Setback for Lemelson

Here are the latest ins and outs of this complicated legal case affecting automatic data collection.

Setback for Lemelson

Until now, inventor Jerome H. Lemelson (actually, the Lemelson Foundation, since he died in 1997) had a lock on patents to automatic identification technology. Lemelson signed up hundreds of bar code and machine vision users to contracts for licenses to use his patents. Big users like automotive figured that the cost of a license — sometimes less than a penny per $100 in retail sales, depending on the industry — was less than the cost of contesting and certainly less than the penalty for patent infringement. So, as Lemelson continues to expand his (the Foundation’s) market, any company that uses bar code equipment is sure to be pressured into signing up.

Are the patents valid? Objectors, including seven manufacturers of Auto ID equipment, point to the way the patents were issued. Lemelson applied for most of the patents in 1960 and kept them alive for about 30 years by resubmitting. (At the time, a patent extended 17 years from the date it was issued, not from the date of application, as it does today.) What Lemelson contended was that the Patent Office requested more details, he provided more details, they kept rejecting, he kept reapplying, etc.

But Arthur H. Stroyd, the partner of Reed Smith LLP, and general counsel of the Material Handling Industry, explains, “Essentially the effective date of the patent used to go back to the date it was applied for, but the technology and contents of the application were secret. Each time Lemelson reapplied for a patent, he would be able to send up what could be described as a submarine periscope to look at what was going on in the bar code industry. And then he could tweak his patent application, or his reapplication, to reflect some of those developments that he had spied through the periscope.”

By the time the patent was finally approved, Lemelson surfaced with a document that included the latest developments in Auto ID technology. “Much to the surprise of everybody who thought that the technology was in the public domain, without any patents acting as a monopoly,” says Stroyd.

It was legal at the time to submarine your patents, ruled the courts in patent infringement suits. The document of “prosecution laches” was not a valid defense, said the judge.

Arthur Stroyd explained prosecution laches: “The prosecution part means simply that you’re prosecuting a patent. Laches are delays, so the phase means delays in prosecution.”

Most people are familiar with that statute of limitations that says you have a certain number of years to bring a lawsuit or some finite period of time. According to Arthur Stroyd, the doctrine of laches is a little bit fuzzier and is applied by the courts to somebody who has a cause of action and doesn’t do anything about it. “The doctrine says, ‘You sat on your thumbs while others were relying on the fact that nothing was going on; they relied to their detriment on the fact that they did not know you were going to pursue this claim.’”

In a recent development, the U.S. Court of Appeals for the Federal Court has overturned the trial judge and allowed the doctrine of prosecution laches to be used by the Auto ID manufacturers in their declaratory action against Lemelson. This action would bar Lemelson from enforcing certain patents because of “unreasonable and unexplained delays.”

Although the doctrine of laches is a defense for somebody being sued for patent infringement, in this case the manufacturers were plaintiffs in an action to get Auto ID declared in the public domain and make Lemelson’s patents unenforceable

Now the question is whether Lemelson will appeal to the U.S. Supreme Court. A lot of questions will have to be answered before you’re free to install a bar code system without getting a license.

Bernie Knill, contributing editor, [email protected]

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