[Federal Register: September 26, 2001 (Volume 66, Number 187)]
[Notices]
[Page 49200-49211]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26se01-85]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. 3D Systems Corporation and DTM Corporation;
Proposed Final Judgment and Competitive Impact Statement
Notice is hereby given pursuant to the Antitrust Procedures and
Penalties Act, 15 U.S.C. Section 16(b) through (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. 3D Systems Corporation and DTM
Corporation, Civil Action No. No. 1:01CV01237. On June 6, 2001, the
United States filed a Complaint alleging that 3D Systems Corporation's
proposed acquisition of DTM Corporation would violate Section 7 of the
Clayton Act, as amended, 15 U.S.C. 18. The proposed Final Judgment,
filed on August 16, 2001, requires the defendants to license their
rapid prototyping patents to a company that will compete in the U.S.
market. Copies of the Complaint, proposed Final Judgment and
Competitive Impact Statement are available for inspection at the
Department of Justice in Washington, DC in Room 215, 325 Seventh
Street, NW., and at the Office of the Clerk of the United States
District Court for the District of Columbia, 333 Constitution Avenue,
NW., Washington, DC.
Public comment is invited within 60 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 J. Robert Kramer II, Chief, Litigation II Section, Antitrust
Division, Department of Justice, 1401 H Street, NW., Suite 3000,
Washington, DC, 20530, (telephone: (202) 307-0924).
Mary Jean Moltenbrey,
Director of Civil Nonmerger Enforcement.
In The United States District Court for the District of Columbia
[Civil No: 1.01CV01237 (GK)]
United States of America, Plaintiff, v. 3D Systems Corporation and DTM
Corporation, Defendants
Filed: August 16, 2001.
Stipulation and Order
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, for purposes of this case only, over each of the parties
hereto, and venue of this action is proper in the United States
District Court for the District of Columbia.
(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 the United States of America (hereinafter
``United States'') has not withdrawn its consent, which it may do at
any time before the entry of the proposed Final Judgment by serving
notice thereof on the parties and by filing that notice with the Court.
(3) Defendants shall abide by and comply with the provisions of the
proposed Final Judgment, pending the Judgment's 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 by the parties, 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.
(4) Defendants shall not consummate the transaction sought to be
enjoined by the Complaint herein before the Court has signed this
Stipulation and Order.
(5) 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.
(6) In the event (a) the United States has withdrawn its consent,
as provided in paragraph (2) above, or (b) the proposed Final Judgment
is not entered 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.
(7) The defendants represent that the divestiture ordered in the
proposed Final Judgment can and will be made, and that the defendants
will later raise no claims of mistake, hardship or difficulty of
noncompliance as grounds for asking the Court to modify any of the
divestiture or termination provisions contained therein.
(8) The parties stipulate that Appendices IIA. and IV of the
proposed Final Judgment, relating to defendants' patent applications,
shall be filed under seal.
For plaintiff United States of America.
Dando B. Cellini, Esq.
Paul A. Moore III, Esq.
U.S. Department of Justice, Antitrust Division, Litigation II, 1401
H Street, NW, Suite 4000, Washington, DC 20005, (202) 307-0829.
For defendant DTM Corporation.
Charles F. Rule, Esq. (#370818)
Fried Frank Harris Shriver and Jacobson, 1001 Pennsylvania Ave,
N.W., Suite 800, Washington, D.C. 20004, (202) 639-7300
For defendant 3D Systems Corporation.
John A. Herfort, Esq.
Gibson, Dunn & Crutcher LLP, 200 Park Avenue, New York, NY 10166,
(212) 351-3832.
For defendant 3D Systems Corporation.
Charles E. Biggio, Esq.
Akin, Gump, Strauss, Hauer & Feld LLP, 590 Madison Avenue, New York,
NY 10022, (212) 872-1010.
For defendant 3D Systems Corporation.
David Donohoe, Esq. (#3426);
[[Page 49201]]
Akin, Gump, Strauss, Hauer & Feld LLP, 1333 New Hampshire Avenue,
NW, Washington, DC 20036, (202) 887-4000.
Order
It is so ordered by the Court, this 16th day of August, 2001.
In the United States District Court for the District of Columbia
[Civil No: 1:01CV01237 (GK)]
United States of America, Plaintiff, v. 3D Systems Corporation and DTM
Corporation, Defendants.
Filed: August 16, 2001.
Final Judgment
Whereas, plaintiff, United States of America, filed its Complaint
on June 6, 2001, plaintiff and defendants, 3D Systems Corporation
(``3D'') and DTM Corporation (``DTM''), by their respective attorneys,
have consented to the entry of this Final Judgment without trial or
adjudication of any issue of fact or law, and without this Final
Judgment constituting any evidence against or admission by any party
regarding any issue of fact or law;
And Whereas, defendants agree 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 divestiture of certain rights or assets by the defendants to
assure that competition is not substantially lessened;
And Whereas, plaintiff requires defendants to make certain
divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
And Whereas, defendants have represented to the United States that
the divestitures required below can and will be made and that
defendants will later raise no claim of hardship or difficulty as
grounds for asking the Court to modify any of the divestiture
provisions contained below;
Now Therefore, before any testimony is taken, without trial or
adjudication of any issue of fact or law, and upon consent of the
parties, it is Ordered, Adjudged and Decreed:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and, for
purposes of this case only, each of the parties to this action. The
Complaint states a claim upon which relief may be granted against
defendants under Section 7 of the Clayton Act, as amended (15 U.S.C.
18).
II. Definitions
As used in this Final Judgment:
A. ``Acquirer'' means the entity to whom defendants divest the
Divestiture Assets.
B. ``3D'' means defendant 3D Systems Corporation, a Delaware
corporation with its headquarters in Valencia, California, its
successors and assigns, and its subsidiaries, divisions, groups,
affiliates, partnerships and joint ventures, including 3D Systems,
Inc., and their directors, officers, managers, agents, and employees.
C. ``DTM'' means defendant DTM Corporation, a Texas corporation
with its headquarters in Austin, Texas, its successors and assigns, and
its subsidiaries, divisions, groups, affiliates, partnerships and joint
ventures, and their directors, officers, managers, agents, and
employees.
D. ``Defendants'' means, collectively or individually as the
context requires, DTM and/or 3D.
E. ``Divestiture Assets'' means (1) a perpetual, assignable,
transferable, fully paid-up (except as permitted by Section IV(E)
below), non-exclusive license (without the right to sublicense, except
for establishing distribution and contracting out manufacturing) under
the RP Patents to develop, test, produce, market, sell, or distribute,
or to supply any support or maintenance services for, products for use
only in the field of either (but not both) the SL Technology or the LS
Technology, which technology shall be the technology currently used by
the Acquirer to manufacture RP Industrial Equipment (the ``Selected
Technology''); and (2) the RP Assets.
F. ``North America'' means Canada, Mexico and the United States.
G. ``RP Assets'' means (1) a list of all North American purchasers
of RP Industrial Equipment from 3D, if the Selected Technology is SL
Technology, or from DTM, if the Selected Technology is LS Technology;
(2) all software copyright licenses needed by Acquirer to purchase and
resell both defendants' used RP Industrial Equipment in North America;
and (3) at the option of the Acquirer, DTM's plant located at 1611
Headway Circle, Bldg. 1, Austin, Texas (``Plant'').
