[Federal Register: March 13, 2000 (Volume 65, Number 49)]
[Notices]
[Page 13309-13325]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13mr00-41]
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DEPARTMENT OF JUSTICE
Anitrust Division
United States of America v. Miller Industries, Inc., Miller
Industries Towing Equipment, Inc., and Chevron, Inc., No. 1:00CV00305
(D.D.C., Filed February 17, 2000); Proposed Final Judgment and
Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment,
Stipulation, and Competitive Impact Statement have been filed with the
United States District Court for the District of Columbia in United
States of America v. Miller Industries, Inc., Miller Industries Towing
Equipment, Inc., and Chevron, Inc., No. 1:00CV00305. On February 17,
2000, the United States filed a Complaint alleging that the acquisition
by Miller Industries, Inc. on September 2, 1996, of all the issued and
outstanding capital stock of its competitor Vulcan Equipment, Inc., a
Mississippi corporation, and the acquisition by Miller Industries, Inc.
on December 5, 1997, of all the issued and outstanding capital stock of
its competitor Chevron, Inc., a
[[Page 13310]]
Pennsylvania corporation, violated Section 7 of the Clayton Antitrust
Act, as amended, 15 U.S.C. 18. The proposed Final Judgment, filed with
a Stipulation at the same time as the Complaint, would require Miller
Industries, Inc. and its wholly owned subsidiaries Miller Industries
Towing Equipment, Inc., and Chevron, Inc., to grant to anyone
requesting it a non-exclusive license, at unit royalties that are not
to exceed specified amounts, under any one or more of five towing and
recovery vehicle equipment patents, and to notify the Department of
Justice prior to future acquisitions of towing and recovery equipment
assets or patents having a value that exceeds $5 million. The
Stipulation provides for these patent licenses to become available
within ten (10) days following the filing of the Stipulation with the
Court. Copies of the Complaint, Stipulation, proposed Final Judgment,
and Competitive Impact Statement are available for inspection at the
Department of Justice in Washington, D.C. in Room 207, 325 Seventh
Street, NW, where copies may be obtained upon request and payment of a
copying fee, and at the Office of the Clerk of the United States
District Court for the District of Columbia.
Public comment is invited within sixty days of the date of this
notice. Such comments, and responses thereto, will be published in the
Federal Register and filed with the Court. Comments should be directed
to Mary Jean Moltenbrey, Chief, Civil Task Force, Antitrust Division,
Department of Justice, Suite 300, 325 Seventh Street, NW, Washington,
D.C. 20530 (telephone: (202) 616-5935)
Rebecca P. Dick,
Director of Civil Non-Merger Enforcement.
Stipulation
It is stipulated by and between the undersigned parties, by their
respective attorneys, as follows:
(1) The Court has jurisdiction over the subject matter of this
action and over each of the parties hereto, and venue of this action is
proper in this Court.
(2) The parties stipulate that a Final Judgment in the form hereto
attached may be filed and entered by the Court, upon the motion of any
party or upon the Court's own motion, at any time after compliance with
the requirements of the Antitrust Procedures and Penalties Act, 15
U.S.C. 16, and without further notice to any party or other
proceedings, provided that plaintiff has not withdrawn its consent,
which it may do at any time before entry of the proposed Final Judgment
by serving notice thereof on defendants and by filing that notice with
the Court.
(3) Defendants shall abide by and comply with the provisions of the
proposed Final Judgment pending its entry by the Court, or until
expiration of time for all appeals of any Court ruling declining entry
of the proposed Final Judgment, and shall, from the date of the signing
of this Stipulation, comply with all the terms and provisions of the
proposed Final Judgment as though the same were in full force and
effect as an order of the Court. As part of this compliance, defendants
shall not assign, transfer interest, or take any action, direct or
indirect, that will impede or impair the value or ownership rights of
the `737, `147, `509, `609, and `623 Patents (as those terms are
defined in the proposed Final Judgment) before the proposed Final
Judgment shall be effective.
(4) Pursuant to Section IV of the proposed Final Judgment,
Defendants shall offer to any requesting third party a license or
licenses, the terms of which shall comply with the terms set forth in
the proposed Final Judgment and Exhibits A and B thereof; provided,
however, that if the proposed Final Judgment has not been entered
because Plaintiff has withdrawn its consent or the time for all appeals
of any Court ruling declining entry of the proposed Final Judgment has
expired, then the license(s) shall terminate effective upon withdrawal
of consent of expiration of time for appeals. As provided in Exhibits A
and B, licensees shall have the right to sell at any time products made
within 60 days of termination caused by the withdrawal of the
Plaintiff's consent or by the Court's declining to enter the proposed
Final Judgment.
(5) Within ten (10) days of its filing of the proposed Final
Judgment and every thirty days thereafter until entry of the Final
Judgment, defendants shall provide Plaintiff an affidavit setting forth
the name, address, and telephone number of each person who, at any time
after the period covered by the last such report, made an offer to
license, expressed an interest in licensing, entered into negotiations
to license, or was contacted or made an inquiry about licensing the
`737, `147, `509, `609, or `623 Patents, and shall describe in detail
each contact with any such person during that period.
(6) This Stipulation shall apply with equal force and effect to any
amended proposed Final Judgment agreed upon in writing by the parties
and submitted to the Court.
(7) In the event Plaintiff withdraws its consent, as provided in
paragraph (2) above, or in the event that the Court declines to enter
the proposed Final Judgment pursuant to this Stipulation, the time has
expired for all appeals of any Court ruling declining entry of the
proposed Final Judgment, and the Court has not otherwise ordered
continued compliance with the terms and provisions of the proposed
Final Judgment, then the parties are released from all further
obligations under this Stipulation, and the making of this Stipulation
shall be without prejudice to any party in this or any other
proceeding.
(8) Defendants represent that the licenses ordered in the proposed
Final Judgment can and will be made, and that defendants will later
raise no claims of hardship or difficulty as grounds for asking the
Court to modify any of the licensing provisions contained therein.
For plaintiff United States of America:
Susan L. Edelheit,
D.C. Bar No. 250 720, Assistant Chief, Civil Task Force Antitrust
Division, U.S. Department of Justice, Suite 300, 325 7th Street, NW,
Washington, D.C. 20530, (202) 514-5038.
Date Signed: February 16, 2000.
For Miller Industries, Inc., Miller Industries Towing Equipment,
Inc., and Chevron, Inc.
C. Loring Jetton, Jr.,
(202) 663-6738, D.C. Bar No. 083766
John Q. Rounsaville, Jr.,
(202) 663-6328, D.C. Bar No. 162305
William F. Adkinson, Jr.,
(202) 663-6530, D.C. Bar No. 411922
Wilmer, Cutler & Pickering, 2445 M Street, NW, Washington, DC 20037.
Date Signed: February 16, 2000.
Frank Madonia,
Executive Vice President and General Counsel, Miller Industries,
Inc., 8503 Hilltop Drive, Ooltewah, TN 37363--0120, (423) 238-4171.
Date Signed: February 16, 2000.
Stipulation Approved for Filing:
Ordered this ____ day of ____________, 2000.
----------------------------------------------------------------------
United States District Judge
Final Judgment
Whereas, Plaintiff, the United States of America (``United
States''), having filed its Complaint in this action, and Plaintiff and
Defendants, Miller Industries, Inc. and its wholly-owned subsidiaries
Miller Industries Towing Equipment, Inc., and Chevron, Inc. (any one or
more of which may be referred to as ``Miller Industries''), by their
respective attorneys, having consented to the entry of this Final
Judgment without trial or adjudication of any issue of fact or law
herein, and without this Final Judgment constituting any evidence
against or an admission by any
[[Page 13311]]
party with respect to any issue of law or fact herein;
And Whereas Defendants have agreed to be bound by the provisions of
this Final Judgment pending its approval by the Court;
And Whereas the essence of this Final Judgment is the prompt and
certain licensing of specified patents to one or more third parties;
And whereas Defendants, as alleged in the Complaint, as owners of
all right, title, and interest in the L-Arm Patent (defined below),
acquired all of the capital stock of Vulcan International, Inc.,
including all right, title, and interest in the Vulcan Improvement
Patents (defined below), and thereafter acquired all of the capital
stock of Chevron, Inc., including all right, title and interest in the
Independent Wheel Lift Patent and the Backsaver Patent (defined below):
And whereas licensing of the specified patents is necessary to
remedy the loss of competition resulting from Defendants' acquisition
of control of competitors' assets as alleged in the Complaint;
And whereas Plaintiff takes no position as to the validity or
enforceability of the patents at issue or as to whether they are or
have been infringed by any third parties, and Plaintiff and Defendants
agree that this Final Judgment shall have no impact whatsoever on any
adjudication concerning the validity or enforceability of the patents
at issue or any other patents assigned to or owned by Defendants;
And whereas Defendants have represented to Plaintiff that Miller
Industries is the owner of the patents at issue, that the licensing and
other terms and conditions ordered herein can and will be accomplished,
and that Defendants will later raise no claims of hardship or
difficulty as grounds for asking the Court to modify any of the
provisions contained below;
Now, therefore, before the taking of any testimony, and without
trial or adjudication of any issue of fact or law herein, and upon
consent of the parties hereto, it is hereby ordered, adjudged, and
decreed as follows:
I.
Jurisdiction
This Court has jurisdiction over the subject matter of this action
and over each of the parties hereto. The Complaint states a claim upon
which relief may be granted against the Defendants, as hereinafter
defined, under Section 7 of the Clayton Act, as amended (15 U.S.C. 18).
II.
Definitions
As used in this Final Judgment:
A. ``Miller Industries'' shall mean one or more of Miller
Industries, Inc., a Tennessee corporation headquartered in Ooltewah,
TN, and tits wholly-owned subsidiaries Miller Industries Towing
Equipment, Inc., a Delaware corporation headquartered in Ooltewah, TN,
and Chevron, Inc., a Pennsylvania corporation headquartered in Mercer,
PA, and their successors, assigns, subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, and directors, officers,
managers, agents, and employees.
B. ``Produce,'' ``Producing,'' or ``Production'' shall mean to
manufacture, make, have made, import into the United States, use, offer
to sell, sell or otherwise dispose of
C. ``The `737 Patent'' (commonly referred to as the `` L-Arm
Patent'') shall mean United States Patent Number 4,836,737 and all
continuations, continuations-in-part, and divisions or reissues
thereof, if any.
D. ``The `623 Patent'' shall mean United States Patent Number
4,637,623 and all continuations, continuations-in-part, and divisions
or reissues thereof, if any.
E. ``The `509 Patent'' shall mean United States Patent Number
4,798,509 and all continuations, continuations-in-part, and divisions
or reissues thereof, if any.
F. ``The `147 Patent'' (commonly referred to as the ``Independent
Raise-and-Lower Patent'') shall mean United States Patent Number
5,061,147 and all continuations, continuations-in-part, and divisions
or reissues thereof, if any.
