L.A. Jury Orders Honeywell to Pay $234 Million to Litton Industries

A federal jury in Los Angeles late Thursday ordered Honeywell Inc. to pay $234 million in damages to Litton Industries Inc. for monopolizing the market for a product used in guiding commercial jetliners--a sum that would automatically be tripled to $702 million under U.S. antitrust law.

Honeywell, saying it was “surprised and extremely disappointed” by the jury’s verdict, said it would immediately appeal the decision. Litton spokesman Robert Knapp declined to comment, as did Honeywell’s outside lawyer on the case, Robert E. Cooper.

The jury’s decision came after the panel deliberated for 19 days following an 11-week trial.

The award by the nine-member jury was the second big victory for Woodland Hills-based Litton in a dispute that included a separate, historic claim by Litton that Honeywell infringed its patent on Litton’s version of the product, called a ring laser gyroscope.

In that case, a Los Angeles jury in 1993 awarded Litton $1.2 billion in damages, the largest patent-infringement victory ever. But the judge in the case, U.S. District Judge Mariana R. Pfaelzer, later nullified the award, and Litton is now appealing to get it back. Pfaelzer also presided over the antitrust case.

In the latter case, Litton argued that Honeywell took steps to unlawfully exclude Litton from competing in the commercial market for the gyroscopes. But Honeywell denied the claims and argued that it dominates the market fairly, in good part because it pioneered the gyroscope’s technology.

“Honeywell is a fair and lawful competitor,” Edward D. Grayson, general counsel of Minneapolis-based Honeywell, said in a statement. “This case is yet another transparent effort on Litton’s part to recoup in the courtroom what it wasn’t able to achieve in the marketplace.”

The ring laser gyroscope, housed in a nondescript box inside the aircraft, costs about $75,000 and uses mirrors, sensors and other components to help a pilot track an airplane’s position, speed and attitude. Many jetliners carry three gyroscopes to provide backup in the event of failure.

In court documents, Litton argued that Honeywell has a whopping 90% of the commercial market for such gyroscopes, and that it “relentlessly pursued a monopolistic scheme to retain that dominance” by unlawfully trying to keep Litton’s product out of airlines’ hands.

Litton maintained that Honeywell excluded Litton mainly by signing contracts with aircraft makers that made Honeywell their exclusive supplier for the gyroscopes, then “enforced its exclusive arrangements” by imposing “onerous financial penalties” if the manufacturers bought Litton’s product--penalties that would have been passed on to the airlines.

Honeywell thus “denied the airlines the freedom of choice,” restrained competition and “saddled them with higher prices,” Litton’s court papers contended.

But Honeywell asserted that it pioneered the gyroscopes before Litton jumped into the market, giving Honeywell the competitive lead to capture most of the market.

Honeywell also maintained that its product was more reliable and otherwise of better quality than Litton’s, which earned Honeywell a bigger market share.