Hughes Patent Case Sent Back to Appeals Court

Hughes Aircraft Co. must go to court one more time to make its case that the federal government stole key technology for communications satellites and should have to pay a $114-million penalty.

The Supreme Court Monday ordered a federal appeals court to reconsider whether Hughes--which General Motors Corp. has agreed to sell to Raytheon--should win its patent-infringement claim in light of the high court’s unanimous ruling last month on another patent case.

The case--already more than a quarter-century old--is likely to drag on for several more months while the appeals court in the District of Columbia takes it up again. That court previously upheld a 1988 trial judge’s ruling that the government infringed on 81 patents for satellites worth a total of $3.5 billion and that it owed the Los Angeles-based aerospace company $114 million in royalties.

The latest twist in the soap-opera-style case came as little surprise to Hughes, spokesman Richard Dore said.

“We kind of anticipated this because the Supreme Court has been sending other patent suits back for review,” Dore said. The company still expects to prevail in the case because the District-based appeals court has already affirmed the judgment and the burden of proof now rests with the government.

The Department of Justice had no comment on the case, said spokeswoman Christine DiBartolo in Washington, D.C.

The claim revolves around a device invented in the early 1960s by Donald Williams, a brilliant Harvard-trained Hughes engineer. His simple, lightweight device made it possible to control a communications satellite anywhere in orbit with a single rocket thruster. The Air Force used Williams’ technology on military satellites.

Hughes had asked for $1.2 billion in damages, although attorneys in the case had at one time thought it was worth as much as $6 billion. Even though the $114-million award was significantly smaller, it was still the largest award ever against the federal government for a patent infringement case at the time.

More than $100 million of that award stems from the government’s use of a type of satellite that infringed on Williams’ patent under the “doctrine of equivalents,” which allows patent infringement lawsuits against an invention that is not identical to a patented product but is so similar that it performs the same functions in the same way with the same results.

Last month, the Supreme Court ruled that patent holders cannot win infringement suits by relying on broad overall similarities but must focus on specific inventions claimed as new in a patent application. Patent holders must undertake an “element-by-element” examination to show that a rival product contains equivalent items for those specific claims, the justices ruled.

If the appeals court finds that Hughes’ claim does not hold up under the more stringent rules, the majority of its award could be wiped away. The case is U.S. v. Hughes Aircraft Co., 96-1297.

General Motors’ Class H stock--which represents Hughes Aircraft parent Hughes Electronics--rose 50 cents to close at $53 on the New York Stock Exchange Monday.

Hughes also accused Ford Motor Co. of patent infringement, but the two companies settled out of court for $75 million in 1987.

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Bloomberg News contributed to this report.