Full opinion text
RIFKIND, District Judge. By its complaint the United States alleges a cause of action under sections 1 and 2 of the Sherman Act, 26 Stat. 209, 15 U.S. C.A. §§ 1, 2. Its prayer is for an injunction to restrain the alleged violations of the statute and for ancillary remedies to make the court’s mandate effective. The defendants are National Lead Company and E. I. du Pont de Nemours & Company, Inc., the two principal producers of titanium pigments in the United States and the two largest producers thereof in the world; and Titan Company, Inc., wholly owned by NL and in turn the owner of substantial stock interests in the following corporations, producers of, dealers in titanium pigments: BTP, TG, SIT, TAS and TK. The complaint charges that: “Beginning on or about July 30, 1920, defendant National and co-conspirator Titan A/S, and the remaining defendants and co-conspirators, and others to plaintiff unknown, on various dates thereafter, continuing at all times thereafter to the date of the filing of this complaint [June 24, 1944], have been continuously engaged in a combination by the means and methods hereinafter set forth, in restraint of, and to monopolize, the aforesaid trade and commerce in titanium compounds among the several -states of the United States and with foreign nations and have been and are now parties to contracts, agreements, and understandings in restraint of such trade and commerce, all in violation of Sections 1 and 2” of the Sherman Act. The evidence supports the allegation in every material respect. Titanium is a very abundant element. The principal ores which yield titanium in commercial concentration are ilmenite and rutile. Titanium compounds and particularly titanium dioxide possess the characteristics of opacity, great hiding power, high tinting strength and chemical inertness. These properties make it superlatively suitable for the manufacture of white paint and valuable in the production of rubber, glass, paper and several additional materials. The commercial development of titanium compounds is founded largely upon the work of three groups of chemists working independently at and about the time of the first World War. In the United States, at Niagara Falls, New York, Messrs. Barton and Rossi developed a process for the manufacture of titanium compounds. Patents were issued to them; and these they assigned to TP, a corporation formed for the purpose. In Norway, Gustav Jebsen and his associates interested in the utilization of a large ilmenite deposit, developed another process. The patents which were granted thereon were assigned to TAS, organized for the purpose of exploiting them. In France, Joseph Blumenfeld invented and procured patents for a third process. Terres Rares acquired these patents. In 1920 NL held 10% of the stock of TP and had an option to acquire up to 50% of its stock. NL thereupon negotiated an agreement with TAS which was executed and went into effect on July 30, 1920. This agreement became the basic charter for the world-wide regulation of production and commerce in titanium compounds. It marked the birth of a new industry. In the course of the ensuing twenty years titanium pigments outstripped the production and sale of lithopone and white lead. In the United States production rapidly mounted and by 1940 more than 100,000 tons of pure TÍO2, having a value in excess of $40,000,000 were manufactured and sold. In Europe and other parts of the world, too, the industry took serious hold and production mounted to approximately one third of the United States tonnage. By 1944 American production had risen to 133,000 tons of pure TÍO2. Most of the sales were not in the form of pure TÍO2 but in the form of extended pigments — that is, pigments composed of TÍO2 chemically united or mechanically mixed with other ingredients. Throughout this period prices were repeatedly reduced and only once, in 1941, increased. At or about the time of the outbreak of World War II [this point of time is taken arbitrarily] we find this industry predominantly occupied in the United States by two producers, NL and DP, who supplied, in 1939, 73,645 tons out of a total of 82,940 tons. The balance of 9,295 tons is produced by American Zirconium, a licensee of both NL and DP and by Virginia Chemical, a licensee of DP . We further find a complete absence of imports of titanium products from abroad, and complete absence of exports from the United States, except to the countries of the Western Hemisphere. In order to understand how this condition of affairs came to be, it is necessary to review the provisions of the mentioned contract of 1920 and briefly to relate the history of the persistence of its principles in more than 60 agreements subsequently executed. The 1920 agreement between TP and TAS provided: The preamble recited that each of the parties owned and expected to own certain patents and that each desired to obtain rights under the patents owned by the other, within the “licensed field.” “Licensed field” was defined to include all substances consisting of or containing above two per cent, of titanium, or a compound or compounds thereof, unless such substances contained by weight more than five per cent, of a metal other than titanium in its purely metallic state, and all apparatus, methods, and processes useful in the obtainment or manufacture or use of said substances. TP agreed to grant to TAS and TAS accepted a license, exclusive of all others including TP, to manufacture, use, and sell each and every invention improvement, or subject matter in the licensed field, under existing or future letters patent; but only in or for territories outside of North Amer-ica and South America. TAS agreed to grant to TP and TP accepted a license, exclusive of all others, including TAS, identical in scope and extent except that it was limited to and for the territories within North America (defined to include Central America and Panama). Each party granted the other a nonexclusive license to use or sell, under patents issued by South American countries, but only in South America. The parties agreed to make available to each other copies of patent applications; and detailed provision was made for the prosecution of patent applications and the maintenance of patents within the territory of each party respectively. Each party agreed never to question the validity of the patents of the other. TAS appointed TP its sole agent for the introduction into and sale in North Amer-ica of all products of TAS in the licensed field. Such importation into the United States could take place only upon the order of the agent; and the sales in North Amer-ica were to be made at prices and upon conditions fixed by the agent. TP similarly appointed TAS its sole agent for introduction and sale, outside of North and South America, of all TP products in the licensed field. Each party was permitted to import into the territory of the other finished articles, such as paint, glass, rubber, in which a titanium product had been used as a raw material — but only when the titanium product did not constitute such an important part of the finished article that its sale would substantially interfere with sales of its own products by the other party within its own territory. Each party agreed to