A Patent Story

 

On the label for the battery charger with the Panasonic camcorder I recently took apart there is a reference to a patent 4942516

 

 

And on the the label of the camcorder there is reference to 5 patents.

I took a look at the patents to see if they would help research the teardown. As it happens the patents did not help with the teardown, but they did lead me to research an interesting story.

All the patents are assigned to a Gilbert P. Hyatt (And nothing to do with Panasonic) and the one patent on both labels US4942516 is particularly interesting

The Abstract of the 516 patent reads:

“Microcomputer architecture is provided that facilitates a fully integrated circuit computer on a single integrated circuit chip. The architecture includes use of an integrated circuit ROM for program storage, an integrated circuit RAM or scratch pad memory for alterable operand storage, and integrated circuit logic. Additional architectural features include serial data communication, pulse modulated communication, eight bit instruction bytes, sixteen bit operand words, and shared I/O channels.

and the first claim:

“1. A computer system comprising:

a single chip stored program digital computer implemented on a single integrated circuit chip, said single chip stored program digital computer including

(1) an integrated circuit read only memory storing computer instructions, wherein said integrated circuit read only memory is implemented on said single integrated circuit chip;

(2) an integrated circuit alterable memory storing computer operands, wherein said integrated circuit alterable memory is implemented on said single integrated circuit chip; and

(3) an integrated circuit processing circuit coupled to the integrated circuit alterable memory and processing the computer operands stored by said integrated circuit alterable memory in response to the computer instructions stored by said integrated circuit read only memory, wherein said integrated circuit processing circuit is implemented on said single integrated circuit chip.”

Hang on a minute this is a patent describing a Microcontroller!  And it is – turns out Hyatt filed a patent application on Dec 28th 1970 and presumably through the process of filing continuation applications the patent was eventually granted 20 years later on July 17th 1990.

Now this patent grant apparently caused a small storm in the semiconductor industry as both Texas Instruments  (With Gary Boone and the TMS1000 launched in 1974) and with Intel (Frederico Faggin and the 4004 launched in 1971) had long claimed rights to the first Microcontroller. Both companies fought the patent and the patent was later invalidated in a patent interference case brought forth by Texas Instruments in 1995 on account that the device it described was never implemented and was not implementable with the technology available at the time of the invention. (The final decision was in 1998 and if you like this sort of thing the full judgement is here).

Between 1991 and 1995 Hyatt received $70m+ in royalties. My camcorder was from June 1994 so right in the applicable timeframe.  So Panasonic must have paid royalties on these patents. I don’t really see why Panasonic have paid royalties, when the MCU manufacturer was NEC who also had a licensing deal for the 516 patent.

But the story doesn’t end there. Up to September 1991 Hyatt lived in La Palma California, before receiving royalty payments he moved to Nevada (which has much lower state tax than California). The California Franchise Tax Board (FTB) decided to audit him and after some very heavy handed audit methods issued notices of proposed assessment (NPAs) of $4.5 million for the 1991 tax year and $6 million for the 1992 tax year. They determined or claimed he was not a Nevada resident until April 1992, and thus royalty payments in 1991 and upto April 1992 were taxable in California.

This was disputed and was in and out of court over two decades.  In addition Hyatt filed a civil suit in Nevada state court against the FTB alleging tortious conduct by FTB auditors. This too has been in and out of court for many years.  In 2008 a Nevada jury found in favor of Hyatt on all intentional tort causes of action awarding him $335M in damages (and $2.5M in costs)!  

From what I can read after 20+ years with Hyatt now in his late 80’s this legal action is still ongoing and will be for several more years making its way through the US Supreme court.  The gory details can be read in this Law360 article (That is not behind a paywall).

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