Charges fly in five-way fight over TAWS patents

 - May 6, 2008, 9:28 AM

Makers of terrain awareness and warning systems (TAWS)–mandated safety avionics that the FAA says must be installed in most turbine-powered airplanes by March 2005–have started to fight back against a Honeywell lawsuit alleging infringement of patents relating to the original TAWS: the Phoenix company’s Enhanced Ground Proximity Warning System (EGPWS).

Tucson, Ariz.-based Universal Avionics, a Honeywell competitor and one of four defendants embroiled in the lawsuit, last month lodged a counterclaim against its cross-state rival, accusing the avionics and engines giant of “customer intimidation” and “sham lobbying” of the FAA and European Commission. It is a move that has provoked “dismay” at Honeywell, where officials call the counter legal action nothing more than a “groundless attempt” to avoid the central argument presented in its original patent lawsuit.

Universal filed the counterclaim in the U.S. District Court in Delaware on the eve of last month’s NBAA Convention, held September 10 to 12 in Orlando, Fla. In the complaint, the privately held avionics developer, best known for its line of FMS equipment, alleges that Honeywell is “attempting to monopolize” the market for TAWS with its patent lawsuits, filed separately on May 10 and August 6, also in the U.S. District Court in Delaware.

Universal’s attorneys also allege that Honeywell has interfered with the company’s “business expectancies” and has engaged in “unfair competition under state law.” The claim seeks treble damages against Honeywell under the Sherman Antitrust Act, as well as unspecified compensatory and punitive damages.

Honeywell filed its patent infringement lawsuits against TAWS makers Universal, Sandel Avionics, Goodrich and Aviation Communications & Surveillance Systems (ACSS–the joint venture between L-3 Communications and Thales Avionics). The company is seeking damages from the competing TAWS manufacturers while also asking that its rivals be “permanently enjoined” from selling their TAWS products.

Sham Lobbying?

In a statement issued at the NBAA show, Universal accused Honeywell of taking legal action “in bad faith, knowing that its patents are invalid.” It also accused the aerospace giant of engaging in “sham lobbying of the Federal Aviation Administration and European Commission, in that Honeywell failed to disclose to those agencies either the existence of its pending patents and/or its intent to enforce them at the time those agencies were making critical decisions affecting the TAWS market.” Universal concluded that Honeywell has been “intimidating” its customers and “engaging in patent misuse.”

In a statement issued after the details of Universal’s claim were made public, Honeywell countered that the assertions in the case were “merely baseless attempts to evade the central issues in our patent infringement lawsuit.” It continued: “Honeywell thoroughly investigated the validity of each of the five patents cited in our lawsuit[s] and is confident they are valid. We have also evaluated Universal’s product and feel similarly confident that those products infringe on our patents. Honeywell Aerospace has spent millions of dollars to develop its EGPWS, which has saved thousands of lives since 1996. The patents at issue in Honeywell’s lawsuit protect [the] proprietary technology [that resulted] from that investment.”

The four companies targeted by Honeywell for legal action are the main competitors to EGPWS, the TAWS product introduced by AlliedSignal in 1996, before its 1999 merger with Honeywell.

A Honeywell attorney said that the five patents (each 165 to 180 pages long) cover myriad details that would be exemplified by the mathematical algorithms that enable EGPWS to calculate the distance between aircraft and terrain and the precise evasive action that pilots need to take to avoid collision. “People are welcome to compete,” he said, “but they can’t use our intellectual property.”

A Patent Battle

Universal founder Hubert Naimer told AIN he and his attorneys have closely reviewed the patents at issue in Honeywell’s lawsuit and have concluded claims in the lawsuit are not valid. He called the lawsuit a “tactic” designed to “intimidate our customers” as the market for TAWS heats up, an assertion that Honeywell officials strongly refute.

Honeywell also denies that it is seeking to force its rivals to take their TAWS products off the market. Instead, a Honeywell spokesman last month said that the company seeks only to prevent other companies from using its patented EGPWS technology. Naimer said he takes particular umbrage with this statement, going as far as to call it an outright falsehood.

The European Commission had to give its blessing to the Honeywell-AlliedSignal merger in 1999, and did so on the condition that sufficient competition was preserved in the avionics market. The EC specifically named EGPWS and TAWS in its list of requirements. At the time Honeywell lawyers told the EC that its EGPWS would have no fewer than five competitors.

Naimer also said that from the outset, when he first learned of Honeywell’s lawsuit last spring, he instructed his lawyers to get tough with Honeywell.

“I told them, ‘Defense is for the birds. We’re going to attack,’” he said.

It was not clear at press time whether other defendants were preparing legal maneuvers similar to the one launched by Universal, but analysts said anything appeared possible.

Brett Pogany, director of investment banking with Westport, Conn.-based financial advisors First Equity, which now has business connections with Sandel, said that although Universal so far is the only company publicly to announce a counterclaim, further such reprisals from other companies named in Honeywell’s lawsuits are likely in the works.

Sandel product marketing director Gregory Wilson told AIN last month that the Vista, Calif. firm would make no public comment on either of the cases. In its October issue, however, Flying magazine attributed Sandel president and CEO Gerry Block with saying that Honeywell’s lawsuit could create a “monopoly” in the TAWS market. A spokeswoman for Charlotte, N.C.-based Goodrich, meanwhile, said that its lawyers have advised it not to “comment on pending litigation.”

An ACSS spokesman said the company “will vigorously defend ourselves from these groundless accusations.” Honeywell sued ACSS on August 6–almost three months after the initial court action. Its T2CAS system combines both traffic and terrain avoidance capability (TAWS and TCAS) and is claimed by ACSS to be more advanced than the rival TAWS systems from Honeywell and the other competitors.

Pogany, meanwhile, publicly endorsed concerns expressed privately by companies embroiled in the case, saying that Honeywell is using the legal action as a marketing tactic to scupper its competitors in the TAWS market. He predicted that Honeywell will “drag out” the case through the TAWS installation mandate in 2005 in a bid to deter operators from ordering its competitors’ products.

Senior executives at firms being sued by Honeywell have made the same charge, but have felt obligated to speak on a “not for attribution” basis on advice from their attorneys. Several company representatives told AIN during the NBAA Convention that once their legal defense cases are fully prepared, they intend to launch hostile public-relations counter-offensives against Honeywell in the marketplace.

U.S. antitrust officials appointed First Equity as trustee to oversee Honeywell’s merger with AlliedSignal. This was the first time a private company had been given this role and its main responsibility was to handle the divestiture of competing subsidiary operations within the two companies, including Honeywell’s TCAS 2000 product, which was bought by L-