Document mBoadyeRqXv2RavgOR6yJ997Z

157V Cleveland May 20, 1959 DISCLOSURES OF FORMULAS AID TBCHffOLOOICAL KSCW-HW RELATIVE TO RAW MATERIALS USED Bf HBBXGDI UCERSE88 Iff THE MAKUPACTURB OF PAIffT PRODUCTS. TO: Mr. Pwlgjbrb P. Joyce Mr. W. C. Lighter Mr. A. D. Duncan cct Board of Directors Dr. W. vco Fischer Hie foreign licence agreements negotiated by oar Faint Division obligate us to stake continuing disclosures to our licensees of formulas for and technology pertaining to the manufacture of paint. WC are not obligated contractually, hotrever, under any of these agreements to make disclosures of formulas for or technology relating to raw materials used by our licensees in their paint manufacturing operations (even if such materials are manufactured In this country by our cam Paint Division) except to the limited extent necessary to enable the licensee to make (Hidden quality paints containing such materials as ingredients. XT certain rear materials are not available through purchase from (Hidden, Dcnr, Relchhold, Rohm & Haas or other paint Chemical suppliers, ve may also be obliged to furnish know-how concerning the manufacture of such materials in order to enable a licensee to manufacture all of the paint products included in its license. Our license agreements provide that we will disclose to the licensee all of the paint manufacturing formulas and processes we own, or may during the contract period, develop or acquire, which we are not precluded fren disclosing by our contracts with others. Because of the nature of this obligation the question has frequently arisen as to what constitutes a development of a process or formula so as to obligate us to disclose research technology to a licensee. Our Executive 6LD000960 -2- 1578 Committee carefully considered this question cm January 26# 1956# and decided that formulas and processes being developed in our laboratories should not he revealed to our licensees except when# in the opinion of our laboratory tech nicians and operating executives, such formulas and processes were sufficiently developed to be of lianediate use to the licensee# and then only if the licensee was prepared to use them* More recently# the question was raised as to whether under our agree ment with W. B Grace & Company's Chilean subsidiary we ware obligated to dis close synthetic resin formulas and know-how to Grace's technologists who were constructing a synthetic resin plant in Chile to supply not only their paint resin requirements but also the resin market generally in that country* 9 At the April 22# 1959 Executive Ccnmlttee meeting Or* von Fischer pointed out that our research laboratories were currently developing synthetic resins substantially superior in quality to the company's existing resins* Ss believed that this resin technology might afford the company a valuable source of future profits which could easily be dissipated should we be required to turn over future resin technology to other parties who permit it to be disclosed to competitors* He questioned whether we could justify proposed future Investment in synthetic resin research if we were obligated to disclose# or adopt a policy of voluntarily disclosing, the results of such research to foreign licensees* It was also pointed out at this meeting that continuation of a policy of disclosing formtdns and technology relating to resins# Xatlces and other raw materials used in the manufacture of paint would result in the loss of not only valuable future synthetic resin developments but also technology that mlgxt be obtained by future acquisitions in the resin field* GLD009961 - 3- ' 157y Over the pest several years there have been frequent requests on the part of Faint Division technical personnel for guidance as to the extent to which they should be expected to disclose resin fonnulae and research devel opments to our licensees* Hr* gprague, Dr* von Fischer, Hr. EUslager and other staff officers have from time to tine expressed strong objection to a policy of voluntarily disclosing to our licensees inforontlon developed in the course of our resin research which we vane not legally obligated to disclose to other companies, particularly where indications existed that information dis closed to a foreign licensee's employees in confidence readily found its way to competing paint resin suppliers in this country. Xt is recognised that if certain disclosures of resin technology are not made to our licensees, our Company may be deprived of royalty income it might otherwise receive from the sale of resins by ItB paint licensees end that its business relationships with seme licensees may tend to be strained by our unwillingness to disclose Infoztmtion which they have been led to be lieve by our past practices or verbal discussions we would continue to make available to them* For this reason we recanmend that a resin foxmula or technological development which our licensees my wish to obtain from us, related in any way to licensed paint products and not required to be disclosed under our agree ments, be withheld only when in the opinion of our own Headquarter's Desearch Staff It represents a substantial iiaprovewent over our competitors1 know-how and is deemed important to the future growth of our chemical business. We further recommend that our Division research and technical per sonnel obtain from Dr* von Fischer and hie staff any direction they may GV.000^62 -4- 1580 require to carry out the Comparer's obligations to disclose Its paint fonaulas and technology to foreign llcenseos. Such direction by Dr. von Fischer will, we believe, provide suitable coordination Kith the wortc of GUdden international and other staff personnel in carrying out our foreign licensing program. Such a policy we feel will further assure our Company that its legal obligations to foreign licensees will be discharged with a minimum of misunder standing on the part of our licensees as to our Intention not to disclose In formation that should. In the Interests of our research efforts and future profits, be securely retained within our own organisation* /vsm B. D. Homer COWflM APPOXHTED 70 DEVELOP SfAHDABD OPERATING PROCEDURE COVERING DISCLOSURES 70 FORBXGft LICENSEES Gt0009963 i* Cleveland 14, Ohio REPORT - CAPITAL APPROPRIATIONS SCREENING COKHITTfR V*V 25/ 1959 .uir TOR Mr. Driest 2* Jo j t m Mr* V. C. Lighter 8* Vnwr D* Horner O* Phillips 3he Capital Appropriations Boretning Conaittee bM Mt and rtrltvid the following two itm aMtMd for consideration at tbs H^r Directors* Meeting! Vorklng B.A.R. 14*854 Capital Capital Additional Paint production and filling facilities $808,000 $780,100 B.A.R. 30-1868 Central Research laboratory $8/000/000 Rw Comltt*# reeou--ends approval of B.A.IU 14*854 for a total of $1,062,100 as presented in the B.A.R. Ibis 1* considered a nonal scheduled growth B.A.R. In reviewing the Central Research laboratory B.A.R. 30-1868, the OandttM reremsnde that the Board, at thle tine, consider approval of a total of $882,500* Tlia covers $92,500 necessary to exercise options oa the site and $190,000 for site laproveaents aad the arehltectural and engineering Assign for the initial unit. The remittee believes that approval of the belanee of the B.A.R* can be considered at soon as a more accurate price tag cea be put on the project and after additional consideration has been given to organisation aad control of the progim to be under* taken* VOPiJts V. 0* Phillips GLD0G9964 j *wr w