Full opinion text
FORMAN, Judge. This is a proceeding instituted under Section 4 of the Sherman Anti-Trust Act to prevent and restrain continuing violations of Sections 1 and 2 of that Act. Each of the following named defendant of the state specified and has its principal corporations is organized under the laws place of business as shown below: Name of Corporation State of Incorporation Location of Principal Office General Instrument Corporation (hereinafter referred to as General) New Jersey Elizabeth, N. J. Radio Condenser Company (hereinafter referred to as Radio) New Jersey Camden, N. J. Condenser Development Corporation (hereinafter referred to as Development) New Jersey Newark, N. J, Variable Condenser Corporation (here-New York Brooklyn, N. Y. inafter referred to as Variable) Each of the individual defendants whose of the corporate defendants and holds the name and address is set forth hereunder is official title or position as shown below: associated with or employed by one or more Name Address Title or Position Corporation With Which Associated Abraham Blumenkrantz or Abe Bloom Elizabeth, New Jersey President, Treasurer and Director General Secretary, Treasurer and Director Development Samuel Cohen Elizabeth, New Jersey Chairman, Board of Directors General Director Development Stanley S. Cramer Camden, New Jersey President and Director Radio President and Director Development Russell E. Cramer Camden, Vice President and Director Radio Director Development Charles H. Hyman Brooklyn, New York, President and Director Variable Nathan Hyman Brooklyn, New York Vice President and Director Variable Edward Hyman Brooklyn, Secretary and Treasurer Variable The subject matter of this action concerns tuning devices used in radio receiving sets to select the incoming signals of a particular radio station, sist of both variable meability tuners. In Tuning devices con-condensers and per-1946 approximately 85% of all home radio sets manufactured and sold in the United States contained variable condensers. The Pleadings The plaintiff alleged that in 1934, Radio, General and De Jur Amsco (hereinafter referred to as Amsco) together manufactured more than 75% of all variable condensers made in the United States; that the remaining manufacturers in 1934 were Federal Instrument Company (hereinafter referred to as Federal), Reliance Die and Stamping Company (hereinafter referred to as Reliance), and American Steel Package Company (hereinafter referred to as American) ; that defendant Variable commenced manufacture of condensers in 1938; [sic] that defendant Development was organized in 1934 as a patent holding corporation by Radio, General and Amsco; that from March 1940 to March 1946 General, Radio (including its affiliates Western Condenser Company and Manufacturers Supply Company), Variable, Oak Manufacturing Company, and American were the sole manufacturers of condensers, and that all the above except American were patent licensees of Development; that from 1934 to the date of the suit 60% of all variable condensers for home radios were manufactured by General and Radio, and since 1938, 3% of all variable condensers were manufactured by Variable; that about March 1946 several additional concerns commenced the manufacture of variable condensers with a total combined production not exceeding '5% of the condensers produced in the United States; that although since 1934 variable condensers have not been patented devices, some of the defendants held patents covering specified parts of variable condensers or methods of manufacturing or assembling parts of variable condensers; and that prior to July 30, 1934, Radio, General and Amsco had been active competitors and had been involved in patent infringement suits. The alleged conspiracy to evade the Sherman Act is claimed to have commenced in or about 1934 when the three above mentioned competitors resolved their differences by forming Development; that on August 7, 1934, Radio, General and Amsco agreed for a period of five years with the right to extend the agreement for an additional period of years: “(a) To assign to Development all of their present and future patents and patent rights relating to variable condensers and other tuning devices; “(b) To give Development the option to purchase from others all present and future patents and patent rights relating to variable condensers and other tuning devices; “(c) To cause Development to sue for alleged infringement of the pooled patents and to defend suits for infringement brought against any one of the parties to the agreement; “(d) To cause Development to refuse licenses to others under any of the pooled patents unless it should obtain the unanimous approval of the stockholders of Development ; and “(e) To admit the validity of all patents held or subsequently acquired by Development, and not to contest the validity of such patents.” On the same date Development is alleged to have granted Radio, General and Amsco royalty-free, non-exclusive licenses under the assigned patents for the life of the patents. Immediately following the formation of Development, it is alleged to have notified Federal and Reliance that they were infringing the pooled patents of Development; that in settlement of the subsequent patent infringement suit against Federal, Development granted to it on April 15, 1935, a license under the pooled patents at an unreasonably high royalty rate; that Reliance was issued a license by Development for the pooled patents in settlement of a patent infringement suit on May 19, 1937; that Federal, becoming insolvent on January 4, 1938, Development cancelled the license and that Rae Manufacturing Company (hereinafter referred to as Rae) was refused a license after having purchased the variable condenser business of Federal; that at the time of issuance of the license to Reliance, it, along with Radio, General and Amsco agreed to price schedules set by Development; that soon after Variable entered the condenser field it was sued by Development for patent infringement; that Development purchased Wilhelm condenser patents in order to prevent their purchase by Variable; that Variable on February 4, 1938, was granted a license by Development providing that it observe Development’s price schedules and not contest validity of Development’s patents ; that to eliminate competition in variable condensers General and Radio on or about May 28, 1939 jointly paid Amsco $50,-000 for the patents and patent rights owned by Amsco, which, in turn, agreed not to manufacture or sell tuning devices in the United States and Canada for a period of ten years thereafter and that Amsco further agreed to discontinue use of its tools, dies, jigs and fixtures and not to sell them except for export to a foreign country other than Canada; that Radio, General and Development, on June 9, 1939, entered into two agreements to give General and Radio power to grant non-exclusive licenses to others under any of their respective licenses assigned to Development, and Development reassigned certain pooled patents to Radio and that in other respects, the agreement of August 7, 1934 was extended an additional five years; that since the 1939 agreement, General and Radio have refused licenses under the patents, referring all applicants to Development; that Development filed patent infringement suits against American in 1938 and Radio and General conducted a price war for the purpose of forcing American into a price