loss in the operations of our military department. Naturally, we have no thought to blame Zeiss for these conditions, nevertheless, we feel that they should be appreciated and given due consideration. In all other departments we find the Zeiss competition keen and aggressive. Zeiss have established themselves in this country and have been for years making more and more intensive efforts to get business. As an instance of their efforts, we will cite the circumstance of their having put in a bid for field glasses to the government at such ridiculously low prices that we cannot understand how there can be any profit in it for them, but leaves us with a feeling that they are aiming to put us out of competition and acquire the business for themselves. Such efforts as they are making in this territory will surely lead to more aggres sive action on our part and will certainly lead to anything but friendly feeling, and ultimately, to a more serious situation. Bausch & Lomb Optical Co., Rochester, N. Y. DEAR MR. BAUSCH: I received your letter of January 25, and at the same time, a report from our Dr. Bauer about his interview with you and your associates on January 15, 1934 in Rochester. First of all, I wish to thank you for having gone to the trouble to write down the sequence of events, which brought about the change in duty calculation on our prism binoculars, with the result that the duty, which will actually have to be paid, comes very close to doubling the present rate. I expressed myself to Mr. Lomb in a very general way, and had pointed out merely the effect of the change of duty, which was probably caused by your initiative, and I used the expression that the sixty percent rate had, in reality, been doubled. The essential consequence is that quality binoculars-and only those of more than 5x magnification, and of foreign net value of more than $12-have been affected by this measure. In reality, only Zeiss Binoculars fall under this arrangement, whereas all the cheap French prism binoculars, which are not negligible in quantity, are exempt. From your letter, I have noted that the steps taken by you were prompted by our offer and that of Carl Zeiss, New York, of six hundred 6 x 30 prism binoculars at $26 each, which we made in 1931 to the Navy. I believe that I do not have to add anything to the explanation which our Dr. Bauer has given you concerning this matter. The thought occurs to me however, whether it would not have been appropriate, in view of a friendly and long relations between our respective houses, if one of your gentlemen had communicated with our Dr. Bauer and had pointed out the low prices to him in order to bring about a satisfactory solution of the question for the future, and this by means of a friendly understanding. Such an understanding would have been readily possible at the time, for we have always been ready to recognize justified wishes or requests of other houses, especially of those friendly to us. I would consider it to our mutual interests if this duty arrangement, which, as I admit frankly, has caused great bitterness on our part, would disappear again. As you know from several negotiations on other matters here and there, we and Dr. Bauer are always ready for a price agreement, which protects your just interests. Dr. Bauer has informed me that your house will consider the matter definitely within a few weeks, and I should be glad if the solution would satisfy your just interests and ours. I was glad to learn that Mr. Carl Bausch intends to sail by the middle of March, and is expected to arrive here either at the end of that month or early in April. With kind regards, also from the other gentlemen of our management to you and your associates, I remain, Yours very sincerely, HENRICH. Dr. BAUER, CARL ZEISS, EXHIBIT No. 440 FEBRUARY 28, 1935. 485 Fifth Avenue, New York, New York. DEAR DOCTOR BAUER: Although I enjoyed my visit with you last Saturday morning very much, I have not been able to get out of my mind your statement that you have not confidence in the younger generation here in Rochester. Since this is predicated, I believe, entirely upon the binocular situation, I just want to repeat again what I told you in New York, that I believe whatever action we took in regard to the tariff on binoculars was prompted entirely by the fact that you bid a figure on a Navy contract for binoculars which was absolutely out of reason and made it look to us as if you were going to get this binocular business from the United States Navy at any price. When we saw there was no possibility of getting business from our own Navy at a reasonable figure, we took the only step that was open to us and made a complaint to one of our Senators that started a Senate investigation and finally culminated in an Executive order that resulted in changing the method of figuring tariff to the basis of American valuation. Our complaint came at a time when conditions were ripe for bringing about immediate and prompt action, as the administration