H. ``RP Patents'' means all North American patents owned by or
licensed to defendants (including patents relating to materials and
software), as of the date of filing of this Final Judgment, including
all subsequent continuations, continuation-in-part, divisions,
reexaminations or reissues thereof, if any, as well as any patents that
have been applied for as of the date of filing of this Final Judgment
but have not been issued covering technology marketed by defendants as
of the date of filing of this Final Judgment, specifically including
but not limited to the parents listed in Appendix I and applied for
parents listed in Appendix IIA. annexed hereto, but specifically
excluding those Inkjet Technology patents listed in Appendix III and
applied for Inkjet Technology patents listed in Appendix IV annexed
hereto and those licenses granted to 3D and DTM listed in Appendix V
annexed hereto.
I. ``LS Technology'' means technology (other than Inkjet
Technology) that uses data to form, by heat, a three-dimensional
object, layer-by-layer, from a sinterable powder material.
J. ``SL Technology'' means technology (other than Inkjet
Technology) that uses data to form, by radiation, a three-dimensional
object, layer-by-layer, from a liquid, photocurable material.
K. ``Inkjet Technology'' shall mean and include equipment, systems,
supplies, software, processess or other technology utilized in the
fabrication of three-dimensional objects from jettable materials.
L. ``RP Industrial Equipment'' means products or processes
incorporating LS Technology or SL Technology, but not the other, and
not Inkjet Technology.
M. ``Selected Technology'' means whichever one of the LS Technology
or the SL Technology is currently used by the Acquirer to manufacture
RP Industrial Equipment.
III. Applicability
A. This Final Judgment applies to 3D and DTM, as defined above, and
all other persons in active concert or participation with either of
them who receive actual notice of this Final Judgment by personal
service or otherwise.
B. Defendants shall require, as a condition of the sale or other
disposition of all or substantially all of their assets or of lesser
business units that include the Divestiture Assets, that the purchaser
of the Divestiture Assets agrees to be bound by the provisions of this
Final Judgment, provided, however, that defendants need not obtain such
an agreement from the Acquirer.
IV. Divestitures
A. Defendants are ordered and directed, within one hundred twenty
(120) calendar days after the filing of this Final Judgment, or five
(5) days after notice of entry of this Final Judgment by the Court,
whichever is later, to divest the Divestiture Assets in a manner
consistent with this Final Judgment to an Acquirer acceptable to the
United States in its sole discretion. The United States, in its sole
discretion, may agree to extensions of this time period of up to sixty
(60) days, and shall
[[Page 49202]]
notify the Court in such circumstances. Defendants agree to use their
best efforts to divest the Divestiture Assets as expeditiously as
possible.
B. Defendants shall provide Acquirer with all software copyright
licenses needed by Acquirer to purchase and resell defendants' used RP
Industrial Equipment in North America, which licenses shall be on terms
no less favorable than defendants offer to other purchased and
resellers of their used RP Industrial Equipment.
C. The Acquirer shall be a firm that currently manufactures RP
Industrial Equipment in the Selected Technology, and shall be approved
by plaintiff in its sole discretion. If plaintiff does not approve a
purchaser of the Divestiture Assets under this Final Judgment, any
grant by defendants of a license to that purchaser shall not satisfy
the requirements of this Judgment.
D. Defendants warrant that they have the authority to convey all
intellectual property included in the Divestiture Assets free and clear
of any encumbrances, contractual commitments or obligations, except for
the licenses granted to 3D and DTM which are identified in Appendix V
annexed hereto.
E. To the extent that any rights to the RP Patents require
defendants to sublicense rights from a third party to the Acquirer,
such sublicense(s) must either be fully paid-up or granted on terms no
less favorable than the terms applicable to defendants. Any sublicense
granted pursuant to this Final Judgment must include provisions
acceptable to plaintiff that will guard against the monitoring of the
Acquirer's sales or production by defendants.
F. Nothing in this Final Judgment shall be construed to require the
Acquirer, as a condition of any license granted by defendants pursuant
to Sections IV(A) or (B), to extend to the defendants the right to use
the Acquirer's improvements to any of the Divestiture Assets.
G. Defendants shall not assert against Acquirer any claims (1) for
patent or copyright infringement in North America for products made,
sold or used pursuant to the licenses granted in accordance with
Section IV(A) and (B) of this Final Judgment; (2) for patent
infringement in North America of the patents listed in Appendix V; or
(3) that any equipment, systems, supplies, software, processes, or
other technology sold by the Acquirer outside of North America prior to
filing of this Final Judgment infringes in North America any patent or
copyright issued or licensed to defendants in North America prior to
the date of filing of this Final Judgment.
H. In accomplishing the divestiture ordered by this Final Judgment,
defendants promptly shall make known, by usual and customary means, the
availability of the Divestiture Assets. Defendants shall inform any
eligible person making inquiry regarding a possible license or purchase
of the Divestiture Assets that they are being divested pursuant to this
Final Judgment and provide that person with a copy of this Final
Judgment except those parts filed under seal. Defendants shall offer to
furnish to all prospective Acquirers, subject to customary
confidentiality assurances, all information and documents relating to
the Divestiture Assets customarily provided in a due diligence process
except such information or documents subject to the attorney-client or
work-product privileges and except customer lists and information
regarding patent applications. Defendants shall make available such
information to the United States at the same time that such information
is made available to any other person.
I. Defendants shall waive any non-compete clause(s) in any
employment agreement(s), whether written or oral with any of
defendants' present or former employees that are currently in effect,
and shall not include non-compete clauses in any future employment
agreements with respect to such present or former employees for a
period of two (2) years from the date of filing of this Final Judgment.
Defendants shall provide the Acquirer and the United States information
relating to the personnel involved in the sales, marketing and
manufacturing of RP Industrial Equipment in the Selected Technology to
enable the Acquirer to make offers of employment, which does not
preclude defendants from seeking to retain such personnel as employees.
Defendants will not interfere with any negotiations by the Acquirer to
employ any of defendants' present or former employees for a period of
two (2) years from the date of filing of this Final Judgment.
J. Defendants shall permit prospective Acquirers of the Divestiture
Assets to have reasonable access to personnel and to make inspections
of the Divestiture Assets, other than customer lists or patent
applications; access to any and all environmental, zoning, and other
permit documents and information; and access to any and all financial,
operational, or other documents and information customarily provided as
part of a due diligence process.
K. Defendants shall warrant to the Acquirer of the Divestiture
Assets that each tangible asset will be operational on the date of
sale.
L. Defendants shall not take any action that will impede,
jeopardize, or delay in any way the permitting, operation, or
divestiture of any of the Divestiture Assets.
M. Defendants shall warrant to the Acquirer of the Divestiture
Assets that there are no material defects in the environmental, zoning
or other permits pertaining to the operation of any tangible asset, and
that following the sale of the Divestiture Assets, defendants will not
undertake, directly or indirectly, any challenges to the environmental,
zoning, or other permits relating to the operation of any of the
tangible Divestiture Assets.
