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20. Pending Application Royalties

  1. After issuance of the ENIAC patent in 1964 and a demand by ISD for royalties, H and SR discussed a possible cross license of their respective patent portfolios.
    1. After the issuance of the ENIAC patent in 1964, Honeywell and SR, at Honeywell's request, discussed a possible cross-license of the EDP patents.
      1. In October, 1964, ISD requested a meeting with representatives of Honeywell to discuss a license under the ENIAC patent; there has never been an EDP patent cross-license or know-how exchange between Honeywell and SR.
      2. No such patent cross-license ever ensued.
    2. Also in October, 1964, SR sent Honeywell a notice of infringement of two additional SR EDP Patents Nos. 2,625,607 and 2,686,100 (EM Nos. 2 and 2A).
    3. In December, 1964, Honeywell requested a specification of the ENIAC claims believed to apply to Honeywell EDP equipment and indicated that any meetings to discuss licenses under the ENIAC patent would have to be arranged so that both SR and ISD representatives were present.
    4. In May, 1965, SR inquired of Honeywell as to when a meeting with SR and ISD could be arranged but protested that the matters to be considered by Honeywell and SR were entirely separate from the matters to be considered by Honeywell and ISD.
    5. In June, 1965, SR sent Honeywell a notice of infringement of two additional SR EDP Patents Nos. 3,189,290 (EM No. 19A) and 3,189,291.
    6. On July 21, 1965, representatives of SR and ISD asserted that the ENIAC patent claims covered entire data processing systems and submitted to Honeywell a draft of an ENIAC license agreement which provided for a royalty of 1-1/2% of the net amount of the selling price or rental value of the equipment covered by the ENIAC patent.
    7. The draft license agreement also included a clause under which Honeywell was to agree to admit validity of the ENIAC patent and agree not to question or attack it.
    8. Also during the July, 1965 meeting, SR demanded that Honeywell make an initial royalty payment as a prerequisite to any agreement to account for alleged past infringement of the ENIAC patent and estimated that Honeywell's liability during the life of the patent would be in excess of $200,000,000.
    9. SR also stated at the July meeting that it had studied the issue of excluded coinventors to the ENIAC patent four or five times and that it felt safe on the public use question since it had been litigated successfully.
    10. During the July, 1965 meeting, SR gave Honeywell notices of infringement of two additional SR EDP 30A Patents Nos. 2,629,827 and 2,915,966 (EM Nos. 1 and 55C).
    11. In December, 1965, Honeywell informed ISD that it would only deal with SR on a unified basis regarding all patents of both corporations rather than dealing with ISD alone for rights under the ENIAC patent.
    12. At a later meeting in January, 1967, SR representatives informed Honeywell that SR had evaluated its patent portfolio including the ENIAC patent and concluded SR's portfolio was more valuable than Honeywell's; in view of this, SR demanded a royalty of 1-1/2% of all EDP sales to enter into a total cross-license including the 30A Patents and applications.
    13. During the January, 1967 meeting, SR indicated to Honeywell that it would accept a lump sum settlement with Honeywell paying SR $1,250,000 annually for fifteen years [$18,750,000] plus settlement for past liability.
    14. During the January, 1967 meeting, Honeywell stated its belief that the royalty arrangement between IBM and SR was detrimental to Honeywell which was subject to a license on terms which carried a larger dollar amount that was reported to have been paid by IBM which had a much larger sales base.
    15. Honeywell informed SR that it believed the paid-up license offered by SR put Honeywell at an unfair and arguably unlawful disadvantage vis-à-vis both SR and IBM.
    16. During the January, 1967 ,meeting, SR informed Honeywell that its royalty position was nonnegotiable and that any further meetings, including meetings between top management, would not particularly helpful.
    17. On May 26, 1967, ISD sued Honeywell and Honeywell sued SR/
    18. Throughout the license negotiations with Honeywell, SR never indicated that it was willing to grant Honeywell access to any EDP know-how nor did it reveal that IBM and SR had already shared their entire EDP technology.
  2. Honeywell claims that the demands of SR included pre-issuance royalties for the BINAC and UNIVAC, and claims that such demands constitute further violations of the antitrust laws.
  3. I find that SR did not make such demands and if made do not violate the antitrust laws.
    1. Honeywell has not proven that SR either specifically demanded or actually received from Honeywell or anyone else any royalties on its pending BINAC and UNIVAC I patent applications, or any other 30A patent applications.
  4. Plaintiff has not proven injury.

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