impart to the other full and accurate technological information relating to the licensed field, and to permit plant inspection (exclusive of research laboratories). Article XIV of the agreement conferred upon each party the right to grant licenses under its own patents or sublicenses under the other’s patents, on condition that every such licensee or sublicensee would a) grant to the party to the 1920 agreement, other than its licensor, exclusive licenses under all its patents, present and future, in the licensed field, identical in character, territorial scope, and duration to the rights granted by the 1920 agreement by the parties thereto; b) appoint such other party its sole agent on the same terms as obtained between the parties to the 1920 agreement; c) would impart to such other party technological information to the same extent as obtained between the parties to the 1920 agreement; d) would abide by the territorial allocation of the 1920 agreement. The agreement of 1920 was to continue in effect until 1936, and was then to be automatically renewed for successive ten year periods, each party having the right to cause a termination by notice given at least five years before the end of such period. By an agreement executed simultaneously with TP and TAS, NL bound itself to respect the contract of 1920, promptly to assign to TP all its then owned or thereafter acquired patents, inventions and improvements relating to the licensed field, throughout the world, and to communicate to TP all its technical information in the licensed field. It is manifest that by the terms of this agreement the parties had divided the world into two trade areas or territories; that each party agreed not to trespass into the territory allotted to the other; and that all commerce between the two territories in titanium products was, as far as these parties were concerned, interdicted and could proceed only by the grace of their mutual consent. The suppression of this commerce was not limited to patented articles or to articles produced by patented processes but extended to all products within the “licensed field.” The objects of this arrangement have not been left unstated, to be ascertained by inference and deduction. They are disclosed by a large volume of written correspondence, uninhibited by any respect for, or indeed any apparent awareness of, the prohibitions of the anti-trust laws. These explicitly stated objects are: 1, the elimination of competition; 2, the advancement of the art through the exchange of technology. It was the belief of the architects of this foundation of the industrial structure they hoped to build thereon, that the second object could not be attained except in a climate of cooperation engendered by the achievement of the first object. And it was their intention that the advance in the art, accelerated by the exchange of patents, patent applications and “know-how,” should as far as possible remain the private prize of the parties, and constitute their shield and weapon against outsiders. This intention was carried into effect. An examination of the evidence reveals the perpetuation of what the parties called the principles of the 1920 contract by a network of agreements which have confined the international trade in titanium products within the preordained channels where-through it moves only by the grace and under the regulation of NL and its foreign associates. It is unnecessary to rehearse the history and detail of that development. Both are recited in the Findings of Fact. A very brief summarization is all that will be attempted here. In 1927 NL acquired 87% of the stock of TAS. Jebsen retained 13%. In 1929 NL organized Tine, which thereupon acquired the rights and assumed the liabilities of TAS under the 1920 Contract. Tine became NL’s corporate pocket for the deposit of its holdings in foreign titanium enterprises. By 1932 NL had acquired all of the stock of TP and in 1936 it acquired all its assets and assumed its obligations. On May 1, 1925, by agreement between TAS and French interests, SIT, a French corporation, was established to manufacture and distribute titanium products but only within the territory of France and its colonies (except those appurtenant to North and South America). Both TAS and NL acquired substantial interests in SIT. On March 3, 1927, the arrangements between TAS and SIT were confirmed and elaborated to give explicit expression to the provisions of the 1920 Contract relating to territory, competition and technological collaboration. In 1927, by agreement between TAS (acting also in behalf of and in the interest of NL) and IG, a German corporation was established, called TG. IG and TAS became the joint owners of TG. IG agreed that it would not engage in the titanium business except through TG, to whom it assigned all its titanium patents and to whom it agreed to assign all its future titanium patents. To TG was assigned a territory consisting of Germany, Russia, Austria, Hungary, Czechoslovakia, Switzerland, Rouma-nia, Serbia, Croatia, Slovenia, Bulgaria, Greece, Turkey, Japan, China, and Spain. TAS and TG simultaneously entered into an agreement which embodied the principles of the 1920 Contract. NL was in good part motivated in bringing about these German agreements by the desire to be free of the potentially very dangerous competition of so powerful a producer as IG. The evidence is incapable of any other inference. By 1933 NL was acting in the foreign field through Tine. By a series of agreements entered into in February and March, 1933, production and distribution of titanium products within the British Empire (exclusive of North and South America) were brought within the orbit and subjected to the regulation of the principles of the 1920 Contract. The agreements were among Tine, I Cl, ISC and GW. Pursuant to these agreements BTP was formed and became the assignee and licensee of existing and future titanium patents of the parties to the agreement; it also became subject to and beneficiary of the principles of exclusive territorial allocation and patent and technological collaboration of the 1920 Contract. Meanwhile, significant events were taking place within the sphere of relations between the producers already mentioned and other producers, both American and foreign, whose processes stemmed from the inventions of Joseph Blumenfeld. But I shall depart from the chronological order in order to complete the recitation of events pertinent to the producers whose processes were rooted in the Barton and Jebsen Rossi inventions. Canada was NL’s territory under the 1920 Contract. But danger of independent competition in that market developed from the plans of Laporte. In 1937, NL and CIL entered into agreements for the formation of CTP, to whom Canada was assigned as its exclusive territory. CTP became the beneficiary of all present and future titanium patents of both its founders. It was subjected to the restrictions and given the benefits of the principles of the 1920 Contract. The threat of Laport’s competition was eliminated by an agreement under which Laporte’s Canadian business and patents were purchased and Laporte covenanted to stay out of the titanium business in Canada for 15 years. In 1936, Tine, IG and TG, a Blumenfeld company, TR and a