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GE Fanuc signs deal with PLC patent enforcer

01 March, 2005

GE Fanuc Automation Americas has signed a deal with a controversial US company, Solaia Technology, to protect its customers from possible litigation. Solaia has collected more than $24m from automation users who, it alleges, are infringing a PLC patent it bought from Schneider Electric in 2001. The company, which has never produced any control equipment, bought the patent solely to extract licencing fees.

GE Fanuc`s agreement with Solaia releases its customers from any claims from Solaia over the so-called `318 patent. According to Jeff Garwood, GE Fanuc Automation`s chief executive, his company reached this "important" agreement "to assure our customers that they have no potential risk for litigation under the `318 patent".

Solaia`s tactic has been to threaten automation users with litigation if they refuse to pay a licence fee equal to 0.5% of their output for the previous two years - with a cap originally set at $600,000, but since dropped to $300,000. Although there are doubts whether the patent claims would be upheld in court, most of the users approached by Solaia have paid the licence fee because it far cheaper than a court battle. More than 60 companies, including Eli Lilly, BMW and US Steel, have agreed to pay the licence so far.

Solaia has never challenged automation manufacturers directly but Rockwell Automation - many of whose customers have been targeted in the licencing campaign - has filed a lawsuit against Schneider, Solaia and its lawyers, accusing them of conspiring to ruin its reputation with its customers.

Schneider Electric is reportedly benefiting from Solaia`s campaign because, under its deal with Solaia, it is entitled to a proportion of any licence fees. Schneider inherited the patent when it bought Square D, which had originally filed for the patent in 1987 before being granted it in 1991.




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