fixing scheme and to limit its competition, and that the price war was continued until 1941 although the Second Circuit Court of Appeals held in December 1939 that the patent in issue was invalid (Condenser Development Corp., v. Davega-City Radio, 108 F.2d 174) ; that the price fixing provisions of the 1934 agreement, modified and extended in 1939, were terminated by Radio, General and Development on April 27, 1940, but until the date of the present suit General and Radio have continued consultations and agreements as to price fixing, types of tuning devices to be produced, and the allocation of customers; that an agreement on March 1, 1946 between Radio and General modified the 1939 agreement, changing the form but not the substance of the previous agreements relating to variable condenser patents, continued the life of Development to March 1, 1951 and assigned to it nearly all of the tuning device patents held by General and Radio; that Amsco, Kings Electronics Company, National Electric Machine Shops, Robert L. Kahn, Lear, Inc., and other persons between August 1945 and March 1946 applied to General and Radio for licenses, who refused, referring applicants to Development and that Amsco’s application was expressly refused; that certain of the other applicants were offered licenses under circumstances that would have placed the licensees at a serious economic disadvantage in competition with the Development parties and that Development refused licenses upon specific patents insisting that licensees take a license covering all pooled patents. The plaintiff alleged that the defendants to further prevent competition threatened Baldwin Instrument Company in November 1945 with litigation when it planned to manufacture variable condensers and caused a suit for unfair competition to be filed against Kings Electronics Company in February 1946 by Variable; and that the defendants in May 1946, acting through defendant Charles H. Flyman, attempted to purchase equipment suitable for manufacture of variable condensers from Mechanical and Electronic Design Company who desired to enter the variable condenser business, and threatened to drive it out of business. The plaintiff 'further alleged that all of these acts constitute engagement in an illegal combination and conspiracy and restrain and monopolize trade and commerce and that the said combination and conspiracy have consisted of and now consist of a continuing agreement and concert of action among the defendants, the substantial terms of which have been as follows: “(a) That the defendants exclude others from the manufacture and sale of variable condensers by: “(1) Inducing others to refrain from producing variable condensers; “(2) Acquiring tools and equipment theretofore used in the manufacture of variable condensers for the purpose of preventing their acquisition and use by others for the manufacture of variable condensers; “(3) Refusing to fabricate tools for the use of others for the manufacture of variable condensers; “(4) Acquiring patents and patent rights from others; “(5) Pooling patents relating to variable condensers; “(6) Bringing and maintaining suits for infringement of the pooled patents; and “(7) Refusing to grant patent licenses under the pooled patents. “(b) That the defendants eliminate and suppress competition among themselves and with others in the manufacture and sale of variable condensers by: “(1) Agreeing upon prices, terms and conditions of sale for variable condensers sold by the corporate defendants and others; “.(2) Adhering to the prices, terms and conditions of sale for variable condensers agreed upon as aforesaid; “(3) Limiting types of variable condensers sold by each of the corporate defendants and others; “(4) Allocating among the corporate defendants and other customers for sales of variable condensers; “(5) Conducting price wars against other manufacturers of variable condensers; and “(6) Refusing to grant patent licenses under the pooled patents save at unreasonable high rates of royalty and upon other terms and conditions.” The plaintiff prayed that the acts, agreements and practices of the defendants be adjudicated to be in restraint of trade and attempts at monopolization in violations of sections 1 and 2 of the Sherman Act; that such allegedly unlawful agreements be dissolved and the defendants perpetually enjoined from executing similar agreements; that Development have its affairs wound up and its corporate existence dissolved; and for other injunctive relief against the defendants to preclude the unlawful use of their patents or other practices in violation of the Sherman Act. General, Radio and Variable together with individual defendants respectively by way of separate answers generally denied the plaintiff’s charges and set up affirmative separate defenses. The first and second separate defenses of General and Radio alleged running of the statute of limitations and laches. As a third separate defense, Radio claimed that in the emergency of war, civil authority yielded to military authority and the Sherman Act was nullified. Both groups have expressly abandoned the claim that the action is barred by the statute of limitations. In the separate defenses interposed by the Variable group the right to make a motion to dismiss was reserved and pleas were entered that the action is barred by the statute of limitations, and that the court lacks jurisdiction over the group since the corporate and individual defendants reside in New York. The objection made by the Variable group as to the jurisdiction of the court over them may be disposed of at once as being without merit. Since Radio and General are found to be within the District of New Jersey, it was proper to bring in a non-resident defendant pursuant to Section 5 of the Sherman Act, 15 U.S.C.A. § 5. Standard Oil Co. of New Jersey v. U. S., 221 U.S. 1, 46, 31 S.Ct. 502, 55 L.Ed. 619, 34 L.R.A.,N.S., 834, Ann.Cas.1912D, 734. This separate defense will therefore be stricken. The separate 'defense of Radio that in the emergency of war, the war power of the Federal Government and military authorities take precedence over the civil law and nullified the Sherman Act during the emergency period is likewise without merit. It offered no proof of compliance with 50 U.S.C.A.Appendix, § 1112 whereby immunity was granted from the Sherman Act when the doing or omission of an act was determined to be “requisite to the prosecution of the war”. This act demonstrated that special legislation was required to provide immunity from Sherman Act prosecutions. All defendants claim that laches bars relief to the plaintiff arguing that the action was not filed until July 17, 1946 although in December 1944 the plaintiff had “knowledge of such information as would put a reasonable person upon inquiry, if pursued, would have led to knowledge of the matters and things about which plaintiff now complains * * To develop the facts necessary to initiate an action of the scope here involved required a tremendous investigatory task. The plaintiff was not placed on notice leading to a reasonable belief of suppression of competition in violation of the Sherman Act in the production of variable condensers until some time during the war emergency a bottleneck developed in variable condenser production. Its proofs included many documents, designed to show the situation of the defendants, the setting in which the alleged conspiracy was established, the state of the