Don't Be Held Hostage!

Jan. 1, 2003
PLC controls at center of lawsuit.

How many of you have old PLCs controlling various processes? How many of those controls are from Rockwell Automation? Surprise! You may be held hostage to a lawsuit.

The control world is experiencing a questionable legal predicament that is looking more and more like a rerun of the Lemelson case. Lemelson, remember, is the group of lawsuits filed against companies using bar code products, instead of the manufacturers of those products, that allegedly infringe on certain patents held by the Lemelson estate.

The control version of this scenario is known as Patent “318.” A one-year-old company, Solaia Technology LLC is suing customers of Rockwell Automation for infringement on a patent it bought from Schneider Automation Inc. Schneider acquired the patent after it bought Square D. By the way, Solaia apparently was the only bidder in the auction for this patent. And, by the way, Rockwell customers seem to be the only targets of this litigation. (Is this a new definition of competition in a given marketplace?)

This patent covers a technique for sending spreadsheet data to PLCs. The patent involves 16-year-old technology. Thus, only customers using old or legacy PLCs are at risk. Newer PLCs have certainly advanced their techniques for sending data back and forth. However, Solaia would like the courts to interpret the patent broadly. This would open its licensing opportunities.

Solaia doesn’t make anything, not even products that would use the patent. It appears to be a legal firm that does nothing more than enforce patents. This is one of those interesting ways to make money.

Schneider (Paris, France), by the way, expects to receive its share of the money Solaia collects.

Now, in an effort to help protect its customers, Rockwell Automation is suing Solaia, Schneider and the legal firm representing the two companies. A motion filed last December says that these companies have conspired to extract a lot of money (millions) in licensing fees from companies using Rockwell’s industrial automation equipment. Several customers have already settled with Solaia out of court. Apparently, the settlement costs are less than litigation costs. And such settlements prevent the legitimacy of the patent from ever being questioned. Is this a case when convenience wins out over truth?

Another note, Solaia has not sued Rockwell directly, similar to the Lemelson case. Like Lemelson, the litigation is likely to go on for years. Unfortunately.

Schneider’s initial take is that “Rockwell’s claims don’t have merit, and we expect this to be shown as this plays out.”

Another note on all of this: There are lots of rumors and speculation that Rockwell may be acquired in the near future. In more trusting times, one wouldn’t wonder if all this activity isn’t somehow related.

But there’s another aspect to this case that merits attention. All the major control vendors, including Schneider, were involved in an organization known as OPC Foundation. This organization was set up to bring vendors together to develop open technology for automation products. The result was the OLE for Process Control standard. Apparently, Schneider neglected to mention that it held a patent pertinent to the discussions. Schneider, in various public statements, is claiming it was only a minor player in the proceedings and thus can’t be held accountable for not bringing forth information about the patent until after years of product development using the open OLE standard.

But that’s why these organizations form in the first place. What is the point of gathering a group of vendors to develop open standards if all participants aren’t open? Trust is a major element of business — a lesson many companies are rediscovering. There is no point to forming organizations if one or more parties aren’t completely forthcoming. In fact, companies should go so far as to donate potentially useful patents to the organization. And any technologies patented as a result of group development should belong to the foundation organization to protect the interests of customers — the end users.

Two manufacturers suing about patent infringement is one thing. Lawyer owners of a patent who sue end users is another. The courts will decide what’s legal. But in these post-Enron, WorldCom, Tyco, Arthur Andersen, Adelphia days, shouldn’t the bar be raised to include a higher standard of ethics?

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