Japanese company, KK, joined in the formation of TK to engage in the manufacture and sale of titanium products. The territory assigned to TK was the Japanese Empire. This agreement departed in some respects from the principles of the 1920 Contract but it adhered strictly to the principles of exclusive territorial allocation and the elimination of competition between territories. In the new Japanese company ownership was divided as follows: 50% to KK; of the remaining 50%, TR got 30% and Tine and IG 70%. This division of interest between Tine and IG on one side and the Blumenfeld companies on the other was dictated by agreements previously entered into which need now to be briefly mentioned. It has already been stated that Joseph Blumenfeld had assigned his titanium patents to TR. TR in turn assigned or licensed them to Aussig of Czechoslovakia, Montecatini of Italy, Thann of France, Laporte of Great Britain and Commercial Pigments of the United States, who severally were engaged in the production of titanium products and exploited various markets in competition with the producers already mentioned, who utilized the Barton-Rossi and Jebsen processes. Beginning in 1933, a series of agreements were negotiated and executed, the object of which was to bring this competition under the control of the parties. i. The first of these was the Aussig agreement, made in 1933, by TG and Aus-sig. This agreement regulated production, territory of sale, sales quotas, prices and patent exchange. ii. The Contrat a Quatre was executed in 1935 to take effect as of May 1, 1934. The parties were Thann and TR on one hand, and SIT and Tine on the other. It regulated sales quotas, prices and patent exchange. iii. The Contrat de Livraisons was executed in 1935 by the same parties. To prevent the expansion of producing capacity, the contract provided that each would supply the other with its surplus product to satisfy the other’s deficiency. iv. The Contrat a Six was executed at the same time. The parties were Thann, TR, Montecatini, Tine, SIT, and TG. It regulated sales-territories and sales-quotas of each of the parties. All the parties agreed to give neither technical nor commercial assistance or assign any patent or grant any license to any outsider who intruded into the territories covered by the agreement. This agreement was renounced by Montecatini on December 31, 1938. v. The British Empire was not embraced within the aforementioned agreements. Sometime in 1936, BTP and Laporte entered into agreements whereby Laporte withdrew from the world market outside the British Empire and uniform prices were established in the British market. In 1941, BTP entered into a quota arrangement with Laporte, establishing 80% as BTP’s share and 20% as Laporte’s share of the British market. I return now to the United States and take up the thread of the story in 1931. Since this aspect of the case will require more detailed analysis, I shall but sketch its outlines to serve as a frame of reference for the discussion which is to follow. As already indicated, Commercial Pigments held the American rights under the Blum-enfeld patents. Until 1931, the company engaged in manufacturing and selling pure TÍO2. In 1931, these rights were acquired by Krebs, a corporation organized by DP and Commercial Solvents Corporation. DP acquired 70% of the stock of Krebs. Krebs manufactured and sold titanium compounds until 1935, when DP acquired all its assets. Thereafter and to date, DP engaged directly in manufacture of titanium compounds. After a protracted period of negotiation between NL and DP, their respective titanium subsidiaries TP and Krebs entered into a written agreement, dated January 1, 1933, which was executed in July of 1933. By the terms of- this agreement they i. exchanged irrevocable, non-exclusive licenses, within the United States, to use all processes, methods, and apparatus relating to or in the “licensed field,” whether or not patented or subject to patent, then or thereafter owned by them or otherwise at their disposal, with the right to sell products resulting from the exercise of such licenses in the United States, its colonies and possessions, Mexico, Central America, the West Indies and South America; ii. agreed to exchange technical information and experience; iii. agreed to assist each other to acquire an irrevocable, non-exclusive license, for the territory above described, under any patent or application owned by or otherwise at the disposal of third parties, under which one of them was itself licensed; and Krebs agreed that it would offer to any foreign associate of TP, before offering to any other person, the opportunity to acquire, upon mutually satisfactory terms, an irrevocable, non-exclusive license under any patent, then or thereafter owned or at the disposal of Krebs, relating to the “licensed field,” issued in any country of Europe or in Great Britain; iv. released each other from infringement claims; v. agreed that the agreement might be terminated after December 31, 1933, on three years notice. Before this agreement was executed there was an exchange of oral and written communications between NL and DP, of which more will be said hereafter. It is sufficient to indicate at this point that the DP agreement departed in several important respects from the requirements of Art. XIV of the 1920 Contract. In each of the years 1937 to 1941, inclusive, DP and Tine entered into agreements whereby DP granted to Tine licenses, exclusive except as to DP, under specified titanium patents and applications of DP, in specified countries, with the right to grant sublicenses to TG, BTP, SIT and from 1939, to TK; and Tine, with the consent of NL, granted DP non-exclusive licenses under specified United States patents and applications. On or about May 1, 1940, the exchange of technical information between NL and DP was discontinued; and by agreement of January 1, 1941, the 1933 agreement was amended accordingly. As already noted, there are in the United States only two other producers of titanium products, American Zirconium and Virginia Chemical. American Zirconium began the manufacture of titanium compounds in 1934. NL and DP severally notified American Zirconium that it was probably infringing. On May 6, 1935, NL (through TP) entered into an agreement with American Zirconium for the cross-licensing of patents. The agreement in all material respects embodied the principles of the 1920 Contract. In lieu of royalties NL received 10% of the stock of American Zirconium. In April, 1944, the agreement was can-celled and NL assigned its American Zirconium stock to the latter’s parent corporation. In July, 1935, DP and American Zirconium entered into an agreement dated January 1, 1935, whereby DP granted American Zirconium a non-exclusive license under specified patents, subject to a royalty on the “total quantity of titanium dioxide produced” and subject to a quantity limitation on the tonnage of “titanium dioxide made wholly or partly under the license.” The quantity limitation was graduated from 3,000 tons at the inception of the contract to 9,000 tons in 1944 and thereafter. The limitation was from time to time somewhat relaxed and was cancelled on November 10, 1944, on recommendation of DP’s Legal Department. Virginia