industry within which the alleged conspiracy operated, and those preliminary and collateral matters necessary to present the alleged conspiracy in its context of operating facts. This necessitated minute and detailed study to develop the facts. Furthermore, since the United States is asserting rights as a sovereign to enforce a public policy, this defense, as a matter of law, is inapplicable, for the United States is not the nominal but real plaintiff. United States v. Beebe, 127 U.S. 338, 344, 8 S.Ct. 1083, 32 L.Ed. 121; United States v. Insley, 130 U.S. 263, 266, 9 S.Ct. 485, 32 L.Ed. 968. Both the plaintiff and the defendants have presented a motion for summary judgment on the ground of the absence of any genuine dispute as to material facts. Both rely upon admission of fact, exhibits and affidavits. The defendants have admitted the authenticity of all of the plaintiff’s exhibits, primarily consisting of contracts, correspondence between individual defendants, and their agents, interoffice memoranda, and minutes of meetings of Development, with the exception of plaintiff's exhibit 10 in response to plaintiff’s requests for admissions and stipulations. For the purpose of this motion, Exhibit 10, is not considered nor does the plaintiff rely upon it. Since these are motions for summary judgment, it is not for the court to resolve disputed questions which appear in issue but to determine whether a question of fact is present. Frederick Hart & Co. v. Recordgraph Corp., 3 Cir., 169 F.2d 580. In the absence of triable issues of fact, no reason exists for not granting a motion for summary judgment in antitrust actions. Cf. International Salt Co. v. U. S., 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20; Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013. The facts determined, a court is not precluded from adjudicating the legal consequences to be drawn from undisputed facts. Fox v. Johnson & Wimsatt, 75 U.S.App.D.C. 211, 127 F.2d 729, 737; Fletcher v. Krise, 73 App.D.C. 266, 120 F.2d 809. The Arguments The plaintiff contended that the agreements by which General and Radio concentrated patents in Development eliminated competition and are inherently illegal for the following reasons: (1) The parties obligated themselves to pool present and future patents and to act jointly in prosecuting and defending patent infringement suits; (2) the parties to the pool relinquished their individual rights to license others and acted jointly in approving or disapproving the applications for licenses under the pooled patents; (3) the parties agreed not to compete in acquiring patents and patent rights from outsiders; (4) the blanket admission of the validity of present and future patents is illegal since the requirement exceeds what is necessary to settle a patent controversy; (5) the price fixing agreement was an act of the pool and its licensees, neither justified nor validated by holdings of the United States Supreme Court. The defendants contended that the patent pool and cross-license arrangements under which they operated from August 1934 to the date of suit were legal in fact and in law; that the agreements did not have the effect of “excluding others from the manufacture and sale of variable condensers” but on the contrary had the actual effect of licensing and permitting not only each of the patent owners in the pool but all other “condenser manufacturers as well, to manufacture and sell the best condensers invented and designed by the patent owners who were the largest manufacturers in the field, and this with the elimination of all past patent conflict and the expected elimination of all future patent conflict.” They insisted that their patent pool was within the normal confines of the patent law and that the United States Supreme Court had upheld as valid “pooling” as they operated it. The plaintiff argued that the defendants had refused to license Rae, Amsco (following the 1939 agreement), Kings Electronic Company, National Electric Machine Shops, Robert L. Kahn, and Lear Incorporated, and that Development had issued no license since 1944 except to Oak Manufacturing Company, and that when licenses were offered they were to cover all of its patents at rates which, if accepted, would have placed the applicants at a serious economic disadvantage. Defendants admitted the applications for licenses as enumerated but claimed that licenses on reasonable terms were offered to all. They claimed that from 1939 to 1944, only one application for a license was made, and this by Winters & Crampton Corporation in the latter part of 1944, who later decided not to enter the business. Defendants further claim that no other applications were made until the termination of World War II and that then applications were received from December 1945 to February 1946 from Kings Electronic Company, National Electric Machine Shops, Robert L. Kahn and Lear Incorporated. The refusal to License Rae was conceded but it was alleged to be based upon poor economic conditions in 1938. Defendants deny that Amsco seriously endeavored to resume the manufacture of variable condensers during World War II and claim that their rejection of its request for a release from its agreement in October 1945 was not ultimate or final for it was accompanied by the following statement: “If you see any reason for our reaching a different conclusion we will be pleased to further hear from you”, to which Amsco made no reply. The plaintiffs in support of the charge that the defendants excluded others from entering or exploiting the variable condenser field by bringing and maintaining suits for infringement of pooled patents argued that licenses to Reliance, Variable and Federal were adjunctive to infringement prosecutions and asserted that certain Wilhelm patents were acquired to prevent their acquisition by Variable which needed them in defending a patent infringement suit instituted by Development and which intended to avoid Development’s patents by manufacturing under them. The defendants submitted that Development was within its rights in instituting suits and that the last infringement suit was disposed of in 1939 which they urged refuted the charge that they impinged the anti-trust laws by bringing and maintaining oppressive suits for infringement. They argued that there were 739 patents in the variable condenser field and that from August 1934 to date they purchased but two patents from others, the Wilhelm patents, known at the time to have no material value, for which $500 was paid. They insisted that those patents were purchased in January of 1938 and constituted an isolated act, which, even if it were in violation of the Sherman Act, would be barred by the statute of limitations and that in any event their right to purchase patents is undeniable. To the plaintiff’s charge that they eliminated and suppressed competition among themselves and others, the defendants claimed that members of the alleged pool have always competed among themselves. With respect to the suppression of others, defendants pointed to licenses granted Federal, Variable, Manufacturers Supply, Reliance and its successor Oak Manufacturing Company and that a similar license was offered at all times to American and all others with the exception, in 1938, of Rae. In answer to the plaintiff’s charge that they agreed upon and adhered to price schedules in common, the defendants asserted that Development’s authority to fix prices never extended