Tiny Firm Wins Case vs. Rockwell

After wilting into near extinction during a prolonged legal battle, a tiny Newport Beach firm cleared its last hurdle Tuesday and will receive $57 million from Rockwell International Corp.

The U.S. Supreme Court turned down Rockwell’s final appeal without comment, paving the way for Celeritas Technologies Inc. to collect the money.

Two years ago, a jury found that Rockwell infringed on Celeritas’ patents, stole the company’s trade secrets and violated a nondisclosure agreement in using a technology that speeds data transmission over cellular telephones and modems.

A judge eventually awarded the company more than $57 million, although after interest is added, the company will receive about $64 million from Rockwell, Celeritas’ attorneys said. Celeritas, a privately held two-employee company, had already received $6 million in settling a near-identical lawsuit against AT&T; Corp. in 1995.

“We had tried very hard all along to settle with Rockwell,” said Frederick Lorig, an attorney for Celeritas. “When AT&T; settled, we really thought that Rockwell would as well. We thought that it was very obvious from Day One.”

Rockwell officials had little to say about the matter.

“This is old news,” said Rockwell Chief Financial Officer Mike Barnes during a conference call with financial analysts after the company had reported its earnings. “We’ve already reserved the money to pay the judgment.”

Lorig said Celeritas had not yet decided what to do with the money.

The company, which at its height had only six employees, had presented its technology to Rockwell in 1993, with the understanding that Rockwell would not use or disclose the information without licensing it. Rockwell, which then controlled more than 70% of the cellular analog modem market, used the technology anyway, Celeritas claimed in its suit.

Rockwell argued that Celeritas had not developed the technology, that it was already in the public domain, and that Celeritas’ patents had been improperly issued.

During the trial, Rockwell officials chose not to testify, and Celeritas attorneys used videotaped depositions of high-ranking Rockwell executives, including Dwight Decker, who was then president of the company’s semiconductor division and is now chief executive of the Rockwell spinoff Conexant Systems Inc.

Just as in the current lawsuit between Microsoft Corp. and the Justice Department, Celeritas attorneys would show a videotape snippet on a 60-inch television, pause the video, and then, on the same screen and with the executive’s image still up, show documents contradicting that testimony.

“It’s not just words, it’s visual, and it changes the trial from being merely a verbal procedure to a very visual one,” Lorig said.

Both Celeritas’ chief executive, Glenn Ray, and vice president of research and development, Michael Dolan, declined to comment directly on the lawsuit.

Since the trial began, the company has been all but dormant, Lorig said, with the lawsuit taking up most of the company’s time and effort.

Money from the lawsuit will go to the company and its investors, although the company’s future is unclear.

It does not anticipate any future revenue from licensing its technology, and Lorig could not say what technologies or products the company plans to offer now.