Smith to Appeal Patent Verdict Won by Hughes

Smith International Inc. today plans to begin an appeal of the $204.6-million patent infringement judgment that led it to seek refuge from creditors in bankruptcy court last month.

Smith attorney Richard Stone said Thursday that notice of an intent to appeal the massive judgment won by Hughes Tool Co. would be filed today in the Los Angeles court of U.S. District Judge Harry L. Hupp.

Ultimately, Stone added, the appeal will be heard by the U.S. Circuit Court of Appeals in Washington.

Stone said he would explain the grounds of the appeal in an opening brief that he will submit to the court within two months.

On Thursday he would say only that Smith would be “challenging some of the rulings made by the court in arriving at the judgment.” Stone said the case will probably be argued before the appeals court in the fall.

Before the appeal can go forward, Stone added, he will need permission from U.S. Bankruptcy Court Judge James R. Dooley, who is presiding over Smith’s Chapter 11 bankruptcy proceeding. In a Chapter 11 proceeding, a company is protected from its creditors while attempting to reorganize its debts. Stone said he expects to receive the judge’s go-ahead at a hearing scheduled for Monday.

Meanwhile, Hughes, which successfully argued that Smith had wrongfully infringed on a drill-bit patent, will have 14 days to decide whether it also wants to contest the U.S. District Court’s judgment.

“Were we to appeal, we would probably have some other grounds besides the size of the award,” said Hughes attorney Dave Toy. “We are confident we can successfully defend against Smith’s appeal,” he added.