPont points out that the policy concerned commodities not within the scope of any agreement. Furthermore, duPont does not dispute that the agreements inevitably involved some territorial withdrawal, but urges that the surrendered territory was competitively difficult, and that the technological benefits outweighed the loss of markets. Thus, Lammot duPont’s export policy might be explained as reflecting the same view of the competitive unremunerativeness of the “Inactive Territories,” as was reflected in the patents and processes agreements themselves. This ingenious interpretation becomes difficult to sustain, however, when considered with other language in the same document. Lammont duPont also- wrote: “As far as placing an obligation upon the company is concerned it appears to me that we are practically obligated to this policy now, insofar as it limits our activities” (Ex. 2, ■p. 34). This language is subject to several possible interpretations. One is that the exchange of licenses under the patents and processes agreements had been so complete that under the terms of the agreements complete territorial division had already taken place. Nothing in the record indicates this to he the fact. But, if this be considered the fact, it would afford striking confirmation of the utility of the patents and processes agreements as a device for dividing territories, and its identification in the minds of the parties with that result-Another interpretation — and in our view the more probably correct one — is that Mr. duPont understood that his company was under an obligation not to compete in the “Inactive Territory.” Under the circumstances, such an over-all obligation must have involved an agreement with Nobel. Whether the obligation became effective irrespective of the granting of licenses, or whether it was intended to make it effective upon interchange of licenses intended to achieve that purpose, is not here important. The claim that the memorandum misstated duPont policy and that its recommendations were never adopted, is a subject for further inquiry. What is presently significant is that an important duPont executive apparently understood, twelve years after the termination of the 1897 Agreement, and six years after the termination of the 1907 Agreement, that his company was committed to a policy of territorial division- This conclusion, almost irresistible upon close study of the memorandum in the light of surrounding circumstances, casts a curious light on previous disavowals of such purpose by duPont executives, and indeed, on the weight to be accorded subsequent statements of similar import. It is particularly important in view 'of the fact (which will receive more detailed consideration), that ICI executives later persisted in the same understanding of the nature and effect of the patents and processes agreements. Another feature of this memorandum 'deserving of note is the inquiry addressed by Lammot duPont as to whether anything in his memorandum “-Would be objectionable as a matter of record” (Ex. 2, p- 34), a statement which may well be taken as an indication of a policy of concealment by duPont. In 1923, a controversy between duPont and ICI resulted from sales in Europe by duPont of I. M. R- powder (a new form ■of nitro-cellulose powder). Unfortunately, the factual background of this disagreement is not entirely presented by the evidence but it appears that duPont had offered licenses for the I. M. R. powder to ICI which they had declined. Military -authorities had interposed objections to the licensing of some secret military inventions, but whether this objection extended to I- M- R. powders does not appear- DuPont had discontinued licenses in this area allegedly with a view to freeing itself to sell military products abroad; but what licenses these were, and to what products in Europe they related, and what the sales picture was with respect to those products remains obscure. Another element in the factual melange was the pressure to which duPont was subjected by American Army officers to sell abroad in order to keep works in operation, and skilled personnel on the job, in preparation for any -emergency. The controversy was initiated by ICI in a letter from. Sir Harry-McGowan (Ex- 33, pp. 186-7). Subsequently, ICI's position was fully stated in a memorandum in which they noted that: “Nobel have always interpreted the arrangement with duPont by reference to the sequence of agreements and arrangements dating back to 1897 and not merely on a strict reading or interpretation of the present Patents and Processes Agreements, * * (Ex. 36, p. 193). In this connection, the language' of Barksdale, duPont’s counsel, describing the 1913 Agreement as an effort to maintain the spirit of the 1907 Agreement, was cited (Ex. 36); the memorandum continued: “2. Nobel have n'o desire, nor do they see any necessity, to make any change in the -existing arrangements which, have worked all this time so satisfactorily, leading as they have done to a free and frank exchange of ideas on all -sorts of subjects to the mutual benefit of both parties. “3. If duPont consider that any altered conditions have arisen, which call for a change in the business policies of the parties and also possibly of the actual agreement, as it now exists, then it would appear to be a matter for duPont to put forward their proposals, in the promulgation of which it seems advisable to keep the following points in mind:— “(a) According to Mr- Felix duPont, the reason for the development of the duPont ideas is based on a desire to keep their powder factories employed with orders from the European markets. It must be borne in mind that our American friends are not alone in this, because many of the European manufacturers (apart altogether from Nobel) have unemployed capacity not only in military powders but also in other Commercial