N. Unless the United States otherwise consents in writing, the
divestiture pursuant to Section IV, or by trustee appointed to Section
V, of this Final Judgment, shall include the entire Divestiture Assets
and shall be accomplished in such a way as to satisfy the United
States, in its sole discretion, that the Divestiture Assets can and
will be used by the Acquirer as part of a viable, ongoing commercial
enterprise engaged in the sale of RP Industrial Equipment in North
America, and that the divestiture will remedy the competitive harm
alleged in the Complaint. The divestitures, whether pursuant to Section
IV or Section V of this Final Judgment,
(1) Shall be made to an Acquirer that, in the United States' sole
judgment, has the intent and capability (including the necessary
managerial, operational, technical and financial capability) of
competing effectively in the business of servicing and selling RP
Industrial Equipment in the United States; and
(2) Shall be accomplished so as to satisfy the United States, in
its sole discretion, that none of the terms of any agreement between an
Acquirer and defendants give defendants the ability unreasonably to
raise the Acquirer's costs, to lower the Acquirer's efficiency, or
otherwise to interfere in the ability of the Acquirer to compete
effectively.
V. Appointment of Sales Trustee
A. If defendants have not divested the Divestiture Assets within
the time period specified in Section IV(A), defendants shall notify the
United States of that fact in writing. Upon application of the United
States, the Court shall appoint a trustee selected by the United States
and approved by the Court to effect the divestiture of the Divestiture
Assets.
[[Page 49203]]
B. After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the Divestiture Assets. The
trustee shall have the power and authority to accomplish the
divestiture to an Acquirer acceptable to the United States at such
price and on such terms as are then obtainable upon reasonable effort
by the trustee, subject to the provisions of Sections IV, V, and VI of
this Final Judgment, and shall have such other powers as this Court
deems appropriate. Subject to Section V (D) of this Final Judgment, the
trustee may hire at the cost and expense of defendants any investment
bankers, attorneys, or other agents, who shall be solely accountable to
the trustee, reasonably necessary in the trustee's judgment to assist
in the divestiture.
C. Defendants shall not object to a sale by the trustee on any
ground other than the trustee's malfeasance. Any such objections by
defendants must be conveyed in writing to the United States and the
trustee within ten (10) calendar days after the trustee has provided
the notice required under Section VI.
D. The trustee shall serve at the cost and expense of defendants,
on such terms and conditions as the plaintiff approves, and shall
account for all monies derived from the sale of the assets sold by the
trustee and all costs and expenses so incurred. After approval by the
Court of the trustee's accounting, including fees for its services and
those of any professionals and agents retained by the trustee, all
remaining money shall be paid to defendants and the trust shall then be
terminated. The compensation of the trustee and any professionals and
agents retained by the trustee shall be reasonable in light of the
value of the Divestiture Assets and based on a fee arrangement
providing the trustee with an incentive based on the price and terms of
the divestiture and the speed with which it is accomplished, but
timeliness is paramount.
E. Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestiture. The trustee and any
consultants, accountants, attorneys, and other persons retained by the
trustee shall have full and complete access to the personnel, books,
records, and facilities of the business to be divested, and defendants
shall develop financial and other information relevant to such business
as the trustee may reasonably request, subject to reasonable protection
for trade secret or other confidential research, development, or
commercial information, customer lists and information relating to
patent applications. Defendants shall take no action to interfere with
or to impede the trustee's accomplishment of the divestiture.
F. After its appointment, the trustee shall file monthly reports
with the United States and the Court setting forth the trustee's
efforts to accomplish the divestiture ordered under this Final
Judgment. To the extent such reports contain information that the
trustee deems confidential or that would be deemed confidential under
Section V(E), such reports shall not be filed in the public docket of
the Court. Such reports shall include the name, address, and telephone
number of each person who, during the preceding month, made an offer to
acquire, expressed an interest in acquiring, entered into negotiations
to acquire, or was contracted or made an inquiry about acquiring, any
interest in the Divestiture Assets, and shall describe in detail each
contact with any such person. The trustee shall maintain full records
of all efforts made to divest the Divestiture Assets.
G. If the trustee has not accomplished such divestiture within six
months after its appointment, the trustee shall promptly file with the
Court a report setting forth (1) the trustee's efforts to accomplish
the required divestiture, (2) the reasons, in the trustee's judgment,
why the require divestiture has not been accomplished, and (3) the
trustee's recommendations. To the extent such reports contain
information that the trustees deems confidential or that would be
deemed confidential under Section V(E), such reports shall not be filed
in the public docket of the Court. The trustee shall at the same time
furnish such reports to the plaintiff who shall have the right to make
additional recommendations consistent with the purpose of the trust.
The Court thereafter shall enter such orders as it shall deem
appropriate to carry out the purpose of the Final Judgment, which may,
if necessary, include extending the trust and the term of the trustee's
appointment by a period requested by the United States.
VI. Notice of Proposed Divestiture
A. Within two (2) business days following execution of a definitive
divestiture agreement, defendants or the trustee, whichever is then
responsible for effecting the divestiture required herein, shall notify
the United States of any proposed divestiture required by Section IV or
V of this Final Judgment. If the trustee is responsible, it shall
similarly notify defendants. The notice shall set forth the details of
the proposed divestiture and list the name, address, and telephone
number of each person not previously identified who offered or
expressed an interest in or desire to acquire any ownership interest in
the Divestiture Assets, together with full details of the same.
B. Within fifteen (15) calendar days of receipt by the United
States of such notice, the United States may request from defendants,
the proposed Acquirer, any other third party, or the trustee if
applicable, additional information concerning the proposed divestiture,
the proposed Acquirer, and any other potential Acquirer. Defendants and
the trustee shall furnish any additional information requested within
fifteen (15) calendar days of the receipt of the request, unless the
parties shall otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided the additional information requested from defendants, the
proposed Acquirer, any third party, and the trustee, whichever is
later, the United States shall provide written notice to defendants and
the trustee, if there is one, stating whether or not it objects to the
proposed divestiture. If the United States provides written notice that
it does not object, the divestiture may be consummated, subject only to
defendants' limited right to object to the sale under Section V(C) of
this Final Judgment. Absent written notice that the United States does
not object to the proposed Acquirer or upon objection by the United
States, a divestiture proposed under Section IV or Section V shall not
be consummated. Upon objection by defendants under Section V(C), a
divestiture proposed under Section V shall not be consummated unless
approved by the Court.
VII. Financing
Defendants shall not finance all or any part of any purchase made
pursuant to Section IV of V of this Final Judgment.
VIII. Preservation of Assets
Until the divestiture required by this Final Judgment has been
accomplished:
A. Defendants shall provide sufficient working capital and lines
and sources of credit to continue to maintain the Plant as an
economically viable facility.
B. Defendants shall not, except as part of a divestiture approved
by the United Stases, remove, sell, lease, assign, transfer, pledge or
otherwise dispose of any of the Divestiture Assets.
C. Defendants shall take no action that would interfere with the
ability of any trustee appointed pursuant to the Final Judgment to
complete the divestiture to
[[Page 49204]]
an Acquirer acceptable to the United States.
IX. Affidavits
A. Within twenty (20) calendar days of the filing of the proposed
Final Judgment in this matter, and every thirty (30) calendar days
thereafter until the divestiture has been completed under Section IV or
V, defendants shall deliver to the United States an affidavit as to the
fact and manner of its compliance with Section IV or V of this Final
Judgment. Each such affidavit shall include the name, address, and
telephone number of each person who, during the preceding thirty days,
made an offer to acquire, expressed an interest in acquiring, entered
into negotiations to acquire, or was contacted or made an inquiry about
acquiring, any interest in the Divestiture Assets, and shall describe
in detail each contact with any such person during that period. Each
such affidavit shall also include a description of the efforts
defendants have taken to solicit buyers for the Divestiture Assets, and
to provide required information to prospective purchasers, including
the limitations, if any, on such information. Assuming the information
set forth in the affidavit is true and complete, any objection by the
United States to information provided by defendants, including
limitation on information, shall be made within fourteen (14) days of
receipt of such affidavit.