Chemical received a license from DP on August 5, 1937. Its terms were substantially similar to those of the American Zirconium license. The quantity limitations were eliminated at the same time and under the same circumstances as the corresponding change was made in the license to American Zirconium. This concludes the barest outline of the history of the titanium industry. In detail, the elapsed quarter century is crowded with negotiations, conferences, correspondence and agreements. The men who participated in these were all articulate, literate and, with the exception of DP’s Rupprecht, recorded what they saw, heard, said and thought with Boswellian fidelity. When the story is seen as a whole, there is no blinking the fact that there is no' free commerce in titanium. Every pound of it is trammelled by privately imposed regulation. The channels of this commerce have not been formed by the winds and currents of competition. They are, in large measure, artificial canals privately constructed. The borders of the private domain in titanium are guarded by hundreds of patents, procured without opposition, and maintained without litigation. The accumulated power of this private empire, at the outbreak of World War II, was tremendous. It was more difficult for the independent outsider to enter this business than for the camel to make its proverbial passage through the eye of a needle. For the purpose of the discussion which follows, it is convenient to segregate DP’s relations with NL and the foreign producers from NL’s relations with the foreign producers. I. The Case Against NL and Tine. At the outbreak of World War II we find that NL and Tine are, by virtue of agreement, members of a world-wide combination. The more intimate members of that combination are NL, Tine, TAS, SIT, TG, BTP, TK and CTP. Among these, the closest cooperation prevails. Territories are allocated; patents and patent applications are interchanged and cross licensed; technological information or “know-how” of one is promptly made available to the others (except TK). Each operates in its own exclusive territory. When there is suspicion that a customer of one is shipping into the territory of another, investigation is promptly made with a view to suppressing the “illicit” traffic. Competition among them is non-existent. A less intimate bond unites the members of this Titan family with the Blumenfeld group. No member of the latter group exports into NL’s exclusive territory. NL does not export outside of the Western Hemisphere. For the territory beyond NL’s frontiers, quota arrangements and price agreements assure the absence of competition between the Titan family and the Blumenfeld group. In Japan both groups unite in a common enterprise. And all this is the product of agreements. Clearly this combination affects the interstate and foreign commerce of the United States. No titanium pigments enter the United States except with the consent of NL. No foreign titanium pigments move in interstate commerce except with like approval. No titanium pigment produced by NL may leave the ports of the United States for points outside the Western Hemisphere. One of the objects of the combination is to suppress competition. On January 12, 1927, the president of NL writes to Evans McCarty, its vice-president, and one of the chief architects of the combination: “The titanium patents expire in 1936 unless extended in ways not at present known to us. * * * Therefore, with us in the United States and with the Norwegian Company, there is a common need to exploit titanium pigments and, at the same time, protect ourselves; so that after the expiration of patent rights, we may have the manufacture and sale thereof under our control so as to continue to reap the harvest from the seed we are now sowing. If you, therefore, could formulate a plan satisfactory to Dr. Jebsen, whereby we could arrange to pay a royalty to the Norwegian Company similar to that he proposed to ask from the German Company, under an agreement that the National Lead Company would endeavor to organize companies in Germany, England and such other European countries as it desired — in each of which companies the National Lead Company should acquire and own at least one-half of the capital stock outstanding — I would personally look with favor upon such an arrangement.” (Pl.Ex. 70.) On April 27, 1932, Je'bsen writes to Major Barley, of Imperial' Chemical Industries, Ltd., proposing the formation of a British company in keeping with the suggestion of NL’s president. Therein he refers to the 1920 Contract and adds: “In order to avoid competition and friction, it was agreed that each company should confine its activity of manufacture and sales to a definite territory.” (Pl.Ex. 112.) Prior thereto, on September 16, 1930, Jebsen reported to' McCarty concerning the early conversations with Aussig: “I presented for discussion your suggestion of a pooling of the patents. It is not quite clear to me what is meant by this. We thought, however, that the idea was mutual cooperation and possible joint tion to keep third parties out.” (Pl.Ex. 522.) He pointed out a number of obstacles in the path of such a scheme — but these were in fact overcome. In April, 1931, Cornish, president of NL, finds himself obliged to contribute to the correspondence by reason of McCarty’s illness. The subject under discussion is apparently the proposed arrangement with the Blumenfeld companies: “May I call the proposed combination, for simplicity, a cartel?” . And he defines it. “The whole purpose of the cartel is to obtain a monopoly of patents so that- no one can manufacture it excepting the members of the cartel, and so can raise the prices by reason of such monopoly to a point that would give us much more profit on our present tonnage, but also prevent a growth in tonnage that would interfere with their greater profits in lithopone.” (Pl.Ex. 183.) He voices objections based on business, not legal, grounds. His objections, however, were apparently not pressed. Such was the purpose for which, and such were the means by which, NL, McCarty and Jebsen built their closed system. To have access to the patents of the combination, the stranger must not only have the consent of the member of the combination in whose “territory” he would operate, but he must adhere to the principles of the combination. The cornerstone of the system was the private regulation of international trade. The suppression of competition was the cement which held the superstructure in place. 