Rockwell misappropriated technology article:
By FREDERICK ROSE
Staff Reporter of THE WALL STREET JOURNAL
LOS ANGELES -- Rockwell International Corp., hit by a $115.3 million judgment related to its fast-growing computer-semiconductor operations, said it will appeal the verdict handed down in a Los Angeles federal court.
The award to closely held Celeritas Technologies Ltd. followed a jury finding last month that Rockwell had breached patent protections and misappropriated trade secrets involving Celeritas's technology for computer-data transmission by cellular telephone.
In a strongly worded decision doubling the earlier jury award of $57.6 million against Rockwell, Judge Edward Rafeedie of the Central District of California told the court earlier this week that Rockwell's witnesses, presented on videotape, "looked like liars, hedgers." The judge described Rockwell's conduct as "somewhat egregious," adding he concluded "the intent was there from the beginning to misappropriate the technology."
A spokesman for Rockwell said the company "obviously disagrees with the judge's characterization." Rockwell declined to say whether it has to take one-time accounting reserves for prospective charges in the case.
Celeritas declined to comment.
At the heart of the case is complex technology that permits computers to communicate through cellular phones at speeds close to those possible on regular telephone circuits. Rockwell used it in many of its modem chips from early 1995 to the end of 1996, said James O'Shaughnessy, a Rockwell vice president and chief intellectual-property counsel. It was incorporated in low-power-consuming chips and is no longer used, he said.
Rockwell, the world's dominant maker of modem chips, contends that the technology was known in high-tech circles and was in the public domain. That assertion was rejected by the jury and by Judge Rafeedie, who told the court that "this case is one of the worst that I have ever heard in terms of the evidence presented."
According to both sides, Celeritas, Newport Beach, Calif., showed Rockwell engineers details of its technology in September 1993 under a nondisclosure agreement, more than a year before the technology was incorporated in Rockwell's circuitry. Celeritas was granted a patent on its design in January 1995. Rockwell, however, proceeded with its use of the technology without a royalty arrangement.
During the trial, Rockwell said officials in its semiconductor operations concluded, without legal advice, that the Celeritas technology was in the public domain. Rockwell later cited publications it said made clear that Celeritas wasn't the only source of the insight. But Judge Rafeedie said events described by Rockwell after the fact didn't seem to be in accord with the evidence.
Mr. O'Shaughnessy said computation of the damages is wrongly based on estimates of modem-chip sales from early 1995 and projections through the year 2000. "This is completely unprecedented," he said, adding that Rockwell will next week ask Judge Rafeedie to retry the damages portion of the case. Failing that, he said, Rockwell will appeal both the damage award and the substance of the case.
Celeritas has forcefully protected its technology. Lucent Technologies Inc.'s AT&T Paradyne division last year agreed to a royalty arrangement
with the company for a reported $6 million after Celeritas filed suit. Separately, Celeritas has signed licensing agreements with International Business Machines Corp. and Toshiba Corp.
Rockwell's semiconductor business has been a stellar performer among the operations left after the Seal Beach, Calif., company's recent $3.2 billion sale of its defense and aerospace operations to Boeing Co. Led by modem-chip results, semiconductor sales nearly doubled to $1.59 billion in the 1996 fiscal year, ended Sept. 30, providing $330 million in operating profit, or 26% of total operating results. |
