Jury's Decision Could Affect Patent Rights

 

In a decision that could significantly affect the legal relationship between inventors and the companies they work for, a California jury recently awarded two engineers $2.6 million in damages in a patent dispute with their employer, Lockheed Missiles & Space Co. Inc.

The case involved Lockheed's Patent Plan, an incentive program that grants cash awards to the company's inventors. Many other companies, especially high-technology firms that rely heavily on in-house innovation, have similar employee benefit arrangements.

After they learned of the existence of Lockheed's incentive plan, engineers Oscar Brandt and Joseph Harris asked the company for "reasonable" compensation for an invention Lockheed has sold to the Voyager, MX missile, Trident submarine, and Space Shuttle programs, among others. The device Brandt and Harris invented is expected to earn Lockheed at least $400 million by 1985.

Lockheed gave the engineers an award of $1,250 each. In court, the company argued that the two men had only improved an existing device and that the company had the right to decide the amount of the award.

The jury disagreed, concluding that the giant aerospace company had acted with malice and in bad faith by refusing to give the two inventors adequate compensation. The jury also ruled that the company had concealed the existence of the Patent Plan from the employees.

The Lockheed lawsuit was the first of its kind to be based on a breach of "good faith and fair dealing," says Palo Alto attorney Randall Widmann, who represented Brandt and Harris. This legal argument had never before been applied to an employee benefit policy, he says. "The verdict is creating quite a stir within companies and in the legal community," adds Widmann, who has received many inquiries about the case from inventors and patent attorneys.