Judge Throws Out $1.2-Billion Jury Award to Litton Industries : Aerospace: Woodland Hills firm says it will appeal federal ruling that finds Honeywell did not infringe patent.
A federal judge in Los Angeles threw out a jury verdict Monday that had ordered Honeywell Inc. to pay Litton Industries Inc. a record $1.2 billion for alleged patent infringement.
The award, the largest in U.S. patent history, evaporated because U.S. District Judge Mariana R. Pfaelzer declared Litton’s patent invalid after hearing additional evidence following the August, 1993, jury verdict.
The patent covered a Litton process for coating mirrors used in ring laser gyroscopes, which are components in guidance systems commonly found in commercial and military aircraft.
“It’s obviously a very good day for Honeywell,” said Edward D. Grayson, Honeywell’s general counsel. “The court’s decision is a clear and complete victory.”
Litton, a Woodland Hills-based producer of defense electronics and Navy ships, said it expects to appeal the case.
“We are disappointed that the judge disregarded the jury’s verdict,” John M. Leonis, Litton’s president and chief executive, said in a statement. “We will continue to pursue vigorously all available avenues of protecting our investment” in the technology, he said.
The judge’s ruling caught Wall Street by surprise, although there had already been speculation that after the case was reviewed, it “was unlikely that Litton would see” a check for the full $1.2 billion, said R. Jackson Blackstock, an analyst with Donaldson, Lufkin & Jenrette Inc. in New York.
Trading of both companies’ stocks was halted at mid-session on the New York Stock Exchange pending the announcement. After trading resumed less than an hour before the Big Board’s close, Litton’s stock surrendered an earlier gain and finished with a loss of $1.75 a share, to $36, while Honeywell surged $2.625 a share to $34.
Honeywell, a Minneapolis-based concern that also makes housing and industrial controls such as thermostats, had not set aside any cash for the Litton award, Grayson said, and the award’s reversal will not boost its profit.
Litton filed its suit in 1990, alleging that Honeywell adopted Litton’s patented process for coating mirrors inside the gyroscopes after it ran into problems with its own mirror technology. The gyroscopes use a system of mirrors and lasers to measure changes in an airplane’s movement.
Honeywell denied any wrongdoing, and “we didn’t believe the (Litton) patent was any good,” Grayson said.
Pfaelzer agreed, finding that Litton’s process was an invention that would have been “obvious” by combining existing processes. She also ruled that Litton obtained its patent by “inequitable conduct”--meaning Litton failed to disclose certain information to patent and trademark authorities, Honeywell said.
Grayson said Litton won the award because “the jury just failed to understand the complexity of the technology and the legal issues” related to patent law.
But Litton defended the jury and said Pfaelzer was “in error” in refusing to enter the verdict.
Besides Litton’s expected appeal of the patent ruling, Litton and Honeywell have separate claims before Pfaelzer in which they have accused each other of anti-competitive practices in the gyroscope market. The claims are expected to be heard late this year.
