Honeywell V. Sperry Rand - Dispute Origins

Dispute Origins

The case was a combination of two separate lawsuits: one brought by Sperry Rand Corporation and its holding company Illinois Scientific Developments against Honeywell Corporation in Washington, D.C. charging Honeywell with patent infringement and demanding royalties, and a countersuit filed in Minneapolis, Minnesota by Honeywell charging Sperry Rand with monopoly and fraud and seeking the invalidation of the ENIAC patent, alleged to be infirm. Both suits were filed on May 26, 1967, with Honeywell filing just minutes earlier, a fact that would later have tremendous bearing on the case.

The trial was presided over by U.S. District Court Judge Earl R. Larson between June 1, 1971 and March 13, 1972 in Minneapolis, Minnesota, a jurisdiction decided when D.C. Circuit Chief Judge John Sirica ruled that Honeywell had won the May 26 race to file the suit in court. (Attorneys for Sperry Rand wanted the case to be tried in Washington, D.C., a district perceived to be friendlier to the rights of patentholders; by contrast, Honeywell was at the time the largest private employer in Minnesota.) The plaintiff's final 500-page brief in the case was filed September 30, 1972.

Chief among the disputes Honeywell v. Sperry Rand was to resolve were:

• The legality of a 1956 patent-sharing agreement between Sperry Rand and IBM (itself born out of patent litigation), which was contended to represent an illegal collusion in violation of antitrust laws.
• The enforceability and validity of the patent for the ENIAC filed by its inventors J. Presper Eckert and John W. Mauchly, a patent which by that time had come to be held by Sperry Rand Corporation through a series of corporate acquisitions and mergers. The patent on the ENIAC, U.S. Patent 3,120,606, application date June 26, 1947, issue date February 4, 1964, had been placed with a Sperry Rand subsidiary, Illinois Scientific Developments, newly created for the express purpose of marketing licenses for the newly issued patent. Because it was ostensibly the patent on the premiere electronic digital computer, Sperry Rand held that this patent entitled them to collect royalties on the sales of all electronic digital computers in what was by the late 1960s a rapidly expanding data processing industry, including Honeywell, Control Data, Burroughs, RCA, National Cash Register, General Electric, and Philco-Ford, and peripheral equipment manufacturers. (Illinois Scientific Developments demanded royalties of $250 million from Honeywell initially, a figure that was lowered to $20 million prior to the start of litigation, and $150 million altogether from the other listed firms.)
• The enforceability (but not the validity) of what was known as the 30A package of patents filed by Eckert and Mauchly and held by Sperry Rand, which included patents for a delay line memory system (U.S. Patent 2,629,827, applied for October 31, 1947 and issued in 1953) and a number of serial binary adders.
• Royalties (and damages, legal fees, court costs, etc.) owed Sperry Rand by Honeywell should their patents be found valid and enforceable.

With 135 days of oral courtroom testimony by 77 witnesses—and the presentation of the deposition of an additional 80 witnesses—for a total trial transcript of 20,667 pages, Honeywell v. Sperry Rand was at that time the longest trial in the history of the federal court system. It was preceded by six years of litigation that produced thousands of pages of under-oath depositions. 25,686 exhibits were marked by the court for plaintiff Honeywell; defendants Sperry Rand and its subsidiary Illinois Scientific Developments contributed 6,968 exhibits. The corporations on the two sides spent a combined more than $8 million pursuing the case. The resulting exhibits and testimony constitute a massive evidentiary record describing the invention and development of the electronic digital computer. Materials relevant to the case but not entered into evidence have appeared, but sparsely and infrequently, since the case's conclusion in 1973.

The computer played a major role in the prosecution of the case for plaintiff Honeywell. A computerized record of documents pertaining to the case, known as Electronic Legal Files (or ELF), allowed Honeywell attorneys to store, sort, recall, and print information on hundreds of different subjects.