Lemelson Decision Will Shape Bar Coding

Last month’s column, “Setback for Lemelson,” deals with an important issue for any company that’s using a bar code system for anything — which is just about everybody. The following questions and answers will give you more reasons to care about the outcome of this case.

Question: What is the Lemelson patent suit about and how will it affect me?

Answer: The patent suit questions the method used by inventor Jerome Lemelson (now the Lemelson Foundation, since he died in 1997) to obtain his patents on automatic identification equipment and machine vision equipment. Since bar coding is everywhere, and machine vision growing in importance, those patents — if allowed by the courts — are worth a pile of royalties, which your company will have to pay.

Q. Was Jerome Lemelson a serious inventor? Is the Lemelson Foundation something more than a memorial society?

A. Lemelson ranks up there with Edison and Land as an inventor. When he died he held 550 patents, including technology used in the cordless telephone, the camcorder and the fax machine. The Lemelson Foundation has been raking in royalties from licenses for bar coding and machine vision equipment. The Foundation has deep pockets and is ready to fight any challengers.

Q. Has anybody in the bar coding or machine vision community heard from the Foundation?

A. The Big Three automobile companies, for example, had signed agreements to pay royalties for using bar coding and machine vision equipment. So have more than 900 other companies. Hundreds more are being sued. Bar code users who were fingered got a letter from the Foundation’s attorneys that said they were infringing on Lemelson’s patents and offered a licensing arrangement.

Q. What was the licensing arrangement like? Was it expensive?

A. “One of the Lemelson Foundation’s successes in getting companies to sign on the licensing arrangements is that the royalties were calculated slightly below the threshold of pain,” says Arthur Stroyd, an attorney for Reed Smith LLP, a law firm with headquarters in Pittsburgh. Stroyd is general counsel of the Material Handling Industry. “The royalties may be only a fraction of a cent for every item being processed under the scanner; it seems like only pennies, but before long those pennies turn into dollars,” Stroyd says.

Q. What are the legal challenges to the Lemelson patents and who is making them?

A. First of all, the Foundation has been carefully selecting only users of automatic identification and machine vision equipment, not the manufacturers. It’s probably on the theory that the manufacturers are more likely to fight any threat to their chief source of income. However, the manufacturers are legally allowed to support the users in court. So the manufacturers of bar code equipment have gone to court and asked for a declaratory judgment that the patents were invalid.

Q. What is the basis of this suit?

A. The suit contended that Lemelson submarined the technology and in a way that violated the doctrine of prosecution latches. That is, Lemelson applied for a patent in the early ’50s, which was rejected by the Patent Office. Over the years he kept re-applying and kept getting rejected. This was all done in secret. Every now and then Lemelson would raise his periscope [the submarine analogy], check the technology of the bar code industry and revise the patent accordingly. You can’t do that, according to the doctrine of prosecution latches, which says that if you are prosecuting a legal action, you must do it with diligence and not allow it to languish to the detriment of others — in this case, the developers of bar code technology.

Q. What has been the outcome so far?

A. The condensed version of the trials and appeals is that the manufacturers will be allowed to use the doctrine of prosecution latches in their suit, which will be sent back to the district court for trial on November 18. Attorney Arthur Stroyd believes that “it will be a complicated trial, and it certainly will be a fairly involved process after the evidence is introduced.”

Bernie Knill, contributing editor, bernknill@aol.com