Lough vrs. Mercury Marine Page

Steven Lough vrs. Mercury Marine

Steven Lough and Mercury Marine went through a long patent fight concerning a brass seal. Several publications about the case are presented below.

Early October 1994 Newspaper Article by Dominic Bencivenga

Inventor Takes On Mercury Marine

Steven Lough won a $1.5 million judgment when the boat and motor builder began using an engine part similar to the one he had invented.

In 1988 as Steven Lough of Sarasota stood in his garage at his grandfather's 1936 Craftsman metal lathe, he had no idea the seal he had just designed would land him in a court battle with Mercury Marine, one of the nations's largest boat and motor builders.

He definitely didn't know it would bring him a $1.5 million judgment, either.

Lough just wanted to fix a chronic problem with his boat: Water kept leaking into the drive mechanism that turns the propeller.

"I just decided I was going to fix that thing in my boat," Lough said. "By golly, I put a piece of brass in there, whittled out a brass bushing that held seals to keep the water out of the shifting component of the drive, and I made myself one and put it in my boat."

The seal sealed.

What followed was a multi-year cruise across rough seas that had ended - for the moment - with a federal jury in Tampa deciding that Mercury and its parent company, the Brunswick Corp. improperly used Lough's deal design.

A jury awarded him $1.5 million after a three-week trial in January, said Ward Dahlgren, one of Lough's attorneys with the Sarasota firm, Dickson, Gibbons. The judgement was not entered until August 18th.

Attempts to contact Mercury's attorneys or a company representative were unsuccessful, Dahlgren said Mercury has indicated it will appeal the verdict. Lough's rough voyage began in the late 1980's when he took a job in a Sarasota marine. He planned to stay two months but lasted two years. Lough, now 42, has lived in Sarasota since 1954 and has spent his life working with aluminum and ding carpentry and boat repair.

He took the marina job to learn how to fix the drive on his 1967 Hurricane boat, which has a 250-horsepower, 6-cylinder Chevrolet engine, with a Mercruiser sterndrive. The problem was that water kept seeping into the drive's shifting component and the universal joints.

He became proficient at working on the drive and eventually figured out a way to keep water out.

After building a seal for himself he built another for a friend. He asked around at other marinas, found out the leaking was a common problem with the drive units, and built a few more seals for friends.

Lough got a patent for his design on July 18, 1989, and had Sun Precision , a Sarasota metal works company, make him a few thousand at $6 each. He began selling them in January 1989 to boat yards around the state for $25 each.

lough said a representative from Mercury at the firm's test plant in Placida called in the spring of 1991, asking about the seal. Lough said he jumped on his motorcycle and delivered a handful.

In April 1991, he said , a Mercury executive called and wanted to buy the patent. The representative offered $50,000, Lough said, but he realized he had something valuable. He wanted $750,000 for the patent and rights.

The executive refused, Lough said, telling him "If I didn't take the $50,000 for the patent they would go ahead and make the seal anyway and we would end up in a big court battle."

In September 1991, Lough took a call from a Sarasota marine operator.

"He said what kink of a lucky guy I was," Lough said, "He said, 'You ought to be rich by now, because the new Mercury boat coming in has your seal in it.' "

Lough examined the Mercury seal, believed it mirrored his design with a few insignificant modifications, and went straight to his attorney's office.

In December 1991, Mercury began mass producing the seals, selling them for about $8. Six months later, Lough said he was out of the seal business.

He filed suit in federal court in Tampa in 1992.

In January, Lough won the first round of the case in federal court.

"I won everything I could win, except they didn't give me triple damages," he said. "They awarded me $1.5 and I still own the patent."

The jury found that Mercury's seal was not a "willful infringement" of the patent, meaning Mercury "didn't do it recklessly or intentionally," Garland said.

Lough said the jury awarded hi $15 per seal for each of the 120,000 seals Mercury sold. The company produced 130,000 seals, he said.

Dahlgren, whose firm will receive 33% of any judgement, said that the interest and costs will be added to the judgment if Mercury appeals to a federal patent appeals court in Washington, D.C.

Lough is obviously pleased by the verdict, but still cannot understand why Mercury was so obstinate in the beginning.

"They could have had the whole package for $750,000," Lough said. "I don't know how much they paid for attorney fees, or how much I'll end up with when the total comes. I don't understand why they keep this thing going."

Brunswick appealed on the court denying their Motion for Judgment as a Matter of Law and its Motion for a New Trial after the jury verdict of infringement of U.S. Patent #4,848,775 June 12, 1996 the U.S. Court of Appeals for the Federal Circuit ruled on the appeal. The ruling said, "Because the court erred in denying Brunswick's Motion for Judgment as a Matter of Law, we reverse in part and vacate in part." The full text of the ruling is available at our FTP Site in Microsoft Word format and in Word Perfect format. You can FTP one of them, print it out, and read the 36 page document. Microsoft Word is the original format and looks best. The Word Perfect version is not able to maintain the proper page break locations, but the document is all there.

It is a very interesting case that will have significant impact upon future individual inventors. It describes Lough making six prototypes in the Spring of 1986 for his own boat and 3 months later giving one to a friend who installed it on his boat. He gave the other prototypes to longtime friends who were employees at another marina in Sarasota. He did not charge anyone for these prototypes. For over a year following the installation of these prototypes, he neither asked for nor received any comments about the operability of the prototypes. During the same time he did not attempt to sell any seal assemblies.

On June 6, 1988 He filed the patent application, "Liquid Seal for Marine Stern Drive Gear Shift Shafts" which issued July 18, 1989.

When Lough sued Brunswick on June 12, 1993 alleging infringement on the patent, Brunswick counterclaimed for a declaratory judgment of patent noninfringement, invalidity, and/or unenforceability. The Jury found that Brunswick failed to prove that Lough's invention was in public use before the critical date of June 6, 1987 (your invention cannot be in public use before one year prior to obtaining a patent. If so, the patent is invalid.) The jury also found that Brunswick infringed on claims 1-4 of the patent both literally and under the doctrine of equivalents. Based on the infringement finding the jury awarded Lough $1.5 million in lost profits. After the trial, Brunswick filed a Motion for Judgment as a Matter of Law in which it argued that the claimed invention was invalid because it had been in public use before the critical date. Brunswick also filed a Motion for a New Trial on damages. The court denied Brunswick's motions without any comment. Brunswick appealed.

Brunswick argued that the 6 early prototypes were not experimental. Lough did not control their use, failed to keep records of the alleged experiments, and did not place the parties involved under any obligations of secrecy. Lough countered that the six prototypes were necessary experiments, that he received no compensation for them, and that he did not place the seal assemblies on sale until after he filed his patent application. The prototypes were given only to his friends and personal acquaintances who used them in such a manner that they were unlikely to be seen by the public. He also argues that to verify the operability of the seal, they had to be installed by mechanics of different levels of skills in boats exposed to different conditions.

The trial centered on the issue of the six prototypes, were they experimental or public use? After providing the 5 prototypes to third parties, Lough neither asked for, nor received any comments concerning the operability of the prototypes. The court found Lough's use of the invention was not "experimental" which would negate a conclusion of public use. He received no compensation for them, at lest one boat was later sold to strangers and lost track of, he kept no records. The Court found, "We conclude the jury's determination that Lough's use of the invention was experimental so as to defeat the assertion of public use was incorrect as a matter of law. The court thus erred in denying Brunswick's JMOL motion on the validity of claims1-4 ..." Finding the patent invalid eliminated the need to consider any of the other matters before the court. The full report includes a rather lengthy dissention opinion from one judge.

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