Trial on Damage Part of Smith Suit to Begin

The inventor of a rock drilling bit that is at the center of a 13-year-old patent infringement battle between Hughes Tool and Smith International stood in a Los Angeles federal courtroom Monday, surrounded by bookshelves and boxes filled with hundreds of volumes of documents.

“It’s been a long time getting here,” said Ed Galle, vice president of engineering and research for Houston-based Hughes Tool.

A trial on the damage portion of the lengthy patent controversy is scheduled to begin Thursday in U.S. District Court in Los Angeles.

Hughes is seeking $1.2 billion in damages, but the exact amount that Smith must pay will be decided by U.S. District Judge Harry L. Hupp.

A federal appeals court previously overturned a District Court decision favoring Smith and ruled that the Newport Beach company had infringed on the Hughes drill bit patent.

“The basic question at this point is the worth of this particular invention and how much it has been used,” said Richard J. Stone, Smith’s attorney. “They (Hughes) claim this rubber ring is worth $1.2 billion, and we say we don’t think so.” The precise use and design of the rubber seal on Smith’s drill bit was the focal point of the infringement suit.

Smith, which set aside a $22.8-million reserve fund in June to cover at least some of the potential damage award, has prepared several scenarios estimating damages ranging from $22.8 million to $62 million. Smith based its estimates on the sale of 460,640 rock bits that it sold between 1971 and the end of 1984. The bit sales generated about $1.3 billion in net revenue, according to court records filed by Smith.

Hughes’ Galle said Smith initiated the patent fight by sending Hughes a letter saying the company believed that Hughes’ patent on a particular type of rock bit had expired and that Smith planned to begin making its own version. “Then they filed suit” to get the patent declared invalid, Galle said. A volley of countersuits and appeals followed.

The complex case has dragged on for more than a decade in various federal courts in California. Galle declined to comment on what took so long to reach the trial stage.

Hupp, in shirt sleeves, warmly greeted the attorneys for both sides when they arrived in court Monday to work out what Smith’s attorney described as “housekeeping matters.”

The judge, who will preside over the non-jury trial, has handled the case for about two years. About a dozen witnesses are expected to testify in the trial, which is scheduled to last about 18 days.

“You couldn’t ask for a better judge,” Galle said with a smile.

Dorsey Baker, an attorney for Hughes, said the Smith case is not the longest case Hughes has been involved in.

“One case went on for 20 years and never went to trial,” Baker said.