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