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. As such it is outlawed by Section 1 of the Sherman Act; and it is unimportant whether it also violates Section 2. No citation of authority is any longer necessary to support the proposition that a combination of competitors, which by agreement divides the world into exclusive trade areas, and suppresses all competition among the members of the combination, offends the Sherman Act. Hence we need only consider the adequacy of the defenses asserted against the case established by the plaintiff. The system of territorial allocation and suppression of trans-Atlantic traffic in titanium compounds and pigments cannot be justified as ancillary to the grant of a license under a patent. True, the network of agreements did involve cross-licensing of patents — but it was not limited thereto. The agreements applied to patents not yet issued and to inventions not yet imagined. They applied to commerce beyond the scope of any patents. They extended to a time beyond the duration of any then-existing patent. Ethyl Gasoline Corporation v. United States, 1940, 309 U.S. 436, 456, 60 S.Ct. 618, 84 L.Ed. 852. They embraced acknowledgment of patent validity with respect to patents not yet issued, nor applied for, and concerning inventions not yet conceived. Pope Mfg. Co. v. Gormully, 1892, 144 U.S. 224, 12 S.Ct. 632, 36 L.Ed. 414; United States v. Hartford-Empire Co., D.C.N.D.Ohio, 1942, 46 F.Supp. 541, 615. They extended to countries, such as China, where no system of patent monoporlies exists. Interstate Circuit, Inc., v. United States, 1939, 306 U.S. 208, 59 S.Ct. 467, 83 L.Ed. 610. They regulated the disposition of the products after sale by the licensees. United States v. Univis Lens Co., 1942, 316 U.S. 241, 62 S.Ct. 1088, 86 L.Ed. 1408; United States v. Bausch & Lomb Optical Co., 1944, 321 U.S. 707, 64 S.Ct. 805, 88 L.Ed. 1024. While it has been held that the owner of a patent may license whom he will or refuse to license, Continental Paper Bag Co. v. Eastern Paper Bag Co., 1908, 210 U.S. 405, 28 S.Ct. 748, 52 L.Ed. 1122, it is now well settled that a license may not be used to extend the patent monopoly beyond its terms. Morton Salt Co. v. Suppiger Co., 1942, 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363; Ethyl Gasoline Corporation v. United States, 1940, 309 U.S. 456, 60 S.Ct. 618, 84 L.Ed. 852. And where there is a refusal to license (or refusal to license except on specified conditions which would extend the patent monopoly) which is the product of agreement or conspiracy, on the part of the owners of competing patents, I believe, the law is offended to the same extent as the law is violated when several combine and agree not to do business with a particular customer or class of customers. United States v. Colgate & Co., 1919, 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992, 7 A.L.R. 443; United States v. A. Schrader’s Sons, Inc., 1920, 252 U.S. 85, 40 S.Ct. 251, 64 L.Ed. 471; United States v. Waltham Watch Co., D.C.S.D.N.Y.1942, 47 F.Supp. 524, 531. The agreements here involved offend in that respect, as well. 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, affirmed 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. 1448. In each of the subsequent agreements which resulted in the creation of SIT, TG, BTP, CTP and TK, the same purpose, to restrain trade in order to avoid competition, was paramount. It is suggested that this Court is without jurisdiction to consider conduct abroad, on part of foreign corporations, relating to the commerce of foreign nations. Unquestionably, if the gravamen of the complaint were to impeach the Aussig agreement as such, or the BTP-Laporte quota arrangement as such, the point would be well taken. But that is not the gist of the complaint. On the contrary, it has been alleged and proved that a conspiracy was entered into, in the United States, to restrain and control the commerce of the world, including the foreign commerce of -the United States. The several agreements relating to manufacture and trade within the European markets are but some of the links in the chain which was designed to enthral the entire commerce in titanium. The object of the government’s attack is a conspiracy in the United States affecting American commerce, by acts done in the United States as well as abroad. It follows that the Sisal case rather than the Banana case is the pertinent analogue. The argument has been advanced that this court cannot invalidate contracts with parties who are not within the court’s jurisdiction and amenable to its order. The absence of NL’s foreign associates will, of course, place a practical limitation upon the scope of the court’s decree; it does not prevent the court from finding a violation as the facts warrant, and from restraining those within the reach of its mandate from continuing a conspiracy in defiance of the Sherman Act. It is suggested that plaintiff has failed to establish injury to the public interest, Appalachian Coals, Inc., v. United States, 1933, 288 U.S. 344, 53 S.Ct. 471, 77 L.Ed. 825; and that the defendants have proved substantial public benefit. The latter proposition, defendants derive from two lines of evidence. The first is that during the regime of the combination, the art has rapidly advanced, production has increased enormously and prices have sharply declined. The evidence does show as much; but it does not follow that the public interest has not been abused. Indeed, the major premise of the Sherman Act is that the suppression of competition in international trade is in and of itself a public injury; or at any rate, that such suppression is a greater price than we want to pay for the benefits it sometimes secures. Nor does it necessarily follow that the advance of the art, the rise in production and the decline of prices are attributable to the effects of the combination. Post 'hoc, prop-ter hoc, is an invalid argument whether used by the plaintiff or the defendant. Anyone is free to speculate whether, in the absence of the arrangement, the stimulus of competition might not have produced far greater strides in these beneficial directions. The economic theory underlying the Sherman Act is that, in the long run, competition is a more effective prod to production and a more trustworthy regulator of prices than even an enlightened combination. The second line of evidence is that American producers cannot do business successfully in a cartelized world except on cartel terms; and that, to abstain from such business, would amount to a greater restraint on trade than is involved in joining the cartel; see, Cartels: What Shall We Do About Them? Milo Perkins, Harper’s Magazine, November, 1944. The validity of this argument has been the subject of congressional inquiry: Temporary National Economic Committee, 76th Congress, Monograph No. 40; Economic and Political Aspects of International Cartels, Committee on Military Affairs, U. S. Senate, 78th Congress, 2d Session. That kind of inquiry, rather than a judicial one, is appropriate to the evaluation of the merits of the proposition. For the courts it is conclusive that Congress has not yet validated such a solution to the problem. Until it does, private agreement and combination and private regulation may not substitute for legislation. Only Congress, not the courts, may grant the required immunity. It is suggested that the truly vital issues of this case have become moot by the intervention of war with Germany, Japan and Italy; and that the complaint should be dismissed. Reliance is placed upon United States v. Hamburg-Amerikanische Packet-Fahrt-Actien Gesellschaft, 1916, 239 U.S. 466, 36 S.Ct. 212, 60 L.Ed. 387. Several reasons dictate the rejection of this argument. (1) The Hamburg case rests upon its own peculiar facts. The offending contract had come to an end by its own terms; as far as the Germans were concerned, it had also terminated by reason of war; and as far as the others were concerned, by the withdrawal of the Germans. United States v. Aluminum Company