B&W Participation In Bat Research

While B&W attorneys were busy trying to conceal the fact that the company was aware of certain information obtained from research conducted by BAT, the documents themselves tell us that B&W was actually an active partner in much of the BAT Group research and, therefore, must have known of most of the important information obtained from it. All the information in the documents about BAT research activities

around the world is from the files of Brown and Williamson. While some research activities, such as work on smoker compensation and biological testing, were never conducted in the United States, there is abundant evidence that B&W actively participated in planning and funding at least some of this work and that the company benefited from receiving the results of these studies.

Active Participation By B&W Personnel

B&W had at least one delegate at each of the seventeen research conferences held between 1962 and 1985 (see table 7.2). BAT representatives from the United Kingdom, Canada, and Germany also attended each research conference. Brazil was regularly represented by the mid-1970s while Australia was represented only occasionally. In addition, as described below, B&W scientists attended other BAT R&D meetings and conferences, including meetings on the direction of the biological testing programs, such as Project Janus.

B&W contributed experiments to Project Janus (see chapter 4) {1164.03; 1112.04}. A B&W scientist was a member of the Biological Testing Committee. Moreover, B&W scientists made site visits to BAT research labs in the United Kingdom. Dr. R. B. Griffith visited Southampton in the summer of 1965 {1105.01}, and Dr. Robert R. Johnson made an extensive visit in mid-1967 {1109.01}.

B&W scientists sometimes made comments on proposed agendas of research conferences and edited drafts of minutes that resulted from these meetings. For example, Dr. Robert Sanford of B&W made detailed suggestions to Dr. S. J. Green of BAT for revising draft minutes of the 1968 Hilton Head research conference (discussed in chapter 4) {1112.02}. The B&W general counsel, Addison Yeaman, received a copy of this letter. Dr. Alan Heard of BAT Southampton sent Dr. R. A. Sanford a questionnaire about the draft agenda for the 1980 Sea Island research conference. As described in chapters 3 and 4, Dr. Sanford responded with a number of comments about areas of research, such as inhalation, that should not be further pursued {1132.01}. In July 1983 the director of R&D at Millbank, Dr. L. C. F. Blackman, sent Earl Kohnhorst of R&D B&W the proposed agenda for the 1983 research conference in Rio and asked him to comment on it {1180.05}. Similarly, draft minutes of the 1983 Rio meeting were sent to B&W for comment and feedback. Edits appearing in handwriting in the draft from B&W's files {1180.09} were incorporated into the final set of minutes {1180.07}. These editorial changes in-

cluded the excision of a phrase referring to a filter developed at B&W. Thus, under a discussion of research at the German affiliate, the draft minutes contain the following paragraph about filter variants:

A description was given of a number of filter designs capable of directing smoke to specific areas of the mouth. This technology, which is an extension of the B&W Actron concept, has led to patent applications. Results

with other novel filters which make use of the principles of 'smoke elasticity' were given. {1180.09, p. 14}

The phrase "which is an extension of the B&W Actron concept" is lined out in the draft, and the final version of the minutes reflects this edit {1180.09, p. 14}.

The minutes of the Rio conference also discuss an information exchange system called Interbat {1180.07}. The minutes indicate that there were mechanisms within Interbat's structure to control the flow of "sensitive reports or information."

With the growing interest and use of INTERBAT, CAC Companies should be reminded that facilities are available to limit or block access to sensitive reports or information. {1180.07, p. 16}

The CAC Companies were the members of the Chairman's Advisory Conference, BAT affiliates in the United States, Canada, Brazil, Australia, and Germany, the places outside the United Kingdom where BAT maintained research facilities. The draft minutes circulated at B&W include a marginal note stating, "We own 1/3 share" {1180.09, p. 15}, which indicates that B&W was a participant in the Interbat system. The documents do not indicate exactly what information was shared on the Interbat system, but it might be the information retrieval and sharing system recommended for BAT's R&D by a consultant in 1979 {1175.03, p. 7}. Southampton, Louisville, and Hamburg were each to have input into the design of the system, and this might explain the reason B&W bore a third of the costs.

