More Lemelson Lawsuits Filed

Ten patent infringement lawsuits are pending.

In November, the Lemelson Foundation continued its litigious ways by filing two more patent infringement lawsuits in the U. S. District Court in Arizona. In one lawsuit, Lemelson sued a wide range of companies including FedEx Corporation, Amazon.com, Avis, BlockBuster, Abercrombie & Fitch, and 82 other defendants claiming that they had infringed auto-identification systems such as bar code readers.

The other lawsuit was filed against 17 wine, medical, pharmaceutical and paper companies for allegedly infringing 14 machine vision patents, covering technologies that facilitate automated packaging and inspection of goods.

These two lawsuits make a total of 10 in patent infringement lawsuits pending in Phoenix against approximately 400 companies. According to Gerald D. Hosier, lead counsel for the Foundation, 912 companies have settled lawsuits involving Lemelson patents at this point, and they have paid more than $1.2 billion. In addition to the infringement lawsuits, there are a number of other lawsuits initiated against Lemelson requesting declaratory relief from Lemelson license agreements and seeking to have various Lemelson patents declared invalid, unenforceable, and not infringed.

The late Jerome Lemelson was a prolific inventor, obtaining more than 500 patents during his lifetime. There are still 180 of his patents that have not expired, while an additional 40 of his patent applications are still pending. The Lemelson Foundation has continued to pursue enforcement of these patents, their licensing, and their alleged infringement. Many of these patents are particularly controversial because of the method by which Lemelson obtained them — submitting broad patent applications that were repeatedly amended while the auto-identification industry developed around them. When the applications were ultimately approved and by the time that the patents surfaced, an entire industry had grown up in the midst of their subject matter.

This prolonged application process is referred to as “submarining,” has been heavily criticized, and is no longer permitted under U.S. patent laws. Attorney Hosier has argued, however, that the lengthy application process was caused by unavoidable delays but was not fraudulent. He contends that these patents cover novel technology that Jerome Lemelson always contemplated and that the Foundation is simply protecting the intellectual property rights that it owns as a result of its founder’s creations. Critics, on the other hand, charge that Lemelson was more creative in his manipulation of the patenting process than he was in developing innovative breakthroughs in technology. They believe that the Lemelson patents challenge the very integrity of the U. S. patent system.

While these legal concepts are being debated, the number of lawsuits continues to grow and the amount of royalties being paid under licensing agreements continues to increase.

— Arthur H. Stroyd, Reed Smith LLP

Arthur H. Stroyd is the partner of Reed Smith LLP, a full-service law firm including Intellectual Property, and is a trial lawyer specializing in commercial and product liability litigation. He serves as the General Counsel of the Material Handling Industry.

Online Ordering Improves for E-Tailers

Online purchasing continues to improve for consumers in the United States and remains far ahead of key European markets, according to Accenture’s third annual holiday eFullfillment survey, which included for the first time France, Germany, Spain and the United Kingdom.

In fact, European e-tailers are at roughly the same level of performance as U.S. sites were in 1999. For example, in providing in-stock information, only 32 percent of European e-tailers show this information, ranging from a low of eight percent in Spain to a high of 58 percent in France. This compares to the 44 percent rate seen in the U.S. for 1999.

In the U.S., e-tailers have improved their ability to guarantee that product is in stock when it is ordered. The percentage of sites showing this information almost doubled from last year, moving from 38 percent to 72 percent of the sites. They are making sure that consumers know what is going on every step of the way. For example, e-mail confirmations for orders were received on 81 percent of orders in 2000, rising to 98 percent this year.

Also, the study showed that it takes a bit longer to place orders this year, but not because the Web sites are slow. E-tailers are generally expanding their product lines and it is taking consumers longer to find and navigate to the products they want. Typical ordering time increased to 13 minutes this year, compared to only 10 minutes in 2000.

“That’s still a lot faster than most store visits. Online buying still has the edge on convenience. Pure e-tailer’s sites continue to be a bit faster than traditional retailers’ or catalogers’, reflecting apparently better Web-savvy designs,” said Bob Mann, an associate partner at Accenture.

Costs for shipping packages are almost exactly the same as 2000, averaging an additional 15 percent of product costs. This is despite price increases for many major parcel carriers since the 2000 study. However, fewer sites are offering free shipping — only two companies in the 2001 study, down from 14 in 2000.

Companies Making News

FKI Logistex announced the signing of an alliance agreement with Manhattan Associates Inc. The alliance was formulated to enhance the integration of warehouse management systems with order processing and warehouse control systems for common customers of FKI Logistex and Manhattan Associates. FKI Logistex also announced the acquisition of UK-based designer and integrator of automated warehouse and distribution systems, Cleco Group Limited.

Robotic Vision Systems Inc. and the SICK Group, a privately held manufacturer of sensor technology, announced the acquisition, by affiliates of the SICK Group, of RVSI’s material handling business.