beyond the three patents to which Radio held a reversionary interest (Cramer Patents 1,800,719 and 1,-757,357 and Swope Patent 1,620,244) and that by a reassignment of these patents to Radio on June 9, 1939, the owner and not Development became the licensor. The plaintiff countered with the assertion that the modifications attempted by the assignment of June 9, 1939 were only nominal and were never actually utilized. Defendants insisted that price fixing was eliminated in 1940 following the declaration of the invalidity of Cramer Patent 1,800,719. The plaintiff claimed that by an agreement of May 1937 certain of the defendants allocated customers among themselves and agreed that none of them would solicit the customers then being supplied by the other nor would the defendants reduce their respective prices by bidding in competition with each other. However, upon demand, the plaintiff did not specify the names of the parties among whom customers were allocated, who did the allocating, when, and of what the allocations consisted. Defendants denied the alleged agreement and argued that an arrangement of this sort would conflict with the interest of their respective commission salesmen. They submitted that it is the practice of customers to spread their orders among manufacturers in order to avoid the consequence of work stoppages. The plaintiff claimed that the defendants engaged in a price war with American Steel Package Company with intent to drive the alleged sole remaining independent manufacturer out of the variable condenser field. The defendants denied that a price war was conducted against American and submitted that there was a general lowering of prices in 1938 because of a depression in the radio industry. The plaintiff contended thaf none of the defendants during the period January 25, 1938 until August 24, 1938 offered a new-model of variable condensers for sale at a selling price below the price then charged for a common Model 20 condenser and during the period July 13, 1939 until the date of the filing of this suit no new models were offered for sale by General, Radio or Variable because of a specific agreement between the parties. Defendants asserted that every party to the alleged pool had a right to bring out new models without pri- or consultation, that within the 1939 period specified two new models were offered to the trade, and that 17 new models were offered in the second period beginning July 1939. The plaintiff claimed an agreement of April 1939 between General and Radio, on the one hand, and Amsco on the other, whereby Amsco, among other things, agreed to withdraw from the variable condenser business and was paid $50,000, was a non-ancillary agreement in restraint of trade and violative of the antitrust laws. The defendants insisted that it was upon Amsco’s initiative that they entered into the agreement to purchase its variable condenser business of which Amsco for a number of years had expressed the desire to rid itself. They denied the agreement was to lessen competition and insisted that the covenant by Amsco not to engage in the condenser business for ten years was a reasonable protection to the defendants and ancillary to their agreement to purchase. The plaintiff contended specifically that the defendant Variable was part of the general conspiracy to violate the antitrust laws with knowledge of its illegality and must be held liable for its own and the acts and statements of its co-conspirators. Variable argued that it was nothing more than a reluctant licensee acting to protect its business from patent litigation; that it did not participate in any other agreements or arrangements; that it did not maintain prices; or even pay the royalties demanded of it and compromised the claim for royalties only after bitter litigation; and that it had no knowledge of the basic agreements between the other defendants having neither the right nor the opportunity to participate in their meetings. The Facts. From the undisputed documents and evidence offered by the plaintiff and such admissible evidence as may be gleaned from the defendants’ proofs before the court on these motions, the facts in this case appear to be as follows. Prior to 1934, the principal manufacturers of variable condensers within the United States were Radio, General, Amsco, Reliance and American, and all were engaged in interstate trade and commerce. General and Radio were the two largest manufacturers, controlling between themselves a percentage in excess of 50 percent of the total production within the United States. All of the aforesaid manufacturers were in active competition and patent litigation had been conducted between them. Early in 1934, Mr. Maxwell James, general counsel and a director of General, proposed to Amsco and Radio a comprehensive scheme whereby their continuous and expensive patent litigation could be adjusted. These negotiations culminated in an agreement signed on July 30, 1934 whereby a patent holding corporation, Development, was formally organized, with the 'parties to the agreement being General, Radio and Amsco. On August 7, 1934 an agreement was signed by General, Radio and Amsco, “the first contracting parties”, and Development, “the second contracting party”, whereby provisions were established for the assignment to Development of all present and future patents and patent rights relating to variable condensers and for Development to grant licenses to the “first contracting parties” at reasonable rates of royalty. Because of a differential value in the patents owned by Radio and assigned to Development, it was paid the sum of $7,500 by General and Amsco in further consideration of the assignment. Development was given the option to purchase all present and future patent rights from outsiders. It was further provided that: “The contracting parties further mutually covenant and agree that the said second contracting party shall have the power to grant non-exclusive licenses to other persons, firms or corporations unanimously designated by the first contracting parties to receive such licenses. * * *” Infringement suits brought against any of the contracting parties were to be defended by Development provided all of them were manufacturing and selling types similar to the claimed infringing condenser with the costs and expenses of the litigation to be paid by Development from a working fund. Development was further empowered to initiate infringement suits under the pooled patents upon request of two or more of the contracting parties provided that if the suit was against customers, the party who had the bulk of the customer’s business had to be one of the consenting parties. Where an outsider sued an individual member, that member was given the right to use any of the pooled patents originally owned and controlled by it in the litigation and Development was required to reconvey these patents for that purpose. The costs and expenses of such suits were to be paid out of a working fund held by Development which was provided for by assessing equal shares from the first contracting parties and any money derived from the suits as well as royalties were to go into this fund. When the working fund exceeded $9,000, the surplus was to be distributed among the first contracting parties. There was a further provision that: “Each of the parties hereby admits the validity of all the Letters Patents in Schedules A. B. and C. hereof and agrees to admit the