G. ``The `609 Patent'' (commonly referred to as the ``Backsaver
Patent'') shall mean United States Patent Number 5,628,609 and all
continuations, continuations-in-part, and divisions or reissues
thereof, if any.
H. The ``Century Design'' shall mean Miller Industries' wheel lift
designs depicted in the engineering drawings attached as Exhibit D and
E and which are embodied in Century Model Nos. 124002217 and 12400221,
currently being marked by Miller Industries in the United States, as
well as the wheel lift designs incorporated in the previously marketed
Century Model Nos. 124001824 and 124001825.
I. ``The Improvement Patents'' (commonly referred to as the
``Vulcan Improvement Patents,'' covering such items as the horizontal
and vertical ``pivot'' L-arm features) shall mean the `623 Patent and
the `509 Patent.
J. The ``Licensed Claims of the Improvements Patents'' shall mean
Claims 1-3, 6-10, 12, 15, 17, 18, 20 and 22 of the `623 Patent and
Claims 1, 4-9, 11-14 and 16-19 of the `509 Patent. The Licensed Claims
include such features as the horizontal and vertical ``pivot'' of the
L-arm.
K. The ``Unlicensed Claims of the Improvements Patents'' shall mean
Claims 4, 5, 11, 13-14, 16, 19 or 21 of the `623 Patent and Claims 2,
3, 10 or 15 of the `509 Patent. The Unlicensed Claims of the
Improvement Patents embody the following features of the Improvement
Patents: (1) the vertical locking pin device; (2) the elongated curved
wheel retainer plate (sometimes referred to as ``the Scoop''); and (3)
the wheel lift receiver placed completely above the cross-bar. The act
of Producing products containing (a) a horizontal locking pin device,
(b) a vertical alignment pin on the receiver used in combination with a
horizontal locking pin device, or (c) two flat surfaces joined together
to form the wheel retainer plate, or any combination of (a), (b), or
(c), by a licensee under the Licensed Claims of the Improvement Patent
shall not constitute an infringement of any of the Unlicensed Claims of
the Improvement Patents.
III.
Applicability
The provisions of this Final Judgment apply to Miller Industries,
its successors and assigns (including any transferee or assignee of any
ownership rights to, control of, or ability to license the patents
referred to in this Final Judgment), its subsidiaries, affiliates,
directors, officers, managers, agents, and employees, and all other
persons in active concert or participation with any of them who shall
have received actual notice of this Final Judgment by personal service
or otherwise.
IV
Licensing of Patents
A. Beginning no later than ten (10) business days after the filing
pursuant to 15 U.S.C. 16(b) of this Final Judgment, Miller Industries
shall offer to any third party a non-exclusive license in the form
attached hereto as Exhibit A (with the exception of licenses that
include the Improvement Patents) or Exhibit B (for licenses that
include the Improvement Patents) under the following patents subject to
license fees not to exceed the corresponding stated amount per unit:
[[Page 13312]]
------------------------------------------------------------------------
Unit
license
Patent(s) to be licensed fee not
to exceed
------------------------------------------------------------------------
`737 Patent.................................................. 125.00
`147 Patent.................................................. 150.00
`609 Patent.................................................. 150.00
Licensed Claims of the Improvement Patents................... 150.00
`737 Patent & `147 Patent, Together.......................... 175.00
`737 Patent & `609 Patent, Together.......................... 175.00
`737 Patent & Licensed Claims of the Improvement Patents, 175.00
Together....................................................
------------------------------------------------------------------------
The Maximum Unit License Fee shall be adjusted up or down annually in
accordance with the change in the U.S. Department of Labor Producer
Price Index for Finished Goods.
B. Such licenses shall be available for the life of the licensed
patent. The Maximum Unit License Fee for a license covering more than
one patent shall, in the event of the expiration of any covered patent,
be modified to reflect the Maximum Unit License Fee for the remaining
licensed patent or patents. The terms of Exhibit A or Exhibit B may be
modified upon consent of both parties to the license.
C. In accomplishing the licensing ordered by this Section IV,
Miller Industries shall retain the services of an Independent Auditor
(a certified public accountant from a firm of good standing) who shall
collect from each licensee reports and royalty payments as required by
each license agreement made pursuant to this Final Judgment. Miller
Industries shall instruct the Independent Auditor to provide Miller
Industries no more frequently than on a quarterly basis the aggregate
dollar amount of royalty payments collected under each category of
license set forth in Paragraph A hereof, together with a report stating
the name of each licensee making royalty payments and the aggregate
number of units of licensed products reported by all licensees for that
period. Miller Industries shall instruct the Independent Auditor not to
provide or disclose any information or data that would allow Miller
Industries to determine the number of units of licensed products
produced by any particular licensee, but may permit the Independent
Audit to disclose to it facts that constitute grounds for material
breach under the terms of the license.
D. Any existing licensee of any one or more of the `147, `509,
`609, `623 or `737 Patents may elect to modify its existing license to
any such patent by substituting the terms and conditions of the
licenses available pursuant to this Section IV on thirty (30) days`
written notice to Miller Industries.
In accomplishing the licensing ordered by this Section IV, Miller
Industries promptly shall make known, by usual and customary means, the
availability of the licenses, including mailing within ten (10) days of
filing pursuant to 15 U.S.C. 16(b) of this Final Judgment notices of
the available licenses in the form of Exhibit C along with copies of
this Final Judgment to all firms known to it that manufacture tow
trucks, car carriers, or similar towing and recovery vehicles. Miller
Industries shall provide any person making an inquiry regarding a
possible license with a copy of this Final Judgment, including all
exhibits thereto. At Plaintiff`s request, Miller Industries shall
furnish to Plaintiff copies of any executed licenses made pursuant to
this Section IV.
F. Miller Industries shall retain the services of a Designated
Expert, to be selected by Plaintiff in its sole discretion, who shall,
at the request of any existing or prospective Licensee of the
Improvement Patents (hereafter ``Licensee''), determine whether a
proposed design is an ``Approved Proposed Design.'' A proposed design
shall be an Approved Proposed Design if it falls within the Licensed
Claims of the Improvement Patents and does not fall within the
Unlicensed Claims. Miller Industries shall provide the Designated
Expert with a copy of this Final Judgment and shall instruct him/her to
use his/her best efforts to provide the Licensee with a written
determination within 30 days after receipt of engineering drawings and
other necessary information. A Licensee has no obligation to request a
determination from the Designated Expert, and use of the Designated
Expert is at a Licensee`s sole discretion.
G. Miller Industries shall be bound by the Designated Expert`s
determination that a proposed design is an Approved Proposed Design,
and shall not challenge as infringement of any Unlicensed Claim the
Licensee`s Production of products made in accordance with the
specifications of an Approved Proposed Design.
H. Miller Industries shall instruct the Designated Expert to keep
confidential all submissions and contact with any Licensee seeking a
determination, and shall instruct the Designated Expert not to disclose
to Miller Industries or any third party, unless required to do so by
law, any information concerning the Licensee`s request for a
determination on any proposed design. However, Miller Industries may
instruct the Designated Expert (1) to notify Miller Industries after a
proposed design has been approved, of the identity of the firm
submitting the design, and (2) after the Licensee has begun selling
products made in accordance with an Approved Proposed Design, to
provide Miller Industries with a description of the product and its
features sufficient to enable Miller Industries to determine whether
the product is made in accordance with the specifications of the
Approved Proposed Design, subject to the Licensee`s confirmation that
the description to be disclosed reveals no confidential data or trade
secrets.
I. Miller Industries will pay the Designated Expert`s fees, up to
maximum of five (5) thousand dollars, for his/her services in gaining
sufficient familiarity with the licensed patents and the scope of the
claims thereof to enable him/her to undertake to determine whether
proposed designs are Approved Proposed Designs. The cost of the
Designated Expert`s determination of whether a given submitted proposed
design is an Approved Proposed Design shall be borne by the Licensee.
J. Within fifteen days from the filing pursuant to 15 U.S.C. 16(b)
of this Final Judgment, Miller Industries shall provide Plaintiff with
the names of three candidates (each with sufficient expertise in patent
interpretation to be able to make qualified determinations) who have no
affiliation or relationship with Miller Industries or any other
towtruck or car carrier manufacturer to serve as the Designated Expert.
After reviewing these candidates, Plaintiff may request from Miller
Industries the names of additional candidates to serve as Designated
Expert, Miller Industries shall provide such additional names within
fifteen days from receipt of such request. Should Plaintiff object to
all candidates submitted by Miller Industries, Plaintiff may select a
Designated Expert of its own choosing.
K. Miller Industries shall not challenge as infringement of its
Unlicensed Claims, or of any other claims of any patents owned by or
assigned to Miller Industries, the Production of a product embodying
the Century Design by a licensee of the `737 Patent and the Licensed
Claims of the Improvement Patents. Miller Industries shall also not
challenge as infringement of any claims under the Improvement Patents
the Production of a product with a wheel lift design made pursuant to
the specification in the `609 Patent (the ``Backsaver Design'') by a
licensee of the `609 Patent.
[[Page 13313]]
V
Limitations
A. Nothing in this Final Judgment shall be construed to restrict
Miller Industries` ability to manufacture and sell products pursuant to
the `737 Patent, the Improvement Patents, the `147 Patent, or the `609
Patent.
B. Notwithstanding Section IV of this Final Judgment, Miller
Industries is not required to grant a license to any person to whom a
license was previously granted under this Final Judgment that was
terminated for material breach.
VI
Notification
A. Miller Industries shall provide advance notification to the
Plaintiff (1) when it directly or indirectly acquires (other than in
the ordinary course of business as defined in the HSR regulations) any
assets of, or any interest (including any financial, security, loan,
equity, or management interest) in, any manufacturer of towtrucks, car
carriers, or other towing and recovery equipment, with the exception of
any transaction where the total value of the assets or interest being
acquired is less than five (5) million dollars; or (2) when it directly
or indirectly (i) acquires any exclusive license or (ii) acquires or is
assigned any ownership or security interest in a patent or patents
relating to the manufacture of towtrucks, car carriers, or other towing
and recovery equipment, with the execution of any transaction where the
total value of the interest acquired in such patent rights is less than
five (5) million dollars. For purpose of this paragraph, total value
shall be determined as prescribed in 16 CFR Sec. 801.00. If the
transaction is covered by the reporting and waiting period requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, 15 U.S.C. 18a (the ``HSR Act''), Miller Industries' obligation
to provide notification under this Section shall be satisfied by
compliance with the HSR Act.
B. Notification under this section shall be provided to the
Plaintiff in the same format as, and per the instructions relating to,
the Notification and Report Form set forth in the Appendix to Part 803
of Title 16 of the Code of Federal Regulations, as amended.