RVSI manufactures machine vision products. Its material handling business, a product line within RVSI Acuity CiMatrix, is a supplier of advanced bar code reading systems for high-speed sortation. These systems are used by package delivery services as well as by major catalog and mail order organizations. The purchase price is $11.5 million in cash. Approximately 70 RVSI employees are joining SICK as part of the acquisition.

Material handling and logistics consultants CDM has relocated to 25 Industrial Way, Chelmsford, MA 01824. Its telephone numbers remain the same.

Association News

L. Drew Rosen, Ph.D., has been elected president of the board of directors of APICS — The Educational Society for Resource Management. Assisting Rosen in leading the 60,000-member association will be Bob Collins, president elect; Mark K. Williams, executive vice president; and Thomas J. Krupka, secretary/treasurer.

IoPP Relocates

The Institute of Packaging Professionals has moved from its Virginia location to Chicagoland. Full address and phone information is available on the organization’s Web site, iopp.org. Edwin O. Landon has been hired as the new executive director of IoPP following the retirement of the group’s founder and long-time executive, Bill Pflaum.

Landon has been a part of the packaging industry press for more than 20 years, serving in a variety of positions with publications such as Packaging magazine and Food & Drug Packaging. Managing the daily business of the organization with Landon will be Patrick M. Farrey and Robert L. DePauw.

Resources on the Web

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New AIAG Supplier Guidelines

To help the automotive industry implement a common approach to evaluating supplier delivery performance, the Automotive Industry Action Group’s (AIAG) Supplier Delivery Performance Metrics Work Group — under the direction of the Materials Management Steering Committee — recently published its Supplier Delivery Performance Metrics Guideline.

“A standard approach to delivery evaluation will save both time and money for suppliers that currently have to cope with varying requirements from multiple customers,” said Morris P. Brown, AIAG program manager. “At the same time, the document will provide assistance to automotive companies that wish to develop or enhance existing measurement systems.”

The goals of the guideline are to consolidate best practices, to reduce multiple trading partner performance requirements and to focus on the material delivery component of the manufacturing process, specifically for production and service parts.

According to Brown, this document will help automakers and suppliers develop a delivery performance program that meets their particular needs, while ensuring that the metrics chosen are standardized within the industry. All rating systems that are developed under this guideline must include the following attributes: accuracy, fairness, validity and acceptance. DaimlerChrysler Corp., Ford Motor Co. and General Motors Corp. have agreed to recommend this guideline to their suppliers that are looking for assistance in implementing performance programs.

To obtain a copy of the Supplier Delivery Performance Metrics Guideline (M-8), contact AIAG’s Customer Service Department at (248) 358-3003. The cost of the document is $10 for members and $50 for non-members. AIAG members can download an electronic copy of this document at no charge from the members-only portion of the organization’s Web site.

CLM Elects Officers

Members of the Council of Logistics Management (CLM) elected officers for the coming year. Under the council’s bylaws, the first vice president automatically succeeds to the presidency. Thus, Joel Sutherland will serve as president. Elected to serve on the 2002 executive committee are Thomas W. Speh, first vice president; Elijah Ray, second vice president; and Mark E. Richards, secretary and treasurer.

Positive Supply Chain News

Lower interest rates, a strong Christmas and improving credit terms will allow mass merchandisers to continue to invest heavily in supply chain hardware and software systems and point-of-sale (POS) systems in the next six to12 months, according to a new report from IHL Consulting. The report is entitled IT and North American Mass Merchandisers.

“These retailers have always led the pack in terms of investing in technology in the supply chain,” says Greg Buzek, president, IHL Consulting Group. “Now they are trying to increase their lead in this area while investing in new POS technology that allows easy access to inventory levels and that support cross-channel retailing.”

Combine these technical trends with favorable vendor financing (as low as 0-1 percent in some cases) and we are looking at a period of strong, targeted investment in key technologies for these mass merchants, he adds. As a result, IHL Consulting expects retailers to increase the capital IT spending in the next six to 12 months.

The 101-page report provides detailed discussion of the departments and systems/inventory challenges that mass merchants and discounters face due to heavy competition, cross-channel integration, changing economic conditions, and an ever-expanding product mix. The report includes rankings and profiles of the top 20 mass merchants, the hardware and software systems that they are using, and the key personnel to talk to at each of these top retailers.

For more information about the report, please visit the Web site, www.ihlservices.com.

Managers Making News

Alvey Systems Inc., an FKI Logistex company, has promoted Ted Clucas to vice president, systems engineering and operations.

Savi Technology has named two leaders in supply chain software and consulting services to its executive team. The new executives are Stephen Zujkowski, senior vice president of business development and strategic accounts-public sector, and Melvin Poi, vice president, sales and marketing-ASEAN.

Teklynx International announced the appointment of Robert Blythe as vice president of sales and professional services.

Phoenix Contact Inc. announced that Donald Springer was named president and CEO for the company’s new production initiative in the United States.

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