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Patent Pending

Story of an inventor's 30-year battle to gain control of patent rights to the laser technology he helped develop.
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The laser was one of the great inventions of this century. The question was, who owned it?

Gordon Gould, inventor of the laser, spent 30 years and $6 million staking his claim to one of the most spectacular advances of modern science. What stood in his way? Just the twin phalanxes of U.S. government and big business. Many people bet their careers, and their companies, to back the inventor, and the rewards are finally streaming in. Gould's triumph closes the book on a fascinating legal and scientific endeavor. -- E.L .

Even before he entered high school, Gordon Gould knew he wanted to be an inventor. His heroes were Marconi, Bell, and Edison. He knew, too, that to invent anything truly significant he'd have to understand the physics of things, how things worked deep down in the invisible quanta. In high school, college, and graduate school he gathered the tools. He wanted to be ready when the light bulb flickered. On November 9, 1957, a Saturday night just given to Sunday, Gould was unable to sleep. He was 37 years old and a graduate student at Columbia University. The idea came to him, he remembers, about one o'clock. No mere Soft White, this bulb. For the rest of the night and the rest of the weekend, without sleep, Gould wrote down descriptions of his idea, sketched its components, projected its future uses.

On Wednesday morning he hustled two blocks to the neighborhood candy store and had the proprietor, a notary, witness and date his notebook. The pages described a way of amplifying light and of using the resulting beam to cut and heat substances and measure distance. "That notebook is absolutely incredible," says Peter Franken, a professor of physics and optical sciences at the University of Arizona, in Tucson. "It's as if God came down and whispered in Gordon's ear and said, 'Listen, buddy, this is what you're going to do.' "

Gould dubbed the process light amplification by stimu-lated emission of radiation, or laser, and he knew -- he knew, no question -- that this was the invention he'd been preparing himself for all along. The invention of a lifetime.

It was indeed, in a way Gould did not anticipate. For it took nearly half a lifetime -- the next 30 years -- to win the patents for his ideas. At times the government's resistance to Gould's claims was so stubborn, its behavior so unusual, that he and his allies began to fear a concerted government-industry effort to keep Gould from ever getting a patent.

Gould's vindication came only last year, when he won the last of a series of victories that left him in control of patent rights to perhaps 90% of the lasers used and sold in the United States, lasers that weld auto parts, destroy skin cancers, aim weapons, and register prices at the checkout counter. Gould's patents directly affect some half-billion dollars in annual sales of lasers; ironically, had they been granted 30 years ago these patents would have expired while the industry was still tiny, and would have captured only a fraction of their current revenue. The company formed to license the Gould patents, Patlex Corp., now sits atop a rapidly growing mountain of cash, and last summer it hired Frank Borman, moon pilot and former chief executive of Eastern Air Lines Inc., to be its new boss.

For Gould especially, victory is very, very sweet. Every other day a Federal Express truck arrives at his home in Virginia bearing license contracts to sign. Every quarter a check comes. A grin breaks across Gould's face, a Cheshire cat's grin flecked with canary feathers, as he matter-of-factly estimates that total royalties will be $46 million. "That's my share of it."

But Gould is 68 years old. He and his partners, men who gambled their futures to back him, spent more than $6 million fighting both the United States Patent and Trademark Office and the laser industry. The story is not one of courage and perseverance only on Gould's part. Gary Erlbaum liquidated his company and bet the proceeds on Gould. Richard Samuel, a patent attorney, gave up his law partnership to become Gould's master strategist. Gould fought history -- and won.

Gordon Gould, for now, lives in a small, gray ranch house situated by a creek in Virginia's Northern Neck, two and a half hours from Washington, D.C. The place is modest because that's the way Gould likes to live, not because he can't afford better. He's already a millionaire. At the rear of the house is a huge all-weather porch, and Gould is sitting there in the smoke of an endless chain of cigarettes.

