Inventor Takes On the U.S. Auto Industry
LAS VEGAS -- The U.S. auto industry denounced Jerome Lemelson’s $100-million settlement with Japanese automakers, whom he had accused of infringing on his patent for machine vision -- a breakthrough that helped enable an assembly line of robots.
But the Japanese couldn’t risk a trial. If they had lost, they could have been barred from exporting cars to the United States.
“You weigh your risks,” said Frederick Michaud, a patent lawyer who represented the Japanese automakers. “That is the difficulty with all patent litigation. How much is it going to cost to get out of it?”
Now, the focus turned on American automakers. They considered Lemelson and his attorney, Gerald Hosier, nothing more than predators.
“Ford, GM and Chrysler and Motorola desperately wanted to stop that trend, to stop the flow of money to Lemelson before it got started,” Hosier said. “They didn’t want to see me get money to fight them.”
While battling the Japanese, Hosier had also started sending form letters to hundreds of companies in 1989, accusing them of infringing Lemelson’s machine vision and bar code patents. It was, said Hosier, the single-greatest patent licensing campaign by an individual in history.
Many, such as Cognex in Natick, Mass., the world’s largest maker of machine vision, ignored the letters initially, thinking Lemelson’s claims were baseless.
But Hosier soon wrapped up other deals worth $350 million. Forbes declared him one of the highest-paid lawyers in the country and The American Lawyer put him on the cover.
The money didn’t change Lemelson, said Robert Lemelson, his son. He still drove that old Mercury Marquis and wore the same ratty wool sweater.
“He was intensely frugal,” the son said.
With the licensing campaign in full swing, Hosier and Lemelson decided not to go after the smaller companies that produced the equipment, such as Cognex or Symbol Technologies, of Holtsville, N.Y., which made the bar code scanner.
Instead, they focused on the large corporations with deep pockets, customers of Cognex and Symbol that made use of the technology.
Getting them to pay, Hosier said, was based on a simple premise.
“This business is not based on what’s right or what’s wrong,” Hosier said. “It’s based on fear. Nobody would pay you for a patent unless they feared that the consequences of not paying you vastly exceeded the consequences of paying.”
Not everyone relented. Ford, Chrysler, General Motors and Motorola thought Lemelson had to be stopped and filed suit in September 1992.
Other Fortune 500 titans also joined the fight. Mitsubishi Electric Corp. and Mitsubishi Electronic America Inc. struck back in a February 1993 lawsuit.
“When his applications are questioned by the patent examiners, as they often are, Lemelson delays, continues, retracts, supersedes, redrafts and churns the applications,” Mitsubishi alleged. He “has become adept at fraudulently manipulating the ... patent application process and the overworked or inexperienced patent examiners to cause various patents to wrongfully issue to him.”
These accusations stuck to Lemelson for the rest of his life. Still, despite his family’s pleas, Lemelson carried on. He thought he was right and did not fear any court’s verdict.
But Hosier saw it differently. Even if he didn’t let on, Hosier knew he was in trouble. If these behemoths pooled their resources they could drown his small team of lawyers. The legal costs were unthinkable, the paperwork unimaginable.
Something had to be done. One of Hosier’s must trusted associates, Steve Lisa, persuaded GM to sit out the litigation after a craps game one night in Reno, Nev.
Chrysler later snapped up the same deal.
The ramifications were enormous. It meant Hosier would only face Ford at trial. GM and Chrysler would save millions of dollars in legal fees and let Ford do all the work.
“It was what enabled us to continue on,” Lisa said. “It enabled us to go toe-to-toe with the staff we had.”
Ford soon found itself isolated. Motorola settled in 1994. Mitsubishi bailed out the next year and handed over another royalty check to Hosier.
But Ford pressed forward, asking a federal court in Nevada for an immediate judgment, and the company scored a huge victory in June 1995.
“Lemelson’s use of continuing applications has been abusive and he should be barred from enforcing his asserted patent rights,” U.S. Magistrate Judge Phyllis H. Atkins wrote.
Her opinion wasn’t a ruling, merely a recommendation to U.S. District Judge Lloyd D. George in Las Vegas, who was responsible for making the decision. It appeared George would side with Ford.
Lemelson, who had by then been diagnosed with cancer, lectured about tangling with Ford. He seemed somber and tired, almost frail. He spoke softly.
The car companies had put Lemelson through the wringer, subjecting him to hundreds of hours -- 60-odd days -- of brutal depositions. “I just hope no other inventor has to go through what I went through with these people,” he said on April 8, 1996.
A week later, George accepted Atkins’ conclusions and effectively eliminated all the machine vision and bar code patents.
The Lemelson freight train had been derailed. “A dark chapter in the history of the American patent system” had come to a close, said Roger May, Ford’s lawyer.
But then, a final twist.
A year later, George reversed his own decision. He ruled in Lemelson’s favor on April 28, 1997, stunning Ford and the patent world.
Lemelson, in his hospital bed, raised an emaciated arm in victory. He died on Oct. 1, 1997, convinced his reputation as an inventor was secure.
“I think you will find his legend will grow,” Hosier said at Lemelson’s memorial service. “I predict he will be recognized as one of the greatest minds of the 20th century and of all time.”
But Robert Shillman vehemently disagreed. Head of the machine vision company that Lemelson’s legal juggernaut had ignored in favor of bigger fish, Shillman had had enough of the great inventor.
Crediting Lemelson with machine vision is like “saying Jules Verne invented space travel,” he said. “For Lemelson to get the credit for inventing machine vision and, to add insult to injury, to sue people for using our machine vision is just too bitter a pill to swallow.
“We ain’t swallowing that pill. We invented machine vision.”
And so, he went after Lemelson’s ghost.
The Story So Far
Was he one of the great American inventors -- the first to imagine the bar code scanner and a robot assembly line? Or was he a fraud with a clever lawyer who abused the patent system? Either way, Jerome Lemelson ended up a wealthy man, with more than 600 patents and a $100-million settlement with Japanese automakers.
Next week: One man says no.