David Beats Goliath 

Inventors Whip Corporations in Court 
by Harold A. Meyer, III

In the past few years there have been a remarkable number of lawsuits, cases and judgments involving inventors with sizable claims against large corporations involving patent infringement, fraud and breach of contract. Despite the many recent attempts to disadvantage the inventor with bills such as HR.400 and S.507, inventors have had the law on their side and have given big corporations a good run for their money.

Some of the biggest cases by dollar amount include the following:

$500 million dollars was paid to America’s most prolific recent inventor, Jerome Lemelson, from over forty foreign automakers and electronics companies. Lemelson had been involved in legal battles with corporations almost from the beginning of his career when he started inventing toys and meeting with companies to pitch his patented and patent pending ideas. In numerous instances throughout his career, companies outright stole his work without offering compensation and sought to tarnish his name. Among the worst company for stealing intellectual property was Ford Motor Company; to this day, in their unconscionable submission contract, they mandate inventors waive all rights to sue Ford for any reason. (Source: WALL STREET JOURNAL 4/16/97, ALLIANCE for AMERICAN INNOVATION, FORD, and the author)

$212 million was won and collected by Haworth Inc in a protracted battle over its three circuit pre-wired panels for office cubicles. In the 1970s, co-inventor Dick Haworth and his father risked their modest sized business (which had sales of only $31 million in 1978) on manufacturing it with the hopes of making it ‘big.’ Now the company has sales over $1 billion. Infringer Steelcase Inc the industry gorilla, picked up the tab cited above, although Herman Miller Inc also paid an additional $44 million. (SOURCE: MUSKEGON TIMES 12/ 31/ 96)

$128 million was received by Fonar in July 1997. GE’s ultimate appeal to the Supreme Court was denied in October 1997. Almost 20 years earlier, Dr. Raymond Damadian, MRI inventor, chairman and founder of Fonar, together with his two post-graduate assistants, constructed the first human-sized nuclear magnetic resonance (NMR) scanner, today known as a magnetic resonance imaging (MRI) scanner. After numerous legal battles against such titans as Siemens, Philips and Hitachi, comes the huge payment reported above from GE. (Source: FONAR 9/97, BUSINESS WIRE 10/97)

$115 million was awarded to Celeritas Technologies in early 1997. The tiny two employee company in Irvine CA invented new technology for speeding up computer modems. In keeping with the statutory power that federal judges have to double or triple damage awards for willful violations, the judge did so, doubling the original award to the amount reported above. Characterizing Rockwell International’s corporate witnesses as "hedgers" and "liars" the judge blasted Rockwell with unusually strong language stating in court transcripts, "It appears that the intent was there from the beginning to misappropriate the technology." (Source: LA TIMES 1/31/97)

$96 million was recently upheld on appeal as an award to inventor CR Stevens who successfully argued that he had been cheated when the company that had licensed his electronic ballast technology for flourescent lighting decided to suppress it rather than commercialize it. Commercializing it would have meant competition for their old inefficient magnetic ballast product. Expert witnesses at the trial stated that the failure to commercialize the invention cost the American public $100 billion in wasted energy costs. Original defendants include Universal Manufacturing Corp and its former parent company, Northwest Industries, now Fruit of The Loom, Inc. Magnetek, Inc which now owns Universal was indemnified. (Source: NY TIMES 9/1/97)

$57 million was awarded to Ron Chasteen in April 1997. Chasteen, a former Colorado mechanic and skimobile shop owner, invented an electronic fuel injection system for skimobiles which was especially useful in high altitude mountain areas where traditional carburetors malfunction. In many ways, this case was an inventor's worst nightmare. Chasteen worked closely with Polaris Industries for a long time, and then suddenly, the company said they were not interested anymore and stopped returning phone calls. Then, to the inventor's great dismay, their new product with the inventor's stolen technology was rolled out to the public! At least one of the defendants, Polaris Industries, intends to appeal; Fuji Heavy Industries was the other defendant. (Source: AMERICAN SNOWMOBILER 4/28/97)

$50 million was eventually paid to optically pumped laser inventor Gordon Gould. Due to PTO mismanagement, interferences and surging development in the industry, Gould’s patents were pending for 16 years. Eventually, the patent was split into 4 separate patent applications, each of which was ultimately allowed. The first patent issued in 1977, and the first litigation began shortly thereafter. It wasn’t until 10 years later, in 1987, that the litigation was resolved. This is not unusual for court cases of this subject matter or any other to drag on interminably. The reason this case dragged on for so long was corporate greed and hubris. The big corporations had almost universally turned it down for licensing; some were polite but others said 'get the hell out of here, this is not an invention, we’ve been making it for years.' In general, the smaller companies were less adamant about taking licenses and acknowledging Gould’s creation. At one point, Gould was just about to sign a license agreement when intense laser industry pressure called for a monolithic united industrial front against Gould. Under the threat of, and under incipient litigation, eventually IBM, GM and AT&T bought licenses. Despite long periods of delay, others fell into place. Ultimately, ALL of Gould’s court actions were successful and every patent was upheld. Coherent Corp. and Spectra Physics were among the biggest infringers. (Source: REFAC 9/97)

$45 million was awarded to two researchers and the University of Colorado who had told a colleague how they discovered a way to increase iron absorption for pregnant women. Leon Ellenbogen and American Cyanamid’s Lederle Labs stole the idea and claimed it as their own in their ‘Materna’ line of vitamins. They were so brazen as to copy one of the researchers’ pre-publication articles directly onto their patent application. (Source: INVENTORS’ DIGEST 9/97 and TECH. ACCESS REPORT 8/97)

$30 million was won by Robert Kearns, inventor of the intermittent windshield wiper. He has 20 patents protecting many aspects of his invention. Like so many inventors, Kearns faced an uphill battle of attrition with a much larger and better funded adversary. After spending 12 years in court with Ford Motor Co., he ultimately settled for 1/3 of the above amount; the balance was from a jury verdict involving Chrysler. (Source: WALL STREET JOURNAL 4/16/93 and U. of BRITISH COLUMBIA)

At press time, there are also some very interesting cases now pending. About a half dozen automated voice messaging patents are being appealed by inventor Peter Theis. He is up against such industry giants as: Ameritech, AT&T, Northern Telecom, PacBell and many others. The inventor alleges massive foul play. It’s a biggie. The value of the case may exceed $500 million. (Source: PETER THEIS)

The attitude at many big corporations seems to be, "Why pay for an idea, when we can steal it? Especially when the only way anybody can prove we stole it is to undertake a lengthy and expensive lawsuit, in which we outnumber them by overwhelming odds." Lawsuits of this type may take ten years or more to resolve. But inventors have proven that against the odds, they can make a comeback.

Despite deeply disturbing proposed 'patent reform' legislation, the bulk of the law is still on the inventor's side (for now). The large judgments cited herein at least prove that some inventors have offered convincing proof to win over judges and impartial juries for large damages, money which was essentially stolen from them in the first place. May the trend towards compensation continue, and hopefully even increase!

© 9/1997 by the author

Harold A. Meyer, III  is Chairman of The Hook Appropriate Technology, a performance based licensing, marketing and new product development company. He can be reached at:
.

The Hook Appropriate Technology
52 Bank Street, Suite A
New Milford, CT, 06776-2706 USA
info@thehooktek.com
http://www.thehooktek.com



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