Furthermore, the minutes of the Rio conference include a list of the dozen technical meetings that had been held over the past year (including a "smoking behaviour" conference in the United States in March 1983) and conclude,

It was agreed that the meetings had been a highly effective means of exchanging technology throughout the Group, and that a similar level should be maintained in the future. {1180.07, p. 16}

These conferences covered a wide range of issues in research and development. The full list of immediate past and future BAT technical exchange meetings for 1982–1985, as it appeared in the Rio conference documents {1181.14}, is shown in table 7.3. The comment from the conference minutes suggests that participants at each conference included individuals from various BAT companies. These frequent exchanges (nine or ten a year) clearly permitted companies not doing the actual research

work or receiving formal reports to benefit from the results of the work being done throughout the group. It may be that, after lawyers at B&W became more concerned about what was discoverable in its files in the late 1970s and early 1980s, these conferences were scheduled more often so that not as much paper would have to change hands.

B&W scientists also attended meetings other than the annual research conferences. For example, Dr. Sanford was one of eight participants from four operating companies who attended the R&D Policy Conference held at Chewton Glen and Torquay in February 1979 {1175.03}; and Earl Kohnhorst attended a Chairman's Advisory Conference meeting at Wallingford, England, in September 1985. In the notes on this meeting, Kohnhorst is listed as a speaker on several technical topics to be

discussed at the 1985 research conference scheduled for November of that year in Rio {1182.01}.

Records of some of the series of meetings held from the mid-1960s through at least 1983 to monitor toxicological (biological) research, including Project Janus, are included in the documents {1164.03 through 1164.26}. B&W personnel participated in three of the meetings for which records are available. R. B. Griffith is listed as a "member" of the Biological Testing Committee in the minutes of the Southampton meeting held in June 1969 {1164.03}; R. A. Sanford is listed as a guest at the same meeting. Dr. Sanford was also present at the May 1970 meeting of this committee {1164.05}, and J. G. Esterle attended the November 1977 meeting {1164.23}.

The documents also include the participant list for the Smoking Behaviour/Marketing Conference held in Montreal in 1983 {1224.01, unnumbered page}. This conference featured major presentations of BAT-sponsored research for marketing personnel of BAT-affiliated companies. B&W personnel in attendance at this conference included the section head of Sensory Evaluation (W. H. Deines), the division head of Product Development (Tilford Riehl), and a representative from Marketing (Andy Mellman).

R&D Cost- And Risk-Pooling Agreement

Additional evidence of the extent to which B&W participated in BAT research can be found in the cost- and risk-pooling agreements between the two companies. According to handwritten notes made sometime in 1980, perhaps by J. K. Wells, B&W's corporate counsel, these agreements dated back at least to April 1958 {1838.01}. At that time, the notes indicate:

We have been pooling the findings and experience resulting from our joint and separate research programmes. {1838.01, p. 1}

The agreement called for costs to be shared on the basis of B&W sales to BAT sales, and the companies shared reports and findings. In 1961 the 1958 agreement was abrogated (as of October 1, 1960), evidently because the sales formula was not working. In its place, an arrangement was made whereby each company bore the cost of its own research. However, the two companies focused on different areas of concern: B&W was "best suited for research [on] seed to warehouse," while BAT was "better suited for work on processing, smoking, [and] smoke effects" {1838.01, p. 1}. A short entry dealing with March 6, 1962, states:

B&W shall have access to everyone else's [research results]—everyone else shall have access to B&W's. {1838.01, p. 1}

In July 1969 a major cost- and risk-pooling agreement, a copy of which appears in the documents {1810.01}, was entered into by the two companies. The agreement was effective as of January 1, 1969, and was to last five years. According to the notes, among the important aspects of the agreement was the fact that it recognized that the parties had for many years exchanged the product of their R&D work to their mutual benefit. The notes describe the opt-out procedure under the agreement and indicate that the costs were shared on the basis of the sales ratios of the two companies {1838.01, p. 2}.