B. Within twenty (20) calendar days of the filing of the proposed
Final Judgment in this matter, defendants shall deliver to the United
States an affidavit that describes in reasonable detail all actions
defendants have taken and all steps defendants have implemented on an
ongoing basis to comply with Section VIII of this Final Judgment.
Defendants shall deliver to the United States an affidavit describing
any changes to the efforts and actions outlined in defendants' earlier
affidavits filed pursuant to this section within fifteen (15) calendar
days after the change is implemented.
C. Defendants shall keep all records of all efforts made to
preserve and divest the Divestiture Assets until one year after such
divestiture has been completed.
X. Compliance Inspection
A. For the purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should be
modified or vacated, and subject to any legally recognized privilege,
from time to time duly authorized representatives of the United States
Department of Justice, including consultants and other persons retained
by the United States, shall, upon written request of a duly authorized
representative of the Assistant Attorney General in charge of the
Antitrust Division, and on reasonable notice to defendants, be
permitted:
(1) Access during defendants' office hours to inspect and copy, or
at plaintiff's option, to require defendants to provide copies of, all
books, ledgers, accounts, records and documents in the possession,
custody, or control of defendants, relating to any matters contained in
this Final Judgment; and
(2) To interview, either informally or on the record, defendants'
officers, employees, or agents, who may have their individual counsel
present, regarding such matters. The interviews shall be subject to the
reasonable convenience of the interviewee and without restraint or
interference by defendants.
B. Upon the written request of a duly authorized representative of
the Assistant Attorney General in charge of the Antitrust Division,
defendants shall submit written reports, under oath if requested,
relating to any of the matters contained in this Final Judgment as may
be requested.
C. No information or documents obtained by the means provided in
this section or Section IX shall be divulged by the United States of
any person other than an authorized representative of the executive
branch of the United States, except as required by this Court, or 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 the United States, defendants represent and identify in
writing the material in any such information or documents to 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 the United States shall
give defendants ten (10) calendar days notice prior to divulging such
material in any legal proceeding (other than a grand jury proceeding).
XI. No Reacquisition
Defendants may not reacquire any part of the Divestiture Assets
during the term of this Final Judgment.
XII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and
directions as may be necessary or appropriate to carry out or construe
this Final Judgment, to modify any of its provisions, to enforce
compliance, and to punish violations of its provisions.
XIII. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall
expire ten years from the date of its entry.
XIV. Public Interest Determination
Entry of this Final Judgment is in the public interest.
Court approval subject to procedures of Antitrust Procedures and
Penalties Act, 15 U.S.C. 16.
Appendix I
United States Patents Issued, Assigned or Licensed to 3D Systems
------------------------------------------------------------------------
Patent No. Patent title
------------------------------------------------------------------------
4,469,654......................... EDM Electrodes.
4,491,558......................... Austenitic Manganese Steel-
Containing Composite Article.
4,575,330......................... Apparatus for production of three-
dimensional objects by
stereolithography.
4,929,402......................... Method for production of three
dimensional objects by
stereolithography.
4,961,154......................... Three dimensional modelling
apparatus.
4,996,010......................... Methods and apparatus for production
of three-dimensional objects by
stereolithography.
4,999,143......................... Methods and apparatus for production
of three-dimensional objects by
stereolithography.
5,015,424......................... Methods and apparatus for production
of three-dimensional objects by
stereolithography.
5,058,988......................... Apparatus and method for profiling a
beam.
5,059,021......................... Apparatus and method for correcting
for drift in production of objects
by stereolithography.
5,059,359......................... Methods and apparatus for production
of three-dimensional objects by
stereolithography.
[[Page 49205]]
5,071,337......................... Apparatus for forming a solid three-
dimensional object from a liquid
medium.
5,076,974......................... Methods of curing partially
polymerized parts.
5,096,530......................... Resin film recoating method and
apparatus.
5,104,592......................... Method of and apparatus for
production of three-dimensional
objects by stereolithography with
reduced curl.
5,123,734......................... Apparatus and method for calibrating
and normalizing a stereolithography
apparatus.
5,130,064......................... Method of making a three dimensional
object by stereolithography.
5,137,662......................... Methods and apparatus for production
of three-dimensional objects by
stereolithography.
5,143,663......................... Stereolithography method and
apparatus.
5,164,128......................... Methods for curing partially
polymerized parts.
5,174,931......................... Method of and apparatus for making a
three-dimensional product by
stereolithography.
5,182,055......................... Method of making a three dimensional
object by stereolithography.
5,182,056......................... Stereolithography method and
apparatus employing various
penetration depths.
5,182,715......................... Rapid and Accurate production of
stereolithographic parts.
5,184,307......................... Method and apparatus for production
of high resolution three-
dimensional objects by
stereolithography.
5,192,469......................... Simultaneous multiple layer curing
in stereolithography.
5,192,559......................... Apparatus for building three-
dimensional objects with sheets.
5,209,878......................... Surface resolution in three-
dimensional objects by inclusion of
thin fill layers.
5,234,636......................... Method of coating stereolithographic
parts.
5,236,637......................... Method of and apparatus for
production of three-dimensional
objects by stereolithography.
5,238,639......................... Method and apparatus for
stereolithographic curl balancing.
5,248,456......................... Method and apparatus for cleaning
stereolithographically produced
objects.
5,256,340......................... Method of making a three-dimensional
object by stereolithography.
5,258,146......................... Method of and apparatus for
measuring and controlling fluid
level in stereolithography.
5,267,013......................... Apparatus and Method of profiling a
beam.
5,273,691......................... Stereolithographic curl reduction.
5,321,622......................... Boolean layer comparison slice.
5,345,391......................... Method and apparatus for production
of high resolution three-
dimensional objects by
stereolithography.
5,358,673......................... Applicator device and method for
dispensing a liquid medium in a
laser modeling machine.
5,447,822......................... Apparatus and related method for
forming a substantially flat
stereolithographic working surface.
5,460,758......................... Method and apparatus for production
of a three-dimensional object.
5,481,470......................... Boolean layer comparison slice.
5,495,328......................... Apparatus and method for calibrating
and normalizing a
stereolithographic apparatus.
5,534,104......................... Method and apparatus for production
of three-dimensional objects.
5,536,467......................... Method and apparatus for producing a
three-dimensional object.
5,554,336......................... Method and apparatus for production
of three-dimensional objects by
stereolithography.
5,569,431......................... Method and apparatus for production
of three-dimensional objects by
stereolithography.
5,571,471......................... Method of production of three-
dimensional objects by
stereolithography.
5,573,722......................... Method and apparatus for production
of three-dimensional objects by
stereolithography.
5,582,876......................... Stereographic apparatus and method.
5,597,520......................... Simultaneous multiple layer curing
in stereolithography.
5,609,812......................... Method of making a three-dimensional
object by stereolithography.