was very much concerned with unemployment, and they were not only willing, but anxious to do anything to correct a condition that looked manifestly unfair. From what information you gave me, I believe that if the tariff were the only consideration, you could still compete successfully with Bausch & Lomb in the commercial binocular field. It is undoubtedly the change in valuation of the dollar that is now your great handicap. To myself and my other colleagues here in Rochester, it is a matter of great concern to feel that a businesslike, aggressive action on our part to offset certain action on your part should lead you to a conclusion that that we are not people that you can have confidence in. I hope and feel quite sure that a calm survey of the facts and circumstances will ultimately result in your assuming a different attitude. DEAR MR. BAUSCH: I thank you for your letter of February 28, referring to our conversation of February 23rd. I wish to correct your impression of my having made the general statement "that I have no confidence in the younger generation in Rochester". I said: "How can we have confidence, that an agreement regarding contact glasses-if possible at all-will turn out satisfactorily, after the experience we had in the binocular matter?" I also said that under the management of the older generation, such a thing, as this binocular case turned out to be, would not have been possible. But I do not wish these words to be generalized to the above blunt statement, and I am sorry, if I may not have expressed myself clearly enough. Now turning to the binocular matter, you know that I have had conversations with your firm in which I found a certain degree of understanding for the untenability of the present tariff situation and a willingness not to resist a reasonable solution. Due to the political constellation and to tariff negotiations pending in Washington with other countries, the flexible tariff clause is at present petrified and nobody can say, when this may change. In the meantime, importation of high-grade binoculars continues to be impossible. As long as this condition lasts, we shall naturally feel irritated and we cannot but resent the fact that it was brought about by methods which we must condemn. The nature of the tariff action was camouflaged by the wording of the Senate Resolution, in order to deceive the importers of prism binoculars. We ourselves as well as other importers were deprived of what little right we had under the tariff law to state our side. If you personally have any doubt as to who engineered this whole affair, I suggest that you read the stenographic report of the so-called "Public Hearing" which took place in Washington on October 18, 1932. You say that we quoted on 600 binoculars 6 x 30 such a low price that it was "out of reason." Admitted that our price of $26 was low. Your quotation of $39.50, however, seems to be exorbitant. It is also true that the quality specified by the Navy was of a higher grade than that of commercial binoculars. But this fact is more than compensated by the large number of 600 glasses involved, which were to be manufactured, shipped, and delivered at one time to one party, whose credit is beyond doubt. The large number called for a special low price. Instead you quoted to the U. S. Navy-your best single customer-considerably more than what you asked from a dealer for one single glass. At that time you sold your 6 x 30 model (with central focusing device) $66 list, and at 35.18 and even at $33 net to the trade; a few months later at even lower prices. If you deduct from these prices an adequate amount for the central focusing device, which the Navy did not require, your net trade price for one single 6 x 30 binocular with individual focusing would have come rather ciose to our price of $26. What difference remained might have been cut down further by the quantity factor as explained above. Had your firm quoted as one should have expected, considering all that has been said above, we would have had no chance whatever to get the order under the Budget Law even at a lower price. In our opinion you bid too high, expecting that under the Budget Law you would have the monopoly anyhow. Coming to another part of your letter I want to say, that we shall never dispute your right to "business-like agressive action"-even if it is directed against our interests-provided such action is carried out in a straight-forward way. If it is not, we not only resent such methods-the same as you would-but we heed it as a warning that we must be on our guard. You are mistaken in assuming that it is the devaluation of the dollar which makes it impossible for us to import binoculars. Even if no devaluation of the dollar would exist, the present high rate of duty would bring our "landed cost" within a few cents of your net trade prices, which include all your overhead and profit. This shows how absolutely unreasonable the present exorbitant duty is. Many more things might be said regarding