validity of all the Letters Patents which may hereafter be acquired from whatever source by the second contracting party, and each of the parties agrees not to contest or aid in contesting, directly or indirectly, the validity of any of such Letters Patents.” Attached to the contract were the lists of patents designated Schedules A, B and C, respectively owned by the first contracting parties. The parties eventually assigned all their respective patents relating to variable condensers to Development, creating a pool of 47 patents in the amounts originating as follows: Radio, 24 patents; General, 12 patents; and Amsco, 11 patents. On August 17, 1934, prior to the issuance of licenses by Development to the remaining contracting parties, Development sent notices to American, Reliance and Federal (a newcomer in the industry), advising of alleged infringement of certain of the pooled patents. Development commenced suit on November 5, 1934 against Federal on two pooled patents, Cramer No. 1,800,719 (ball-bearing), subsequently declared invalid in an action against a distributor of American, Condenser Development Corp. v. Davega-City Radio, Inc., 2 Cir., 108 F.2d 174, and Cramer No. 1,757,357 (insulating strip). Federal accepted a license from Development on April 15, 1935 whereupon a consent decree was entered April 23, 1935 disposing of this litigation. Development brought an infringement suit on November 3, 1934 in the Eastern District of New York, on Cramer patent No. 1,800,719 and Tompkins patent No. 1,932,328 against Montgomery Ward, a distributor of Reliance,. although earlier Reliance, in a notice from Development, was charged with having infringed these patents in addition to Hardy patent No. 1,609,118. A patent infringement suit was filed by Development against Walgreen & Co., another distributor of Reliance, on February 24, 1936 in the Southern District of New York but this suit was discontinued in favor of prosecuting the former suit. Reliance vigorously defended Montgomery Ward. The trial court declared the Tompkins patent invalid and the Cramer patent valid and infringed. Condenser Development Corp. v. Montgomery Ward & Co., D.C., 20 F.Supp. 600. Reliance appealed and filed briefs and reply briefs when counsel for Development opened negotiations for settlement. Reliance withdrew its appeal and took a license with price fixing provisions under the pooled patents on May 19, 1937. In this license agreement between Development, called the licensor, General, Radio and Amsco, called the manufacturing parties of the licensor, and Reliance, called the licensee, Development granted a nonexclusive license to Reliance under all of the patents held by Development with provisions for royalties and a price schedule. Under the price schedule, customers were divided into three classes, A, B, and C, with different prices for each class. Prices and charges for calibration, labor, parts, tools and extras were fixed. A penalty for violating the fixed prices, not to exceed ten percent of the total sales price of the condensers involved, was to be distributed to the other parties and licensees in proportion to their respective gross business in condensers for the current year. In addition to the price provisions, Radio, General, Amsco and Reliance agreed to put up their proportionate shares of $3,000 for expenses and thereafter to pay their proportionate monthly shares of expenses based upon their respective gross business in condensers, the sum of which was not to exceed $25,000 per annum unless otherwise consented to. Development was to have charge of the funds. An Administrator was provided for the industry by this agreement with specific duties and authority set forth. All parties to the agreement were to abide by the decisions of the Administrator. Radio, General, Amsco and Reliance were to forward to the Administrator the specifications of standard condensers (those included in the price schedules) and the proposed price and terms twenty-four hours before quoting a price to a prospective customer. The Administrator was to check the specification, prices and terms and notify the party or licensee of any violation. Similar information on orders for new condensers (condensers not included in present or future price schedules) plus the tooling costs involved were to be sent to the Administrator. The prices and terms on new condensers, however, were to be not less than the prices and terms on any similar standard condenser. The Administrator was given authority to make periodic visits to plants and offices of all of the parties and licensees to investigate and verify all matters pertaining to his duties. Contemporaneously, there was executed in addition to the contract with Reliance, a supplemental contract between General, Radio and Amsco, as one party, and Development, as the other party, wherein the 1934 agreement was extended to August 7, 1944. Paragraph 2 of this agreement stated : “The parties hereto mutually agree that any one of the first contracting parties hereto [General, etc.], at any time after six (6) months beginning with the day the administrator (provided for in said agreement dated the 19th day of May, 1937) has been appointed and has been set up and is ready to carry out the duties of his office, upon reaching the conclusion that the Price Schedule Provisions and the administration thereof provided for in said agreement of the 19th day of May, 1937, are practically unworkable, may empower the second contracting party, Condenser Development Corporation, to cast in fifteen (15) days after notice given, a unanimous vote to terminate or cancel the Price Schedule Provisions of said agreement and the administration thereof pursuant to Paragraph Fifteenth of said agreement; and the Condenser Development Corporation shall thereupon cast said unanimous vote and notify all the parties thereof pursuant to said Paragraph Fifteenth of said agreement.” The fifteenth paragraph of the license agreement to Reliance contained a provision wherein Development was authorized to specify the types of condensers, prices and terms for sale with notice of intention to effect changes to be given by the Administrator simultaneously to all parties by telegraph and further provisions for effecting the changes and future cancellation. By a contract dated July 1, 1937, Mr. Edward Metzger was employed as Administrator and held this position until March 21, 1940 when it was terminated. Mr. Metzger attended most of the major meetings of Development, actively participated in them, was frequently consulted on policy matters, and had access to considerable confidential information. As Administrator, he served as the coordinating element for all the parties permitting Development to be attuned to competitive conditions in the industry. When a later agreement by which Amsco terminated the manufacture of condensers was effected, he was charged with the supervision of its provisions concerning the inventory and storage of tools involved in that agreement. Development had been notified in 1937 that Variable, a newcomer to the variable condenser industry, was infringing patents assigned to it. It filed suit on November 9, 1937 against Union Parts Manufacturing Co., a distributor of Variable, alleging that Cramer patent No. 1,800,719 was infringed. Variable had discovered two patents, Wilhelm patent No. 1,602,803 and Wilhelm patent No. 1,717,429, which it believed would permit it to manufacture condensers