He is a lean, angular man, with heavy-framed glasses and a scalp that has yielded some to the advance of time. There is a war-torn aspect to the room symbolic of the battles so recently won. Smoke. Ragged butts jamming two ashtrays. Gammon, a German shepherd with one blood-fused eye and severe hip dysplasia, moves sideways across the room, a dog in serious misalignment. Gould lives with his longtime companion, Marilyn Appel. Of dragonish temperament, she is tough, energetic, and blunt, a screener of calls, guardian of the gate. Now and then she charges onto the porch, lights a cigarette, catapults herself into the conversation. Gould sits at rest, a portrait of physical entropy.

What kept him going all these years was sheer, blissful ignorance. "What you have to realize," he says, "is that at no point did I expect it was going to take more than a couple of years to resolve whatever problem existed at a given moment." Only once, he says, did he fear he would never get a patent.

"What'd you say?" Appel asks, squinting through wayward smoke. "That was the only moment? Or the first moment?"

"Well, OK. It was the first moment."

Gould was born on July 17, 1920, in New York City. He was the kid who fixed clocks for neighbors. At Union College, in Schenectady, N.Y., he studied physics and fell in love with light. He went to Yale in 1941 to begin work toward his doctorate, but war forced him to quit. Over the next two years, he worked on the Manhattan Project, the ultimate in applied physics. In 1945, indulging his girlfriend, he began attending meetings of a Marxist study group in Greenwich Village. The government yanked his security clearance. He took a job at a company that made specialized mirrors and spent the rest of his time trying to develop inventions.

In 1951 Gould resumed his doctoral work at Columbia. He taught part-time at City College of New York until 1954 -- Senator Joseph R. McCarthy's heyday -- when he was called before a special panel of the state board of higher education commissioned to root commies from the halls of academe. Gould spent a day under interrogation but refused to testify against colleagues and friends. He was fired. His faculty adviser at Columbia, incensed by this treatment, got Gould a research assistantship at the university's radiation lab.

Meanwhile, a Columbia physicist, Charles H. Townes, had devised a method of amplifying microwave energy, an advance he dubbed the maser. To do the same with light required a radically different approach, and it was this process Gould conceived that night in 1957. "I almost immediately saw the tremendous potential of this device," Gould says. "It would do for light what the vacuum tube and later the transistor did for radio frequency electronics." He envisioned lasers used to heat, weld, and cut; to machine parts; to measure distance; even to produce the heat necessary for nuclear fusion, technology only today being seriously investigated.

It was then that Gould made the mistake of a lifetime -- a mistake that in the grandest of paradoxes promises to make him an extremely wealthy man.

In courtrooms around the country, there are mounds of Gould paper. In the National Archives, a full cart of boxes accounts for a single lawsuit. At one point the patent office set aside a separate room for the Gould patents and took reservations from companies wanting a look.

The patent office lives paper, breathes paper -- most of it precise, legal, notarized, certified, a massive white drift of painfully accurate prose. Even with the help of a patent lawyer, few applications succeed on the first round. Two out of three, however, eventually will become patents. In fiscal 1988 this rite of passage -- the pendancy period -- was 19.9 months. To understand why Gould needed 30 years, it's necessary first to know the ritual.

For the inventor, this bureaucracy becomes distilled in a single individual: the patent examiner, the high priest of invention. There are 1,400 examiners, each possessing a startling degree of control over the fate of an idea. On the average, an examiner will spend 17 hours on each case. How does 17 hours become 19.9 months? The initial processing takes a month. An examiner won't get the case for another two to three months. The inventor has three months to respond to each formal action the examiner takes. In a typical case there are two such actions. Throw in another three months for printing and publishing the final patent, and you've spent more than a year.

A challenge to a patent dramatically extends this pendancy period. When two applications conflict, the patent office can begin what is called an interference proceeding to determine who was the first inventor. These proceedings can last decades. In another type of proceeding, called reexamination, the challenger can trigger rejection of the patent by producing new evidence of prior art -- new evidence that the invention was "not novel or was obvious."

Gould took the proper first step and consulted a patent attorney for advice on how to proceed. "I was so ignorant of the whole patent procedure that I came away from that meeting with the wrong impression, which was that I had to build a model in order to get a patent," Gould recalls. This is where he made his big mistake: patent law requires no such thing. Gould needed only to present enough detail to allow someone skilled in the art to build the device.