this matter. The above, however, may suffice to show you that every rule of fair play has been violated in this binocular case. I regret being obliged to correspond with you concerning such an unpleasant subject. I assure you that I foster for many of you gentlemen, including yourself, sincerely friendly feelings. But the above mentioned affair provokes me as well as everybody else concerned. Wishing you the best of health, I remain Yours very truly, K. A BAUER. SUBMITTED BY JAMES S. MARTIN, DEPARTMENT OF JUSTICE, SEPTEMBER 8, 1944 ON JAPANESE COMMERCIAL ARRANGEMENTS EXHIBIT No. 442 [Quote from foreword to Universal Oil Products booklet, entitled "Universal Inventions, United States Patents owned by Universal Oil Products Company as of September 1, 1938"] Universal's activity and progress are indicated by the following list of United States patents which are the result of intensive research and development work the past quarter of a century. Its Universal is an organization of nearly 600, composed largely of scientists, technologists, engineers, and specialists in the petroleum refining art. It maintains research laboratories at Riverside, Illinois, covering an area of 28 acres. research and development work is not limited to its laboratories but is also carried forward in commercial installations under its direction in refineries throughout the world. Many of its outstanding inventions and discoveries are covered by patents and patent applications in all the important countries. Uni versal has more than 1,100 United States patents and hundreds of pending applications. Universal devotes its efforts exclusively to pioneering, research, development, and technical service to the petroleum refining industry. It does not operate any refineries or manufacturing plants. It is the clearinghouse of technical information on problems for large and small refineries all over the world. Many of its discoveries and developments are disseminated to the world through publications, lectures, and cooperation with universities and national and international technical societies. All UOP processes are available to anyone under license. The benefits of Universal's contributions to science, industry, and society are generally recognized as fundamental and vital to their welfare and progress. EXHIBIT No. 443-A [Contract Between Universal Oil Products and Sekiguchi] THIS AGREEMENT, made and entered into this 19th day of July 1928, by and between UNIVERSAL OIL PRODUCTS COMPANY, a Corporation duly organized and existing under and by virtue of the laws of the State of South Dakota, having its principal office in the City of Chicago, State of Illinois, United States of America, party of the first part, and hereinafter referred to as "UNIVERSAL," and HISASHI SEKIGUCHI, of Tokyo, Japan, party of the second part, hereinafter referred to as "SEKIGUCHI"; WITNESSETH: WHEREAS SEKIGUCHI is desirous of acquiring for himself and for his associates the patents, patent applications, and inventions covered thereby and all rights thereunder in Japan relating to cracking and treating petroleum oil in Japan, now owned by UNIVERSAL, UNIVERSAL hereby agrees to sell to SEKIGUCHI all such right, title, and interest in said patents, pending applications and inventions covered thereby in Japan on the following terms and conditions, it being understood and agreed that Japan in this agreement shall be inclusive of its territories Korea, Formosa, southern half of Sakhalin, the leased territory of Kwantung, and the portion of Southern Manchuria specifically recognized by the United States as belonging to Japan. It is agreed by both parties hereto : (1) The patents are as follows: No. 34.360, May 23, 1919 36,965, Aug. 20, 1920 66,786, Dec. 2, 1925 68,139, Apr. 27, 1926 76,070, Dec. 28, 1927 44,156, Dec. 13, 1922 44,949, Mar. 19, 1923 29,265, Mar. 31, 1916 The applications now pending are as follows: No. 255-25, filed Jan. 15, 1925 7440-25, filed July 26, 1925 (2) This agreement shall also include the assignment and sale to SEKIGUCHI Of all UNIVERSAL's right, title, and interest in Japan to any future improvements UNIVERSAL may make relating or pertaining to the inventions, as disclosed and claimed in the above identified patents and applications. SEKIGUCHI is to have the option of filing in his own name and at his own expense or in the names of such party or parties as SEKIGUCHI may select, applications for patents in Japan on such future improvements of which SEKIGUCHI will be advised by UNIVERSAL when UNIVERSAL proceeds with the filing of such applications in other foreign countries, and all right, title, and interest in and to such applications and patents that may issue thereon in Japan shall belong to SEKIGUCHI. (3) SEKIGUCHI is under this agreement to advise UNIVERSAL from time to time of any improvements made by SEKIGUCHI, his employees or associates or any improvements acquired by SEKIGUCHI relating to this subject and UNIVERSAL has at its option the exclusive right to apply for patents