Meanwhile, the costs of these battles had grown too much for TRG. The company's parent, Control Data Corp., sold Gould back his rights. TRG's patent attorney backed Gould, on spec, for another five years, but Gould needed a partner with clout. He thought he had found his knight, REFAC Technology Development Corp., in New York City. In 1975 REFAC agreed to act as Gould's licensing agent in return for 50% of any future royalties. "I believed in Gordon Gould," says Eugene Lang, REFAC's founder, perhaps best known for guaranteeing the college educations of an entire sixth-grade class in Harlem. "My own associates thought I was nuts."
Gould signed with REFAC expecting that the company would help him win his patents. But REFAC contended it had agreed only to license Gould's inventions. What Gould needed were big legal guns and the big bucks to pay them.
Gould turned 55 that year. He still did not possess a single significant U.S. laser patent.
Richard I. Samuel knows from kooks, the people who troop through a patent attorney's door claiming such minor inventions as the wheel. Samuel is a somber man with a dark, gray-misted beard. When he met Gould, he was a partner in a patent-law firm in Westfield, N.J. "We get a lot of nutcakes coming in," says Samuel. "You need to figure out whether they are dealing with reality."
Gordon Gould, referred to the firm by REFAC, quietly explained to Samuel that he had invented the laser. Gould presented his application, all 113 pages and 19 drawings. He presented other official papers, including a document dated only six weeks earlier. This was especially striking. The ritual of the patent process demands that an inventor keep the chain of action and response going. Once this chain is broken, the patent office considers the application abandoned. "With Gould," Samuel says, "the more I delved, the more I believed he was right."
Samuel decided Gould's claims indeed had merit, and the firm agreed to pursue them for up to $300,000 worth of work. In 1976 that kind of money bought some real litigation. Gould gave the firm 15% of his future royalties and REFAC chipped in part of its share, giving the firm a total of 25%. Gould had traded away 65% of his patent rights.
The patent office, meanwhile, had ruled that Gould's patent application included not one but several inventions, and that Gould had to isolate the sets of claims of each. As a test, Samuel decided to pursue just one of them. If this tactic succeeded, he would divide up other applications as well.
The strategy worked. In May 1977 the patent office notified Gould that it planned to issue him a patent for one type of device that amplifies light. By narrowing the claims, Samuel had carved for Gould a niche that he could defend despite his earlier losses.
Between May and October, when the patent was formally issued, Samuel wrote three more applications: the "use" patent, covering the use of lasers for cutting, machining, heating, and other functions; the gas-discharge laser amplifier patent, for another device of amplification; and the Brewster's angle patent, for a device to polarize light within a laser.
The law firm and REFAC filed suit against Control Laser International Corp., a Florida laser maker, for infringement. The laser industry rose in anger. It had paid royalties on Townes's maser patent for 17 years, and just as it expired, this new one appeared.
Patent examiner Nelson Moskowitz caught heavy flak for his decision to allow Gould's claims, say former insiders. In November he rejected Gould's application for his second amplifier. Samuel fought this all the way up the line and finally sued the patent office in federal court. This was inch-by-inch combat: complex and costly. His $300,000 worth of work was quickly done, but Samuel couldn't bail out. The case had consumed him for well over a year, and so much more had to be done.
Eugene Lang and REFAC, meanwhile, were doing fine. Earlier, in May, when the patent office notified Gould that his claims on the optically pumped amplifier would be allowed, the price of REFAC's stock rose from 27/8 to 8¼ in one week. In October, when the patent was formally issued, it hit 17½.
And here was Samuel, his law firm hemorrhaging money, watching REFAC's shareholders get rich. The market was putting a value on the patent. The thing to do was go public. But how do you take a massive lawsuit public?
In Philadelphia, Gary Erlbaum had begun considering the future of his company, and he didn't like what he saw. He was CEO of Panelrama Corp., a small, publicly traded chain of home-improvement stores. The company had had a losing year but was now profitable. Times had changed, however. The big hardware/department stores would soon make his stores obsolete. Erlbaum asked his investment banker, Kenneth Langone, to look for some means of investing Panelrama's assets. One of Samuel's partners had also contacted Langone in the firm's search for a way to finance the Gould litigation.
Over dinner one night, Erlbaum, his brother Steven, and Langone discussed Panelrama's future. Langone touched on the Gould affair. After several more conversations, Langone arranged a meeting of Erlbaum and Samuel and his partners. "The Gordon Gould story was compelling," says Erlbaum. "It challenged my sense of fair play. And there was always that pot of gold at the end of the rainbow."
Panelrama agreed to liquidate its assets, merge with a corporation formed by Samuel's law firm, and use the proceeds of the liquidation to back Gould.
Gary Erlbaum believed the whole problem would be resolved in a year or two. And in fact, Gould had begun making real progress. On July 17, 1979, Gould's 59th birthday, the patent office issued him his second patent, the use patent. This was an important victory. Many manufacturers, including the big automakers, had by then put lasers to work aligning, measuring, cutting, and welding. The Panelrama agreement became final in 1979; Panelrama became Patlex, in a sense a publicly traded litigation.