Gould was so excited about his laser ideas that he left Columbia without finishing his thesis. He joined Technical Research Group Inc. (TRG), a small scientific company on Long Island, hoping to develop laser applications. In 1959 he won TRG a $1-million contract for laser research, and filed for his patents. But he had lost precious time. Charles Townes and Arthur Schawlow, a Bell Labs physicist, had applied the previous July to patent the optical maser.

Soon after receiving notification that the contract had been awarded, Gould also learned of the government's intent to classify his research as secret. This would not have caused Gould much grief had he been considered your basic loyal American. Officially, however, Gould remained suspect. He was denied clearance to work on the project; his notebooks were confiscated. (Again that Cheshire grin -- Gould admits he kept copies of them.)

TRG's president, Lawrence Goldmuntz, spent $50,000 fighting to win Gould clearance, an effort that culminated in a 1959 hearing during which the ghosts of Gould's past marched before him. An FBI agent testified that he had tapped Gould's phone. The man who had led the Marxist study group revealed he had been an FBI informant. Gould had married and divorced the woman with whom he'd attended the meetings; she too appeared and testified against him. Gould did not get his clearance.

Gould's security troubles put TRG in a bind. In seeking the contract, he'd deliberately kept his proposal vague. Now, that proposal would be used by scientists who did not have his knowledge; they could ask him questions but could not tell him a thing. Largely as a result, Gould contends, TRG failed to build the country's first laser. It was a failure that would haunt Gould for decades to come.

In March 1960 Schawlow and Townes received their optical maser patent. For the next 17 years this and Townes's earlier patent would be considered the laser patents. Two months later Theodore Maiman, a scientist at Hughes Research Laboratories, built the first working laser.

Gould's application met its first serious resistance in the early 1960s, when it became mired in the first of five interference proceedings. Although Gould won some claims, he also lost important ground. The patent office ruled that he had not disclosed enough detail to enable anyone to build his laser.

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.

Now, Gould's attorneys had a $1.5-million war chest. "It was a miracle come in the nick of time," Gould says. He sold Patlex another 15% of his royalties for a whopping $2.3 million, which Patlex raised through the sale of stock.

This was the good news.

Dick Samuel remembers the moment. Spring 1982. He is in federal court in Washington, D.C., arguing yet another motion before Judge Thomas A. Flannery. Samuel's daughter, Mimi, a junior at Georgetown University, is observing from the back of the courtroom. "I'm standing there and I remember telling her once when she was 12 how Daddy had taken this case and was going to make all this money. The patent application had been filed three years before she was born, and there she is, a 20-year-old woman, sitting there in court. It gave me a feeling of 'My God, how long can something like this go on?' "

The gas-discharge amplifier involved in this suit was potentially the most valuable of Gould's inventions, as it had become the technology of choice for laser makers. In July the judge dismissed the case. He agreed with the patent office's argument that the earlier interference cases had already decided the issue. Judge Flannery's decision was devastating enough, but the shock rumbled along the fault lines of all of Gould's other patents.

Soon, so much would go so wrong that Gould, Appel, and Samuel began feeling a bit paranoid. "I became convinced there was a conspiracy," Gould says. "I still don't know." Samuel says a patent attorney gets a feel for patent ritual, for the flow of routine: "What happened with the Gould cases was totally outside normal expectation."

Samuel filed a routine motion asking Judge Flannery to reconsider his dismissal. In the court debate that followed, the patent office filed a curious and controversial motion, seeming to invite outsiders to ask for reexamination of Gould's patents. This public expression of doubt ran contrary to the office's mandate to act as an impartial administrator. Samuel was shocked. "In our view, this was a signal to others that if they filed a request for reexamination it would be favorably looked upon," he says.

A copy of the government's motion arrived in Orlando as the Control Laser trial was to begin. Control Laser's attorney asked the Orlando judge to postpone the trial.

