PRIOR COVERAGE

Milwaukee, WI - Rockwell Automation Inc. filed a lawsuit on Dec. 10 in the U.S. Circuit Court's eastern Wisconsin district that charges Schneider Automation (North Andover, MA), Solaia Technology LLC and the law firm of Niro, Scavone, Haller and Niro Ltd. (both of Chicago, IL) with conspiring in violation of antitrust laws to ''shake down'' Rockwell's users and customers with ''baseless patent infringement lawsuits.'' No court dates have been scheduled yet.

In its lawsuit, Rockwell states that its litigation ''arises out of the concerted action by the defendants to extract substantial sums of money from the industrial automation customers of Rockwell through an ongoing, bad-faith campaign to 'enforce' and 'license' U.S. Patent 5,038,318. In furtherance of this conspiracy, defendants have made and continue to make false and objectively-baseless claims of patent infringement against numerous manufacturers that use Allen-Bradley industrial automation products, and thereby have caused injury to Rockwell in its business and injury to competition in one or more markets and industrial automation systems.''

Matt Gonring, Rockwell's marketing and communications vp, adds that, ''This lawsuit was filed to support our customers, and to put a stop to what we believe are baseless and repetitive patent infringement litigations by Solaia and the Niro law firm.''

Bob Fiorani, Schneider's corporate communications vp, responded on Dec. 18 that, ''Our initial take is that Rockwell's claims don't have merit, and we expect this to be shown as this plays out.''

Rockwell's Dec. 10 lawsuit adds that the defendants overstated the applicability of the 318 patent; threatened manufacturers that they're infringing it; and then instituted repetitive, baseless, sham patent-infringement lawsuits against those manufacturers, particularly users of Rockwell's automation equipment, without regard to the underlying merits of the claimed infringement. Rockwell reports the defendants don't even want to determine the merits of their claims, but instead want to capitalize on the collateral effects of their litigation by shaking down manufacturers; disrupting Rockwell's relationships and weakening its competitive viability; and generating settlements from Rockwell's users without adjudicating whether those users actually infringe the 318 patent.

After learning of Rockwell's action, Niro partners Patrick Solon and Paul Vickrey stated Dec. 19 that they added a motion that day to Solaia's earlier patent enforcement litigation in U.S. District Court for Northern Illinois in Chicago against 10 of Rockwell's customers. This new motion asks that Rockwell be prevented from proceeding with its lawsuit. Judge Ronald Guzman has allowed Rockwell to file a response within 14 days. The lawyers add that they expect the judge to rule on the motion in January 2003.

''If Rockwell believes our litigation is a sham and without merit, then why did they run to another court to file their lawsuit?'' asked Mr. Solon and Mr. Vickrey. ''We believe Rockwell's suit is a smear job and an attempt to intimidate Solaia and its lawyers.''

In describing the parties involved, Rockwell's lawsuit adds that Solaia doesn't manufacture any industrial automation equipment, and that it's a single-purpose ''shell'' created to hold the 318 patent that was sold to it by Schneider Electric's (Paris, France) Square D subsidiary (Palatine, Ill.) at an auction in early 2001.

The 318 patent deals with transferring data between programmable logic controllers and spreadsheet programs. The patent is entitled ''Device for Communicating Real-Time Data between a Programmable Logic Controller and a Program Operating in a Central Controller.''

In its lawsuit's background statement, Rockwell says the 318 patent relates to a now-obsolete method of using an 'add-in' program running through a general application spreadsheet software program to control and monitor PLCs on a network. Essentially, the 318 patent was reportedly designed to be limited to permitting data transfers directly from the spreadsheet and without transfers through the operating system program or specially written device driver programs. As a result, Rockwell says its and other manufacturers' client-server methods of moving data transferring data aren't covered by the 318 patent, and that the defendants were aware of this when they filed their initial lawsuits in 2001 and 2002.

Solaia and Mr. Niro's law firm filed their first lawsuit on Aug. 27, 2001, against four of Rockwell's users: Jefferson Smurfit, The Clorox Co., BMW Manufacturing Corp., and Konica Corp. In March 2002, Clorox and Smurfit filed lawsuits in March 2002 against Rockwell for failing to indemnify them against the infringement problems.

While the initial litigation by Solaia against Konica was dismissed for lack of jurisdiction, the other defendants recently settled out of court for less than the cost of defending against the lawsuit, according to Rockwell's lawsuit.

Subsequently, Solaia and the law firm filed patent infringement lawsuits in July 2002 in U.S. District Court against 16 more manufacturers that use Rockwell's equipment. These reportedly include ArvinMentor Inc., The Boeing Co., Borg Warner Corp., Callaway Golf Co., Chevron Texaco Corp., Conoco Inc., Eastman Kodak Co., Eli Lilly and Co., Enbridge Inc., General Dynamics Corp., The Gillette Co., Kellogg Co., Lexmark International Inc., Shell Oil Co., Sun Chemical Co., and Tyco International. Though no trial has been scheduled in this case either, so far, Lilly, Chevron, General Dynamics, Lexmark, Shell and Kellogg also settled out of court between September and November 2002, according to Mr. Solon and Mr. Vickrey.

Back in its own litigation, Rockwell maintains that all of the lawsuits against these firms are objectively baseless. Rockwell adds that the law firm reports that it has a target list of hundreds of potential future defendants.

Finally, Rockwell says it's seeking ''damages adequate to compensate for harm caused to it as a result of the defendants anti-competitive and tortious acts;'' treble damages arising from the alleged anti-trust violations; punitive damages; and a permanent injunction prohibiting further action against Rockwell's customers for allegedly infringing the 318 patent based on using its products.