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UNITED STATES v. CERTAIN-TEED PRODS. CORP.

DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF COLUMBIA


February 26, 1941

UNITED STATES
v.
CERTAIN-TEED PRODUCTS CORPORATION et al.

The opinion of the court was delivered by: MORRIS

MORRIS, Justice.

On June 28, 1940, an indictment was returned in this Court by the grand jury, charging the defendants (two corporations) with violation of Sections 1 and 3 of the Sherman Anti-Trust Act, 26 Stat. 209, 15 U.S.C.A. ยงยง 1-3. *fn1" The defendants were arraigned on September 20, 1940, and pleaded not guilty. Thereafter leave was granted by the Court to the defendants to withdraw the pleas of not guilty, and to file demurrers or other preliminary motions within thirty days after arraignment. No demurrer was filed by either of the defendants within such period. However, the defendants have joined in a motion for a bill of particulars. The case is now before the Court on such motion, which was argued with a motion for a bill of particulars in the case of United States v. United States Gypsum Company et al., D.C., 37 F.Supp. 398, because of the close relation in which the two cases stand. Briefs were submitted and have been considered.

In substance the indictment charges that the two defendants and an alleged co-conspirator corporation, not named as a defendant, beginning in the year 1935 and continuing into the year 1939, "combined and conspired to establish, fix and maintain high uniform and non-competitive prices" for perforated gypsum lath sold by them in commerce between the States and the District of Columbia, and pursuant to such combination and conspiracy "throughout the period from the month of July, 1936, to the month of May, 1938," sold such product in commerce between the States and the District of Columbia to dealers and consumers within the District of Columbia at the high uniform and non-competitive prices so established, fixed and maintained. The indictment describes the method by which the alleged combination and conspiracy was entered into and effectuated. It is charged that, during the months of June and July, 1936, the United States Gypsum Company entered into substantially identical license agreements with the Certain-Teed Products Corporation and the American Gypsum Company relating to letters patent No. 1,938,354, which had been issued to the United States Gypsum Company on December 5, 1933, upon application of Carlisle K. Roos, director of research and development for United States Gypsum Company, and which patent purported to cover gypsum lath with perforations of a certain dimension and number and with a designated spacing and relationship. It is charged that, by these licensing agreements, the United States Gypsum Company purported to license the two other corporations to manufacture and sell perforated gypsum lath under the patent above referred to; that the two corporations agreed not to contest the validity of this patent during the life of the agreements, and the United States Gypsum Company reserved the right to determine and fix the minimum prices of perforated gypsum lath manufactured and sold by the licensee corporations, which corporations agreed to abide by these minimum prices. It is further charged that the patent upon which the agreements above mentioned were based was void and did not embrace any patentable invention within the meaning of the patent laws; and that the defendants and co-conspirator were informed and believed said patent to be void and not to embrace any patentable invention at the time of the execution of the license agreements and throughout the time of their operation. It is further charged that the defendants and co-conspirator entered into the licensing agreements "principally for the purpose of enabling the United States Gypsum Company to determine and fix the prices of perforated lath manufactured and sold" by the defendant and co-conspirator, and that the license agreements were not bona fide patent license agreements, and the exercise of price control by the United States Gypsum Company under the agreements was "not normally and reasonably adapted to protect the pecuniary reward of a patentee under a lawful patent monopoly." It is charged in other counts of the indictment that a combination and conspiracy was entered into between the defendants and the co-conspirator for the purpose of fixing the price of perforated lath, and that it was carried out by means of patent licensing agreements which were executed as the result of an agreement among the defendants to fix the price of perforated lath at a specific differential above the price of straight lath, it being claimed that, in these circumstances, such price fixing agreements constitute violations of the Sherman Anti-Trust Law, notwithstanding the use of patent licenses to effectuate the purpose of the agreements. Other subordinate allegations of the indictment are stated in the margin. *fn2"

 As in the case of United States v. United States Gypsum Company et al., the defendants in this case, by their motion for a bill of particulars, seek definite and specific detail respecting substantially every act mentioned in the indictment. A summary of the motion is stated in the margin. *fn3"

  The principles which it is considered should guide the requirement for additional information respecting the allegations of an indictment of this character are discussed in the memorandum opinion in the case of United States v. United States Gypsum Company et al.

 An order will, therefore, be entered requiring the United States within sixty days to serve upon the attorney for the moving defendants a bill of particulars, setting forth the information respecting the allegations of the indictment indicated below. It will be further ordered that such bill of particulars may be supplemented if the Government should subsequently learn of further particulars with respect to the allegations of the indictment as to which it is required to furnish information indicated below, such supplementary bill of particulars to be served within ten days after learning of such further particulars, provided service be at least ten days prior to the trial. In all respects, except as otherwise indicated, the motion for a bill of particulars will be denied.

 I-1 and II-1. The information contained in the indictment is deemed sufficient to inform the defendants as to the method by which it is charged each defendant became a party to the alleged conspiracy; and the time, fixed as it is by the indictment within reasonable limits, is deemed sufficient, by proper investigation on the part of the defendants, to enable them to properly prepare their defense.

 I-2. The particular allegation of the indictment here questioned is one which undertakes to bring home to the defendants actual knowledge or advice that the patent involved was void. It is believed that the Government should, therefore, furnish such information in its knowledge with respect to time, within reasonable limits, parties, or by other means of identification, as will enable the defendants, by proper investigation, to prepare their defense.

 I-3.It is deemed that, if the information herein required in response to the foregoing paragraph is furnished, that which is sought by this section is not necessary to enable the defendants to properly prepare their defense.

 I-4 (1), (2), (3) and (5). Inasmuch as the charge here involved is not only the invalidity of the patent, but the application for and use of the patent as a subterfuge, it is considered that more particular identification of such prior art should be stated to enable the defendants to properly prepare their defense. The Government shall furnish such information within its knowledge respecting parties, or by such other means of identification as will, by proper investigation on the part of the defendants, accomplish this purpose.

 (4). It is considered that the information furnished in the indictment is sufficient.

 I-5. It is considered that the information furnished in the indictment is sufficient with reasonable investigation on the part of the defendants to enable them to properly prepare their defense.

 II-2, 3, 4 and 5. It is not believed that information in addition to that contained in the indictment is necessary to enable the defendants by reasonable investigation to prepare their defense with respect to the allegations here questioned.


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