The sun rose on a bad day in Orlando. Gould is en route to Orlando. He has spent weeks preparing to testify. Samuel has temporarily moved to Florida. "The case had been pending for five years," Samuel says. "We'd passed all the physical and economic hurdles of finally being allowed to tell our stories to somebody who would pay attention -- we had even bought new suits and ties and polished our shoes. And it was like the circus starting all over again."

The judge who'd presided over the suit for the past five years chose that day to remove himself from the case, citing a potential conflict of interest. The newly assigned judge canceled the trial.

Within two weeks American Telephone & Telegraph Co. challenged the same patent. Other reexamination requests followed. On November 17 General Motors Corp. asked for a review of both patents and hauled in official paper weighing 27 pounds, including a 122-page memorandum and 30 bound volumes of transcripts, stipulations, and exhibits. On December 6 GM filed 14 more pounds of paper. GM, which made extensive use of lasers, argued that Gould's ideas for using lasers simply were not all that new, citing Archimedes's use of a lens in the third century B.C. to set a ship on fire.

The patent office assigned the requests to Harvey E. Behrend, a veteran examiner. The choice was a curious one. Typically a case goes back to the original examiner or an examiner in his unit. Behrend had not been involved on either application, according to court filings. A third application was also assigned to Behrend; it had earlier been assigned to two examiners outside his unit.

Behrend is said to be a dedicated, hardworking examiner. But there is another side to his reputation. He is widely known as one of the toughest, most stubborn examiners, particularly regarding whether an application contains sufficient disclosure of an invention. In one court filing, Patlex alleged that the Gould patents were assigned to Behrend "in part because of statistics demonstrating that Examiner Behrend allows and had allowed a smaller percentage of cases than the examining corps as a whole."

In 1983, Behrend rejected the two patents already issued to Gould.

Gould's journey had begun in 1957. In the interim, John Glenn had rocketed into space. John F. Kennedy had been assassinated. The Beatles had landed in New York. U.S. troops had landed in Da Nang. The scope of this thing: Woodstock. Kent State. Robert Kennedy. Martin Luther King Jr. Neil Armstrong had strolled on the moon. Steve Jobs had created an industry. Lasers had transformed life -- medicine, warfare, printing, shopping, music. A laser had even saved the sight in one of Gould's eyes.

And Gould passed to the far side of middle age. He was no sad-sack technological hobo, however. He taught physics. He helped found an optical communications concern, and came away with $500,000. This, plus what he'd received from Patlex, put him securely in the millionaire category. "I didn't spend all that time moping," he says. Still, he did not possess a valid U.S. patent for any of the ideas he'd proposed 25 years before. He had not received due credit from his peers, or any of the other intangibles that might have been his had his patents been issued decades before. In some circles, he remained a crackpot.

One day in 1983, the world collapsing once again around Gould, Erlbaum shocked the Patlex board by announcing his resignation. "I was frustrated," he says. He shocked Samuel by proposing for the first time that Samuel succeed him.

At the time Samuel was still a partner at his law firm. He was making serious money; the firm was successful and growing. This idea was craziness. Take a 20% cut in salary and throw away a valuable partnership? To defend an obscure inventor?

But Samuel had come too far. He calculated that, given other sources of income and the supply of Patlex's cash, he could be financially secure for six more years. His father and his fiancée's father gently questioned his judgment.

Meanwhile, the patent office continued behaving in ways that seemed unusual. In the gas-discharge suit, for example, the patent office filed a motion stating, in part, that it needed more time to consult with the Department of Justice, "to give that agency an opportunity to determine whether there are additional Government interests in this case" that might require the patent office to handle the case "in a manner different" from usual policy. The patent office noted that any patent arising from Gould's application "may be enforced against the Government."

The patent office, however, is not supposed to care about anyone else's interests, or whether a patent is likely to be enforced against other government agencies, says Rene D. Tegtmeyer, an assistant commissioner for patents. Yet the solicitor's remarks seemed to indicate that the patent office was indeed taking on a role beyond its mandate.

