Patent infringement case remains a tangled web

In the April issue of CONTROL magazine, Managing Editor Steve Kuehn reports on how Solaia may have finally met its match now that it has faced off against Rockwell Automation in a U.S. patent court case.

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 By Steve Kuehn, Managing Editor

I

f you exclude sex and murder, this increasingly complex drama has a plotline that just about covers everything else involved with human avarice including suspect ethics, pride, jealousy, intrigue, conspiracy and betrayal. No it&rsquos not The Sting, but to many in the process and manufacturing industries it&rsquos beginning to feel like one. Actually it&rsquos the continuing saga of a patent infringement dispute over the ubiquitous way most companies manage control automation data.

To recap, in early 2001, Solaia LLC purchased the rights to the now controversial patent known as the &ldquo&rsquo318 patent&rdquo from Schneider Automation. Soon thereafter, it engaged the services of renowned Chicago patent enforcement law firm Niro, Scavone, Haller & Niro, to pursue its claims against users of the technology defined by the patent granted in 1991 to Square D (acquired by Schneider) and employee and inventor Brooke T. Roseman. Formally, it&rsquos Patent 5,038,318 covering the &ldquoDevice for Communicating Real Time Data Between a Programmable Logic Controller and a Program Operating in a Central Controller.&rdquo In a twist that is becoming a hallmark of contemporary, high-stakes patent enforcement litigation, instead of going after companies (at least initially) that make the technology that purportedly infringes on the &rsquo318 patent, namely Rockwell Automation, Siemens Energy & Automation, and GE Fanuc Solaia targeted companies that use computer controlled factory automation systems&mdashwhich just about covers everybody who makes something.

Regardless of the legal arguments of who is right or wrong in the Solaia case, most users of factory and process automation use the technologies covered by the &rsquo318 patent. The stakes are extremely high for vendors, but if Solaia prevails it&rsquos the users who may suffer in the long run.

           

Click the Download Now button at the end of this story for a pdf verion of the full text of the Summary Judgment Decision in the ArvinMeritor/Solaia Case.


 
Choice the First Victim
The freedom to choose automation weighted towards technical merit could be the first victim. Users may not venture to purchase a certain technology because it might be vulnerable to a future patent infringement claim, even though its implementation might benefit the organization. As editor in chief Walt Boyes points out in his editorial in "The Death of Innovation?" (CONTROL, Feb. &rsquo04, p9) &ldquoIt is important to remember these cases are about what … users will be permitted to use in hardware, software and networking technologies in the future.&rdquo Price is another aspect, because if suppliers are forced to pay newly minted royalties on firmly established automation technologies they are likely to eventually pass-along the costs to users. Similarly, users paying royalties on technologies they&rsquove banked their entire production line on will also have to pass on or redirect such costs as well. Such intrinsic costs are truly a hidden tax that create a damping effect on the healthy economic dynamics of industry in this country and put further pressure on the U.S. to remain competitive with countries that do not maintain similar legal labyrinths.

Innovation&rsquos Next
Boyes argues that the pace and volume of technological change and innovation has accelerated to the point were the patent office does not have the ability to correctly judge the true technical veracity of emerging technologies and has not served the automation community, nor U.S. commerce well at all by granting such broad patents (see &ldquoTechnocrats Take the ‘318 Patent to Task&rdquo). Boyes and patent-law pundits point out that far from protecting the IP rights of individuals and companies, overly broad patents actually stifle innovation, technical development and competition.

Schneider&rsquos Role
In the case of the &rsquo318 patent, Schneider ostensibly chose to sell the patent and leave it to Solaia to invest the resources, shoulder the risk (as well as bad PR) and reap the rewards as they pressed their claims of infringement against it. But their involvement didn&rsquot end with a simple sale. Although at the time Schneider was loath to discuss the actual terms of the sale, it was eventually revealed that a percentage of the revenue generated by the &rsquo318 patent&rsquos licenses return to Schneider as part of the patent purchase agreement.

This connection has become quite a source of rancor between Rockwell and Schneider who remain direct and fierce competitors in the automation industry. For one thing, it moves the competition out of the plant and into the courtroom. It also smacks of dirty pool, because rather than exploit technical advantage, better service and efficient business practice to win in the marketplace, it appears Schneider has chosen to exploit legal loopholes and employ legal mercenaries to hammer the competition.

Hot Summer
By the summer of 2002 the number of companies being drawn into litigation began to mount. In July of that year Solaia and its law firm filed against 16 more companies that ostensibly use Rockwell's equipment. These included ArvinMeritor (a former Rockwell International company), Boeing, Borg Warner, Callaway Golf, Chevron Texaco, Conoco., Eastman Kodak Co., Eli Lilly, Enbridge, General Dynamics, Gillette, Kellogg, Lexmark, Shell Oil, Sun Chemical and Tyco.
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