of America, 2 Cir., 148 F.2d 416, 448. “Besides, the contract was of such a kind that the exclusion of the German lines probably made impossible the realization of its purposes in any part.” Id. In the instant case, the contracts with the Germans had not expired by their terms; and, at least to the moment of America’s entry into the war, the parties did not intend or expect that war should or would involve a permanent divorce. (2) This case abounds with evidence that the parties foresaw the possibility of interruption causa belli and made provision for dealing with the interlude and for resumption thereafter. At least this can be said with complete assurance that until the entry of the United States into the war, the contracting parties regarded the war as a temporary interruption, for which they would, after cessation of hostilities, make adjustments in a spirit of fairness and amity. Peculiarly revelatory in this connection is plaintiff’s Exhibit 512. It is the draft of a letter preserved in the files of Tine, entitled, “Draft of letter from Titan Co., Inc. to be sent later, presumably after the war, to: I. G. Farbenindustrie, Titange-sellschaft, British Titan Products Company and Ste. Inc. du Titane.” The letter reports the amendment of January 1, 1941, to the NL-DP agreement of 1933, explains that war conditions rendered consultation with the addressees impractical and expresses a desire for their approval. When this was written, the United States was not at war; but England, France, Germany, and Italy were at war. One can not read Exhibit 512 without sensing the expectation, indeed the assumption, that the war may have interrupted the execution of the several agreements among the parties, it had not permanently disarranged the relations of the parties, and that the return of peace would bring a resumption of the established “cooperation”. Much other evidence points in the same direction; and none of the evidentiary material created ante litem motam points in a conflicting direction. Upon the trial in the midst of war, the future resumption of relations with the Germans was emphatically repudiated. The inference I draw is that there is a preponderant probability that the underlying combination or conspiracy persists and that, but for these proceedings, would resume the exercise of its restraining force on commerce to the extent that international conditions permitted. (3) That some of the contracts have been terminated by war, it seems to me, is of relatively little significance. For in a legal sense we mean no more thereby than that the contracts have become unenforci-ble. But these contracts, being in restraint of trade and violative of the anti-trust laws, were never enforcible. If the non-enforcibility of the contract were to render an action under the anti-trust laws moot, we would face the absurd result that only innocent combinations would remain available for judicial scrutiny. It is suggested that the validity of the British and Canadian contracts has become moot by the application of the doctrine that cancellation or abandonment of provisions of a contract prior to final decree renders the question of the validity of such provisions moot. Standard Oil Co. v. United States, 1931, 283 U.S. 163, 51 S.Ct. 421, 75 L.Ed. 926; United States v. United States Steel Corporation, 1920, 251 U.S. 417, 445, 40 S.Ct. 293, 64 L.Ed. 343, 8 A.L.R. 1121. It should be noted that the authorities do not justify the statement of the rule in quite such broad terms. United States v. Trans-Missouri Freight Ass’n, 1897, 166 U.S. 290, 17 S.Ct. 540, 41 L.Ed. 1007; United States v. Sugar Institute, Inc., S.D.N.Y.1934, 15 F.Supp. 817, modified 297 U.S. 553, 56 S.Ct. 629, 80 L.Ed. 859. Injunctions, of course, relate to future conduct. The formal cancellation of a contract, or df a provision of a contract is a fact to be considered in determining whether, under all the circumstances, the unlawful action of the past is likely to recur in the future; the issue is the likelihood of continuance. Swift & Co. v. United States, 1905, 196 U.S. 375, 396, 25 S.Ct. 276, 49 L.Ed. 518. The facts in the instant case with respect to the British and Canadian contracts are briefly these. At a pretrial conference held in this case on October 30, 1944, counsel for NL called attention to the existence of a new form of contract, then in a state of negotiation between NL and the British companies. At the trial, a copy of such a proposed agreement, not yet executed by the parties, was received in evidence. The named parties were I Cl, ISC, GW, Tine, BTP and NL. Similarly, there was testimony that negotiations were in progress among NL, CIL and CTP to revise the Canadian agreements. This evidence shows that there is a disposition on the part of defendants NL and Tine to abandon illegal practices; it does not rise to the dignity of proof of abandonment. Nor is it necessary to recite here the precise changes which the parties are willing to introduce into their relations. To my mind these proposed agreements amount to little more than a statement of what defendants are willing to accept. Apparently, execution of the new agreements is awaiting some word of approval by the court. It seems, under the circumstances, that it would be more appropriate to examine them in connection with the framing of a decree, rather than as bearing on the question whether any decree is to be made for injunctive relief. This branch of the case may be briefly summarized thus: Agreements creating a world-wide patent pool of all present and future patents of the parties, covering an entire industry, and embracing a division of the world into exclusive territories within which each of the parties is to confine its business activities, with respect to patent protected commodities, as well as unpatented, for the purpose and with the effect of suppressing imports into and exports from the United States, are unlawful under the Sherman Act; they constitute an unreasonable restraint of trade. II. DP’s Part in the International Cartel. As to DP, the facts are by no means as clear. Stoutly it denies any complicity in the combination; and much of the evidence supports its denial. It did not subscribe to the 1920 agreement; the agreement it did sign, in 1933, deviated sharply from the form and from the principles of the 1920 agreement. In 1940, it withdrew from the exchange of technological information with NL. It competed with NL for the American market. It was never regarded by the Titan group as a full fledged member of their family. Its anomalous position was the subject of frequent discussion and apprehension among the Titan members, and efforts were made to convert DP into a fully conforming member. In sharp contrast with NL, DP exhibited, from the very beginning of its interest in titanium, an alert consciousness of the antitrust laws and moved cautiously and under the guidance of trained anti-trust lawyers. The question is whether it succeeded in avoiding not only the form but also the substance of transgression. I have concluded that it has not; and I arrive at that conclusion by the following analysis of the facts: DP was manifestly eager to obtain access to NL’s patents and skill in the titanium field. NL was equally eager to grant such access. NL’s