The 1969 agreement was extended indefinitely in June 1974. It was amended in December 1975, limiting the amount payable by either party to $100,000. In February 1977 the agreement was rescinded, effective as of October 1, 1976, and a new agreement became effective {1838.01, p. 2}. A separate document, evidently a cover letter to the new agreement, written on February 7, 1977, by an unknown person at B&W (only the first page of the letter is available) to the secretary of BAT, discusses the review of the old agreement that led to the decision to formulate a new arrangement. Of particular interest is the following observation:

This review has served to underscore the importance of the centralized and coordinated research program which is being carried out by BAT in support of long-range overall Group strategy. {1815.01, p. 1}

The notes discussed above indicate that, under the new agreement, central group research was carried out by BAT for the mutual benefit of itself, B&W, and other affiliates. The research included biological, product, smoker, process, and new smoking material areas. B&W contributed 0.15 percent of its net turnover, and received information in return. In 1979 an amendment was proposed to increase B&W's contribution to 0.21 percent, and it was eventually executed in January 1980. Then, on the last day of 1980, everything was canceled. Finally, in a subscript, the notes state that under the 1977 agreement B&W was paying around one million (presumably dollars), whereas, under the increased factor, it would be paying between two and three million {1838.01, p. 2}.

The two companies continued to operate under cost-sharing arrangements after 1980. This fact is shown in the notes to an R&D meeting of BAT affiliates (the CAC Companies, described above) at Wallingford, England, in September 1985 {1182.01}. Under a section entitled "Funding of BATUKE R&D Centre," the notes state:

In view of the pressure from various countries to have some indication of their likely contribution to this laboratory, ALH [A. L. Heard, chairman of the meeting] presented a proposal for funding BATUKE R&D Centre which reflected the BATCo recommendations at least for the next two years.

Despite the considerable reduction in costs of the laboratory, if CAC's were no longer to contribute, the result would be a considerable increase in the sum paid by BATCo (in addition to the individual BATCo companies), with major savings by all CAC's unless they rapidly scale up their domestic R&D costs which looks improbable (with the possible exception of USA). As a guideline for the next two years it is proposed that BATCo will continue to support the laboratory at its current level and that the balance be shared between CAC countries (not Brazil) using a [specified] formula. {1182.01, pp. 6–7}

As indicated in a letter written on August 20, 1970, by attorney David R. Hardy to DeBaun Bryant, general counsel at B&W {1840.01}, these cost- and risk-pooling agreements created a potential legal problem for B&W. In the letter, Hardy discusses the possible adverse effects of statements made by BAT and B&W scientists in a products liability lawsuit against the company. Hardy points out that such statements could be construed as being contrary to the industry's position that there is no proof that smoking causes disease (see the discussion earlier in this chapter regarding concerns of lawyers about scientists' statements). After explaining how the statements could be used by a plaintiff, Hardy notes that the pooling agreement exacerbated the problem:

Also adding to the need for recognition of the problem created by statements such as those I have described is the existence of the "BAT/B&W R&D Cost and Risk Pooling Agreement" executed in July, 1969. This document creates an inter-relationship (or confirms a relationship which already existed) that would assist a plaintiff's attorney greatly in obtaining information from B&W about BAT research and development work. {1840.01, p. 4}

Later, Hardy notes that:

The findings and opinions of persons engaged in work covered by the "BAT/B&W R&D Cost and Risk Pooling Agreement" are available to both BAT and B&W. Carefully framed discovery would certainly force disclosure of the Agreement as well as other documents bearing on smoking and health issues [emphasis added]. {1840.01, p. 5}