$26-Million Judgment in Product Suit
Two Bay Area entrepreneurs have won a $26-million judgment in U.S. District Court in Oakland against a company owned by a Los Angeles electrical equipment maker that the two contended suppressed their energy-saving office lighting technology.
The manufacturer, MagneTek Inc., said Tuesday that it plans to appeal the jury judgment against Universal Manufacturing Corp. of Paramus, N.J., which MagneTek bought in 1986. The $25.8-million award includes a judgement for $7.5 million in punitive damages, issued last month, and $18.3 million in compensatory damages, awarded Monday.
The suit against Universal was filed in 1984 by inventor Carlile R. (Steve) Stevens and entrepreneur William Alling, based in Danville, a suburb east of Oakland. It alleged, among other things, breach of contract, fraud and antitrust violations.
At issue was an energy-saving fluorescent lighting technology that Stevens invented in the 1970s for use in offices and retail stores. He teamed up with Alling to take the product to market.
However, the two contended, they were unable to compete in a market dominated by Universal and a division of North American Philips. As a result, in 1981 they licensed rights to the technology to Universal in return for Universal’s promise to attempt to sell the product and make it profitable.
Instead, they charged, Universal suppressed the technology in favor of its own products.
The jury found Universal not guilty of the antitrust claims but said it was guilty of breach of contract and of fraudulently inducing the two businessmen to sell the license. Under a renegotiated agreement with Universal, they have since been allowed to license the patent to Motorola.
MagneTek, which had 1989 sales of $962 million, bought Universal for $72 million from Northwest Industries, now Fruit of the Loom. At the time, according to MagneTek spokesman Robert W. Murray, Fruit of the Loom agreed to cover any costs that might stem from the lawsuit.
However, Murray noted that Fruit of the Loom is contesting that it agreed to compensate MagneTek for such damages. Those suits are being considered by courts in California and Illinois.
Executives at Fruit of the Loom could not be reached.
Alling, who said he is a former aerospace executive, said in a telephone interview that the case “really stirred up a rat’s nest” by dealing with the unusual issue of product suppression.
A spokeswoman for Stevens’ San Francisco attorney, Eugene Crew, said Stevens also invented a computerized traffic control system now in place in many U.S. towns.