motives for this eagerness are not too important. It matters little whether it sought the reciprocal advantage of DP patents and research; or whether it feared DP’s hostile competition more than it feared its friendly, though competitive, collaboration; or whether it anticipated that NL and DP together would constitute an alliance so formidable as to preclude any other important competition. Whatever its motive, NL was willing; but its liberty of action was sharply circumscribed by the agreement of 1920. That required that, before NL could license DP under its patents, DP must adhere to the principles of the 1920 agreement. Such adherence, DP refused. The reasons assigned by DP for its refusal were several, and varied from time to time, but always conspicuous among them was the claim that its adherence was forbidden by the anti-trust laws. In this troubled atmosphere, the 1933 agreement was drawn, after long negotiation, by lawyers who were aware of the then recent decision in the Gasoline Cracking case. Standard Oil Co. v. United States, 1931, 283 U.S. 163, 51 S.Ct. 421, 75 L.Ed. 926. Carefully, they cast the agreement into the form of a settlement of patent disputes. The disturbing fact about that instrument is that despite the high professional skill expended upon it, its terms are, in important respects, so vague that upon the trial, counsel for NL and counsel for DP did not agree upon its meaning. It is clear, and I believe not disputed, that the 1933 writing is far from the lawyer’s ideal of clarity and precision. The only explanation which the record affords for this unexpected obscurity is contained in a letter from Mr. Beschorman to NL’s English associates, that the vagueness in the writing is deliberate and the product of fear of the anti-trust laws. That, of course, does not affirmatively show that the law was violated; moreover, it is true that no evidence is available that DP knew of Beschorman’s letter. Consequently, I draw no inference therefrom against DP; but I do draw an inference as to NL’s frame of mind in its negotiations with DP. To return to the negotiation: NL was not at liberty to enter into the 1933 agreement unless and until its foreign associates consented. TG objected. It was particularly concerned lest, as a result of this agreement, TG should find itself in competition, in its own “territory,” with DP, the latter armed with TG’s own skill, acquired by DP, via NL — a state of affairs which TG regarded as intolerable. To overcome the obstacle of TG’s objection, conversations were had between Rupprecht, on behalf of DP, with Beschorman, on behalf of NL, and also between Rupprecht and Jeb-sen ; and as a result of these conversations two letters were written, one by DP to NL with the intention that it be transmitted to TG; and the other by NL to TG to accompany DP’s letter. If DP is bound by the second letter, it unquestionably joined the conspiracy then in effect between NL and its foreign associates. The text of the two letters is set out in the margin. 1 believe that DP is bound by the second letter because (1) DP asked NL to persuade TG to consent. Rupprecht told Beschor-man, “that it was a selling job for them [NL] to make I.G. realize that they were putting their interests in National Lead’s hands, and that they would be well taken care of”; (Pl.Ex. 268.) (2) Rupprecht was shown the Beschorman letter before it was mailed; and a copy thereof was later sent to him “for your files”. There was no repudiation by Rupprecht; or at least, the record shows none; and at this point the burden of going forward with proof of such repudiation shifted to DP. Interstate Circuit, Inc., v. United States, 1939, 306 U.S. 208, 225, 59 S.Ct. 467, 83 L.Ed. 610. Such quiescence on the part of DP can only be construed as ratification. It follows that the assurance that “Du Pont will loyally respect the territory of T.G.” which TG discovered in the communications from Rup-precht and Beschorman was an assurance which must be attributed to DP, despite the painstaking efforts on its part to sever the line of imputation. At least then as to territorial delimitations of the titanium pigment business, DP joined the combination. United States v. Masonite Corp., 1942, 316 U.S. 265, 62 S.Ct. 1070, 86 L.Ed. 1461. It may well be, and I take it as a fact, that in giving the assurance not to manufacture in or sell in TG’s territory, DP was not making a promise; it was doing no more than giving expression to its then existing business policy not to manufacture or sell in Germany and other TG territory; and it may well be that in any event, DP could not successfully compete in Germany. While much has been made of this point, it does not cover the whole issue either factually or legally. Factually it is inadequate, because TG’s exclusive territory extended very considerably beyond Germany and included territories where DP might have competed. Legally it is insufficient, because concerted abstinence from commerce is proscribed even where there are valid unilateral reasons for abstaining ; and also because DP’s assurance, in part, formed the consideration for the continued abstinence of the European producers from exporting 'to the United States. It is idle to speculate as to what might have happened had NL and DP insisted on making their agreement without regard to TG’s objections. Presumably, had such an event occurred, TG would have been relieved of its promise not to export to the United States. In a very important way, DP’s assurance closed the breach which was in the making in the wall built around the titanium business by NL and its foreign associates. It also removed the last obstacle to the establishment of a commercial collaboration between the Titan group and the Blumenfeld companies. True, Rup-precht did not go as far with Blumenfeld as he did with NL. Not as much was necessary. Indeed, no action on his part was necessary since he sought nothing from Blumenfeld. From the somewhat conflicting testimony as to the nature of Rup-precht’s conversations with Blumenfeld, I conclude that Rupprecht made no promise; but that he did explain to Blumenfeld DP’s policy with respect to the European market, a policy made unilaterally in many respects, but undoubtedly strengthened and territorially extended as a result of the assurances to NL. This description of DP’s position in 1933 is consistent with subsequent developments. To Jebsen, devotee of the precise covenant, advocate and practitioner of clarity and definition in language and obligation, such vague and Janusfaced language was a source of disquiet and apprehension. But he hoped for the best. He regarded Rup-precht as one who 'rarely descended from “sound to things.” But he appraised DP as an organization that would not repudiate an unwritten obligation. Rupprecht, on the other hand, found the business of practicing one code, and writing another, rather strenuous and emotionally confusing. No wonder that communication between DP and NL became somewhat difficult; and, at times, NL’s and Tine’s representatives left a conference with very different impressions of what had been agreed to from those entertained by Mr. Rupprecht. The point is made in behalf of DP that there is no evidence that its Executive Committee knew of Rupprecht’s commitments. It