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YAMAHA (NIPPON-GAKKI) (continued)
Just about this time, Hiroshi Kawakami, the son of President Genichi Kawakami, entered the conference room and began looking over the documents. He seemed angry; with a dramatic flourish, he took his pen and made a big “X” across the document, thus indicating his extreme disapproval. At this point, the meeting was approaching chaos; but again, things quieted down. After approximately an hour or so, we indeed had a rough document which was agreed to by the parties. The document was reflective of what was later to be converted into a formal document by the joint agreement of Allen and Yamaha attorneys. Things were now on an even keel and we were treated to a fine dinner prior to retiring for the evening.
Our patent business was now concluded. Therefore, I decided that I would take advantage of the fact that, in order to go back to the United States, a return to Tokyo was necessary. Realizing there were several hours of waiting involved, I decided that I would go to the U.S. Yokota Air Base near Tokyo where an Allen Organ had been installed in the main military chapel. The Yamaha people kindly provided me with one of their engineers who acted as a guide back to Tokyo and then to the Air Base where we had a very pleasant visit.
I believe that it was on Thursday morning, May 26, that I returned to my office to resume the various routine business matters at hand. My associates and I were certainly not ready for the bombshell being sent our way.
On June 2, 1977, by registered mail, we were served with a Complaint, Yamaha vs. Allen, in the form of a Motion for Declaratory Judgment asserting invalidity of at least one of the patents. The Complaint was approximately eighteen pages long; I was surprised that this formidable document had arrived so promptly after my return from Japan.
A “Declaratory Judgment” action, for those who are not familiar with the term, is a lawsuit initiated by someone who allegedly is threatened by a potential plaintiff. The purpose is to seize the initiative before the plaintiff acts. Of course, in this situation, we had no intention of filing a lawsuit since we thought that we had already settled the matter.
Consternation followed. However, we reacted quickly. Within the next few days we filed a countersuit charging Yamaha, among other things, with patent infringement and violation of antitrust laws.
As the summer of 1977 moved on, it became apparent that Yamaha really was not too anxious to pursue the litigation. Settlement discussions occurred after Yamaha switched lawyers, the case being taken over by a Japanese-American lawyer named Jun Mori. After this change, dealings became much more pleasant. By October, a settlement was reached with the situation being reported in the Wall Street Journal on November 3, 1977.
The settlement included a payment by Yamaha to Allen of a minimum of $1 million and a maximum of $2,250,000 over a five-year period in return for settlement of the litigation and a license to continue manufacturing electronic musical instruments using the patents.
The settlement was actually more favorable than that which we had agreed upon in Japan. I can only speculate that some U.S. lawyers had convinced Yamaha that they could break the patent or patents, and Yamaha later had second thoughts. In any case, subsequently Yamaha fulfilled all of their obligations in a timely manner. Other than the frenetic events which occurred early on, I can’t say that I maintain any malice toward them.
KLANN ORGAN COMPANY
Let us return to the Allen vs. Rockwell litigation which, as previously indicated, covered the period of 1972 through 1976. On May 10, 1974, to the great surprise of both Allen and Rockwell, both parties were served with a patent infringement complaint by Klann Organ Company, a relatively small producer of organ supplies in Virginia. Strangely enough, this suit was initiated in the Central District of California, Los Angeles. “Discovery” proceedings followed.
Sometimes during discovery either or both sides obtain a better picture of their position—whether stronger or weaker—than they originally perceived. This often leads to a settlement prior to trial. A most unusual aspect of this case, brought to light through the deposition of Paul Klann, president of Klann Organ Company, was the identity of the lawyer in California who represented him and the circumstances surrounding how it came to pass that Klann selected an attorney so remote from Klann’s business establishment.
What was “discovered” was that during a trip to the West Coast, Paul Klann had, among other things, met with none other than Ralph Deutsch. While not directly admitted, it seemed to me that Deutsch germinated this litigation by saying whatever it took to incite Klann to file the suit. To make the matter even simpler for Klann, Deutsch accompanied him to another office in the same building to obtain the services of Attorney Howard Silber.
Interestingly, attorney Silber was the very same attorney who was previously employed by Rockwell in the 1967-68 time frame as an in-house patent attorney working on the original digital organ patents. In view of this, Rockwell immediately took legal steps to have Klann’s attorney, Howard Silber, disqualified on the basis of conflict of interest due to his previous employment at Rockwell. This procedure was successful; in September, Silber was indeed disqualified and the case was dismissed. This means that the issues of the Complaint were never tried by the court. In the years following, Klann chose not to exercise his option to revive the litigation with another attorney. Shakespeare might have called this case “much ado about nothing.”
OTHER JAPANESE COMPANIES
During 1981, we became aware of another Japanese company which we believed was infringing on certain of our patents. Again, a series of notice letters was forwarded; since these did not produce any results, we felt compelled to institute a patent-infringement lawsuit shortly thereafter.
This lawsuit went through the initial stages of discovery; then, it became apparent that the company involved would be willing to settle. The settlement included an up-front payment to Allen. My reason for not identifying this particular company is that, as reflected in the settlement agreement, confidentiality was required at the insistence of the licensee. I never fully understood the rationale for secrecy since, ultimately, the terms had to be disclosed in our financial statements. In any case, I have no desire to breach the agreement.
In the period following this settlement, additional license agreements were negotiated with other Japanese companies including Roland, Akai, Matsushita, Seiko, and Korg. These license agreements were negotiated on a “business basis” without any litigation. I believe that the terms of the agreements reflected our appreciation for the avoidance of litigation.