Free Status Report - District Court of Federal Claims - federal

Case 1:04-cv-01661-EJD

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS KOLLMORGEN CORPORATION, Plaintiff, v. THE UNITED STATES OF AMERICA, Defendant, and GR DYNAMICS, LLC, Intervenor-Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

No. 04-1661C Chief Judge Edward J. Damich

JOINT STATUS REPORT Pursuant to this Court's Order entered on December 16, 2005, plaintiff Kollmorgen Corporation ("Kollmorgen"), defendant the United States of America (the "Government"), and intervenor-defendant GR Dynamics, LLC ("GRD") hereby submit this Joint Status Report ("JSR"). The Government and GRD are sometimes jointly referred to herein as "Defendants," and Kollmorgen, the Government and GRD are jointly referred to as "the parties." At the request of the parties, the Court previously withdrew its July 6, 2005 Scheduling Order and granted a 61-day stay of all proceedings in this case to permit the parties to pursue settlement discussions. The stay began on December 14, 2005 and expired on February 13, 2006. The following is a report of the events that transpired among the parties during the stay. First Meeting. In December 2005, representatives of plaintiff Kollmorgen and of third-parties RAFAEL USA, Inc. ("RAFAEL USA") and RAFAEL Armament and Defense Authority, Ltd. ("RAFAEL ISRAEL") met in Washington, DC to discuss settlement of this

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litigation. RAFAEL USA is one of two joint owners of intervenor-defendant GRD and a subsidiary of RAFAEL ISRAEL, an Israeli company that developed the Mini-Typhoon weapon system that GRD is selling to the Government and which is the subject of Kollmorgen's claims of patent infringement in this case. RAFAEL USA and RAFAEL ISRAEL, although non-parties to the instant litigation, met with Kollmorgen to negotiate on behalf of GRD with the consent of all of the parties. The participants at the initial meeting in Washington, DC were David Graves, Chief Financial Officer, and Joseph Gaetani, Manager of Contracts, for plaintiff Kollmorgen, Yigal Ben-Hanan, President & CEO and Patrick Baravi, Vice President of Marketing & Business Development of RAFAEL USA, and Dr. Ehud Netzer, a RAFAEL ISRAEL Vice President and head of its Systems Division. At this meeting, Kollmorgen proposed terms for a settlement of this litigation and resolution of any disputes over the patented weapon control system worldwide. Representatives of RAFAEL USA and RAFAEL ISRAEL advised Kollmorgen at this meeting that they would present Kollmorgen's proposed terms to the management of RAFAEL ISRAEL and GRD and obtain sales information for Kollmorgen's consideration. Second Meeting. Due to intervening holidays and unavoidable scheduling conflicts, a meeting to discuss further the terms offered by Kollmorgen and any counteroffers on behalf of GRD could not be held until February 12, 2006 in Haifa, Israel. The participants at that meeting were David Graves, Chief Financial Officer, Matthew Richi, Vice President of Business Development, and Joseph Gaetani, Manager of Contracts, for plaintiff Kollmorgen, and Gadi Kazir, Director of Marketing & Business Development, Yochi Goldberg, Corporate Director of Contracts, Business Development & Marketing, and Yael Hiram, Deputy General Manager for Strategic Planning & Business Development, System Division, of RAFAEL ISRAEL on behalf

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of GRD. At this second meeting, counterproposals were exchanged as well as sales and other financial data to evaluate whether terms for a mutually acceptable settlement could be achieved. Third Meeting. A third meeting was held on February 21, 2006 in London, England to further discuss settlement terms. The participants at the meeting in London were David Graves, Chief Financial Officer, and Joseph Gaetani, Manager of Contracts, for plaintiff Kollmorgen, and Gadi Kazir, Director, Marketing & Business Development and Yochi Goldberg, Corporate Director of Contracts, Business Development & Marketing, of RAFAEL ISRAEL on behalf of GRD. Status. The parties are pleased to report to the Court that, as a consequence of these meetings, the parties believe agreement has been reached on certain principle terms to form the basis of a formal settlement agreement to resolve all issues in this case as well as any other disputes between the parties, in the United States and abroad, involving the patented weapon control system which is the subject of this lawsuit.1 The parties, however, require additional time to prepare and finalize an appropriate agreement implementing the terms that have been proposed for settlement of the litigation, including to resolve any outstanding differences, and to obtain necessary corporate approvals from all parties (including the United States) and from third-parties RAFAEL USA and RAFAEL ISRAEL. Although the Court requested in its December 16, 2005 Order that the parties submit a revised proposed claim construction and discovery schedule with this Status Report, the parties believe such a revised schedule is

While no Government representatives attended any of the above-referenced meetings, counsel for both GRD and Kollmorgen have represented that they believe they have reached an agreement "on certain principle terms" that will form the basis for a formal settlement agreement that will resolve all issues in the case between them. Based on these representations, the Government understands that this agreement on principle terms will result in resolving all issues in the case.

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unnecessary because they expect a settlement agreement resolving this dispute will be finalized shortly. Simultaneously with the filing of this Status Report, the parties are jointly moving for an additional 30-day stay of the proceedings from February 27, 2006 up to and including Wednesday, March 29, 2006, to allow the parties additional time to finalize the settlement of this litigation.

Respectfully submitted, February 27, 2006 s/Andrew M. Riddles by s/Janice A. Christensen JOSEPH A. DEGIROLAMO ANDREW M. RIDDLES ANDREA L. WAYDA JANICE A. CHRISTENSEN MORGAN & FINNEGAN, LLP 3 World Financial Center New York, New York 10281 Telephone: (212) 415-8700 Facsimile: (212) 415-8701 Attorneys for Plaintiff Kollmorgen Corporation

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PETER D. KEISLER Assistant Attorney General JOHN FARGO Director February 27, 2006 s/Walter W. Brown by s/Janice A. Christensen WALTER W. BROWN Attorney Commercial Litigation Branch Civil Division Department of Justice Washington, D.C. 20530 Telephone: (202) 307-0341 Facsimile: (202) 307-0345 Attorneys for the United States of America

February 27, 2006

s/James E. Hopenfeld by s/Janice A. Christensen JAMES E. HOPENFELD ROPES & GRAY, LLP One Metro Center 7001 12th Street, N.W., Suite 900 Washington, D.C. 20005-3948 Telephone: (202) 508-4600 Facsimile: (202) 508-4650 LAURENCE S. ROGERS STEVEN PEPE MATTHEW TRAUPMAN ROPES & GRAY, LLP 1251 Avenue of the Americas New York, New York 10020 Telephone: (212) 596-9000 Facsimile: (212) 596-9090 Attorneys for Intervenor-Defendant GR Dynamics, LLC

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