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US patent ruling ends `legalised exortion`

01 March, 2004

In a landmark decision, a US judge has ruled that the claims of 14 patents covering barcode and machine vision systems, held by an organisation called the Lemelson Partnership, were invalid and unenforceable. He also ruled that the patents had not been infringed by the machine vision specialist, Cognex, or by users of its products.

The origins of the long-running case date back to 1954 and 1956 when Jerome Lemelson filed initial patents covering these technologies. Later, he reworded the original documents to claim new patents and used these to collect royalties from users of vision and barcode systems, even though he never put his designs into production. It is estimated that Lemelson - and, following his death in 1997, the Partnership - collected more than $1.5bn in licensing fees from 940 equipment users.

Lemelson`s legal representative, Gerald Hosier, reportedly became the highest-paid lawyer in the US on the proceeds, owning three jets and receiving a reported income of $40m in 2000.

In September 1998, Cognex filed a suit against the Lemelson Partnership, seeking a declaration that the patents were invalid, unenforceable, and had not been infringed either by Cognex or its customers. In 2000, the Court combined this lawsuit with a similar suit by Symbol Technologies and seven other manufacturers of barcode readers.

Following the ruling in January, Cognex chief executive Dr Robert Shillman, declared that it was "truly a cause for celebration…for Cognex and for every company around the world that makes, sells or uses machine vision systems or bar code readers. It is also a victory for consumers everywhere, because every one of us has paid a hidden tax to Lemelson each and every time that we made a purchase of virtually any item that was manufactured since the start of Lemelson`s licensing onslaught.

"Much of the litigation in our society is motivated by greed, but that was not Cognex`s reason for suing Lemelson," Shillman continued. "Cognex has spent millions of dollars on this case, and even though we won, we won`t receive a single cent from Lemelson. We pursued this litigation because we knew that what Lemelson and his Partnership were doing was terribly wrong, and only Cognex had both the technical knowledge and the fortitude to put an end to their campaign of legalised extortion. Our only reward is the knowledge that we did the right thing…we stood up to wrongdoing and we triumphed.

"By determining that the Lemelson patents are invalid and unenforceable," Shillman concluded, "the US District Court has done a great service to the patent process, and it has lifted the hearts of the thousands of true inventors."

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