products, which they are all equally anxious to fill. “Note at this point if duPont seek business in European markets it will be no longer possible for Nobel to hold the European manufacturers off in the manner which we have been able to d'o so far- “(b) From our knowledge of the European markets, which duPont are investigating, it seems that most if not all such countries have now or will have in the near future factories adequate for the production of normal needs, and that 'only in case of emergency or of special circumstances will orders be placed with outsiders. In such cases the Governments in question will be influenced entirely by the presence of stocks and will place the business with whichever supplier has the goods available. Spain, for instance, where duPont claim to have sold, only bought because of and at the time of the Moroccan troubles, and we have recently been assured that the factories existing in that country and owned by the Union Española and by the Government are adequate for all normal needs and that no business will be placed outside which can be filled from those sources. “(c) Nobel have no desire to sustain an arrangement which will preclude duPont from supplying anything which they themselves or the local people are unable to supply, and some machinery might be devised dealing with emergencies or special demands, should duPont be approached, but Nobel hold strongly that the introduction of an active campaign in the European markets is a violation of the spirit of the understanding which must have far-reaching effects on the general business of both parties, and which cannot possibly lead to any regular trade, and certainly not to a volume of business sufficient to employ duPont plants economically or regularly” (Ex. 36, pp. 193-95). Finally, it is observed, “ * * * if the subject is to be governed by a strict reading of the existing agreement, Nobel has the right to take the I. M. R. manufacturing rights for European markets (subject to the Government Prohibition Clause), but it is felt by N'obel that the agreement should not be construed on its exact phraseology, but rather on the broad lines of interpretation which have always governed the dealings between the parties” (p. 195). This memorandum was relayed by Crane, then in duPont’s London office, to Haskell, vice-president of duPont. He prepared a response by letter to Crane. It is not entirely clear whether it was intended that the letter was to be shown by Crane or whether it was designed merely to guide Crane in conversations with Nobel officials (Ex. 36, p. 192). Mr. Haskell commenced by repudiating .the interpretation placed on Barksdale’s language by ICI to the effect that the Patents and Processes Agreement referred back to the 1897 Agreement; but he acknowledged that the previous arrangements had been based on sound business considerations ; that mutual benefits had come from friendly relations, and that expansion in certain directions might well result in harmful retaliation (Ex. 37, p. 198). lie takes issue with the Nobel “camouflage” view of the agreement which he states to be contrary to the fact, in that the 1907 Agreement was cancelled and its place taken by the 1913 Agreement which “was complete in itself and represented all that could be done legally, and was so> accepted by the parties” (Ex- 37, p. 198). Mr- Haskell then notes that the sale by duPont of military powders to Europe was at the base of the controversy. He recalls that on several previous occasions duPont had sold military powders to Europe without protest from Nobel. He considered the “present situation” to be an outgrowth of the First World War when duPont supplied European requirements which in turn developed new buyers who preferred duPout powder. He observed that while Nobels disclaim any desire to act the part of dog in the manger, they are really so acting, for they “ ‘hold strongly’ that we should not sell nitrocellulose powder-something they do not themselves manufacture in Europe” (Ex. 37, p. 203)* Furthermore, he points out: “ * * * the kind of powder required by European buyers is the same as that formerly produced by the Germans. It also happens that the territory in-question is to a very large extent the same territory the Germans enjoyed before the war. Therefore, in introducing a campaign in Europe to sell nitrocellulose powder, we are really entering the countries formerly sold by the Germans in which Nobel powder (Cordite) was never in demand. “Since we are supplying something the Nobels have not yet manufactured to countries formerly supplied by the Germans, it seems rather far-fetched to evoke the spirit of a contract which would have expired in 1921 and to which the Germans were pre-viously a party but which was cancelled in 1913 and by the Germans never renewed, and use this as a basis for excluding duponts from the former German markets and preclude their selling nitrocellulose powder — something Nobels have never themselves manufactured” (p. 205). Mr. Haskell points out the change in conditions over the years, and that “I.M.R. powder was unknown in those years and the present trade conditions resulting from the War were then undreamed of” (p. 207). The divergence in interpretation of the 1920 Agreement, he attributes to Nobels’ inability to understand the Sherman Act, and, finally, he summarized his conclusions as follows: “1. The Patents and Processes Agreement signed in 1919 means what it says and not more or less. “2. Experience has indicated that friendly cooperation between such concerns as duPonts and Nobels is preferable to antagonism. The word ‘friendly’ is used in its widest sense and embraces not only the give-and-take of every day life but also rivalry and competition having due regard for fair play and the ethics of the game. * * * “3. It must be recognized that new conditions constant