without infringement of the Cramer patent. Mr. Charles Hyman of Variable notified Mr. Stanley S. Cramer, President of Development, that he had located these patents and that he intended to use them in connection with the threatened patent litigation. Mr. Cramer forwarded this information to Messrs. James, Harry de Jur of Amsco and Abraham Blumenkrantz of General. On December 8, 1937, Mr. James reported by letter to the Development parties and Mr. A. D. T. Libbey, attorney for Radio and Assistant Secretary of Development, that he had been in communication with Mr. Alexander Konoff, President of Metric Instrument Company, another client of Mr. James, and exclusive licensee of the Wilhelm patents. Mr. Konoff had advised Mr. James that Mr. Charles Hyman of Variable was negotiating for the purchase of the Wilhelm patents which Variable desired for use in the patent suit brought by Development and also to permit it to change the structure in its condensers so that they could come under the Wilhelm patents. Mr. James requested Mr. Konoff not to sell the patents until Development had an opportunity to investigate them and determine whether it desired to purchase them. In his letter Mr. James analyzed the patents, concluded that it was doubtful that Variable would adopt a construction of the character of the Wilhelm patents in any condensers in the future and stated that upon being further pressed by Mr. Konoff for a decision whether Development would purchase the patents, he gave him the substance of his opinion concerning them and informed him that: “ * * * I could not see my way clear to advising my client to purchase these patents except possibly for the reason of preventing their being picked up by the Variable Condenser •Corporation and provided only that the price set thereon was low.” Mr. James continued as follows: “I, therefore, asked Mr. Konoff to let me know what the offer on these condensers was so that I might pass the word along and be enabled to make my recommendations accordingly. He informed me that he was asking $1000.00 for the patents, that the first offer that was made thereon was $250.00 and that Mr. Hyman told him this morning that he may be able to get his board to agree to pay $500.00 for them, but that this would be the highest figure available.” He again requested Mr. Konoff not to sell the patents until he had further opportunity to talk the matter over with the members of Development. On January 7, 1938, Mr. John H. Wilhelm, as owner, and Metric Instrument Corporation, as exclusive licensee, transferred their respective interests in the patents to Development for the sum of $500. On January 4, 1938, Federal became insolvent and Mr. James, acting for Development, terminated its license. Its business was purchased by Rae, which on May 25, 1938 applied to Development for a license, but was refused. Mr. James, by letter dated January 26, 1938, to the Development parties and Mr. Libby, reported a conversation with Mr. Arthur Schneider, counsel for Variable. regarding a license. In this letter Mr. James set forth the fact that Development followed the policy of not granting two licenses in the same locality. He reported that Variable was experiencing serious financial difficulties and faced extensive patent litigation. The progress of the negotiations toward the licensing is further reported in detail by Mr. James in his letter of February 3, 1938, in which he said, among other things, the following: “This is a brief report on a conference had yesterday at this office between Mr. Metzger and the writer and Mr. Schneider, attorney for Variable. Mr. Hymans was not present at this conference. “There was obviously much preliminary work to be done to educate the new licensee to C. D. C.’s methods and to the seriousness of C. D. C.’s policy. Much of our time was consumed in this educational process and in that respect it was well spent. We objected to Mr. Hymans’ absence and this fact is being conveyed by Mr. Schneider to Mr. Hymans. Mr. Schneider came alone because Mr. Hymans seems to have full confidence in Mr. Schneider and because there were apparently a number of legal matters that Mr. Schneider first wished to have considered. “The next conference has been set for tomorrow, Friday, at 11 A.M., at which conference it is expected that both Mr. Hymans and Mr. Schneider will be present representing Variable and Mr. Metzger and the writer will be present representing C. D. C. Mr. Metzger is getting up the price schedule applicable to Variable and it is expected that this price schedule will be ready to be appended to the agreement tomorrow. We see no reason why the agreement should not be concluded in tomorrow’s session. “From all the discussion which took place on the legal aspects of the agreement, only a number of minor changes to the agreement has been arranged for. This will be discussed below. “The main point at first made by Mr. Schneider was to convey Mr. Hymans’ business decision that Variable did not wish to be bound by any minimum and that the royalty rate should be the flat one-half cent even in the event that the price provisions are terminated. “Either of these proposals, I absolutely refused to entertain. I informed Mr. Schneider that I had received the approval to make the minimum figure of $1800. and to make the basic royalty one cent instead of one-and one-quarter cent. I explained why this was absolutely essential. This figure was arrived at as amounting to a 5% royalty. I pointed out that the members of C. D. C. in carrying on their research work and in spending money for their patents and litigation pay far more than the equivalent of this 5% royalty. With reference to the ‘minimum’, I pointed out that the stipulation in the agreement really did not mean a minimum as such, but was an option on the part of C. D. C. to cancel the agreement in the event that the minimum number of condensers were not made, but that such option could be can-celled by the payment of the minimum royalty. Schneider seemed to be satisfied with both explanations and later intimated that he was ‘sold’ on the fairness of the agreement and that he was representing Mr. Hymans’ point of view. “You will recall that we had similar discussions on these two subjects with Reliance and that Reliance also took the viewpoint that in the event of a breakdown of the price provisions of the agreement, the basic royalty should be less rather than more than the one-half cent figure. ****** “Mr. Metzger at various parts of the conference impressed Mr. Schneider with the seriousness of C. D. C.’s maintenance of the price provisions, and Mr. Metzger insisted time and time again that unless Variable was prepared to adhere strictly to the high moral policy adopted and now being carried out by the members of C. D. C. and the other licensees, C. D. C. was not interested in granting any license. Mr. Schneider was informed that Mr. Hymans would be held to strict accountability in every way to following and upholding the rules of conduct laid down by the administrator. Mr. Metzger wisely discouraged the granting on our part of a license and the taking on the part of Variable of a license if Mr. Hymans had any idea of using any method to render nugatory or vitiate the work of the administrator under this .agreement. “I assume that Mr. Metzger will repeat these ‘lectures’ for the benefit of Mr. Hymans at our next session. “Mr. Schneider in arguing for the right to cancel the agreement