Gilbert Hyatt is quite a remarkable man. In 1968, he advanced the concept of the integrated circuit when he developed the method for including all the pieces necessary to operate a computer - other than the memory and interface - in one place. In 1970, he applied for a patent for a computer microprocessor.
While Hyatt’s patent application worked its way through the bureaucracy of the patent office, three engineers from Intel Corporation created the first commercially viable microprocessor. So, Intel is usually credited with the invention of the first microprocessor. Gilbert Hyatt thought that was unfair, and fought the perception of Intel as the inventor of the microprocessor until 1990, when the U.S. Patent Office formally - and finally - recognized Hyatt as the rightful inventor.
Gilbert Hyatt, as you already know, is a very smart man. So in 1991, Hyatt, a multi-millionaire electrical engineer and inventor with more than 70 U.S. patents, moved from La Palma, California to Las Vegas. He wanted a better quality of life and a better business environment. He also wanted the added tax benefits that Nevada offered of having no corporate or personal income taxes.
The California Franchise Tax Board was not happy to see Hyatt - and the hundreds of millions of dollars in licensing from his patents - move from the state. So, they arbitrarily claimed that Hyatt was a California resident through 1992, and assessed millions of dollars in income taxes for those years, in addition to imposing harsh penalties alleging that Hyatt had committed fraud against the state by moving.
Unable to resolve the dispute with the California tax bureaucracy using facts, logic and reason, Hyatt filed a civil lawsuit in 1998 in the Clark County, Nevada District Court. In his lawsuit against the California Franchise Tax Board, Hyatt alleged fraud, intentional infliction of emotional distress, abuse of process, breach of confidential relationship and invasions of privacy.
California fought back, claiming that this lawsuit shouldn’t be heard in Nevada. They took this argument to the Nevada Supreme Court, and lost. So, they appealed to the U.S. Supreme Court, and lost again. In the actual trial, an eight-member civil jury ruled unanimously against the California Franchise Tax Board, finding the allegations of fraud, abuse, and privacy invasions to be true. On August 4th, 2008, the jury awarded Hyatt $138.1 million in compensatory damages, and an additional $250 million in punitive damages on August 14th.
Hyatt expects California to appeal the verdict. John Barrett, spokesman for the tax authority in Sacramento told the San Jose Mercury News that, “we’re reviewing the matter and hope to have a decision soon.”