Notification shall be provided at least thirty (30) days prior to the
acquisition of such interest, and shall include, beyond what may be
required by the applicable instructions, the names of the principal
representatives of the parties to the agreement who negotiated the
agreement, and any management or strategic plans discussing the
proposed transaction. If within the 30-day period after notification
representatives of the Plaintiff make a written request for additional
information, Defendant shall not consummate the proposed transaction or
agreement until twenty (20) days after substantial compliance with the
request for such additional information. The Plaintiff may, however,
grant defendant early termination of the waiting periods prescribed by
this Section. This Section shall be broadly construed, and any
ambiguity or uncertainty regarding the necessity of filing such
notification under this Section shall be resolved in favor of filing
notice.
VII
Affidavits
A. Miller Industries shall provide Plaintiff an affidavit within
ten (10) days of the filing pursuant to 15 U.S.C. 16(b) of this Final
Judgment, and every six (6) months thereafter until the life of each of
`147, `509, `609, `623 and the `737 Patents has expired, as to the fact
and manner of compliance with Section IV hereof. Each such affidavit
shall set forth efforts made to accomplish licensing of the patents
contemplated in his Final Judgment and shall include, inter alia, the
name, address, and telephone number of each person who, at any time
after the period covered by the last such report, made an offer to
license, expressed an interest in licensing, entered into negotiations
to license, or was contacted or made an inquiry about licensing the
patents to be licensed, and shall describe in detail each contact with
any such person during that period.
B. Until one year after each of the `147, `509, `609, `623 and the
`737 Patents have expired, Miller shall preserve all records of all
efforts made to effect the licensing of each such patent.
VIII
Compliance Inspection
For the purpose of determining or securing compliance with this
Final Judgment, or determining whether the Final Judgment should be
further modified or terminated, and subject to any legally recognized
privilege, from time to time:
A. Duly authorized representatives of the United States Department
of Justice, upon written request of the Attorney General or the
Assistant General in charge of the Antitrust Division, and on
reasonable notice to Defendants made to their principal offices, shall
be permitted:
1. Access during office hours of Defendants to inspect and copy all
books, ledgers, accounts, correspondence, memoranda, and other records
and documents in the possession or under the control of Defendants, who
may have counsel present, relating to any matters contained in this
Final Judgment; and
2. Subject to the reasonable convenience of Defendants and without
restraint or interference from them, to interview, either informally or
on the record, their officers, employees, and agents, who may have
counsel present, regarding any such matters.
B. Upon the written request of the Attorney General or of the
Assistant Attorney General in charge of the Antitrust Division, made to
Defendants at their principal offices, Defendants shall submit such
written reports, under oath if requested, with respect to any of the
matters contained in this Final Judgment.
C. No information nor any documents obtained by the means provided
in Sections VII or VIII of this Final Judgment shall be divulged by a
representative of the United States to any person other than a duly
authorized representative of the Executive Branch of the United States,
except in the course of legal proceedings to which the United States is
a party (including grand jury proceedings), or for the purpose of
securing compliance with this Final Judgment, or as otherwise required
by law.
D. If at the time information or documents are furnished by
Defendants to Plaintiff, Defendants represent and identify in writing
the material in any such information or documents for which a claim of
protection may be asserted under Rule 26(c)(7) of the Federal Rules of
Civil Procedure, and Defendants mark each pertinent page of such
material, ``Subject to claim of protection under Rule 26(c)(7) of the
Federal Rules of Civil Procedure,'' then Plaintiff shall give ten (10)
days notice to Defendants prior to divulging such material in any legal
proceeding (other than a grand jury proceeding) to which Defendants are
not a party.
IX
Retention of Jurisdiction
Jurisdiction is retained by this Court for the purpose of enabling
any of the parties to this Final Judgment to apply to this Court at any
time for such further orders and directions as may be necessary or
appropriate for the construction or carrying out of this Final
Judgment, for the modification of any of the provisions hereof, for the
[[Page 13314]]
enforcement of compliance herewith, and for the punishment of any
violation hereof.
X
Termination
Unless this Court grants an extension, this Final Judgment will
expire on the tenth anniversary of the date of its entry.
XI
Public Interest
Entry of this Final Judgment is in the public interest.
Dated:________________________
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16.
United States District Judge
Exhibit A: License Agreement
[Exhibit A to be used for licensing United States Patent Number
5,061,147 (``The Independent Raise-and-Lower Patent''); United
States Number 5,628,609 (``The Backsaver Patent''); United States
Patent Number 4,836,737 (``The L-Arm Patent''); or a combination of
the '737 Patent and either the '147 or '609 Patents. Please see
Exhibit B for licenses relating to United States Patent Number 4,
798,509 & United States Patent Number 4,637,623 (collectively, the
``Improvement Patents'')]
This License Agreement is made by and between ____________
(``Licensee'') and MILLER INDUSTRIES, INC., or a designated
subsidiary thereof (and its successors and assigns, collectively
``Licensor'').
Whereas, Licensor is the owner of [United States Patent Number
5,061,147; United States Patent Number 5,628,609; and/or United
States Patent Number 4,836,737]
And whereas, Licensee desires to obtain a license from Licensor
relating to said patent [or patents];
And whereas, Licensor desire to grant Licensee such a license;
Now, therefore, in consideration of the foregoing and of the
mutual covenants which follow, the parties hereby agree that:
Article 1--Definitions
As used in this Agreement, the following terms shall have the
following meanings:
1.01. ``The '737 Patent'' shall mean United States Patent Number
4,836,737. [``the '147 Patent'' shall mean United States Patent
Number 5,061,147; and/or ``the '609 Patent'' shall mean United
States Patent Number 5,628,609.]
1.02. ``Royalty Bearing Products'' shall mean products made in
accordance with the claims of the '737 Patent [the '147 Patent and/
or the '609 Patent].
1.03. ``Independent Auditor'' shall mean a person or persons
appointed by Licensor subject to the terms and conditions of Section
IV of the Final Judgment in United States v. Miller Industries,
Inc., Civ. 1:00CV00305 (D.D.C. 2000).
Article 2--License and Related Terms
2.01. Patent License. During the term of this Agreement, subject
to the terms and conditions hereof, including, without limitation,
the timely payment by Licensee to the Independent Auditor of the
license fees provided for in Section 2.02 hereof, Licensor hereby
grants to Licensee, and Licensee hereby accepts from Licensor, a
non-exclusive, non-transferable (except as specifically provided in
Section 5.05 hereof), right and license under the `737 Patent [the
`147 Patent and/or the `609 Patent] to make, have made, import, use,
offer to sell, sell or otherwise dispose of Royalty Bearing Products
within the United States.
2.02. Royalties. In consideration of the license granted under
Section 2.01 hereof, Licensee shall pay Licensor a royalty of $
____\1\ per unit for each Royalty Bearing Product Sold or Otherwise
Disposed of by or for Licensee. The term ``Sold or Otherwise
Disposed of'' includes Royalty Bearing Products sold, leased, placed
in commercial service, or delivered by or on behalf of Licensee
within the United States. In no event shall a licensee pay more than
one royalty on a single unit of Royalty Bearing Product.
---------------------------------------------------------------------------
\1\ Royalties shall not exceed the following: `737 Patent:
$125.00 per unit; `147 Patent: $150.00 per unit; `609 Patent:
$150.00 per unit; `147 and `737 Patents, together: $175.00 per unit;
`609 and `737 Patents, together: $175.00 per unit.
These maximum limits on royalties shall be adjusted up or down
annually in accordance with the change in the U.S. Department of
Labor Producer Price Index for Finished Goods.
---------------------------------------------------------------------------
Article 3--Notice Provisions
3.01. Licensee shall make written reports to the Independent
Auditor within 30 days of the end of each calendar quarter through
the life of the `737 patent [the `147 Patent and/or the `609 Patent]
stating in each such report the aggregate number of Royalty Bearing
Products it has Sold or Otherwise Disposed of within the United
States during such calendar quarter and upon which royalty is
payable as provided in this Agreement. The first such report shall
include all Royalty Bearing Products Licensee has Sold or Otherwise
Disposed of between the date of this Agreement and the date of such
report. The Independent Auditor shall report to the Licensor only
such information as is permitted under Paragraph IV.C of the Final
Judgment in United States v. Miller Industries, Inc., et al., Civ.
1;00CV00305 (D.D.C. 2000).
3.02. Concurrently with each report, Licensee shall pay to the
Independent Auditor royalties at the rate specified in Article 2.02
of this Agreement on the Royalty Bearing Products included in the
report.
3.03. Licensee shall keep accurate books and records in
accordance with accepted accounting practices showing the Royalty
Bearing Products it made, had made, imported, used, offered for
sale, Sold or Otherwise Disposed of during the life of this License
Agreement. Such records shall be in sufficient detail to enable the
royalties payable to Licensor to be determined.
3.04. The Independent Auditor shall notify Licensor when, in his
or her independent judgment, an audit is appropriate, and upon
Licensor's approval shall conduct an audit. Upon request of the
Independent Auditor, Licensee will permit its books and records
pertinent to the determination of the royalties payable to Licensor
to be examined to the extent reasonably necessary for the
Independent Auditor to verify the reports provided by Licensee. In
the event that the Auditor shall have questions that appear not to
be answered by such books and records, the Auditor shall have the
right to confer with representatives of the Licensee, including but
not limited to the Licensee's Chief Financial Officer and Plant
Manager. Such examination shall be made at the expense of the
Independent Auditor and may be requested no more than once per year.
The Independent Auditor, who shall be obligated to confidentiality,
shall report to Licensor only the amount of royalty payable for the
period under audit based upon a review of the books and records
provided. If the Independent Auditor determines that Licensee has
underpaid the applicable royalties by less than 5% of the total
applicable royalties for the period in question, Licensee shall pay
the arrears and interest at a rate of 10% per annum, or the maximum
allowable interest rate under the applicable state law, if it is
lower. If the Independent Auditor determines that Licensee has
underpaid the applicable royalties by greater than 5% of the total
applicable royalties for the period in question, Licensee shall pay
the cost of the audit, the arrears, and interest at a rate of 10%
per annum, or the maximum allowable interest rate under the
applicable state law, if it is lower.
3.05. Nothing in this Agreement shall restrict the right of
Licensor to seek redress for infringement of the [patents to be
licensed] by Licensee occurring before the date of execution of this
Agreement.
Article 4--Term and Termination
4.01. Subject to the terms and conditions hereof, this Agreement
shall become effective upon execution by both parties and shall
remain in force for the life of the last licensed patent to expire
or upon termination. Licensee may terminate this Agreement by giving
Licensor at least 90 days' prior written notice of termination.
Licensor may terminate this Agreement immediately, and refuse to
grant Licensee a new license, if Licensee commits a material breach,
as defined in Section 4.02 below.