is true that no direct evidence of such knowledge is in the record; and I need not trouble to decide whether the circumstances warrant an inference of knowledge. There is abundant evidence that Rupprecht’s authority was broad enough to justify charging the corporation with his acts in its behalf. My general summary of the evidence on this issue is that DP was a member of the combination — true, a special member, with a status, rights and obligations, different from that of the other members, but a member nonetheless. At this point, DP advances the argument that it had no choice but to do business with the cartel unless it was content to stay out of the titanium field. To put it in the words of DP’s counsel: “We respectfully submit in conclusion that it cannot be the law of the United States that it is the function of the Courts themselves to impose that form of restraint of competition which must result from a ruling that whenever a European company has a monopoly in its own country (and practically all of them do), and then has a relation in the nature of a common enterprise with some American company, it becomes the duty of all other American companies to renounce and forego access to the inventions and developments controlled by those foreign companies, and to leave them as the exclusive property of its American competitor, the partner of those foreign companies.” Perhaps, the answer is that DP, having discovered the conspiracy, should have asked the Attorney General to break it up. Confessedly, the chances of DP getting NL’s patents and know-how after such a hostile act would be, to say the least, dubious. But in any event the courts may not validate unlawful conduct because in a particular instance there may be social losses involved in enforcing the law. The paradox which DP discovers, even if it were a genuine one, would be of interest to Congress, not to the courts. But the paradox is not genuine. The conflict is a specious one. Judicial intervention to break up a combination in restraint of trade is not in itself a restraint of trade, although for a time the established channels of commerce may be disarranged. To prohibit adherence to conspiratorial trade restraints hampers trade in about the same way that the prohibition, against the circulation of counterfeit money hampers it. It may prevent the consummation of a particular transaction but in the long run it frees business from private regimentation and secures it against those who would trammel it. III. DP’s Relations to American Producers. The case also presents the question whether the contract between NL and DP is offensive to the anti-trust laws independently of the relation of that contract and the parties thereto to the foreign producers. Here are two competing producers who, at the time their agreement is made, between them control 100% of the commerce in titanium products in the United States. They agree not only to settle their conflicting patent claims — which presumably they may do under the Gasoline Cracking case — but they agree to exchange all future patents, patent applications and know-how. Though these exchanges are not on an exclusive basis, is it not clear, however, that the capacity of such a combination to dominate the market is vastly increased, that the capacity for the exclusion of outsiders from the industry is multiplied? In other words, was not Mr. Ewing, DP’s London manager, (whose disavowal of authority to make the following statement I accept) saying no more than the obvious when he wrote in 1933, concerning the NL-DP agreement: “We look upon this patent pool as a definite advance in cooperation and the strengthening of both parties’ position to the exclusion of outsiders”? I think so. When the effect of an arrangement is obvious it is fair inference that the parties intended that effect. The accumulation of great power to restrain trade may in itself be an evil. United States v. American Tobacco Co., 1911, 221 U.S. 106, 175, 31 S.Ct. 632, 55 L.Ed. 663. When the power thus acquired is exerted to accomplish unreasonable restraints of trade, it is surely an evil. A pertinent question is, therefore, how did NL and DP exercise the great power they acquired. NL licensed one American producer, American Zirconium, and on conditions which required submission to the illegal 1920 contract. It never did license Virginia Chemical; and the evidence is rather persuasive that it did not achieve agreement on royalties and could not get from Virginia Chemical written adherence to the 1920 agreement and that Virginia Chemical was not sufficiently well known to the Europeans to warrant acceptance of its oral assurance. DP licensed both American Zirconium and Virginia Chemical. In both instances the licenses were subject to a severe tonnage limitation on the product made under the license and to a royalty on all titanium dioxide produced, whether under the licensed patents or not. DP makes much of the fact that the evidence shows that it never refused a license. It is also true, however, that until 1944, DP did refuse licenses unencumbered by tonnage limitations. Another inevitable consequence of the NL-DP agreement has been the proliferation of patents. The chief spur to private resistance to the grant of patent monopolies has been withdrawn from the parties who, ordinarily, would be chiefly concerned. It is not without significance that, despite the jaundiced eye with which the courts have been examining and rejecting patents in recent years, not a single one of the hundreds of patents here involved has ever been litigated. The result of that is that the newcomer is confronted by a veritable jungle of patent claims through which only the very powerful and stouthearted would venture, having a regard for the large initial investment which this business requires. These patents, through the agreements in which they are enmeshed and the manner in which they have been used, have, in fact, been forged into instruments of domination of an entire industry. The net effect is that a business, originally founded upon patents which have long since expired, is today less accessible to free enterprise than when it was first launched. The exchange of know-how between NL and DP was abandoned in 1940 when, as DP says, the industry matured. The exchange of patents and patent applications continues. The tonnage limitations in the licenses of American Zirconium and Virginia Chemical was eliminated in 1944. The power of concerted action is still there. I need not consider whether an exchange of patents, present and future, between competitors, is violative of the Sherman Act. I assume that such an exchange standing alone is innocent. But in the context of the present case, Associated Press v. United States, 65 S.Ct. 1416, this exchange between two corporations, who between them controlled the entire market, becomes an instrument of restraint, available for use and used, to continue the mastery of the market which NL and DP achieved by means of the illegal international agreements. In order to give effect to the Sherman Act, plaintiff is entitled to a decree which will restore titanium to the system of free competition; the means of preventing such a development must be destroyed and the power to prevent it must be shorn from