Court’s Scan of the Law Reveals No Bar Code Infringement

(Originally printed in Priority Read – Business Law Update, March 24, 2004)

A recent federal court decision will be of interest, and also a source of relief, to makers and users of bar code scanners and readers.

The Automatic Identification and Data Capture industry recently announced the successful conclusion of litigation with the Lemelson Foundation. The Foundation had been making allegations that bar-code scanners, readers and related machine vision technology prevalent throughout the industry infringed on patents it owned.

In 1999, a number of manufacturers of bar-code reading equipment and related machine vision products (Auto ID) jointly filed suit against the Foundation, seeking a declaration that certain patents asserted by the Foundation against end users of barcode reading equipment were invalid, unenforceable and not infringed. In 2000, the case was consolidated with a similar case filed by a maker of machine vision systems. Now, the United States District Court for the District of Nevada has ruled the Foundation patents invalid, unenforceable, and not infringed – as the plaintiffs asserted. This ruling brings great relief to those the Foundation accused of infringement.

The Lemelson Foundation had put significant pressure on the entire Auto ID industry, demanding the payment of millions in dollars in licensing fees. The new ruling should lead to the cessation of the Foundation’s demands for licensing fees for the use of bar-code technology. The Foundation is likely to pursue an appeal, but leaders in the industry firmly believe that the court’s ruling will be upheld by the appellate court.

If your company was contacted by the Lemelson Foundation and alleged to have infringed upon its patents, you can rest substantially easier now that the court has rendered its decision. If your company took a license from the Lemelson Foundation and is paying royalties, you may wish to consider whether the continued payment of those monies makes sense. As always, should you require any legal counsel in these evaluations, please feel free to contact the author.