4.02. Licensor may treat as a material breach: (i) Licensee's
failure to make a report pursuant to Section 3.01 hereof, or to pay
corresponding royalties due under such report pursuant to Section
3.02 hereof, provided that such failure is not cured or resolved
within 30 days after Licensee received notice thereof; (ii) the
Independent Auditor's determination, as a result of an audit
conducted pursuant to Section 3.04 above, that Licensee has
underpaid the royalties by more than 20% in the applicable period,
provided that the underpayment is not cured or resolved within 60
days after Licensee is informed of the determination; (iii) the
Independent Auditor's determination in two successive audits
conducted pursuant to Section 3.04 above, that Licensee has
underpaid the royalties by more than 20% in the applicable period,
whether or not such
[[Page 13315]]
underpayment is cured; or (iv) Licensee's failure to re-establish
compliance with its obligations to maintain liability insurance
under Section 5.10(b) hereof within 60 days of receiving notice from
Licensor of its non-compliance. The provisions of Section 5.04
concerning Force Majeure shall apply to the curing or resolution of
grounds for a material breach.
4.03. [To be included only in all licenses granted before entry
of the Final Judgment.] Licensor shall have the option to terminate
this Agreement if, in the matter United States v. Miller Industries,
Inc. et al., either of the following events occur: (1) Plaintiff
withdraws its consent to entry of the proposed Final Judgment, or
(2) the Court declines to enter the proposed Final Judgment, and the
time has expired for all appeals from any Court ruling declining
such entry. Such termination shall be effective 60 days after
Licensor notifies Licensee of the occurrence of event (1) or (2)
under this Section 4.03.
4.04. In the event of termination, Licensee shall report under
Section 3.01 hereof, and pay under Section 3.02 hereof, royalties on
all Royalty Bearing Products that it has made or imported prior to
termination. A terminated Licensee shall have the right at any time
to sell or otherwise dispose of any Royalty Bearing Product on which
royalties have been paid. Termination shall not affect Licensee's
duty to pay royalty obligations hereunder, and shall not affect
Licensor's right to request an audit covering any period during
which Licensee has a right hereunder to make or import any product.
Article 5--Miscellaneous Provisions
5.01. Limitations of Liability and Claims.
(a) Licensor warrants that is owns the entire right, title, and
interest to the [patent(s) being licensed] and has the ability to
license the [patent(s) being licensed] but otherwise neither party
makes any representations, extends any warranties of any kind,
either express or implied, and each party specifically disclaims any
implied warranty of merchantability or fitness for a particular
purpose in relation to the teachings of the [patent(s) being
licensed].
(b) The parties are under no obligation and shall not be
required under this Agreement to bring or prosecute actions or suits
against any third party for infringement of the [patent(s) being
licensed].
5.02. Relationship of the Parties. The parties shall be
independent contractors hereunder and neither party shall have the
power or authority to bind the other party with respect to any third
party. Except as specifically provided herein, each party shall bear
its own costs and expenses.
5.03. Effect of Agreement. This Agreement embodies the entire
understanding between the parties with respect to the subject matter
hereof and supersedes any and all prior understandings and
agreements, oral or written, relating thereto. Any amendment hereof
must be in writing and signed by both parties.
5.04. Force Majeure. Each party's performance hereunder is
subject to interruption or delay due to causes beyond its reasonable
control such as acts of God, acts of government, war or other
hostility, the elements, fire, explosion, power failure, equipment
failure, industrial or labor dispute, and the like. In the event of
such an interruption or delay, any relevant period of performance of
the party affected shall be extended for a period of time equal to
the period of the interruption or delay and any obligation of the
party whose performance is not affected which corresponds to the
interrupted or delayed performance shall be suspended for a period
of time equal to the period of the interruption or delay. Any party
whose performance hereunder is subject to such interruption or delay
shall give prompt notice to the other party of the reason or reasons
for the commencement of and of the conclusion of such interruption
or delay.
5.05. Assignment and Successors. This Agreement shall inure to
the benefit of and be binding upon the parties as well as
subsidiaries, affiliates, and successors-in-interest of the parties
hereto. Neither party nor any subsidiary, affiliate or successor-in-
interest shall assign or transfer any of its rights, privileges or
obligations hereunder without the prior written consent of the other
party, except that Licensor may, without the consent of Licensee,
assign this license in connection with the transfer of all or
substantially all of its towing equipment manufacturing and
distribution business. Nothing in this Agreement grants, or is
intended to grant the right or authorization to grant, sublicenses
of the [patent(s) being licensed]. Upon a permitted assignment of
this Agreement, said assignee shall expressly agree in writing to be
bound by all of the provisions of this Agreement. However, nothing
in this Section shall permit a former licensee of the [patents being
licensed] who has been terminated for material breach as defined in
Section 4.02 to exercise any rights under this Agreement.
5.06. Severability. Should any provision of this Agreement be
held to be void, invalid, unenforceable or illegal by a court, the
validity and enforceability of the other provisions shall not be
affected thereby.
5.07. Non-Waiver. Failure of either party to enforce any
provision of this Agreement shall not constitute or be construed as
a waiver of such provision nor of the right to enforce such
provision.
5.08. Notices. In order to be effective, all notices, requests,
demands, agreements, consents, approvals, permissions and other
communications required or permitted hereunder shall be in writing,
shall be delivered personally, faxed, transmitted by courier or
express service, or mailed, with proper charge prepaid, to the party
for whom intended as set forth below, and shall be deemed to be
given upon the date of actual receipt:
To Licensee:
To Licensor: President, Miller Industries, Inc., 8503 Hilltop Drive,
Ooltewah, TN 37363.
(by other means)
The sending party shall have the burden of proving receipt.
Either party may change any address to which notices and other
communications are to be directed to it by giving notice of such
change to the other party in the manner provided above.
5.09. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Tennessee.
5.10. Insurance. During the term of this Agreement, Licensee
shall maintain broad form general liability insurance, including
blanket contractual, products and completed operations liability
coverage, in the amount of two (2) million dollars. Within 30 days
following execution of this Agreement, Licensee shall deliver to
Licensor a Certificate of Insurance and, subsequently, any renewals
thereof evidencing the insurance required by this Paragraph.
5.11. Patent Marking. Licensee shall mark each Royalty Bearing
Product made, used, Sold or Otherwise Disposed of under this license
with the following marking:
Manufactured and sold under license of United States Patent Nos.
[Patents(s) being licensed].
5.12. Trademarks and Trade Names. The license herein granted
conveys no right to Licensee to use or register any trademarks or
trade names of the Licensor.
5.13. Preservation of Licensor's Rights. Licensor's grant of
rights to License pursuant to this Agreement shall in no way
restrict Licensor's right to manufacture and sell products pursuant
to the [patent(s) being licensed].
In witness whereof, the parties have executed this Agreement by
their authorized representatives.
[Licensee]
By__------------------------------------------------------------------
Its__-----------------------------------------------------------------
Date__----------------------------------------------------------------
[Licensor]
By__------------------------------------------------------------------
Its__-----------------------------------------------------------------
Date__----------------------------------------------------------------
Exhibit B: License Agreement
[Exhibit B to be used for licenses relating to United States
Patent Number 4,798,509 and United States Patent Number 4,637,623
(collectively, the ``Improvement Patents''). The ``Alternative'' (in
italics) relates to terms for licenses of the Improvement Patents
together with the `737 L-Arm Patent.]
This License Agreement is made by and
between____________(``Licensee'') and MILLER INDUSTRIES, INC., or a
designated subsidiary thereof (and its successors, collectively
``Licensor'');
Whereas, Licensor is the owner of United States Patent Number
4,798,509 and United States Patent Number 4,637,623; [and United
States Patent Number 4,836,737]
And whereas, Licensee desires to obtain a license from Licensor
relating to said patents;
And whereas, Licensor desires to grant Licensee such a license;
Now, therefore, in consideration of the foregoing and of the
mutual covenants which follow, the parties hereby agree that:
Article 1--Definitions
As used in this Agreement, the following terms shall have the
following meanings:
1.01. ``The `737 Patent'' shall mean United States Patent Number
4,836,737.
1.02. ``The `623 Patent'' and ``the `509 Patent'' shall mean
respectively, United States Patent Number 4,637,623 and United
[[Page 13316]]
States Patent Number 4,798,509. (Collectively, the ``Improvement
Patents'').
1.03. The ``Licensed Claims'' shall mean only Claims 1-3, 6-10,
12, 15, 17, 18, 20 and 22 of the `623 Patent and only Claims 1, 4-9,
11-14 and 16-19 of the `509 Patent. The act of Producing products
containing (a) a horizontal locking pin device, (b) a vertical
alignment pin on the receiver used in combination with a horizontal
locking pin device, or (c) two flat surfaces joined together to form
a wheel retainer plate, or any combination of (a), (b), or (c),
shall not constitute an infringement of any unlicensed claim of the
`623 Patent or the `509 Patent.
1.04. ``Royalty Bearing Products'' shall mean products made in
accordance with the Licensed Claims of the `623 Patent or the `509
Patent. [ALTERNATIVE IF LICENSE IS FOR BOTH--ARM AND IMPROVEMENTS:
``Royalty Bearing Products'' shall mean products made in accordance
with any claim or claims of the `737 Patent and the Licensed Claims
of the `623 Patent or the `509 Patent].
1.05. ``Independent Auditor'' shall mean a person or persons
appointed by Licensor subject to the terms and conditions of Section
IV of the Final Judgment in United States v. Miller Industries,
Inc., Civ.1:00 CV00305 (D.D.C. 2000).
1.06. ``Produce,'' ``Producing,'' or ``Production'' means to
manufacture, make, have made, import into the United States, use,
offer to sell, sell or otherwise dispose of.
Article 2--License and Related Terms
2.01. Patent License. During the term of this Agreement, subject
to the terms and conditions hereof, including, without limitations,
the timely payment by licensee to the Independent Auditor of the
license fees provided for in Section 2.02 hereof, Licensor hereby
grants to Licensee, and Licensee hereby accepts from Licensor, a
non-exclusive, non-transferable (except as specifically provided in
Section 5.05 hereof), right and license under the `623 Patent and
`509 Patent to make, have made, import, use, offer to sell, sell, or
otherwise dispose of Royalty Bearing Products within the United
States. This agreement does not provide Licensee with the right to
make, have made, import, use, offer to sell, sell, or otherwise
dispose of products that are made in accordance with (i) Claims 4,
5, 11, 13-14, 16, 19 or 21 of the `623 Patent; (ii) Claims 2, 3, 10
or 15 of the `509 Patent; or (iii) any claim of the `737 Patent.
2.02. Royalties. In consideration of the license granted under
Section 2.01 hereof, Licensee shall pay Licensor a royalty of $____
per unit \1\ for each Royalty Bearing Product Sold or Otherwise
Disposed of by or for Licensee. The term ``Sold or Otherwise
Disposed of'' includes Royalty Bearing Products sold, leased, placed
in commercial service, or delivered by or on behalf of Licensee
within the United States. In no event shall a Licensee pay more than
one royalty on a single unit of Royalty Bearing Product.
---------------------------------------------------------------------------
\1\ The royalty shall not exceed $150 per unit, adjusted up or
down annually in accordance with the change in the U.S. Department
of Labor Producer Price Index for Finished Goods.