in the event that the three price provision patents of the agreement are held invalid and the price provisions are cancelled from the agreement. I have refused to agree to any such right of cancellation. I believe that Mr. Schneider will continue arguing this point tomorrow. “I have anticipated, judging from Mr. Hymans’ insistance [sic] at the last conference, that either Mr. Schneider or Mr. Hymans would take the position that they did not want any minimum guarantee in the agreement and that they did not want a basic royalty higher than the one-half cent figure in any event. I, therefore, gave my study to the recently issued patents to Cramer, Nos. 2,087,902 and 2,101,985, and at an early point of the conference, I informed Mr. Schneider that C. D. C. was determined not to permit Variable to gain a foothold in the business, and that I was authorized to file a supplemental bill of complaint based on alleged infringement of these two newly issued Cramer patents. I argued that the method claims 4 and 6 of the earlier patent (No. 2,087,902) was infringed, and that claims 1, 2 and 12 to 15 of the later patent (No. 2,101,985) were infringed. Mr. Schneider has not had time to digest these patents, but even if he did have time to do so, I think it would have made the impression I wished to convey. “I believe the time has come when the recently issued patents to all three members of C. D. C. should be acquired by C. D. C. so that they may be embodied in Schedules ‘A’, ‘B’ and ‘C’. I believe these patents, because of their recent issuance and because of possible infringement of some of them, should be added to the schedules to strengthen the present license agreement, particularly in the event that the other patents are held invalid and the price provisions fall. I also believe these patents may be useful in helping to get American Steel Package Company into the fold. After Variable’s agreement is signed, I will recommend my again approaching American Steel Package Company charging them with infringement of other patents and possibly with the Cramer patent No. 2,101,-985, in an endeavor to get American Steel Package to change its attitude, particularly in the light of the pending suit which it alone will have to maintain when the Variable litigation is settled.” Variable on February 4, 1938 took a license from Development which contained essentially identical provisions as those in the Reliance license. Because of its financial difficulties, Variable applied to Development for better royalty rates, which application was denied and the Administrator was instructed to press Variable for overdue payments. On May 28, 1938, Variable requested relief from payment of royalties for the remainder of the year due to a price reduction recently announced by Development, high overhead and legal costs. It paid no royalties for approximately one and a half years. On January 18, 1940, Mr. Benjamin Isaacs, an assignee of Development, commenced a suit against Variable for royalties and damages. In an amended answer, filed April 4, 1944, Variable stated: “A. That the plaintiff’s assignor, the Condenser Development Corporation, was owned, operated and controlled and organized by the Radio Condenser Company, General Instrument Corporation, De Jur-Amsco Corporation and others, for the purpose of creating a monopoly in the variable condenser field and for the purpose of restricting and preventing free competition and for fixing prices in violation of the Sherman Anti-Trust Act and other laws. That in the furtherance of said conspiracy and scheme, the agreements sued on herein were made by said Condenser Development Corporation with the defendant. * * * * * * “C. That the agreement upon which the plaintiff brings this action was a device to create a monopoly; and a price-fixing agreement in violation of law and that the same is, accordingly, null and void and inoperative.” However, Variable settled this suit on March 13, 1945 by payment of $1,000 and its admission that the license of January 4, 1938, as amended, was a good and valid one and it remained at the filing of this suit a licensee of Development. In December of 1945, representatives of Kings Electronic -Company approached Development seeking a license -to manufacture a single model condenser. It advised Mr. James that it had been in communication with Variable in regard to the purchase of Variable’s license from Development and its equipment. Mr. James on December 27, 1945 informed Mr. Schneider that Variable was not authorized to offer its equipment or license to Kings Electronics. Kings Electronics commenced to negotiate with Development for a license, never resulting in consummation, and was offered one which contained among other provisions a $5,000 yearly minimum royalty fee. On February 8, 1946 Variable brought a suit for unfair competition against Kings Electronics, but lost the case. Later Kings Electronics sought information from Development on whether, if it accepted a license, the initial royalty payment could be deferred because of its expenses in the Variable suit. In May of 1946, Mr. Charles Hyman of Variable visited the plant of the Mechanical and Electronic Design Company for purposes of purchasing jigs, dies, tools and other equipment thought to be of possible value in the manufacture of variable condensers but no sale was consummated. The suit against Kings Electronics and the visit to Mechanical and Electronics were not pursuant to any agreement between Variable and the Development parties as appears from the evidence relied upon by the plaintiff itself— the affidavit of Mr. Charles Hyman, president of Variable. On April 28, 1939 Amsco entered into an agreement with General Instrument and Radio Condenser whereby its individual officers, directors and stockholders, agreed to withdraw from the variable condenser industry in the United States a.nd Canada for a period of ten years for a consideration of $50,000 paid by General and Radio. It surrendered all of its rights in Development, including stock and reversionary interests in the patents assigned to the pool. Radio and General desired to purchase Amsco’s -tools used in the manufacture of condensers at this time but Amsco did not choose to sell them as it entertained ideas of transporting them to France where it had some interest and there setting them up in a manufacturing business. It was agreed that in order to secure Radio and General against the liberation of the tools in a market competitive to theirs that any tools owned by Amsco which could be employed in manufacturing variable condensers would be held in storage under the control of General and Radio with the further provision that the tools could not be sold in the United States and Canada. However, Amsco was granted the right to sell the tools for export to a foreign country other than Canada provided that in making the sale it would notify the purchaser that the equipment could not be sold or returned to anyone in the United States, its possessions, or Canada and that in the event of Amsco effecting such a sale, it would notify General and Radio. There was a separate agreement between Radio and General of June 10, 1939 which provided that in the event either party purchased the Amsco tools, the purchaser would not resell them in the United States or Canada. The Amsco agreement did not provide for the sale of Amsco’s good will or business but was expressly stated to be that “the parties of the second