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Jury awards Litton $1.2 billion in patent suit against Honeywell

By DAVE McNARY UPI Business Writer

LOS ANGELES -- A federal jury awarded Tuesday a $1.2 billion verdict to Litton Industries Inc. against Honeywell Inc. in a patent infringement lawsuit involving gyroscopes used on airplanes.

Minneapolis-based Honeywell said it will appeal the verdict.

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The jury, which began deliberations on Aug. 23, decided that Honeywell's infringement of Litton's patent either deprived it or will deprive it of $830 million of profits between Aug. 31, 1989 and March 6, 1996 -- the expiration date of Litton's patent. It also awarded Litton another $360 million in projected lost profits following the patent expiration.

Edward D. Grayson, Honeywell vice president and general counsel, said he was 'outraged' at the size of the verdict, which came following an 11-week trial in U.S. District Court in Los Angeles.

Grayson said Judge Mariana R. Pfaelzer, who presided over the trial, may reduce or eliminate the award. Pfaelzer is expected to conduct a hearing shortly on Honeywell's allegations that Litton's patent was improperly obtained due to Litton's conduct.

Grayson also said that Pfaelzer will probably enter a final judgment within a month or two.

'The case is far from over at this point,' Grayson said. 'There are a multitude of issues before the judge.'

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The case concerns a thin-film process to coat mirrors used in ring laser gyroscopes, a device used for aircraft navigation in virtually all major commercial and military aircraft. Honeywell and Litton are the two major suppliers of the devices.

'No one has won or lost at this point,' Grayson said. 'Today's verdict is only one stage of this trial, and Honeywell believes it will have no independent value.'

'We are disappointed and outraged by the jury's findings and believe the decision is unsupported by the facts,' Grayson said. 'We continue to believe that Litton's patent is invalid and that Honeywell's process differs from Litton's.'

The jury found Honeywell intentionally induced Litton licensee Anthony Louderback of Ojai Research to breach his agreement with Litton. The panel also found Honeywell interfered with Litton's prospective economic advantage.

The Litton agreement with Louderback, co-inventor of the thin-film process to coat the gyroscope mirrors, and Ojai Research provided that the process could not be licensed to other companies in two areas in which Litton faced competition -- airplane inertial systems and high- powered lasers.

Litton, of Beverly Hills, Calif., issued a brief statement applauding the verdict.

'We have invested significant funds in the development and production of this Litton technology which the company has every intention to protect,' said Norman L. Roberts, Litton's senior vice president and general counsel. 'We believe that the jury's verdict was clearly justified by the facts presented in the litigation.'

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Honeywell said it will appeal any significant judgment against it. It also said there are several bases upon which the jury's verdict could be overturned.

The lawsuit, filed by Litton in March 1990, alleged patent infringement and violations of antitrust laws by Honeywell in the markets for ring laser gyroscopes.

In December 1990, Honeywell filed a counterclaim against Litton alleging that Litton attempted to monopolized the market for inertial systems and had interfered with Honeywell's relationship with suppliers.

No trial has yet been set for the antitrust parts of the suit and counterclaims.

'Honeywell is a creator of technology and a defender of intellectual property,' said D. Larry Moore, Honeywell president and chief operating officer. 'Litton's lawsuit is an attempt to recover in the court room what it couldn't in the competitive marketplace.'

Litton obtained its original patent on the mirror process in 1979 and was reissued the patent in 1989.

Honeywell's attorneys argued that the reissued Litton patent was not valid and that Honeywell's processes in producing its gyroscopes differed significantly from Litton's. Grayson said Honeywell's patents were not an issue in the case.

Grayson said that no meaningful settlement discussions have taken place since Litton filed the suit three years ago because of the large differences in positions between the two companies.

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'The gulf between the parties was very wide,' Grayson said. 'Litton has been arguing all along that it would have obtained all the gyroscope business if not for Honywell's alleged infringement.'

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