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Patent Fending

A look at some famous legal battles between inventors and the corporations that stole their patented ideas.
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Fighting knockoff artists is easy. If you've got a lifetime to devote to it

As Linda Froehlich can fully attest, patents don't dissuade knockoff artists. Still, some entrepreneurs have successfully defended their patents, succeeding largely by virtue of being as innovative about the battle as they were about the creation that got them into it. Herewith, our (dare we say, copyrighted?) favorites among those patently absurd stories:

Jerome Lemelson v. Mattel Inc. (and Everybody Else)
The late Jerome Lemelson's career as a patent-infringement plaintiff took off in 1989, when a federal jury in Chicago awarded $24.8 million to him, affirming his belief that toy maker Mattel Inc. had infringed on his patent for a flexible toy racetrack. The judge later nearly tripled the award, to $71 million. (Judges and juries can triple patent-infringement damages if they feel that a company violated the patent willfully.) In 1992, however, an appeals court overturned that ruling. Meanwhile, Lemelson--who held hundreds of patents--sued or threatened to sue many companies worldwide, including Motorola, Apple, and Eastman Kodak. He received settlement payments from several major automobile manufacturers, as well as from Sanyo, Siemens, and Sony. Until he died, in October, Lemelson split his time between homes in Nevada and Hawaii, having reaped an estimated $200 million in settlements. Ironically, he won only one of nine lawsuits that went to trial. But even that one was impressive: a $17-million verdict against Illinois Tool Works for infringing on his patent on robot paint sprayers.

Robert W. Kearns v. the Ford Motor Co.
Newlywed Bob Kearns was grooming himself for other things back in 1953, when he popped open a bottle of champagne in his honeymoon suite, only to have an airborne cork cause permanent damage to one of his eyes. That injury--which made it difficult for him to see through two-speed windshield wipers--inspired him to work at developing an intermittent wiper that would imitate the movement of a blinking eye.

Not surprisingly, engineers at Ford, Chrysler, and GM (not to mention Ferrari, Mercedes, and a host of carmakers around the world) were working on similar projects. But Kearns won the patent in 1967 and then spent decades fighting the Big Three in court. In 1990, Ford was first to settle with Kearns, followed by Chrysler in 1992. Kearns's offspring joined Kearns Associates, the business he had set up specifically to litigate patent-infringement claims. Its corporate offices are conveniently located across the street from the federal courthouse in Detroit. Kearns was ordered to pay sanctions after his son, Dennis, obtained confidential documents by dating a paralegal at one of the firms representing several automakers. So far Bob Kearns has won more than $30 million from Ford and Chrysler.

Gordon Gould v. Control Laser International Corp.
For decades, inventor Gordon Gould--blacklisted during the McCarthy era and frustrated by government bureaucracy--fought desperately to get the patents he felt he deserved for the development of the laser. In the meantime, he steamed as elite scientists like Charles H. Townes and Arthur Schawlow received valuable patents and, ultimately, Nobel prizes for their own laser-related discoveries. Gould had been a graduate student at Columbia University when he first developed his blueprint for the laser. With the help of Dick Samuel, a Manhattan lawyer, Gould won his first patent in 1977. "Gordon was not a social person," notes Samuel, "nor was he a member of any organization that had an interest in his success." Based on that 1977 patent, Samuel and Gould gained enough financial backing to help start Patlex Corp., which they took public. The company's main asset was an equity stake in the outcome of various lawsuits. In 1987, Gould finally won his first significant cases, successfully arguing that his patents had been infringed upon by perhaps 90% of the laser industry in the United States at that time. Patlex's stock doubled on the day the first verdict was announced, and Control Laser, in the damages phase of the trial, settled with Gould. Patlex received securities from Control Laser, effectively giving Patlex control of the company, which was later merged with Patlex. Today, Gould enjoys skiing near his $750,000 Colorado ranch, which is equipped with a stable and an indoor pool. He has earned an estimated $30 million.

Stac Electronics v. Microsoft Corp.
Few companies can say that they went up against Microsoft Corp. and won. But in 1994, Stac Electronics, a small software company, was awarded $120 million for infringement of its patent for data-compression technology. Microsoft was awarded $13.6 million for trade-secret misuse. Ultimately, the two companies signed a cross-licensing agreement. Stac received $43 million in cash from Microsoft, and Bill Gates's software behemoth invested $39.9 million in nonvoting Stac stock (about 15% of the company's shares)--a total payout of $83 million. "Most observers saw that as Microsoft's essentially writing an $83-million check," says Constance Bagley, who teaches at Stanford Business School. These days the two former litigants are the coziest of buddies. "On the software side and on the hardware side, we've been working with Microsoft, and we're quite happy with the relationship we've had," says Gary Clow, CEO of the San Diego-based company. "The settlement has been very beneficial to us."

Peter Roberts v. Sears Roebuck & Co.
In 1965, Sears paid Peter Roberts, a 20-year-old former clerk in one of its Massachusetts stores, $10,000 for the rights to license his patented design for a "quick release" socket wrench. At the time, Roberts later argued, Sears suggested that the tool's marketability was limited. Over the next 10 years, some 19 million wrenches were sold, with revenues on the product topping $44 million. Roberts filed a suit in 1969 to rescind the original agreement. A series of legal victories from 1978 to 1982 culminated when a federal judge awarded Roberts $8.2 million, but that decision was overturned on appeal. The scenario ended with an out-of-court settlement in 1989, the terms of which remain confidential. "I'm right; they're wrong," Roberts reportedly said during the litigation. "I've wrapped up a majority of my life around the thing. I'm just trying to get what is justly and rightly mine."

Intex Plastic Sales Co. v. Charles Hall
According to lead counsel Jack Slobodin, Charles Hall was provoked into pursuing his patent-infringement claim. The California inventor had devised and built the first "modern" water bed in 1968, as part of a master's degree program at San Francisco State University. Years later Intex Plastic Sales Co., a subsidiary of a Taiwanese company, sued Hall in an attempt to declare his patent invalid. Hall countersued on the grounds of infringement. "The case is famous because a group of investors acquired part of Hall's right to enforce the patent," notes cocounsel Edward Wright. In March 1991 a six-person federal jury ruled that from 1982 to 1988, Intex had infringed on Hall's 1971 patent. The jury awarded Hall $4.8 million, about 9.5% of the $50.6 million in revenues Intex had derived from water-bed sales. Ultimately, the damages paid totaled $6.8 million, including interest. One high point of the trial: lawyer Slobodin showed the jury a tape of Hall bouncing on his water bed on an episode of The Dinah Shore Show, circa the late 1970s, in an effort to prove that Hall was indeed recognized as the official inventor of the water-bed design.

Mike Hofman is a reporter at Inc.




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