5,609,813......................... Method of making a three-dimensional
object by stereolithography.
5,610,824......................... Rapid and accurate production of
stereolithographic parts.
5,630,981......................... Method for production of three-
dimensional objects by
stereolithography.
5,637,169......................... Method of building three-dimensional
objects with sheets.
5,651,934......................... Recoating of stereolithographic
layers.
5,665,401......................... Apparatus for producing an object
using stereolithography.
5,667,820......................... Apparatus for making solid three-
dimensional article from a liquid
medium.
5,688,464......................... Vibrationally enhanced
stereolithographic recoating.
5,693,144......................... Vibrationally enhanced
stereolithographic recoating.
5,711,911......................... Methods and apparatus for making a
three-dimensional object by
stereolithography.
5,745,834......................... Free Form Fabrication of Metallic
Components.
5,753,171......................... Method and apparatus for producing a
three-dimensional object.
5,762,856......................... Method for production of three-
dimensional objects by
stereolithography.
5,772,947......................... Stereolithographic curl reduction.
5,779,967......................... Method and apparatus for production
of three-dimensional objects by
stereolithography.
5,785,918......................... Method and apparatus for production
of three-dimensional objects by
stereolithography.
5,814,265......................... Method and apparatus for production
of three-dimensional objects by
stereolithography.
5,832,415......................... Method and apparatus for calibrating
a control apparatus for deflecting
a laser beam.
5,840,239......................... Apparatus and method for forming
three-dimensional objects in
stereolithography utilizing a laser
exposure system having a diode
pumped frequency quadrupled solid
state laser.
5,854,748......................... Boolean layer comparison slice.
5,855,718......................... Method and apparatus for making
partially solidified three-
dimensional objects on a layer-by-
layer basis from a solidifiable
medium.
5,870,307......................... Method and apparatus for production
of high resolution three-
dimensional objects by
stereolithography.
5,885,511......................... Method of making a solid three-
dimensional article from a liquid
medium.
5,891,382......................... Recoating of stereolithographic
layers.
[[Page 49206]]
5,897,825......................... Method for producing a three-
dimensional object.
5,902,537......................... Rapid recoating of three-dimensional
objects formed on a cross-sectional
basis.
5,902,538......................... Simplified stereolithographic object
formation methods of overcoming
minimum recoating depth
limitations.
5,904,89.......................... Apparatus and method for producing
an object using stereolithography.
5,932,055......................... Direct Metal fabrication Using a
Carbon Precursor to Bind the
``Green Form'' Part and Catalyze a
Eutectic Reducing Element in a
Supersolidus Liquid Phase Sintering
Process.
5,932,059......................... Method for producing a three-
dimensional object.
5,940,890......................... Apparatus and method for producing
three-dimensional objects.
5,945,058......................... Method and apparatus for identifying
surface features associated with
selected lamina of a three-
dimensional object being
stereographically formed.
5,965,079......................... Method and apparatus for making a
three-dimensional object by
stereolithography.
5,989,476......................... Process of making a molded
refractory article.
5,999,184......................... Simultaneous multiple layer curing
in stereolithography.
6,001,297......................... Method for controlling exposure of a
solidifiable medium using a pulsed
radiation source in building a
three-dimensional object using
stereolithography.
6,027,324......................... Apparatus for production of three-
dimensional objects by
stereolithography.
6,029,096......................... Method and apparatus for identifying
surface features associated with
selected lamina of a three-
dimensional object being
stereolithographically formed.
6,036,911......................... Method of making a three-dimensional
object by stereolithography.
6,048,188......................... Stereolithographic curl reduction.
6,048,487......................... Recoating stereolithographic layers.
6,084,980......................... Method of and apparatus for deriving
data intermediate to cross-
sectional data descriptive of a
three-dimensional object.
6,103,176......................... Stereolithographic method and
apparatus for production of three
dimensional objects using recoating
parameters for groups of layers.
6,110,409......................... Rapid prototyping process and
apparatus.
6,110,602......................... Method of making a three-dimensional
object.
6,126,884......................... Stereolithographic method and
apparatus with enhanced control of
prescribed stimulation production
and application.
6,129,884......................... Stereolithographic method and
apparatus with enhanced control of
prescribed stimulation production
and application.
6,132,667......................... Stereolithographic method and
apparatus with enhanced control of
prescribed stimulation production
and application.
6,153,142......................... Stereolithographic method and
apparatus for production of three
dimensional objects with enhanced
control of the build environment.
6,157,663......................... Laser with optimized coupling of
pump light to gain medium in a side-
pumped geometry.
6,159,411......................... Rapid prototyping method and
apparatus with simplified build
preparation for production of three
dimensional objects.
6,172,996......................... Apparatus and method for forming
three-dimensional objects in
stereolithography utilizing a laser
exposure system with a diode pumped
frequency-multiplied solid state
laser.
6,179,601......................... Simplified stereolithographic object
formation methods of overcoming
minimum recoating depth
limitations.
6,215,095......................... Apparatus and method for controlling
exposure of a solidifiable medium
using a pulsed radiation source in
building a three-dimensional object
using stereolithography.
6,224,816......................... Molding method, apparatus and device
including use of powder metal
technology for forming a molding
tool with thermal control elements.
6,241,934......................... Stereolithographic method and
apparatus with enhanced control of
prescribed stimulation production
and application.
6,261,077......................... Rapid prototyping apparatus with
enhanced thermal and/or vibrational
stability for production of three
dimensional objects
6,261,506......................... Method of making a three dimensional
object,
6,261.507......................... Method of and apparatus for making a
three dimensional object by
stereolithography.
6,264,873......................... Method of making a three-dimensional
object by stereolithograph.
------------------------------------------------------------------------
Canadian Patents Issued to 3D Systems
------------------------------------------------------------------------
Serial No. Topic Patent No.
------------------------------------------------------------------------
596827........................... Curl Reduction.......... 1339750
596825........................... Slice................... 1338521
596826........................... Beam Profiling.......... 1334052
596838........................... Off-Peak Post Cure...... 1338954
596850........................... Stress Reliefs.......... 1338628
596847........................... Supports................ 1339751
612990........................... Doctor Blade/Liquid 1337955
Leveling.
616962........................... Beam Profiling Div...... 1340501
617113........................... SL Beam Profiling....... 1341214
617087........................... SL Curl Reduction....... 1340890
------------------------------------------------------------------------
[[Page 49207]]
Mexican Patents Issued to 3D Systems
------------------------------------------------------------------------
Serial No. Topic Patent No.
------------------------------------------------------------------------
975844........................... Rapid Recoating......... 195669
------------------------------------------------------------------------
United States Patents Issued, Assigned or Licensed to DTM Corporation
------------------------------------------------------------------------
Patent No. Patent title
------------------------------------------------------------------------
4,863,538......................... Method and apparatus for producing
parts by selective sintering.
4,938,816......................... Selective laser sintering with
assisted powder handling.
4,944,817......................... Multiple material systems for
selective beam sintering.
5,017,753......................... Method and apparatus for producing
parts by selective sintering
(Deckard).
5,076,869......................... Multiple material systems for
selective beam sintering.
5,132,143......................... Method for producing parts
(Deckard).
5,147,587......................... Method of producing parts and molds
using composite ceramic powders.
5,155,321......................... Radiant heating apparatus for
providing uniform surface
temperature useful in selective
laser sintering.
