Ex-Officer of Covington Sues for Payment on Patents
A former officer of Covington Industries Inc. has sued the Fullerton-based builder of prefabricated houses and four current or past officers for $10 million on claims that they failed to pay him for five patented products he invented.
Richard F. Artzer, a former Covington vice president, also accused the company and the officers of defrauding and deceiving him into continuing to contribute designs and ideas by making repeated promises that he would be paid.
The suit was filed in U.S. District Court in Los Angeles against the company; Loran D. Covington, its chairman and chief executive officer; Deyo P. Breen, president and chief operating officer; Robert B. Fitzpatrick, Breen’s predecessor, and Donald L. Lloyd, president of a Covington subsidiary.
Lloyd said Wednesday that the company owned the patents, but he declined to comment further. Covington representatives and the other defendants could not be reached for comment.
According to the lawsuit, Artzer was hired by the company as a consultant in 1977 to help solve problems involving prefabricated wall panels that Covington was buying from another firm.
Artzer and the company determined that Covington would be better off building its own panels, the lawsuit said. Artzer was hired as a vice president to design and build the panels, as well as the machinery needed to make them. He later left the company as an employee but was again retained as a consultant.
The prefabricated wall panels, complete with electrical wiring and other features, proved successful for Covington, Artzer said Wednesday. So did the assembly machines, which Covington sold to companies in at least four foreign countries.
Artzer said he was never paid royalties or other income for his patents on the products.
The lawsuit alleged that an oral contract between Loran Covington and Artzer involving payment was never put into writing because Covington continued to reassure Artzer through 1986 that he “would always receive a check as long as Covington . . . produced the panel.”
“The machinery costs around $300,000 to make, and it sells for more than $1 million,” Artzer said. “That’s a large amount, and I should be compensated.”
The suit also accused Lloyd of telling customers and licensees that he was the inventor of the wall panels, but Lloyd denied that.
“I’ve given him (Artzer) credit in all cases,” Lloyd said. “God, why would I do that? I would have nothing to gain by that. Besides, all our licensees know who invented the panel.”
