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Indiana inventors tell Maurer students about challenging big business in federal court

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Speaking recently to a group of students at Indiana University Maurer School of Law, Lebanon inventor Larry Durkos and his son, Duane, told their story of battling the biggest giant in the bedding industry and winning.

The pair filed a patent infringement lawsuit against Missouri-based Leggett & Platt over a stapling machine invented by Larry Durkos. Their success hinged on two key elements: Durkos had the skill to write solid patents, and they had the luck of finding a law firm willing to take the case on contingency.

mattress-ibj-062413-15col.jpg Duane Durkos (left) and his father, Larry, put their business venture on hold and gave money back to investors while they pursued a patent infringement lawsuit against an industry giant. (IBJ File Photo)

“The process is good,” Durkos said, referring to the patent system. “In our case, it saved our lives. If we hadn’t had the patent, we would have been stepped on by Leggett & Platt and been a little grease spot in Boone County.”

Introducing the pair to the students, Mark Janis, director of the Center for Intellectual Property Research at Maurer, said the Durkoses’ story illustrates the way the patent system is supposed to work. When an inventor puts money and sweat behind a product and a company tries to rip off the idea, the patent provides protection.

“It really does show you,” Janis told the students, “how the work you do can make a difference.”

Writing the patents

The elder Durkos got the idea for the stapling machine while he and his wife were touring a bedding factory. When he saw the workers attaching the springs to the wood by hand, he immediately envisioned an automated device.

This is typical for Durkos. He described himself as right-brained and often having pictures of new inventions pop into his mind.

“That has been my whole life,” he said. “I have created things that people like.”

The first patent, from Durkos’ company Imaginal Systematic LLC, was issued for a stapler that was quite sophisticated and included a camera and trainable software. The stapler head would maneuver down through the twisted, zigzag-shaped wire springs and punch the staple into the targeted spot.

A short time later, Durkos noticed the box-spring market was changing. Bedding companies were trending toward the Leggett & Platt wire framework that straightened out the springs and molded them into a more angular configuration.

He realized he had to redesign the staple machine and secure new patents. The next device was actually less sophisticated than the original. Instead of a camera that could rotate, Durkos designed mechanical guides that gripped the wire and moved the stapler head into the proper location.

That guidance mechanism won the patent infringement case. As Imaginal Systematic’s attorney explained to the Federal Circuit Court of Appeals, without that component the entire machine would be worthless because the stapler would not be able to get into the right position.

When the time came to file the patents, Durkos picked up the phone and called his son’s former high school classmate, Tim Niednagel, partner at Faegre Baker Daniels LLP. After all, Durkos was the one who told Niednagel to become a patent attorney.

In the mid-1980s, Durkos was demonstrating his newest invention of a small, portable computer that was much like the laptops which came to market later. He invited Niednagel, then a senior electrical engineering major at Purdue University, to the presentation and afterward advised the young man to go into law.

Writing the patent application is a collaborative process between Durkos and Niednagel. The inventor researches and writes very detailed narratives while the attorney reviews the drafts and suggests revisions.

The day-to-day work would be “a lot more rewarding if there were a lot more clients like Larry,” Niednagel said.

Ironically, Durkos and his son approached Leggett & Platt just as they started work on the first stapling machine in the mid-1990s, asking if the company wanted to be a partner. The bed maker flatly replied it was impossible to invent such a device.

However, when the Durkoses unveiled the equipment at a trade show in 2002, Duane Durkos told the Maurer students, groups of Leggett & Platt representatives constantly walked around the display.

Later, the pair was in a factory in West Virginia and they saw Leggett & Platt’s new stapling machine that looked and functioned a lot like the one Larry Durkos had invented and patented.

Fighting the infringement

At that time, the patents on the second machine had not been issued and, Duane Durkos acknowledged, they were uncertain if Leggett & Platt was infringing. However, he started searching the Internet for a patent litigator.

When he stumbled across Electronics for Imaging Inc., a company that had won a patent lawsuit against Leggett & Platt, he called the general counsel and got the name of the attorney who represented EFI.

Eventually, Steve Hanle, partner at Sheppard Mullin Richter & Hampton LLP, took Imaginal Systematic as a client.

Very few patent infringement lawsuits go to court, according to Don Knebel, partner at Barnes & Thornburg LLP and senior adviser to the Center for Intellectual Property Research at IU Maurer. To litigate a patent dispute, each side must have at least $2 million to cover expenses and have attorneys who can explain complicated technology in terms that the average juror can understand.

Larry and Duane Durkos likely would not have had the funds to take the case to court. When they approached their investors for $250,000 to cover attorney fees, they raised $5,000.

However, they were saved when the law firm agreed to litigate the dispute on contingency. Sheppard Mullin saw the potential to be able to recoup its expenses from the royalties that would flow to Imaginal Systematic for the remaining nine years of the patents.

“It is typical that a couple of guys from Boone County will not be able to file a patent case because they won’t have the money to pay,” Larry Durkos said.

The case moved to court and in January 2012, the U.S. District Court for the Central District of California found Leggett & Platt was, indeed, infringing on the patents of Imaginal Systematic.

A jury was then convened to determine the damages. Larry and Duane Durkos had to fly to Los Angeles and testify during the weeklong hearing.

They followed their attorney’s instruction and put on coats and ties for their court appearances. Knebel said that as a trial strategy, he would probably have kept the pair from wearing ties. He said less-formal dress would have shown the jury they are inventors and possibly convinced the jury to increase the damage amount.

In the end, the jury awarded $5 million to Imaginal Systematic.

With the decision upheld on appeal, the District judge is now determining the royalties. These ongoing payments will come not from the number of machines sold but rather from the savings realized per box spring by using the automated staplers.

Since Leggett & Platt has been willfully infringing since the January 2012 ruling, the judge now has the option of enhancing whatever the royalty amount will be.

Doing some figuring on a spreadsheet, Larry Durkos calculated the savings over the life of the patents would top $100 million.

So much for being a grease spot in Boone County.•

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