---------------------------------------------------------------------------
Article 2--License and Related Terms
[ALTERNATIVE: LICENSE FOR L-ARM PLUS IMPROVEMENT PATENTS]
2.01. Patent License. During the term of this Agreement, subject
to the terms and conditions hereof, including, without limitations,
the timely payment by Licensee to the Independent Auditor of the
license fees provided for in Section 2.02 hereof, Licensor hereby
grants to Licensee, and Licensee hereby accepts from Licensor, non-
exclusive, non-transferable (except as specifically provided in
Section 5.05 hereof), right and license under the `737 Patent, `623
Patent and `509 Patent to make, have made, import, use offer to
sell, sell, or otherwise dispose of Royalty Bearing Products within
the United States. This agreement does not provide Licensee with the
right to make, have made, import, use, offer to sell, sell, or
otherwise dispose of products that embody or are made in accordance
with Claims 4, 5, 11, 13-14, 16, 19 or 21 of the `623 Patent or
Claims 2, 3, 10 or 15 of the `509 Patent.
2.02. Royalties. In consideration of the license granted under
Section 2.01 hereof, Licensee shall pay Licensor a royalty of $____
per unit \2\ for each Royalty Bearing Product Sold or Otherwise
Disposed of by or for Licensee.. The term ``Sold or Otherwise
Disposed of'' includes Royalty Bearing Products sold, leased, placed
in commercial service, or delivered by or on behalf of Licensee
within the United States. In no event shall a licensee pay more than
one royalty on a single unit of Royalty Bearing Product.
---------------------------------------------------------------------------
\2\ The royalty shall not exceed $175 per unit, adjusted up or
down annually in accordance with the change in the U.S. Department
of Labor Producer Price Index for Finished Goods.
---------------------------------------------------------------------------
Article 3--Notice Provisions
3.01. Licensee shall make written reports to the Independent
Auditor within 30 days of the end of each calendar quarter through
the life of each patent to be licensed, stating in each such report
the aggregate number of Royalty Bearing Products it has Sold or
Otherwise Disposed of within the United States during such calendar
quarter and upon which royalty is payable as provided in this
Agreement. The first such report shall include all Royalty Bearing
Products Licensee has Sold or Otherwise Disposed of between the date
of this Agreement and the date of such report. The Independent
Auditor shall report to the Licensor only such information as is
permitted under Paragraph IV.C of the Final Judgment in United
States v. Miller Industries, Inc., et al., Civ. 1:00 CV00305 (D.D.C.
2000).
3.02. Concurrently with each report, Licensee shall pay to the
Independent Auditor royalties as the rate specified in Article 2.02
of this Agreement on the Royalty Bearing Products included in the
report.
3.03 Licensee shall keep accurate books and records in
accordance with accepted accounting practices showing the Royalty
Bearing Products it made, had made, imported, used, offered for
sale, Sold or Otherwise Disposed of during the life of this License
Agreement. Such records shall be in sufficient detail to enable the
royalties payable to Licensor to be determined.
3.04. The Independent Auditor shall notify Licensor when, in his
or her independent judgment, an audit is appropriate, and upon
Licensor's approval shall conduct an audit. Upon request of the
Independent Auditor, Licensee will permit its books and records
pertinent to the determination of the royalties payable to Licensor
to be examined to the extent reasonably necessary for the
Independent Auditor to verify the reports provided by Licensee. In
the event that the Auditor shall have questions that appear not to
be answered by such books and records, the Auditor shall have the
right to confer with representatives of the Licensee, including but
not limited to the Licensee's Chief Financial Officer and Plant
Manager. Such examination shall be made at the expense of the
Independent Auditor and may be requested no more than once per year.
The Independent Auditor, who shall be obligated to confidentiality,
shall report to Licensor only the amount of royalty payable for the
period under audit based upon a review of the books and records
provided. If the Independent Auditor determines that Licensee has
underpaid the applicable royalties by less than 5% of the total
applicable royalties for the period in question, Licensee shall pay
the arrears and interest at a rate of 10% per annum, or the maximum
allowable interest rate under the applicable state law if it is
lower. If the Independent Auditor determines that Licensee has
underpaid the applicable royalties by greater than 5% of the total
applicable royalties for the period in question, Licensee shall pay
the cost of the audit, the arrears, and interest at a rate of 10%
per annum. or the maximum allowable interest rate under the
applicable state law, if it is lower.
3.05 Nothing in this Agreement shall restrict the right of
Licensor to seek redress for infringement of the [patents to be
licensed] by licensee occurring before the date of execution of this
Agreement.
Article 4--Term and Termination
4.01. Subject to the terms and conditions hereof, this Agreement
shall become effective upon execution by both parties and shall
remain in force for the life of the last licensed patent to expire
or upon termination. Licensee may terminate this Agreement by giving
Licensor at least 90 days' prior written notice of termination.
Licensor may terminate this Agreement immediately, and refuse to
grant Licensee a new license, if Licensee commits a material breach,
as defined in Section 4.02 below.
4.02. Licensor may treat as a material breach: (1) Licensee's
failure to make a report pursuant to Section 3.01 hereof, or to pay
corresponding royalties due under such report pursuant to Section
3.02 hereof, provided that such failure to not cured or resolved
within 30 days after Licensee receives notice thereof; (ii) the
Independent Auditor's determination, as a result of an audit
conducted pursuant to Section 3.04 above, that Licensee has
underpaid the royalties by more than 20% in the applicable period,
provided that the underpayment is
[[Page 13317]]
not cured or resolved within 60 days after Licensee is informed of
the determination; (iii) the Independent Auditor's determination in
two successive audits conducted pursuant to Section 3.04 above, that
Licensee has underpaid the royalties by more than 20% in the
applicable period whether or not such underpayment is cured; or (iv)
Licensee's failure to re-establish compliance with its obligations
to maintain liability insurance under Section 5. 10(b) hereof within
60 days of receiving notice from Licensor of its non-compliance. The
provisions of Section 5.04 concerning Force Majeure shall apply to
the curing or resolution of grounds for a material breach.
4.03. [To be included only in all licenses granted before entry
of the Final Judgment.] Licensor shall have the option to terminate
this Agreement if, in the matter United States v. Miller Industries,
Inc. et al., either of the following events occur: (1) Plaintiff
withdraws its consent to entry of the proposed Final Judgment, or
(2) the Court declines to enter the proposal Final Judgment, and the
time has expired for all appeals from any Court ruling declining
such entry. Such termination shall be effective 60 days after
Licensor notifies License of the occurrence of event (1) or (2)
under this Section 4.03.
4.04. In the event of termination, License shall report under
Section 3.01 hereof, and pay under Section 3.02 hereof, royalties on
all Royalty Bearing Products that it has made or imported prior to
termination. A terminated Licensee shall have the right at any time
to sell or otherwise dispose of any Royalty Bearing Product on which
royalties have been paid. Termination shall not affect Licensee's
duty to pay royalty obligations hereunder, and shall not affect
Licensor's right to request an audit covering any period during
which Licensee has a right hereunder to make or import any product.
Article 5--Miscellaneous Provisions
5.01. Limitations of Liability and Claims.
(a) Licensor warrants that it owns the entire right, title, and
interest to the [patent(s) being licensed] and has the ability to
license the [patent(s) being licensed] but otherwise neither party
makes any representations, extends warranties of any kind, either
express or implied, and each party specifically disclaims any
implied warranty of merchantability or fitness for a particular
purpose in relation to the teachings of the [patent(s) being
licensed].
(b) The parties are under no obligation and shall not be
required under this Agreement to bring or prosecute actions or suits
against any third party for infringement of the [patent(s) being
licensed].
(c) Licensor warrants that, should Licensee (in its own
discretion) obtain an ``Approved Proposed Design'' from the
Designated Expert pursuant to Section IV of the Final Judgment in
United States v. Miller Industries, Licensor will not challenge as
infringement of any unlicensed claim of the `509 or `623 Patents the
Licensee's production of products made in accordance with the
specifications of an Approved Proposed Design.
5.02 Relationship of the Parties. The parties shall be
independent contractors hereunder and neither party shall have the
power or authority to bind the other party with respect to any third
party. Except as specifically provided herein, each party shall bear
its own costs and expenses.
5.03. Effect Agreement. This Agreement embodies the entire
understanding between the parties with respect to the subject matter
hereof and supersedes any and all prior understandings and
agreements, oral or written, relating thereto. Any amendment hereof
must be in writing and signed by both parties.
5.04. Force Majeure. Each party's performance hereunder is
subject to interruption or delay due to causes beyond its reasonable
control such as acts of God, acts of government, war or other
hostility, the elements, fire, explosion, power failure, industrial
or labor dispute, and the like. In the event of such an interruption
or delay, any relevant period of performance of the party affected
shall be extended for a period of time equal to the period of the
interruption or delay and any obligation of the party whose
performance is not affected which corresponds to the interrupted or
delayed performance shall be suspended for a period of time equal to
the period of the interruption or delay. Any party whose performance
hereunder is subject to interruption or delay shall give prompt
notice to the other party of the reason or reasons for the
commencement of and of the conclusion of such interruption or delay.
5.05. Assignment and Successors. This Agreement shall inure to
the benefit of and be binding upon the parties as well as
subsidiaries, affiliates, and successors-in-interest of the parties
hereto. Neither party nor any subsidiary, affiliate or successor-in-
interest shall assign or transfer any of its rights, privileges or
obligations hereunder without the prior written consent of the other
party, except that Licensor may, without the consent of Licensee,
assign this license in connection with the transfer of all or
substantially all of its towing equipment manufacturing and
distribution business. Nothing in this Agreement grants, or is
intended to grant the right or authorization to grant, sublicenses
of the [patent(s) being licensed]. Upon a permitted assignment of
this Agreement, said assignee shall expressly agree in writing to be
bound by all of the provisions of this Agreement. However, nothing
in this Section shall permit a former licensee of the [patents being
licensed] who has been terminated for material breach as defined in
Section 4.02 to exercise any rights under this Agreement.
5.06. Severability. Should any provision of this Agreement be
held to be void, invalid unenforceable or illegal by a court, the
validity and enforceability of the other provisions shall not be
affected thereby.
5.07. Non-Waiver. Failure of either party to enforce any
provision of this Agreement shall not constitute or be construed as
a waiver of such provision nor of the right to enforce such
provision.
5.08. Notices. In order to be effective, all notices, requests,
demands, agreements, consents, approvals, permissions and other
communications required or permitted hereunder shall be in writing,
shall be delivered personally, faxed, transmitted by courier or
express service, or mailed, with proper charge prepaid, to the party
for whom intended as set forth below, and shall be deemed to be
given upon the date of actual receipt:
To Licensee:
To Licensor: President, Miller Industries, Inc., 8503 Hilltop Drive,
Ooltewah, TN 37363.
(by other means)
The sending party shall have the burden of proving receipt.
Either party may change any address to which notices and other
communications are to be directed to it by giving notice of such
change to the other party in the manner provided above.
5.09 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Tennessee.