5,156,697......................... Selective laser sintering of parts
by compound formation of precursor
powders.
5,252,264......................... Apparatus and method for producing
parts with multi-directional powder
delivery.
5,296,062......................... Multiple material systems for
selective beam sintering.
5,304,329......................... Method of recovering recyclable
unsintered powder from the part bed
of selective laser sintering
machine.
5,316,580......................... Method and apparatus for producing
parts by selective sintering.
5,342,919......................... Sinterable Semi-Crystalline Powder
and Near-Fully Dense Article Formed
Therewith.
5,352,405......................... Thermal control of selective laser
sintering via control of the laser
scan.
5,382,308......................... Multiple material systems for
selective beam sintering.
5,527,887......................... Sinterable semi-crystalline power
and near-fully dense article formed
therewith.
5,597,589......................... Apparatus for producing parts by
selective sintering.
5,616,294......................... Method for producing parts by
infiltration of porous intermediate
parts.
5,639,070......................... Method for producing parts by
selective sintering.
5,640,667......................... Laser-directed fabrication of full-
density metal articles using hot
isostatic processing.
5,648,450......................... Sinterable semi-crystalline powder
and near-fully dense article formed
therein.
5,733,497......................... Selective laser sintering with
composite plastic material.
5,749,041......................... Method of forming three-dimensional
articles using thermosetting
materials.
5,817,206......................... Selective laser sintering of polymer
powder of controlled particle size
distribution.
5,990,268......................... Sinterable semi-crystalline powder
and near fully dense article formed
therewith.
6,085,122......................... End-of-vector laser power control in
a selective laser sintering system.
6,136,948......................... Sinterable semi-crystalline powder
and near-fully dense article formed
therewith.
6,151,345......................... Laser power control with stretched
initial pulses.
------------------------------------------------------------------------
Appendix II
A. Filed Under Seal Pursuant to Court Order
Appendix II
B. Canadian Patents Applied for by 3D Systems
------------------------------------------------------------------------
Serial No. Topic
------------------------------------------------------------------------
2072136........................... Skintinuous/Weave.
2095225........................... Layer Comparison.
2186613........................... SMLC/Quickcast.
------------------------------------------------------------------------
Appendix III
3D Systems' United States Inkjet Patents
------------------------------------------------------------------------
Patent No. Title
------------------------------------------------------------------------
4,992,806......................... Method of jetting phase change ink.
5,141,680......................... Thermal Stereolithography.
5,174,943......................... Method for production of three-
dimensional objects by
stereolithography.
5,313,232......................... Method of jetting phase change ink.
5,344,298......................... Apparatus for making three-
dimensional objects by
stereolithography.
5,501,824......................... Thermal stereolithography.
5,569,349......................... Thermal stereolithography.
5,672,312......................... Thermal stereolithography.
5,676,904......................... Thermal stereolithography.
[[Page 49208]]
5,695,707......................... Thermal stereolithography.
5,776,409......................... Thermal stereolithography using
slice techniques.
5,855,836......................... Method for selective deposition
modeling.
5,943,235......................... Rapid prototyping system and method
with support region data
processing.
5,997,291......................... Hot-melt material for heating plate.
6,027,682......................... Thermal stereolithograph using slice
techniques.
6,132,665......................... Compositions and methods for
selective deposition modeling.
6,133,353......................... Phase change solid imaging material.
6,133,355......................... Selective deposition modeling
materials and method.
6,136,252......................... Apparatus for electro-chemical
deposition with thermal anneal
chamber.
6,162,378......................... Method and apparatus for variably
controlling the temperature in a
selective deposition modeling
environment.
6,193,923......................... Selective deposition modeling method
and apparatus for forming three-
dimensional objects and supports.
6,270,335......................... Selective Deposition Modeling Method
and Apparatus for Forming Three-
Dimensional Objects and Supports.
Des. 420,371...................... Rapid prototype machine.
Des. 422,609...................... Container for material loading.
Des. 423,023...................... Rapid prototype machine.
------------------------------------------------------------------------
Appendix IV
Filed Under Seal Pursuant to Court Order
Appendix V
Patents Licensed to 3D Systems With No Right To Sublicense
------------------------------------------------------------------------
Patent No. Assignee
------------------------------------------------------------------------
4,704,503................................. Patlex Corporation.
4,746,201................................. Patlex Corporation.
5,253,177................................. NTT Data/CMET Inc.
5,415,820................................. NTT Data/CMET Inc.
------------------------------------------------------------------------
Patents Licensed to DTM Corporation With No Right To Sublicense
------------------------------------------------------------------------
Patent No. Assignee
------------------------------------------------------------------------
5,745,834................................. Rockwell Science.
5,932,055................................. Rockwell Science.
------------------------------------------------------------------------
In The United States District Court for the District of Columbia
[Civil No.: 1:01CV01237 (GK)]
United States of America, Plaintiff, v. 3D Systems Corporation and DTM
Corporation, Defendants
Competitive Impact Statement
The United States, pursuant to Section 2(b) of the Antitrust
Procedures and Penalties Act (``APPA''), 15 U.S.C. 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
The United States filed a civil antitrust Complaint on June 6,
2001, alleging that the proposed acquisition of DTM Corporation
(``DTM'') by 3D Systems Corporation (``3D'') would substantially lessen
competition in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
The Complaint alleges that 3D and DTM are two of only three firms
that produce industrial rapid prototyping (``RP'') systems in the
United States. Both 3D and DTM hold extensive patent portfolio related
to RP systems production. These patents have limited the number of
firms in the U.S. market by preventing firms that sell RP systems
abroad from competing in the United States. The Complaint alleges that
the transaction will substantially lessen competition in the
development, production and sale of industrial RP systems sold in the
United States, thereby harming consumers. Accordingly, the Complaint
asks the Court to issue (1) a judgment that the proposed acquisition of
DTM by 3D would violate of Section 7 of the Clayton Act, 15 U.S.C. 18;
and (2) permanent injunctive relief that would prevent defendants from
carrying out the acquisition or otherwise combining their operations.
After this suit was filed, the United States and defendants reached
a proposed settlement that permits 3D to complete its acquisition of
DTM, while preserving competition in the market for industrial RP
systems by requiring defendants to license their RP-related patent
portfolios. A Stipulation and proposed Final Judgment embodying the
settlement were filed with the Court on August 17, 2001.
The proposed Final Judgment orders 3D and DTM to grant a license to
develop manufacture and sell, and to supply any support or maintenance
services for, products under the defendants' RP patent portfolios
within a limited field of use matching either 3D's or DTM's technology.
The licensee, to be approved by the United States, must be a firm that
currently manufacturers industrial RP systems. The defendants must
complete the divestiture within one hundred twenty (120) calendar days
after the filing of the proposed Final Judgment, or five (5) days after
notice of entry of the Final Judgment by the Court, whichever is later.
The United States may extend the time period for divestiture for up to
sixty (60) days. If the defendants do not complete the divestiture
within the prescribed period, the Court will appoint a trustee to
achieve the divestiture.
The United States and the defendants have stipulated that the
proposed Final Judgment may be entered after compliance with the APPA.
Entry of the proposed Final Judgment would terminate this action,
except that the Court would retain jurisdiction to construe, modify, or
enforce the provisions of the proposed Final Judgment, and to punish
violations thereof.
