318 Patent Update: The Latest on the PLC Communications Patent Infringement Case

Published: March 8, 2005 by Rick Zabel, Automation.com

Recently, Walt Boyes, Editor in Chief of CONTROL Magazine, brought my attention to an article written by Managing Editor, Steve Kuehn. In the article titled "Are you paying taxes on your data yet?", Steve did a great job of researching the state of Solaia and the "318 Patent". I wanted to bring this story to your attention because it really hits home for just about any company using the related communication technology.

As you may recall, in early 2001, Schneider Automation sold the "318 Patent" to Solaia. Otherwise known as Patent 5,038,318, "318 Patent" covers the “Device for Communicating Real Time Data Between a Programmable Logic Controller and a Program Operating in a Central Controller". Shortly after the sale, Solaia hired a patent enforcement firm to go after companies that were using computer controlled technology in their factory automation processes. What better way to get the attention of infringing automation product suppliers. Needless to say, a significant percentage of companies targeted were Rockwell Automation customers. Of course, this DID get Rockwell's attention as they filed a counter suite in an attempt to protect their customer base.

It was later revealed that, as terms of the patent sale, Schneider was to be paid a percentage of revenues generated from "318 Patent" licenses. As of November of 2004, Solaia had secured over $24 Million in license fees from 60 US companies. These 60 companies agreed to "settle", rather than pay enormous legal fees (an estimated $1 - $2 Million) required to dispute the patent infringement. Solaia was originally asking for 1/2 of 1% of the company's output, capped at $600,000 (later changed to $300,000). It comes down to a numbers game...and ultimately, pretty easy money for Solaia and Schneider.

GE-FANUC reached a settlement and license agreement with Solaia recently. Subsequently, Solaia took out a full page ad in February's issue of CONTROL Magazine announcing this agreement and, at the same time, taking aim at Rockwell Automation, Invensys (Wonderware), Siemens, and Opto 22.

It's obvious that this "318 Patent" covers a core and broad communication function of factory automation systems. There's a lot at stake for many vendors and many companies using this technology. Such broad patent infringement cases stand to do some damage to our already weakened industry. The end result could mean increased license fees to users, roadblocks to innovation, and more of these types of lawsuits. For an in depth review of this case, read the full article Are you paying taxes on your data yet? by Steve Kuehn, CONTROL Magazine.

Stay tuned...it appears this case will eventually see it's day in court.

Related links:

The Copyright & Patent Wars

Opto 22 Releases Statement Regarding Schneider Automation Patent Litigation