Small Firm Wins A Round In Patent Case

 

In 1976, when LAM Inc., of Wakefield, Mass., submitted a bid to supply its patented lighting fixtures to five Florida schools, managers of the closely held lighting systems manufacturer were flabbergasted to discover that their rival for the $100,000 contract, Manville Corp.'s Holophane Division, was proposing to use a similar lighting design. Manville, a $2.2-billion construction materials conglomerate, formerly named Johns-Manville and based in Denver, was the low bidder.

Faced with the prospect of watching its fastest-growing product lose key future awards, LAM didn't take the Florida defeat lying down. "The only thing we could do was go to court and find out if our patent was any good," says S. Leonard Kent, LAM's president. "We felt it was a matter of survival for our product."

The company, which had 1981 sales of about $5 million, argued before the U.S. District Court for the District of Colorado that Manville's Holophane Division had violated LAM's patent for indirect lights using high-intensity discharge lamps. The courts so far have agreed.

The U.S. Court of Appeals for the 10th Circuit has recently upheld the finding of district court chief judge Fred M. Winner, who ruled that Manville was guilty of willful infringement of LAM's patent rights. Moreover, the appeals court affirmed the power of the district court judge to award LAM attorneys' fees incurred during the six-year legal battle, and treble payment for damages. The exact amount of those damages will be determined later, but Kent says legal fees alone have amounted to about $300,000.

Although Manville has the right to file a further appeal, Judge Winner has determined that the company's division learned of the LAM specifications and "took a calculated risk" when it copied the product by not investigating the patent before going into production. "The predatory bidding which followed was nothing more than additional evidence that Mr. Big was going to destroy Mr. Little," Judge Winner said. "Commercial piracy can be profitable and it can be expensive to the buccaneer. This case comes down on the expensive side."