Opto 22 confirms settlement with Schneider Electric

Mark Hoske, editor-in-chief -- Control Engineering, 12/1/2003

Temecula, CA—Opto 22 confirmed Nov. 13 that it has settled the lawsuit brought against it more than two and a half years ago by Schneider Electric. Opto 22 stated that the U.S. patent process is broken, and that it chose not to continue spending millions of dollars defending itself against Schneider's litigation, which concerned using Web servers in industrial controllers.

Schneider had announced this settlement close to six months earlier. In a mutually agreed-on statement released May 29, Schneider's attorneys reported that the litigation was settled, and that terms of the settlement and Opto 22's resulting license were confidential. Opto 22 had not commented on the settlement until now.

Opto 22 reported Nov. 13 that Schneider filed its lawsuit without warning on Feb. 26, 2001. "We considered immediately settling to avoid taking on a multi-billion-dollar behemoth like Schneider, but we chose instead to engage in this litigation as a matter of principal, believing strongly that the entire industry should be free to use open standards and technologies that are clearly in the public domain," says Bob Engman, Opto 22's founder and president.

"The suit came as a surprise to us, mainly because it's just not the way we're used to doing business," says Engman. "Twenty five years ago, Opto 22 introduced the first optically isolated modular I/O system. Later, when many competitors began offering similar products, we viewed it as positive because it validated our concept and helped establish an industry standard. It's indicative of the way we've done business since our inception—embracing and encouraging open standards because ultimately, it's in everyone's best interest, especially the customer."

Opto 22's statement adds that, "As the suit dragged on and after millions of dollars spent on legal fees," company officials "came to the realization that the patent litigation process is, at best, a broken down system, and that small companies simply cannot endure the huge legal bills and endless distractions that inevitably result from such litigation."

Engman warns that, "Fear of litigation is stifling innovation as more and more companies decide to compete in the courtroom and not the marketplace. Attorneys and consultants are encouraging their clients to set up intellectual property departments with the idea of making money not through earnest endeavors to produce and offer quality goods and services, but through continuous litigation and intimidation. The lack of resources and expertise at the U.S. Patent Office is only adding fuel to this fire by awarding patents that should never have been issued in the first place. The only way to stop this disturbing and destructive trend is for industry leaders and customers to refuse to sacrifice fair business practices, good faith and integrity in favor of using the legal system to gain some additional revenue."

In any event, Opto 22 says it is pleased to have the lawsuit behind it. Mark Engman, Opto 22's engineering VP, explains, "Though we were and still are confident that our position was both legally and morally just, we owed it to our customers, partners, and employees to make every effort to bring an end to this litigation and get back to doing what we've been doing since our founding in 1974—designing and manufacturing the industry's best and most reliable hardware and software. Opto's engineering, sales and marketing, product support, and manufacturing organizations are all 100% focused on bringing value to customers. Opto 22 will press onward, instilled with the wonderful feeling that results only from the pride of creating and producing something useful."