September 28, 2023
A recent Law 360 story by Travis Bland, “Missing Word Sinks $2.65M Honeywell Fee Bid in Royalty Row”, reports that Honeywell lost out on $2.65 million in attorney fees following a win in a scanner royalties dispute with a Japanese competitor in part because an agreement between the two companies didn't use the word "attorney" in a provision the American company invoked to try to receive the award.
In an order, a North Carolina federal court told Honeywell Wednesday that it would not be awarding the attorney fees after the company prevailed in a jury trial against OPTO Electronics Co., reasoning that while other parts of the partners' contract referenced attorney fees, the part Honeywell cited to try to recover the money only says "fees."
"That provision, drafted by sophisticated counsel, does not mention 'attorney fees' (like every other case under governing Delaware law that has awarded attorney fees under a contract)," U.S. District Judge Kenneth D. Bell wrote in his order.
Judge Bell also reasoned that the provision doesn't have the "prevailing party" language that is the "hallmark" of contracts under Delaware law for a winning litigant to force an opponent to pay attorney fees.
The provision Honeywell cited might not even apply to court actions, Judge Bell said.
Evidence in the case made it clear that Honeywell knew how to craft a contract so that attorney fees would be awarded when it won a case, but it didn't do that in the agreement with OPTO Electronics, according to Judge Bell.
OPTO Electronics was also let down by Judge Bell's order. He punted the Japanese company's requests to throw out the jury verdict, award it a victory or, at least, to grant a new trial.
OPTO Electronics had a "full and fair opportunity to present its evidence and arguments to the jury and the court," Judge Bell said. "While OPTO's arguments were potentially persuasive and the court would have upheld a jury verdict in OPTO's favor, the court finds that there was sufficient evidence to support the jury's and the court's verdicts."
In denying the company a new trial, Judge Bell also rejected arguments that the court made an error when it did not allow certain evidence that OPTO Electronic asserted was favorable to it.
The dispute is rooted in barcode scanner technology that can decode 1D barcodes — such as UPC codes commonly found on items in a grocery store that are scanned at checkout — and can decode 2D barcodes, such as QR codes frequently used by restaurants for online menus.
Honeywell had previously accused OPTO of infringing its patents for 2D products, resulting in a 2020 settlement agreement under which OPTO consented to pay Honeywell 7% royalties for the continued use of that technology.
But in the present case, Honeywell said OPTO tried to skirt that contract by not paying royalties on all of its 2D products, namely those that can read both 1D barcodes and a specific subset of 2D barcodes known as stacked barcodes. A common stacked barcode is PDF417, which is seen on driver's licenses and printed boarding passes at airports.
An eight-person jury sided with Honeywell in a July 19 verdict, finding OPTO scanners that can read both 1D and some 2D barcodes fall within the licensing agreement.