Samuel kept firing his own salvos. He appealed examiner Behrend's rejections. He appealed Judge Flannery's summary judgment in the gas-discharge case. On July 12, 1983, the court of appeals ruled that Flannery had erred in dismissing the case, and that it should go to trial. The trial began in January 1985, back in Flannery's court.

Gould again debated old and gray issues, those earlier interference cases and TRG's failure to build the first laser. If his application was so full of information, the patent office asked, why hadn't TRG been the first to build any of Gould's inventions? On December 19, 1985, Judge Flannery issued his decision.

"We'd been sitting on pins and needles for nine months," says Appel. "When you sit for that long you can't help but think, what's going on? The news is bad. You just can't help it." Then one of Samuel's partners called: the decision was favorable, but he couldn't say anything more. "We were afraid to get too happy," Appel says. "By that time everything we had thought was going to be good had turned out bad. We were afraid to rejoice."

The opinion was more favorable than they could have dreamed. Flannery, the same judge who previously had dismissed the case, did a complete turnabout. Gould's attorneys and witnesses had been persuasive. In 50 pages of dispassionately powerful text, Flannery cited the many errors the patent office had made in evaluating Gould's patent claims.

Patlex announced the victory. In one day the price of its stock doubled to 10½. Long before, the company had issued stock options, which it could call in once the stock topped $10 and stayed there for 20 days or more. The exercise of these and other options brought Patlex more than $5 million by the end of 1986. The company needed the cash. It was still fighting the patent office on the Behrend rejections.

The Flannery decision, however, seemed to work a kind of miracle. In September 1986 the patent office's own appellate board overturned Behrend's rejection of one patent, and in its reasoning cited Judge Flannery's opinion. A year later the board reversed Behrend on another of his rejections. And two weeks later, another federal judge ruled that Gould's use patent was valid.

Patlex won on other fronts. A jury in Orlando ruled that Control Laser had indeed infringed one of Gould's patents. The company was too broke to pay owed royalties and agreed instead to be taken over by Patlex. More than 100 laser makers and users have signed licensing agreements, including such heavyweights as Ford, Toshiba, General Electric, and National Semiconductor. Spectra-Physics and Coherent, the world's two biggest laser makers and the longest, staunchest holdouts, also signed up.

The question now is what to do with all that cash? The stream of royalty revenue is accelerating rapidly -- in the first half of 1988, Patlex took in $3.86 million, five times the total in the first half of 1987. Frank Borman, who'd been an investor in Patlex and later a board member, was hired as CEO last summer to oversee both its licensing efforts and the spin-off of several small manufacturing companies, including a laser maker Patlex had acquired in the early 1980s. Borman isn't talking much about what Patlex will do with the Gould windfall. However, he's brought instant credibility to tiny Patlex.

Borman may help in Patlex's coming battle to sign up the government, the biggest laser user of all, but last December, that effort was on the back burner. "It doesn't make much sense," Borman says, "to pursue that vigorously until the new [Presidential] Administration is in place."

So what happens to the other Gould players? Gould's patents became a minor industry in themselves, the font of modest wealth for many individuals. Samuel will become chairman of the spin-off companies, grouped under the name Geotek Industries Inc.; he continues to hold some 50,000 Patlex shares. REFAC still holds a 16% stake in the royalties and 812,000 Patlex shares. Gary Erlbaum, the man who bet a company, estimates he holds 2% of Patlex. And Dick Samuel's old law firm has done very well indeed. In 1987, Patlex paid it $600,000 for its work on just one of the suits.

And Gordon Gould?

He isn't bitter, he says. That grin comes to his face again. Here in the smoke of this modest ranch in Virginia -- Marilyn Appel curled in a chair, Gammon crossing the room like a wrecked hook and ladder -- Gould spreads out photographs of a new house he's bought, a $750,000 number in the Rockies outside Breckenridge, Colo., with floor-to-ceiling windows and unobstructed views. The best revenge of all.

* * *

"Patent Pending" by Erik Larson. Published by Inc. Magazine, March 1989 issue. © 1989 by Erik Larson. All rights reserved.




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