5.10. Insurance. During the term of this Agreement, Licensee
shall maintain broad form general liability insurance, including
blanket contractual, products and completed operations liability
coverage, in the amount of two (2) million dollars. Within 30 days
following execution of this Agreement, Licensee shall deliver to
Licensor a Certificate of Insurance and, subsequently, any renewals
thereof evidencing the insurance required by this Paragraph.
5.11. Patent Marking. Licensee shall mark each Royalty Bearing
Product made, used, Sold or Otherwise Disposed of under this license
with the following marking:
Manufactured and sold under license of United States Patent Nos.
[Patent(s) being licensed].
5.12. Trademarks and Trade Names. The license herein granted
conveys no right to Licensee to use or register any trademarks or
trade names of the Licensor.
5.13. Preservation of Licensor's Rights. Licensor's grant of
rights to Licensee pursuant to this Agreement shall in no way
restrict Licensor's right to manufacture and sell products pursuant
to the [patent(s) being licensed].
In witness whereof, the parties have executed this Agreement by
their authorized representatives.
[Licensee]
By---------------------------------------------------------------------
Its--------------------------------------------------------------------
Date-------------------------------------------------------------------
[Licensor]
By---------------------------------------------------------------------
Its--------------------------------------------------------------------
Date-------------------------------------------------------------------
Exhibit C: Notification of Available Licenses
Miller Industries, Inc. and Miller Industries Towing Equipment,
Inc. (``Miller Industries'') have consented to the entry of the
attached proposed Final Judgment to resolve a civil suit brought by
the Antitrust Division of the Department of Justice. Under the
proposed Final Judgment, Miller Industries is required to offer to
any third party a non-exclusive license to make and sell products
covered by one or more of the following United States Patents. Terms
and maximum unit royalty rates for such licenses are specified below
and in greater detail in Exhibit A to the Final Judgment:
[[Page 13318]]
No. 4,836,737 (the '737 Patent, also known as the L-Arm Patent):
$125.00
No. 5,061,147 (the '147 Patent, also known as the ``Independent
Raise-and-Lower Patent''): $150.00
No. 5,628,609 (the '609 Patent, also known as the ``Backsaver''
Patent): $150.00
The L-Arm and the Independent Raise-and-Lower Patents, together:
$175.00
The L-Arm and the Backsaver Patents, together: $175.00
The proposed Final Judgment also requires Miller Industries to
offer to any third party a non-exclusive license to certain
improvements in the L-Arm, wheel lift designs covered by United
States Patent Nos. 4,637,623 and 4,798,509 (respectively the '623
and '509 Patents, also known as the ``Improvement Patents''). Miller
Industries will license the features under these Improvement Patents
that allow the L-Arm wheel lift to pivot horizontally and
vertically. Terms and maximum unit royalty rates for such licenses
are specified below and in greater detail in Exhibit B to the Final
Judgment:
Licensed Claims of the Improvement Patents: $150.00
Licensed Claims of the Improvement Patents and the L-Arm Patent,
together: $175.00
These Improvement Patents ('623 and '509), originally owned by
Vulcan International, Inc., embody improvements to the L-Arm wheel
lift found on Vulcan products. Under the terms of this license,
licensees will be able to use all features covered by the
Improvement Patents (such as the horizontal and vertical pivoting of
the L-arms) except for three features: (1) The vertical locking pin
device, (2) the elongated curved wheel retainer plate, and (3) the
wheel lift receiver placed completely above the cross bar.
Licensees under the Licensed Claims of the Improvements Patents
will be able to make and sell many wheel lift devices covered by the
claims being licensed, including Miller Industries' Century design,
drawings of which are attached as Exhibits D and E to the Final
Judgment. Licensees under the Licensed Claims of the Improvement
Patents may also develop and produce their own independent designs,
so long as these do not include the three patented features
mentioned above that are not being licensed.
BILLING CODE 4410-11-M
[[Page 13319]]
[GRAPHIC] [TIFF OMITTED] TN13MR00.004
[[Page 13320]]
[GRAPHIC] [TIFF OMITTED] TN13MR00.005
BILLING CODE 4410-11-C
[[Page 13321]]
If they want additional assurance that Miller Industries cannot
charge their independent designs with infringement of the Unlicensed
Claims of the Improvement Patents, licensees may, before marketing a
product incorporating their independent design, elect to obtain a
determination by an independent expert. Miller Industries will pay
for the time that it takes the independent expert to become familiar
with the Improvement Patents, and the licensee will pay for the
expert's time required, after his/her familiarization, to make the
determination. The independent expert's determination that a design
is covered by the license under the Improvement Patents will be
binding on Miller Industries. The independent expert will be
required to keep the licensee's request for a determination, and the
design for which the determination is requested, confidential from
Miller Industries until the licensee begins selling products based
on the design approved by the independent expert.
Section IV of the Final Judgment describes the requirements for
these licenses. The licenses are available now and will continue to
be available throughout the ten-year life of the Final Judgment. The
licenses are uncancelable by Miller Industries during the life of
the licensed patents, except on the ground of material breach (for
instance, for non-payment of royalties), and in the unanticipated
event that the Court declines to enter the proposed Final Judgment.
In the event of license cancellation, a licensee will retain the
right to sell at any time licensed products manufactured pursuant to
the terms of the license.
Please contact Mr./Ms. ____________ at Miller Industries [phone
number] if you are interested in obtaining a license.
Competitive Impacts Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. Sec. 16(b)-(h),
files this Competitive Impact Statement relating to the proposed Final
Judgment submitted for entry in this civil antitrust proceeding.
I. Nature and Purpose of the Proceeding
On February 17, 2000, the United States filed a civil antitrust
Complaint in this Court charging that Defendant Miller Industries,
Inc., violated Section 7 of the Clayton Act, 15 U.S.C. 18, when it
acquired ownership of two horizontal competitors, Vulcan Equipment,
Inc. (``Vulcan'') and Chevron, Inc. (``Chevron''). Miller Industries
acquired Vulcan in September 1996 and acquired Chevron in December
1997.
The Complaint charges that these acquisitions substantially
lessened competition in the markets for the design, manufacture, and
sale of the two major categories of towing and recovery vehicles
generally used to service passenger cars and light trucks in the United
States: light-duty towtrucks and light-duty car carriers. Prior to
their acquisition, Vulcan and Chevron were proven innovators that had
patented and successfully marketed key functional improvements in
light-duty towtrucks and light-duty car carriers, and were two of the
three most significant competitors faced by Miller Industries \1\ in
these markets. The acquisitions eliminated head-to-head competition
that benefitted consumers, establishing Miller Industries as the
dominant firm in the light-duty towtruck and light-duty car carrier
markets with the ability unilaterally to raise prices or reduce
quality. The acquisitions also increased Miller Industries' ownership
of valuable patent rights, and reduced the number of firms with the
right to offer towing and recovery vehicles incorporating the important
technology covered by those patents. Finally, by reducing the number of
competitors, these acquisitions increased the likelihood of
anticompetitive coordinated behavior to raise prices or reduce quality.
---------------------------------------------------------------------------
\1\ When used herein, the term ``Miller Industries'' refer to
any one or more of the defendants.
---------------------------------------------------------------------------
The request for relief in the Complaint seeks: (1) A judgment that
the acquisitions violate Section 7 of the Clayton Act; (2) injunctive
or other appropriate relief to restore competition; (3) an award of
costs to the Government; and (4) such other relief as the Court may
deem just proper.
Shortly before the Complaint was filed, the parties reached a
proposed settlement that would substantially restore competition in the
United States light-duty towtruck and light-duty car carrier markets,
primarily by requiring Miller Industries to grant a non-exclusive
license to use certain items of important patented technology to any
third party that requests such a license.
Along with the Complaint, the parties filed a Stipulation and
proposed Final Judgment setting out the terms of the settlement.
Pursuant to the obligations imposed in these documents, beginning
within ten days of the time that they are filed with the Court, Miller
Industries must offer to any third party a non-exclusive license under
as many as five different patents. The proposed Final Judgment
specifies the maximum unit royalties payable under these compulsory
licenses, and also contains model licenses setting forth other terms.
Miller Industries is required to continue to offer these licenses
during the ten-year life to the proposed Final Judgment. the licenses
are not cancelable by Miller Industries during the life of any licensed
patent, unless the licensee commits a material breach as defined in the
license (e.g., non-payment of royalties), or the proposed Final
Judgment is not entered by the Court. The proposed Final Judgment also
requires Miller Industries to notify the Government prior to making
future acquisitions of competitive assets valued above a certain dollar
amount.
The plaintiff and defendants have stipulated that the Court may
enter the proposed Final Judgment after compliance with the APPA,
unless the plaintiff has theretofore withdrawn its consent. Entry of
the proposed Final Judgment would terminate this action, except that
the Court would retain jurisdiction to construe, modify, or enforce
provisions of the proposed Final Judgment and punish violations
thereof.
II. Description of Events Giving Rise to the Alleged Violation
A. The Defendants and the Illegal Transactions
Defendant Miller Industries, Inc. is a Tennessee corporation. Its
wholly owned subsidiary, Miller Industries Towing Equipment, Inc., is a
Delaware corporation. Both maintain their principal place of business
in Ooltewah, Tennessee. Defendant Chevron, a wholly owned subsidiary of
Defendant Miller Industries, Inc., is a Pennsylvania corporation with
its principal place of business in Mercer, Pennsylvania.
Miller Industries designs, manufactures, and markets many well
known brands of light-duty towtrucks and light-duty car carriers,
including those carrying the Century, Vulcan, Chevron, Holmes,
Challenger, and Champion brands.
On September 2, 1996, Defendant Miller Industries, Inc., acquired,
in exchange for shares of its capital stock having an approximate value
of $8.2 million, all of the outstanding capital stock of Vulcan, one of
its major competitors in the design, manufacture, and sale of light-
duty towtrucks and light-duty car carriers, thereby obtaining control
of Vulcan's assets, including several patents of great competitive
value in the light-duty towtruck and light-duty car carrier markets.
The transaction was not subject to the notification requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15
U.S.C. 18a, (``HSR Act'') because the dollar value of the transaction
was below $15 million.
Miller Industries continues to market products under the Vulcan
label, but Vulcan's production facilities have been dismantled and its
operations integrated with those of Miller Industries. Title to the
patents formerly owned by Vulcan has passed to Defendant Miller
Industries Towing Equipment, Inc.
[[Page 13322]]
On December 5, 1997, Defendant Miller Industries, Inc. acquired,
for $10 million cash, all of the capital stock of Chevron, another of
its major competitors in the design, manufacture, and sale of light-
duty towtrucks and light-duty car carriers, thereby obtaining control
of Chevron's assets, including valuable patents in the light-duty
towtruck and light-duty car carrier markets. This transaction also was
not subject to the notification requirements of the HSR Act. Although
many of Chevron's functions have now been integrated with Miller
Industries, Defendant Chevron, Inc. survives as a wholly owned Miller
Industries subsidiary and continues as the owner of record of the
patents it held before its acquisition.
