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Settle Lawsuit Over Jet Engine Design

May 23, 1990

FAIRFIELD, Conn. (AP) _ General Electric on Wednesday announced a settlement of its $1.15 billion breach-of-contract suit against Daimler-Benz, the West German technology giant working with both GE and its fiercest U.S. rival in designing jet engines.

GE’s lawsuit claimed that Daimler’s new alliance with Pratt & Whitney, a division of United Technologies Corp., breached an agreement it already had with GE to develop high-thrust engines for jumbo jets.

Under the settlement, currently pending in U.S. District Court in New York, Motoren und Turbinen Union, the aerospace division of Daimler-Benz, will be free to continue its cooperation with Pratt & Whitney on the high-thrust PW4000 engine, GE said in a press release.

In return, Daimler-Benz and MTU agreed to drop out of GE’s parallel venture - the development of the GE90 engine, GE said. Daimler-Benz also agreed to return to GE any trade secrets it has gained so far from its cooperation in the GE90 program and to keep confidential all other proprietary information it has gained from cooperating with GE.

Daimler-Benz also agreed to renegotiate its contract with GE under which the companies cooperate in designing smaller engines to power most large commercial aircraft such as the Boeing 747 and the McDonnell Douglas MD-11.

GE said the renegotiation of that contract will provide it with ″significant″ additional revenues from the sales of engines and parts.

GE spokesman George Jamison would not estimate the value of the renegotiation. David Franus, an aerospace industry analyst for Forecast International in Newtown, Conn., said the renegotiation could be worth as much as $500 million to GE over the next 15 years.

That arrangement gives GE a partner in what is now the most lucrative slice of the jet engine industry. Most large commercial aircraft are powered by engines that range in power from 50,000 pounds of thrust to 75,000.

But the industry’s giants are scrambling to develop larger, high-thrust engines to power the bigger, wider commercial aircraft of the future, and the settlement leaves GE without a partner in that venture.

″It still comes with that slap in the face - that for engines over 75,000 pounds of thrust, GE has lost a longtime partner,″ Franus said. ″GE is going to have to scramble to find other partners.″

Another industry analyst, Paul Turk of Virginia-based Avmark, said GE faces only minimal risk of losing trade secrets to Pratt & Whitney.

″That’s a short-term concern,″ he said. ″These things change twice a week.″

He said most of the inside information from GE that would be of value to Pratt & Whitney would be financial rather than technological, and would probably not differ significantly from Pratt & Whitney’s own information.

UTC spokesman Dan Harrison said the Hartford-based company would have no comment on the lawsuit, in which it was not a party. He added that UTC and Daimler-Benz are still working out the details of their alliance.

When GE first filed the lawsuit, Harrison said neither UTC nor Pratt & Whitney ″needs, wants or would accept confidential GE information.″

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