Irvine Firm May Get $57 Million in Rockwell Suit

A federal jury has ruled that Rockwell International Corp. should pay more than $57 million to a tiny Irvine company that had accused the high-tech giant of stealing technology used in computer modems.

The verdict was a huge victory for Celeritas Technologies, a two-person firm that collected $6 million nearly a year ago when it settled a similar suit it had filed against AT&T; Corp.

The suits against Rockwell and AT&T; both centered on a technology patented by Celeritas that speeds up the transmission of faxes, e-mail and other computerized data over cellular telephone networks. Such technology has become increasingly important as more people send and receive data from cars and other locations beyond the reach of standard phone lines.

Celeritas had accused Seal Beach-based Rockwell--which supplies chips used in 70% of the world’s modems--of patent infringement, breach of contract and misappropriation of trade secrets. The verdict was delivered Dec. 20 in U.S. District Court in Los Angeles.

“This is exactly what we asked for,” said Pat Bright, an attorney with Bright & Lorig, a Los Angeles law firm that represented Celeritas in the case.

The $57-million verdict reflected the amount of money jurors believed Celeritas would have collected from Rockwell under a licensing agreement, Celeritas officials said. Judge Edward Rafeedie, who presided over the case, is expected to enter a final judgment in the next few weeks.

Rockwell attorneys said they plan to appeal the verdict if they cannot persuade Judge Rafeedie to reverse the jurors’ decision.

The verdict “is decidedly misguided, based on a series of errors, one compounding another,” said James O’Shaughnessy, a Rockwell attorney.

Both companies acknowledge that Celeritas had presented the technology to Rockwell officials in 1993. But the two sides disagree on what happened afterward.

“We had gone to them with the technology,” said Michael Dolan, the Celeritas researcher who says he invented the technology. “They tested it, told us to jump in a lake, and put it in their chip sets anyway.”

Rockwell officials argued that the technology used in the company’s modems was not the intellectual property of Celeritas, but was widely known and in the public domain.

Details of the technology “had been published by another company, and AT&T; itself had used the same basic technology in their products,” O’Shaughnessy said. “Celeritas had reinvented the wheel.”

Celeritas’ patent “is not valid,” O’Shaughnessy said. “The U.S. Patent Office did not have the details of these prior inventions by other people.”

Glenn Ray, president of Celeritas, said the company had to lay off one employee and turn to consulting work to stay afloat while battling Rockwell in court. “The company’s growth plans were stymied,” he said.

Rockwell dominates the market for computer modems, but Celeritas has licensed its technology to a number of telecommunications companies, including Toshiba, IBM and AT&T;, Ray said.