B. Product and Geographic Markets
Light-duty towtrucks and light-duty car carriers are the principal
types of vehicles used by towing companies, garages, and other towing
service providers in the United States to recover and transport
immobilized or unattended illegally parked passenger cars and light
trucks. Manufacturers design, construct, and assemble specialized
equipment components, such as booms, winches, and bed-tilting
mechanisms, for mounting on standard truck chassis supplied by
automotive suppliers such as GM, Ford, Dodge, or Navistar. The
installed price of the equipment used to construct a light-duty to
towtruck is generally between twelve to fifteen thousand dollars, and
between eleven and fourteen thousand dollars for a light-duty car
carrier.
Towing and recovery vehicle fleets generally include both light-
duty towtrucks and light-duty car carriers because each possesses
characteristics that make it more efficient than the other in certain
situations. Light-duty towtrucks, which lift a disabled vehicle by its
front or back tires to tow it, maneuver better in confined spaces such
as parking garages and narrow city streets and are generally more
effective in difficult recovery situations. Light-duty car carriers
have flat beds that can be titled to permit a disabled vehicle to be
winched up onto the truck bed and carried. Light-duty car carriers are
preferred for removing vehicles that are particularly susceptible to
damage, and are generally more efficient in transporting a disabled
vehicle over substantial distances. Also, a light-duty car carrier may
be equipped with an ``underlift'' that permits it to tow a second
vehicle in addition to the one on its bed, enabling it to remove two
disabled vehicles simultaneously.
Removal and recovery of larger disabled vehicles, such as buses,
heavy trucks, or construction equipment, requires the service of larger
and more powerful vehicles, which also generally have different
equipment. These heavier removal and recovery vehicles also cost more
to purchase and operate.
Because of the distinct characteristics of light-duty towtrucks and
light-duty car carriers, respectively, prospective buyers would not
respond to a small but significant increase in the price of either one
by substituting the other, or by substituting any other type of towing
and recovery vehicle. Light-duty towtrucks and light-duty car carriers
each comprises a separate relevant product market and, as there is no
significant importation, the United States comprises the relevant
geographic market in which the competitive effects of these
acquisitions must be assessed.
C. Patent Barriers
Miller Industries owned valuable patented technology prior to its
acquisitions of Vulcan and Chevron, and acquired additional important
patents when it acquired these two companies. These patent rights
relate to: (1) Improved wheel lift design technology, and (2) the
``independent raise and lower'' (``IRL'') technology.
1. The Wheel-Lift Patents
A wheel lift is a device mounted on the rear end of a light-duty
towtruck or light-duty car carrier that cradles and supports from
beneath the front or back tires of a disabled vehicle in order to apply
the lifting power required to raise it into towing position, and to tow
it. Nearly a decade ago, Miller Industries acquired the patents rights
to a greatly improved wheel lift design called the L-Arm Wheel Lift
(U.S. Patent No. 4,836,737) when it acquired Century Wrecking Company.
Century had previously granted a paid-up royalty license under this
patent to competitor Jerr-Dan Corporation.
Before being acquired by Miller Industries, Vulcan had invented
significant improvements to the basic patented L-Arm Wheel Lift, and
obtained the ``Vulcan Improvement Patents'' (U.S. Patent Nos. 4,637,
623 and 4,798,509). The key features of these improvements allow the L-
Arm device to pivot both horizontally and vertically, providing for
easier deployment of the wheel lift. Miller Industries and Vulcan
entered into a cross license agreement under which Vulcan obtained a
license under Miller Industries' L-Arm patent and Miller Industry
obtained a license to use the most significant features of the Vulcan
Improvement patents.
There is no established, commercially available alternative to the
L-Arm or the Vulcan Improvement Patents. Prior to Miller Industries'
acquisition of Vulcan, three competitors (Miller Industries, Jerr-Dan,
and Vulcan) had the right to compete with products incorporating the L-
Arm wheel lift, and two (Miller Industries and Vulcan) had the right
also to compete with products incorporating the most significant
features of the Vulcan Improvement Patents. Vulcan reserved for itself
the exclusive rights to other features of the improvements, such as the
use of a vertical looking pin device and the elongated curved plate.
Chevron, lacking rights to the above-described patents, in an
effort to design around them, developed and obtained Patent No.
5,628,609 on the ``Backsaver'' wheel lift. Miller Industries
nevertheless sued Chevron and charged that this Backsaver design
infringed its L-Arm patent, but Miller Industries acquired Chevron
before this issue was adjudicated.
2. The IRL Patent
A light-duty car carrier can be equipped with an ``underlift,''
that is a wheel lift (which can be, but need not be, an L-Arm wheel
lift) mounted on its back end that can be used to tow another disabled
vehicle once one disabled vehicle has been loaded atop its bed. Prior
to its acquisition by Miller Industries, Chevron had developed and
patented a greatly improved design for mounting a wheel lift as an
underlift on a light-duty car carrier so that it could be raised into
towing position, and lowered from it, independently of the tilting
truck bed. The right to use this IRL feature (covered by U.S. Patent
No. 5,061,147), which significantly facilitates removal and
transportation of two vehicles simultaneously by a light-duty car
carrier, is a substantial benefit to competitors in the United States
light-duty car carrier market. Designing around the patent is
difficult, time consuming, and expensive.
D. Harm to Competition as a Consequence of the Merger
Even before it acquired Vulcan and Chevron, Miller Industries was
the nation's largest supplier of light-duty towtrucks and the second
largest supplier of light-duty car carriers, with 45% and 23% shares of
total revenues in those markets, respectively. With these acquisitions,
Miller increased its market shares dramatically, so that after the
acquisitions it accounted for approximately 73% of total revenues for
[[Page 13323]]
U.S. sales of light-duty towtrucks and about 47% of total revenues for
U.S. sales of light-duty car carriers, and significantly increased
concentration in both markets. As measured by the commonly used
Herfindahl-Hirschman Index (HHI),\2\ concentration of the light-duty
towtruck market, which stood at an HHI of about 2650 before these
acquisitions, rose by about 3000 points to an HHI of about 5650 after
the acquisitions. Concentration of the light-duty car carrier market,
which stood at an HHI of about 2380 before these acquisitions, rose by
about 1200 points to an HHI of about 3580 after the acquisitions.
---------------------------------------------------------------------------
\2\ A definition and explanation of HHI is provided in Appendix
A to the Complaint.
---------------------------------------------------------------------------
Miller Industries' acquisitions of Vulcan and Chevron also
eliminated two significant and effective competitors, both of which had
successfully developed and marketed valuable innovations in product
design that had provided Miller Industries' products with important
competition, and both of which would likely have continued to innovate
had they remained independent. The acquisitions also reduced the number
of firms able to offer products incorporating the L-Arm wheel lift and
the most competitively significant features of the Vulcan Improvement
Patents, and substantially increased Miller Industries' ownership of
patent rights important for effective competition in the light-duty
towtruck and light-duty car carrier markets. Miller Industries now
faces competition in these markets from only one large competitor and a
number of small firms.
As a result of the acquisitions, Miller Industries became the
dominant firm in the light-duty towtruck and light-duty car carrier
markets with the ability unilaterally to raise prices or reduce
quality. In addition, by reducing the number of competitors, these
acquisitions increased the likelihood of anticompetitive coordinated
behavior to raise prices or reduce quality.
Successfull entry is difficult and unlikely, in large part because
the L-Arm as well as other patented wheel lift designs owned by Miller
Industries are critical for effective competition in both of these
markets. It would take a new entrant considerable time, expenditure,
and effort to develop product designs that did not infringe Miller
Industries' patents--if it could be done at all--as well as establish
the necessary distribution network and gain customer acceptance of its
products.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment is designed to eliminate the
anticompetitive effects of Miller Industries' acquisitions of Vulcan
and Chevron, primarily by requiring compulsory licensing of the above-
described patents to any present competitor or entrant at reasonable
royalties.
A. Patent Licenses
The proposed Final Judgment directs Miller Industries to offer,
until the expiration of the ten-year term of the decree, to any third
party requesting it a non-exclusive license for any one or more of: (1)
The L-Arm patent, (2) certain specified claims of the Vulcan
Improvement Patents, that allow the L-Arm to pivot horizontally and
vertically, (3) the Backsaver patent, and (4) the IRL patent.
All licenses will be uncancelable by Miller Industries until the
last of the licensed patents has expired, unless the licensee
materially breaches (as defined in the license, e.g., for non-payment
of royalties) its terms.
The proposed Final Judgment requires Miller Industries to retain
the services of an Independent Auditor to collect royalty payments and
provide Miller Industries with the Payments along with reports that do
not disclose competitively sensitive sales information about a
licensee.
Licenses will be for the full subject matter scope of the L-Arm,
Backsaver, IRL patents, and for specified claims of the Vulcan
Improvement Patents (the ``Licensed Claims''). These Licensed Claims
cover the horizontal and vertical pivoting features and are the claims
that Vulcan had licensed to Miller Industries before Vulcan was
acquired. The claims of the Vulcan Improvement Patents that are not
licensed (the ``Unlicensed Claims'') are also specified and described
in the Final Judgment. These cover the same features that, prior to its
acquisition by Miller Industries, Vulcan had reserved for its own
exclusive use.
To clarify the features covered by the Licensed Claims, and to
facilitate the production by licensees of wheel lifts embodying these
features, the proposed Final Judgment makes clear that the wheel lift
design now used in Miller Industries' Century model towtruck is covered
by the Licensed Claims and its not precluded from licensees' use by the
Unlicensed Claims. The engineering drawings for the Century model wheel
lift design are appended to the proposed Final Judgment as Exhibits D
and E.
The Proposed Final Judgment also includes another option to
facilitate licensing of the Licensed Claims and promote product
innovation. Licensees that wish to incorporate the features of the
Licensed Claims into their own wheel lift designs--rather than use the
Century model design--may seek assurance that their designs fall within
the Licensed Claims and do not infringe the Unlicensed Claims. Miller
Industries shall retain a Designated Expert, to be selected at the sole
discretion of the Government, who will at the request of an existing or
prospective licensee, determine whether a licensee's proposed design
falls within Licensed Claims. Miller Industries will be bound by a
determination by the Designated Expert that a design falls within the
Licensed Claims and will not subsequently challenge that design as an
infringement of any Unlicensed Claim of the Vulcan Improvement Patents.
The proposed Final Judgment provides that Miller Industries will pay,
up to a specified maximum amount, the cost for the Designated Expert to
review the licensed patents and gain sufficient familiarity to be able
to assess specific design proposals offered by licensees. Any licensee
that opts for such a determination will bear the additional cost of the
Designated Expert's determination regarding its particular design. The
proposed Final Judgment imposes requirements designed to assure that
information about the proposed design remains confidential with the
Designated Expert until products embodying the design are actually
sold.
Each licensee and prospective licensee under the Vulcan Improvement
patents may use the services of the Designated Expert, but no one is
required to use them. Miller Industries is required to grant each
request for a license, and a licensee of the Licensed Claims may choose
simply to design and market its product. Of course, a licensee choosing
this option would not be protected against the risk of a possible claim
of infringement and the costs inherent therein.