II. Description of the Events Giving Rise to the Alleged Violation of
the Antitrust Laws
A. The Defendants
Defendant 3D is a Delaware corporation with its principal place of
business in Valencia, California. 3D is a manufacturer and supplier of
RP systems and related equipment, proprietary materials used in RP
systems, and associated services. For the year ending December 31,
2000, 3D reported sales of $110 million.
[[Page 49209]]
Defendant DTM is a Texas Corporation with its principal place of
business in Austin, Texas. DTM designs, manufactures, markets and
supports RP systems and related materials used in RP systems. For the
year ending December 31, 2000, DTM reported sales of $40 million.
B. The Proposed Acquisition
On April 2, 2001, 3D and DTM entered into an agreement and plan of
merger, pursuant to which 3D intended to acquire DTM in a cash tender
offer. The defendants valued the transaction at an estimated $45
million. This proposed transaction, which would have reduced the number
of competitors in the U.S. industrial RP systems market from three to
two, precipitated the United States' antitrust suit on June 6, 2001.
Following the filing of the suit, the defendants postponed closing the
proposed transaction pending the outcome of settlement negotiations. On
August 16, 2001, the Stipulation and proposed Final Judgment to resolve
the suit were filed with the Court.
C. The Competitive Effects of the Acquisition
1. Industrial RP Systems. Rapid prototyping is a process by which a
machine transforms a computer design into a three-dimensional prototype
or model. Rapid prototyping is significantly faster and less expensive
than traditional methods of creating a prototype, such as machining,
milling or grinding. Competing technologies are used in industrial RP
systems to create prototypes. Stereolithography (``SL'') technology,
utilized by 3D, forms a three-dimensional object through radiation from
a liquid, photocurable material. DTM's RP systems use laser sintering
(``LS'') technology to heat and form a sinterable powder into a three-
dimensional form.
There are two types of RP systems: industrial and professional.
Industrial RP systems are large, cost hundreds of thousands of dollars
and are able to create functional prototypes, tooling inserts, and low
volume production quantities of parts. Professional RP systems are
smaller and less expensive, use ``inkjet'' printing technology, and are
geared toward the creation of concept models in an office setting.
Sales of industrial RP systems and associated materials represent the
largest and most profitable segment of the U.S. RP industry, accounting
for approximately 85% of the total RP-related sales last year. Because
of limited capabilities, professional RP systems are not good
substitutes for industrial RP systems.
There is a broad range of uses for the technology employed in an
industrial RP system. Industrial RP systems can be used to create
prototypes, running the gamut from a non-functional model of a hand-
held calculator, used for visual inspection in early design phases, to
a sophisticated exhaust manifold for an automobile, which can be bolted
in place and tested. The Complaint alleges that the development,
manufacture and sale of industrial RP systems is a line of commerce or
relevant product market within the meaning of Section 7 of the Clayton
Act. In other words, in the event of a small but significant increase
in the price of industrial RP systems, customers would not switch to
less capable professional RP systems or to traditional technologies,
such as machining, milling or grinding.
The Complaint alleges that the relevant geographic market within
the meaning of Section 7 of the Clayton Act is the United States. There
are no imports of industrial RP systems into the United States.
Although there are producers of industrial RP systems in other
countries, such as Japan and Germany, patents that cover the technology
owned by 3D and DTM have prevented importation and sale in the United
States. Accordingly, U.S. customers are unable to turn to foreign
producers of industrial RP systems. Therefore, a small but significant
price increase of industrial RP systems would not cause any purchasers
to switch to industrial RP systems manufactured outside the United
States, let alone a sufficient number to make the price increase
unprofitable.
2. Anticompetitive Consequences of the Proposed Transaction. 3D and
DTM are two of only three suppliers of industrial RP systems in the
United States. In this highly concentrated market, 3D has approximately
a 60% market share and DTM has approximately a 20% market share.
Currently, 3D and DTM offer the most sophisticated systems in the
industry and compete directly against each other in the development,
manufacture and sale of industrial RP systems. Competition for
innovations and improvements is evidenced by the many RP-related
patents obtained by the defendants. This competition has been the
driving force behind the development of innovative industrial RP system
technology, which has enabled the industry to develop a less costly
method of creating prototypes.
The proposed acquisition would substantially increase concentration
in an already highly concentrated market. The proposed acquisition
would raise the combined firm's share of industry sales to the level
where it would have the ability profitably to raise prices. 3D and
DTM's customers would not switch to the one remaining industrial RP
systems producer in sufficient numbers to make unprofitable a
significant price increase imposed by the combined firm.
Entry into the industrial RP systems market is difficult, time
consuming, and expensive and would not deter the exercise of market
power caused by 3D's acquisition of DTM. It would take well over two
years, and substantial costs, for a new entrant to create the
sophisticated and advanced technological capabilities needed to develop
and manufacture industrial RP systems.
3D and DTM each hold an extensive array of patents to the
prevailing technology used in industrial RP systems. The patent
positions of 3D and DTM prevent other industrial RP systems producers
from competing in the United States. In combination, the acquisition
would enhance 3D's already strong patent portfolio.
The competition between 3D and DTM has benefitted users of
industrial RP systems through lower prices for systems, lower prices
for materials, and improved products. For these reasons, the United
States concluded that 3D's acquisition of DTM, as originally
structured, would substantially lessen competition in the development,
manufacture and sale of industrial RP systems in violation of Section 7
of the Clayton Act.
III. Explanation of the Proposed Final Judgment
The proposed Final Judgment is designed to ensure that competition
that would have otherwise been eliminated as a result of the proposed
acquisition will be preserved. To maintain competition in the
industrial RP systems market, the proposed Final Judgment lifts the
patent entry barriers for a firm that is currently prevented from
selling its industrial RP systems in the United States. Licensing an
acquirer that currently manufactures industrial RP systems and enabling
it to compete in the U.S. market will restore the competition that
would otherwise be lost by reason of the merger of 3D and DTM. Outside
of the United States, defendants face vigorous competition from
companies such as Electro Optical Systems, based in Germany, and Teijin
Seiki, based in Japan. Under the proposed Final Judgment, defendants
must grant a license to one such firm so that it will be able to
compete in the U.S. market. Thus, after the merger, there will still be
three competitors in the U.S. market for industrial RP systems.
[[Page 49210]]
Specifically, the proposed Final Judgment requires defendants to
grant the acquirer a perpetual, assignable, transferable, non-exclusive
license to develop, test, product, market, sell, or distribute, and to
supply any support or maintenance services for, products under both
firms' RP patent portfolios. Defendants must license both 3D's and
DTM's full industrial RP-related patent portfolios to ensure that the
acquirer has the full range of necessary technology to produce and sell
RP systems in the United States. This license will be limited to a
specific field of RP technology to match the RP technology employed by
the acquirer. The proposed Final Judgment also requires defendants to
provide the acquirer with a list of all North American purchasers that
utilize the acquirer's technology and field of use under the license.
In addition, the acquirer will have the option to purchase DTM's
assembly plant, located in Austin, Texas.
Under the proposed Final Judgment, defendants must provide the
acquirer with all software copyright licenses needed to purchase and
resell both defendants' used industrial RP systems in North America.
The acquirer will therefore be able to offer to take the defendants'
systems as ``trade-ins'' on its own equipment, and then resell
defendants' systems as used equipment.