part are desirous of purchasing certain shares of stock of the Condenser Development Corporation, owned by the parties of the first part, and are desirous of securing by assignment certain patent rights owned by the parties of 'the first part, and are desirous of securing the surrender of all licenses now held by the parties of the first part from Condenser Development Corporation * * To secure Amsco’s compliance with the agreement, there was provided as follows: “The parties of the second part, or either of them, shall have the right, at any time at their option, to remove to and to store the said tools, dies, jigs, and fixtures in a bonded warehouse in the City of New York, in the name of the parties of the first part, at the equal expense of the parties of the second part, with a right on the part of the parties of the first part, to withdraw all or part under the limitations imposed by the party of the second part, under this agreement. The warehouse receipt shall be placed in escrow under proper receipt, with any bank, trust company in New York City, or with the said Edward Metzger, for the purpose of assuring the disposition of the tools, dies, jigs and fixtures, pursuant to this agreement. The warehouse receipt is to be turned over to the parties of the second part on demand for the purposes of this agreement. If however, the parties of the second part do not exercise said option to store said tools, dies, jigs and fixtures, then the parties of the second part shall have the right to inspect the said tools, dies, jigs and fixtures from time to time, at the business place of the parties of the first part, for the purpose of ascertaining whether the provisions of this agreement are being fully complied with, and in order to insure the performance of the terms and provisions of this agreement.” For a period of time the tools of Amsco were ’held in storage under the supervision of the Administrator, Mr. Metzger. In interpreting this agreement and explaining the consideration paid for its execution General, in a stock prospectus issued August 28, 1940, stated that “The Corporation has considered this acquisition as being primarily in the nature of a payment to the De Jur-Amsco Corporation for the discontinuance of the use of its tools and has accordingly charged on its books practically the entire sum to an intangible account ‘Tools and Dies — (Special Rights)’ which is being amortized over a period of three years.” Radio organized a new corporation, Manufacturer’s Supply Company (Manufacturer) in August 1939 and purchased nearly all the Amsco tools for the sum of $27,000, which Manufacturer proceeded to utilize for a time in factory space rented from Amsco where it formerly manufactured condensers. Following 1939 Amsco manufactured other products such as exposure meters for cameras. In October of 1945, an official of Amsco approached Mr. Russell Cramer ■in regard to relief from the ten year clause in the Amsco agreement of 1939. Mr. Cramer rejected this offer after discussing the matter with General. In a letter to Amsco dated October 23, 1945 he stated: “Please be advised that upon giving this matter due and careful consideration, we fail to see any reason why you should be released from the aforesaid agreement or why the said agreement should be altered or terminated. “If you see any reason for our making a different conclusion we will be pleased to further hear from you.” Early in 1934 Mr. Russell Cramer, acting for Development, sought to persuade Mr. Grover P. Behringer of American to accept a license from Development. It is in dispute whether this was on a royalty or non-royalty paying basis. American refused this offer although Mr. Cramer continued to discuss the matter until 1937 with Mr. Behringer. There was subsequently extensive correspondence concerning this subject which failed to produce tangible results and eventuated in Development filing a patent infringement action against Acme, a distributor of American, in the Eastern District of New York, and against Davega, another American distributor, in the Southern District of New York. Development claimed that American infringed four pooled patents, but suit was brought on Cramer Patent No. 1,800,719. American defended the Davega suit and the Cramer patent was held to be valid and infringed in the lower court. However, the Second Circuit Court of Appeals reversed in Condenser Development Corp. v. Davega-City Radio, Inc., 2 Cir., 108 F.2d 174. American never became a licensee of Development or any contracting party forming Development and has always continued to remain an active and open competitor. According to the minutes of Development for January 7, 1938, Messrs. Price, Bloom, May, R. Cramer, Winzeler and Metzger held a discussion “regarding a small condenser comparable to Steel Package [American] Model S. After much consideration it was agreed that before any model lower in price than the Model 20 would be introduced by any manufacturing party he would consult with the group before introducing such models.” The new model planned, known as Model 24, was to have the dimensions of Model 20 but incorporated certain internal changes and prices were to be published July 1, 1938. On February 15, 1938 a meeting was held in Chicago' attended by Messrs. Samuel Cohen and H. Berman, representing General; Messrs. William May, sales manager, and Robert Beusman, Western Division sales manager, representing Radio; and Mr. Metzger, the administrator. Mr. Metzger wrote Mr. Russell Cramer of Radio, Mr. B. H. Price of Amsco, and Mr. A. Bloom of General in regard to the meeting that: “The general sales picture may be analyzed as follows: “Model 20 or equivalent at the moment is the only condenser for which there is any call. The statement was made that not alone are they being used on the $10.00 radio jobs, but are also being used on larger jobs, a tendency which may make the Model 20 preponderate as a choice in designing receivers for 1938. “Some effort was made to estimate Tin Can’s production at this time, with a figure somewheres between 6,500 and 8,000 two gang jobs being produced daily by him. “The question of price reduction was introduced on the Model 20. This topic, from the discussion which ensued, may be classified into three general groups:— “1. No reduction advisable at this time. “2. Reduction on base price. “3. Reduction on extras only. “Under Group #1, reasons given making it inadvisable to lower prices on the Model 20 may be set up as follows: “A. Loss in revenue by reason of lower price. “B. Psychological attitude on the trade when business is at its low ebb, and also possible harm in our basic position considering the firm stand shown the trade by C. D. C. members up to this time. “C. What will be gained in lowering prices when Tin Can meets cut, with particular consideration to his more favorable position because of the general sympathy with him as against C. D. C. members. “Under Group #2, the general feeling seemed to be to maintain the present base price, in view of competitor’s base price, which is approximately the same. “Under Group #3, some leaning towards cutting extras on the theory that our price disadvantage is created in the extras. The objectionable feature in cutting the price on the extras is in a general reduction of quotations on condensers in the larger classes. Some of the extras which the field men particularly obj ect to are — packing charges and shaft extras, such as exte