on such improvements at UNIVERSAL'S expense in all other countries outside of Japan, and the exclusive ownership in and to such applications and patents that may issue thereon in all other countries that Japan shall be UNIVERSAL'S right and property. SEKIGUCHI is to execute all such papers as may be required by UNIVERSAL to carry this into effect. (4) At the time hereinafter defined in Paragraph 16, UNIVERSAL will assign to SEKIGUCHI, UNIVERSAL's right, title, and interest in and to the existing license contract under UNIVERSAL's patents, with Nippon Oil Company, of Japan, who have two units now in operation under license with UNIVERSAL and for which they are obligated to pay and are paying monthly royalties. All these royalties from and after the consummation of this agreement with SEKIGUCHI, as defined in Paragraph 16, are to go to SEKIGUCHI or such group as is designated by SEKIGUCHI. (5) UNIVERSAL specifically reserves, however, the privilege of the continuing rights to the Royal Dutch-Shell group (DeBataafsche Petroleum Maatschappij) to construct one or more units under UNIVERSAL'S patents in Japan under their general license contract with UNIVERSAL, which permits them to construct units in any country, but of course upon payment of their royalties, which royalties for these operations in Japan will be either paid direct to SEKIGUCHI by this group or if received by UNIVERSAL in their remittance to UNIVERSAL monthly with royalties from units operated by them in other countries, then UNIVERSAL is to promptly pay SEKIGUCHI the royalties received from them for their operations in Japan. This continuing right for Royal Dutch-Shell group is to apply to any of their existing or future subsidiary companies, which means any companies owned or controlled by them. UNIVERSAL does not know of any intention on the part of this group to presently construct any units, but they are to have this continuing right so long as they have their contract with UNIVERSAL, which is a continuing contract. The royalties to be paid by them for their operations in Japan are to belong to SEKIGUCHI under the within-referred-to contract. (6) All inquiries received by UNIVERSAL or negotiations for installations in Japan by any other parties will be referred to SEKIGUCHI and will be under SEKIGUCHI'S exclusive control. (7) It is a condition, however, of this agreement that the royalties which SEKIGUCHI is to charge to others shall not be lower or on more favorable terms than the royalties which UNIVERSAL charges to its licensees, of which SEKIGUCHI will be advised from time to time. (8) SEKIGUCHI will have all rights of construction of units to be erected in Japan to the extent that SEKIGUCHI desires to do so, UNIVERSAL reserving no rights of construction for itself excepting only the reservation in connection with construction of units for the Royal Dutch-Shell group, hereinbefore mentioned, if so requested by them. (9) SEKIGUCHI, or his representatives, will be free to visit the operations of UNIVERSAL'S licensees in the United States and in other countries to the extent that UNIVERSAL can obtain permission for access for SEKIGUCHI or his representatives to see their installations, the details of their operation and the results thereof, but especially SEKIGUCHI will be free to obtain through UNIVERSAL and UNIVERSAL Will furnish SEKIGUCHI all necessary information, blueprints, specifications, etc., that may be required for SEKIGUCHI's needs and to keep SEKIGUCHI informed of all developments and improvements made by UNIVERSAL So that SEKIGUCHI shall be in position to operate units or to license others to operate units to the best advantage and with all latest improvements. SEKIGUCHI is to pay the cost of any blueprints furnished and any engineering service furnished which SEKIGUCHI may call on UNIVERSAL to furnish. All general information which UNIVERSAL has or may have relating to the operations and general development will be freely at SEKIGUCHI'S disposal and this will include the work that UNIVERSAL does at its Riverside Laboratories. UNIVERSAL will make tests of oils for SEKIGUCHI from time to time as SEKIGUCHI may request and charge SEKIGUCHI only the actual cost thereof. (10) In any matters of litigation that may arise, UNIVERSAL will put at SEKIGUCHI's disposal all information, either offensive or defensive, UNIVERSAL has or may have relating to the prior art, and for such purposes SEKIGUCHI or his representatives or attorneys are free to confer with UNIVERSAL'S attorneys here or such attorneys as UNIVERSAL may have in foreign countries and SEKIGUCHI is to pay only the actual charge that they may make for their time and services in such conferences. (11) It is understood that SEKIGUCHI, or a group or company to be organized by him or some existing group or company to be licensed by him, plans to promptly proceed with the erection of a refinery including the installation of a cracking unit designed and constructed and to be operated under UNIVERSAL'S plans and |