The proposed Final Judgment is intended to restore competition and
promote further innovation in the markets for light-duty towtrucks and
light-duty car carriers. This will benefit customers by providing them
with lower prices, better quality, and a greater variety of products.
The L-Arm, the Licensed Claims of the Vulcan Improvements, the IRL
patent, and the Backsaver Patent are important for effective
competition in the markets for light-duty towtrucks and car carriers.
Licensing these designs will also lower entry barriers and allow many
firms to
[[Page 13324]]
offer products with these important features.
The proposed Final Judgment requires broad licensing to promote the
wide dispersion and use of this intellectual property. This licensing,
offered to all firms now in the industry and to firms that may enter in
the future, will likely enable small firms to become more effective
competitors, will likely lessen Miller Industries' market dominance,
and will substantially ease entry barriers in the future. Broad
licensing and use of the intellectual property, now concentrated in
Miller Industries' hands, will promote further innovation and
improvements in light-duty towtruck and light-duty car carrier
technology. Given the configuration of the markets here, and the fact
that these acquisitions were completed some years ago, the broad
licensing scheme required by the proposed Final Judgment is the most
effective form of relief in this case and offers the prospect of
substantially increasing competition in the affected markets.
Since the decree requires Miller to license all comers during the
term of the decree for the life of the patents, it was necessary to
prevent Miller from exercising market power over the price or terms of
such licenses or from delaying, through lengthy negotiations,
implementation of the compulsory licensing requirement. Therefore, the
decree requires that licenses be at reasonable royalty rates not to
exceed certain maximum amounts and contains model licenses that set
forth the basic terms. However, the decree allows Miller Industries and
a licensee to reach a mutual agreement to lower royalty rates or to
vary other license terms.
B. Notification of Future Acquisitions
The proposed Final Judgment also requires Miller Industries to
notify the Department of Justice prior to acquiring any assets of or
interest in a manufacturer of towing and recovery equipment, or any
patent relating to the manufacture of towing and recovery equipment,
when the value of the acquisition is over $5 million. This provision
supplements the statutory notification provisions of the HSR Act, under
which parties generally need not file a notification if the dollar
value of their transaction is below $15 million. This decree provision
was included because the acquisitions of Vulcan and Chevron lessened
competition even though the dollar value of these transactions fell
below the HSR Act's notification threshold. It will give the Department
of Justice the opportunity to assess, before the acquisitions are
consummated, the likely competitive effects of any future Miller
Industries' asset acquisitions greater than $5 million in value in the
towing and recovery vehicle markets.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. Sec. 15, provides that any
person who has been injured as a result of conduct prohibited by
antitrust laws may bring suit in federal court to recover three times
the damages the person has suffered, as well as costs and reasonable
attorneys' fees. Entry of the proposed Final Judgment will neither
impair nor assist the bringing of any private antitrust damage action.
Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C.
Sec. 16(a), the proposed Final Judgment has no prima facie effect in
any subsequent private lawsuit that may be brought against defendants.
V. Procedures Available for Modification of the Proposed Final Judgment
The United States and defendants have stipulated that the proposed
Final Judgment may be entered by the Court after compliance with the
provisions of the APPA, provided that the United States has not
withdrawn its consent. The APPA conditions entry upon the Court's
determination that the proposed Final Judgment is in the public
interest. The APPA provides for a period of at least sixty days
preceding the effective date of the proposed Final Judgment within
which any person may submit to the United States written comments
regarding the proposed Final Judgment. Any person who wishes to comment
should do so in writing within sixty days of the date of publication of
this Competitive Impact Statement in the Federal Register. The United
States will evaluate and respond to the comments. All written comments
will be given due consideration by the Department of Justice, which
remains free to withdraw its consent to the proposed Final Judgment at
any time prior to its entry. The written comments and the response of
the United States will be filed with the Court and published in the
Federal Register. Written comments should be submitted to: Mary Jean
Moltenbrey, Chief, Civil Task Force, Antitrust Division, United States
Department of Justice, 325 Seventh Street, N.W., Suite 300, Washington,
DC 20530.
The proposed Final Judgment provides that the Court retains
jurisdiction over the action, and the parties may apply to the Court
for any order necessary or appropriate for the modification,
interpretation, or enforcement of the Final Judgment.
VI. Alternatives to the Proposed Final Judgment
The United States considered, as an alternative to the proposed
Final Judgment, a full trial on the merits. The United States is
satisfied, however, that the broad licensing required by the decree is
the most effective form of relief in this case, where the challenged
acquisitions were completed some years ago and given the configuration
of these markets. The proposed relief will provide and promote
competition in the design, manufacture and sale of towtrucks, and will
significantly ease barriers to entry.
VII. Standard of Review Under the APPA for Proposed Final Judgment
The APPA requires that proposed consent judgments in antitrust
cases brought by the United States be subject to a sixty-day comment
period, after which the Court shall determine whether entry of the
proposed Final Judgment ``is in the public interest.'' In making that
determination, the Court may consider:
(1) the competitive impact of such judgment, including
termination of alleged violations, provisions for enforcement and
modification, duration or relief sought, anticipated effects of
alternative remedies actually considered, and any other
consideration bearing upon the adequacy of such judgment;
(2) the impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the
violations set forth in the complaint including consideration of the
public benefit, if any, to be derived from a determination of the
issuers at trial. 15 U.S.C. 16(e).
As the Court of Appeals for the District of Columbia Circuit held,
the APPA permits the Court to consider, among other things, the
relationship between the remedy secured and the specific allegations
set forth in the government's complaint, whether the decree is
sufficiently clear, whether enforcement mechanisms are sufficient, and
whether the decree may positively harm third parties. See United States
v. Microsoft, 56 F.3d 1448 (D.C. Cir. 1995).
In conducting this inquiry, ``the Court is nowhere compelled to go
to trial or to engage in extended proceedings which might have the
effect of vitiating the benefits of prompt and less costly settlement
through the consent decree process.\3\ Rather,
[[Page 13325]]
absent a showing of corrupt failure of the government to discharge
its duty, the Court, in making its public interest finding, should *
* * carefully consider the explanations of the government in the
competitive impact statement and its responses to comment in order
to determine whether those explanations are reasonable under the
circumstances.
\3\ 119 Cong. Rec. 24598 (1973); see also United States v.
Gillette Co., 406 F. Supp. 713, 715 (D. Mass. 1975). A ``public
interest'' determination can be made properly on the basis of the
Competitive Impact Statement and Response to Comments files pursuant
to the APPA. Although the APPA authorizes the use of additional
procedures, 15 U.S.C. 16(f), those procedures are discretionary. A
court need not invoke any of them unless it believes that the
comments have raised significant issues and the further proceeding
would aid the court in resolving those issues. See H.R. 93-1463,
93rd Cong. 2d Sess. 8-9, reprinted in (1974) U.S.C.C.A.N. 6535,
6538.
United States v. Mid-America Dairymen, Inc., 1977-1 Trade Cas. para.
61,508 at 71,980 9W.d. Mo. 1977). Accordingly, with respect to the
adequacy of the relief secured by the decree, a court may not ``engage
in an unrestricted evaluation of what relief would best serve the
public. ``United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir.
1988), quoting United States v. Bechtel Corp., 648 F.2d 660,666 (9th
---------------------------------------------------------------------------
Cir.), cert. denied, 454 U.S. 1083 (1981). Precedent requires that
[t]he balancing of competing social and political interests affected
by a proposed antitrust consent decree must be left, in the first
instance, to the discretion of the Attorney General. The court's
role in protecting the public interest is one of insuring that
government has not breached its duty to the public in consenting to
the decree. The court is required to determine not whether a
particular decree is the one that will best serve society, but
whether the settlement is `within the reaches of the public
interest.' More elaborate requirements might undermine the
effectiveness of antitrust enforcement by consent decree.\4\
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\4\ United States v. Bechtel, 648 F.2d at 666 (internal
citations omitted) (emphasis added); see United v. BNS, Inc., 858 F.
2d at 463; United States v. National Broadcasting Co., 449 F. Supp.
1127, 1143 (C.D. Cal. 1978); Gillette, 406 F. Supp. at 716. See also
United States v. American Cyanamid Co., 719 F. 2d 558, 565 (2d Cir.
1983).
The proposed Final Judgment, therefore, should not be reviewed
under a standard of whether it is certain to eliminate every
anticompetitive effect of a particular practice or whether it mandates
certainty of free competition in the future. Court approval of a final
judgment requires a standard more flexible and less strict than the
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standard required for a finding of liability:
[A] proposed decree must be approved even if it falls short of the
remedy the court would impose on its own, as long as it falls within
the range of acceptability or is ``within the reaches of public
interest.'' \5\
\5\ United States v. American Tel. & Tel. Co., 552 F. Supp. 131,
150 (D.D.C. 1982) (citations omitted), aff'd sub nom. Maryland v.
United States, 460 U.S. 1001 (1983), quoting Gillette, 406 F. Supp.
at 716; United States v. Alcan Aluminium, Ltd., 605 F. Supp. 619,
622 (W.D. Ky. 1985).
Moreover, the Court's role under the Tunney Act is limited to
reviewing the remedy in relationship to the violations that the United
States has alleged in its complaint, and the Act does not authorize the
Court to ``construct [its] own hypothetical case and then evaluate the
decree against the cases.'' Microsoft, 56 F.3d at 1459. Since ``[t]he
court's authority to review the decree depends entirely on the
government's exercising its prosecutorial discretion by bringing a case
in the first place,'' it follows that the court ``is only authorized to
review the decree itself'', and not to ``effectively redraft the
complaint'' to inquire into other matters that the United States might
have but did not pursue. Id.
VIII. Determinative Documents
There are no determinative materials or documents within the
meaning of the APPA that were considered by the United States in
formulating the proposed Final Judgment.
For plaintiff United States of America.
Respectfully submitted,
Kurt Shaffert,
D.C. Bar No. 11791.
John W. Poole,
D.C. Bar No. 56944.
William Stallings,
D.C. Bar No. 444924, Attorneys, Civil Task Force, Antitrust Division,
U.S. Department of Justice, 325 7th Street, N.W., Rm. 300, Washington,
DC 20530.
Dated: February 23, 2000, Washington, DC.
Certificate of Service
This certifies that on this day I caused a true copy of the
foregoing Competitive Impact Statement to be served by first class
mail, postage prepaid, upon counsel for defendants, as indicated below:
C. Loring Jetton, Jr., Esquire, Wilmer, Cutler & Pickering, 2445 M
Street, Northwest, Washington, DC 20037-1420, Counsel for Defendants
Miller Industries, Inc., Miller Industries Towing Equipment, Inc., and
Chevron, Inc.
Dated: February 23, 2000.
Kurt Shaffert.
[FR Doc. 00-5536 Filed 3-10-00; 8:45 am]
BILLING CODE 4410-11-M