The proposed Final Judgment bars the defendants from asserting
against the acquirer any claims for patent or copyright infringement in
North America for products under the licenses granted, or any claims
that any equipment, systems, supplies, software, processes or other
technology currently sold by the acquirer outside of North America
infringe any of defendants' patents or copyrights in North America.
These provisions ensure that the acquirer will be able to import its
current RP systems into the U.S. market, without the threat of patent
or copyright litigation from the defendants.
In order to ensure a capable competitor, defendants must license
their RP patents portfolios to a company that currently manufactures RP
systems. The divestiture required by the proposed Final Judgment must
be to an acquirer acceptable to the United States in its sole
discretion. Specifically, in the United States' sole judgment, the
acquirer must have the intent and capability of competing effectively
in the business of servicing and selling industrial RP systems in the
United States.
The defendants must use their best efforts to complete the
divestiture required by the proposed Final Judgment as expeditiously as
possible. Unless the United States grants an extension of time, the
divestiture must be completed within one hundred twenty (120) calendar
days after the filing of the proposed Final Judgment, or five (5) days
after notice of entry of the Final Judgment by the Court, whichever is
later. If the defendants fail to accomplish the divestiture within this
time period, then the proposed Final Judgment calls for the Court, upon
the United States' application, to appoint a trustee nominated by the
United States to effect the divestiture. If a trustee is appointed, the
defendants are to cooperate fully with the trustee and pay all costs
and expenses of the trustee and any persons retained by the trustee.
The compensation paid to the trustee and any persons retained by the
trustee shall be both reasonable in light of the value of the
divestiture assets, and based on a fee arrangement providing the
trustee with an incentive based on the price and terms of the
divestiture and the speed with which it is accomplished. After
appointment, the trustee will file monthly reports with the United
States, defendants and the Court, setting forth the trustee's efforts
to accomplish the divestiture ordered under the proposed Final
Judgment. If the trustee has not accomplished the divestiture within
six (6) months after its appointment, the trustee shall promptly file
with the Court a report setting forth (1) the trustee's efforts to
accomplish the required divestiture, (2) the reasons, in the trustee's
judgment, why the required divestiture has not been accomplished, and
(3) the trustee's recommendations. At the same time the trustee will
furnish this report to the United States and defendants, who will each
have the right to be heard and to make additional recommendations.
IV. Remedies Available to Potential Private Litigants
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any
person who has been injured as a result of conduct prohibited by the
antitrust laws may bring suit in federal district court to recover
three times the damages the person has suffered, as well as the costs
of bringing a lawsuit 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. 16(a), the proposed Final Judgment
has no effect as prima facie evidence 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 the defendants have stipulated that the
proposed Final Judgment may be entered by this Court after compliance
with the provisions of the APPA, provided that the United States has
not withdrawn its consent. The APPA conditions entry of the decree upon
this Court's determination that the proposed Final Judgment is in the
public interest.
The APPA provides a period of at least sixty (60) 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
within sixty (60) 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 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 entry. The comments and the response of the United States will be
filed with this Court and published in the Federal Register. Written
comments should be submitted to: J. Robert Kramer, II, Chief,
Litigation II Section, Antitrust Division, United States Department of
Justice, 1401 H Street, NW., Suite 3000, Washington, DC 20530.
The proposed Final Judgment provides that this Court retains
jurisdiction over this action, and the parties may apply to this 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 against defendants. The
United States is satisfied, however, that the removal of existing
patent entry barriers through the required license to allow a firm that
currently manufactures industrial RP systems to compete in the U.S.
market, and other relief contained in the proposed Final Judgment, will
establish, preserve and ensure a viable competitor in the development,
manufacture and sale of industrial RP systems. Thus, the United States
is convinced that the proposed Final Judgment, once implemented by the
Court, will prevent 3D's acquisition of DTM from having adverse
competitive effects.
[[Page 49211]]
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 (60) 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
considerations 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
issues at trial.
15 U.S.C. 16(e) (emphasis added). As the Court of Appeals for the
District of Columbia has held, the APPA permits a 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 Corp., 56 F.3d 1448, 1458-62 (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.'' \1\ Rather,
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\1\ 119 Cong. Rec. 24,598 (1973). See 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 filed pursuant to the
APPA. Although the APPA authorizes the use of additional procedures,
those procedures are discretionary (15 U.S.C. 16(f)). A court need
not invoke any of them unless it believes that the comments have
raised significant issues and that further proceedings would aid the
court in resolving those issues. See H.R. Rep. No. 93-1463, 93rd
Cong. 2d Sess. 8-9 (1974), reprinted in 1974 U.S.C.C.A.N. 6535,
6538.
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 comments in order
to determine whether those explanations are reasonable under the
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circumstances.\2\
\2\ United States v. Mid-America Dairymen, Inc., 1977-1 Trade
Cas. (CCH) para. 61,508, at 71,980 (W.D. Mo. 1977); see also United
States v. Loew's Inc., 783 F. Supp. 21, 214 (S.D.N.Y. 1992); United
States v. Columbia Artists Mgmt., Inc., 662 F. Supp. 865, 870
(S.D.N.Y. 1987).
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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, 462-63 (9th Cir. 1988), quoting United States v. Bechtel
Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454 U.S. 1083
(1981); see also Microsoft, 56 F.3d at 1458. Precedent requires that
[t]he balancing of competing social and political interest 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 the
government has not breached its duty to the public in consenting tot
he 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.\3\
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\3\ United States v. Bechtel Corp., 648 F.2d at 666 (citations
omitted) (emphasis added); see United States v. BNS, Inc., 858 F.2d
at 463; United States v. National Broadcasting Co., 449 F. Supp.
1127, 1143 (C.D. Cal. 1978); United States v. Gillette Co., 406 F.
Supp. at 716. See also United States v. American Cyanamid Co., 719
F.2d 558, 565 (2d Cir. 1983), cert. denied, 465 U.S. 1101 (1984).
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
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.' '' \4\
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\4\ United States v. American Tel. & Tel. Co., 552 F. Supp. 131,
151 (D.D.C. 1982) (quoting Gillette, 406 F. Supp. at 716), aff'd sub
nom. Maryland v. United States, 460 U.S. 1001 (1983); United States
v. Alcan Aluminum, Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985);
United States v. Carrols Dev. Corp., 454 F. Supp. 1215, 1222
(N.D.N.Y. 1978).
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Moreover, the court's role under the APPA is limited to reviewing
the remedy in relationship to the violations that the United States
alleges in its Complaint, and does not authorize the court to
``construct [its] own hypothetical case and then the decree against
that case.'' Microsoft, 56 F.3d at 1459. Because the ``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.
Dated: September 4, 2001. Washington DC.
Respectfully submitted,
Dando B. Cellini,
Stephen A. Harris,
U.S. Department of Justice, Antitrust Division, Litigation II Section,
1401 H Street, NW, Suite 3000, Washington, DC 20530, 202-307-0729.
Certificate of Service
I hereby certify that I caused a copy of the foregoing Competitive
Impact Statement to be served on all parties to this proceeding, by
facsimile transmission or by mail, on this 4th day of September 2001.
Stephen A. Harris,
[FR Doc. 01-23999 Filed 9-25-01; 8:45 am]
BILLING CODE 4410-11-M